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.

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?

Pat: Well, I mean, the one that I came out with will probably be the flagship but I don’t want to be, you know, the marker that I used to hate getting emails from all the time about all these different products.So everything’s going to be packed into this one, but it’s funny how you mentioned you have your own team now.

You know I thought about that because obviously I’m doing really good with Bluehost as an affiliate. Could I do something like that on my own and I could but the thing is that’s not the sort of lifestyle I want to live. I don’t want to manage a team of people who manage a hosting company you know what I mean.

James: No, that’s a great cost if you’re going to vertically integrate. You have to take on the costs and the risks in the service, responsibilities. It comes down to personal goals like what result do you want.

Pat: Absolutely.

James: What skill set do you have?

Pat: Should always.

James: Because I’ve got 50-something people in the Philippines so I have a very different background to you and a different business model so for me, it’s a logical step.

For you, I can see from your income report you have a very low staffing cost, I’d happily swap those staff costs, and you’ve got a very efficient model. The only thing is I guess it’s like you say on your blog, I think you’re not a millionaire yet or something, but maybe that’s not even the goal.

Pat: No, the goal is to just be around my family and be financially secure and give them all the options.

James: Which surprised me why you’re getting into the speaking stuff because that is a energy and time-intensive sap of a thing to do. I used to do speaking and you know, the travel.

You’ll be probably there in a hotel, hungry, at two in the morning thinking “What the hell am I doing while my family’s over in another state and why am I here?”, and then you’ll get all these maniacs wanting a piece of you and they feel like even if they talk to you that they’re instantly going to be a millionaire.

Pat: Yeah, I mean, it does take time away for the family which goes against that sort of “I only want to be with them all the time” but the purpose of doing that is to expand on my skills as a communicator which will help my business and also, for me personally, that is something that is very fulfilling – to be on stage and speak and help a group of people in that way.

And my wife knows that I’m doing that, you know ultimately, for them and that’s sort of something we’ve talked about together. And I will say personally, it’s always like great to come back home to the family. That makes sense like I will just…

James: Yeah, you realize what you’ve got.

Pat: Yeah, exactly. So, it’s nice to take those sort of two or three days off to come back to the family. And you know I’m not speaking as much as I could. I turned down over a dozen speaking gigs in 2013 just because I didn’t want to be away for too long.

James: Well, once you speak once, you pop your head up, it’s like everyone wants a piece of you.

Pat: Yeah.

James: It’s a big rabbit hole, and from someone who’s travelled around the world, speaking at various stages, you really have to pick your mark. I’m about to actually travel over your side there and speak at a couple of events about three, three things and they’re all specifically targeted.

One of them interestingly, is a retreat with Ezra, my co-host on ThinkActGet, we’re having a little retreat in Hawaii for some of our top listeners. And this is a great podcast monetization test for us.

Pat: Yeah.

James: To go to a tropical resort lifestyle sort of area, hire out a house, all food and transport covered, and then brainstorm with a very small group. And it’s very rewarding to be able to do that sort of stuff. If you can think about it, it probably can happen right?

Pat: Yeah, definitely, and I will tell you, I mean if this is your first time doing that, there’s nothing more fulfilling than getting a small group of people into a room together and just creating that energy and brainstorming together. Chris Ducker and I, we got together in San Diego when he was in the US for a one day, we call it our One Day Business Breakthrough event.

We had 25 people pay 500 bucks to come hang out with us for the day and we just tore down everyone’s businesses and built them back up all together. And honestly, I know people got a lot of value from Chris and I but a lot of people got a lot of value from everyone else that was in the group too helping each other out, and we just ended the day like “wow!”.

That was probably one of the coolest things I’ve ever done. Even though it was only 25 people, it was you know, these people’s lives have changed and we’ve since talked about doing more of these sort of small intimate sort of get togethers.

James: Right, yeah, well I’ve done about eight events with a hundred or 200 people and I’ve done about seven with six to 12 people, so I know what you’re talking about and I do like it.

I actually used to have people come to my house and sort of like I’ve probably got the idea from Perry Marshall way back. He does some Bobsled Run, and I thought “That’s pretty cool!”.

Have your best customers pop over, look after them and I think it is a great sort of low pressure way to be running events. In fact, yesterday, you know I’ve got another podcast, FreedomOcean, with Timbo Reid and we were talking about “How to Run an Uncomplicated Event.” That was actually the topic and we just went through our checklist and it is very simple.

I mean I just walked next door here. I’m at Manly. I walked next door to the hotel, I booked the ballroom for March next year and I’m going to have 150 or so people come to an event. It’s really just a matter of just setting the date, choosing the content, inviting some people to come over, and putting on a show.

But the best thing as you said, I think it’s the member to member, the peer-to-peer connection because in the internet space, it can get a little bit lonely and a little bit isolating. And especially when a lot of people around you, and especially when a lot of people around you, before you quit your job, will be quite cautious about your level of engagement on the computer for not a lot of return.

I think I’m probably going to be tugging on some nerve endings here but it certainly happened to me. My wife used to come into the room. Because I was running a full-time dealership and she’d say “Are we rich yet?” and I’d say “Not yet, but you know, soon.” And finally, we got there but it can be very difficult and I think it is absolutely essential to go to live events.

Pat: Yes.

James: And that’s why I get out of my house every quarter at least, I’ll fly somewhere else in the world and go to an event, I’ll go and meet people or I’ll just have friends come. I’ve been hanging out with another podcaster this week, Dean Jackson.

We’ve been going to some meals and having coffee and just talking. But the exchange of information at that level is unbelievable compared to trying to suck it down off a podcast here and there. Face-to-face is unbeatable.

Pat: Yeah you can’t. You definitely can’t beat that. I mean, the connections I’ve made, the friendships I’ve made, and the information I’ve learned just through sitting down and eating in a cafe with people is just unlike anything else. And it’s scary at first.

I remember my first conference in 2010. I was log rolled and I felt like a fish out of water. It was just like so much stuff going on and it was a little intimidating. And luckily, I knew a few people and just hung out with them the whole time.

I think that’s, you know, it’s best to go to those things with somebody you know and just try to meet as many other people as you can as well. I mean, you’ve got to get out of your “shy zone”, that’s for sure.

More About Podcasts…
James: Let’s talk a little podcasting tech stuff for a sec.

Pat: Let’s do it.

James: And, I’m sorry to the listener if this seems a bit rambly but I haven’t ever spoken to Pat before and I’ve got a list of questions to ask him and I’m just going to ask him. Now, you use Libsyn to distribute your podcasts?

Pat: I use Libsyn to host the files.

James: Right, and you’ve been using your little John Lee Dumas keyword hack lately by the look of it.

Pat: Well, actually, I was the first one to do that. Actually no, Internet Business Mastery was the first to do that.

James: He told me he sent you his cheat sheet, so you guys have. I demand a fight to the death at twenty paces.

Pat: I mean I haven’t changed my title since I started in 2010.

James: That’s right. Now just for the record, I logged into Blubrry, if anyone is using that, and I found where I can change the keywords and I checked it out and switched mine around yesterday and it’s already in the iTunes store. So, it appears that whichever tool you use these days, you’re able to control that but John’s put a lot of effort into that particular technique.

Pat: Yeah.

James: I think it looks spammy.

Pat: I do too. I mean, he’s putting how many keywords in there and he’s putting other people’s names. I mean that’s, in my opinion.

James: I think it, I mean, I’ve talked about this before at my event when we were recording a ThinkActGet episode and I said “Look, I’ve seen what’s been done and I don’t think I’ll be doing it so, I’m just going to take a longer term sort of view. I have to earn my listeners”. Probably like Dave Ramsey does. You know, he’s just got “Dave Ramsey” in his title.

Pat: Right. But if you look up “blogging” in iTunes, I am ranking number one.

James: You are the man!

Pat: But you know, and John had the number one business podcast for a while and he also somehow, he got contacted by Apple to have a little feature.

James: Yeah, I’ve seen it on the top, the feature thing, and so did my friend, Timbo Reid, with the Australian iTunes. He’s got a Small Business Big Marketing banner. That’s pretty cool. So, if it got in that, that’s a great result for the technique, but I do consider it a trick.

Pat: It is a trick.

Pat’s Fear

James: So Pat, you often talk about fear. Speaking scares you? Or scared you? You’ve gotten…

Pat: It still scares me a little bit.

James: I believe you practice. Like you practice a lot, wouldn’t you?

Pat: I practice like mad. Anyone who has gone with me to conferences know that the day before the conference you’re not going to see me. Or the day before I speak at the conference, you’re not going to see me, because I’m in my hotel room. I actually dress up in the same outfit that I’m going to wear when I’m speaking, and try to make the environment that I’m in as close what it is going to be when I’m speaking.

I also typically go into this speaking venue, or wherever room I’m going to speak in, when it’s completely empty, and just walk around the room and get familiar with it. You know, as many things as I can do to increase my chances of being comfortable, I’ll do that.

James: Yeah, well I have a similar ritual. I put shoes on before I speak, to get myself feeling a little more like I’m going to fit in with society. But I do recommend standing on the stage before you speak, if you can.

Almost always they’ve got a bump-in the night before or very early in the morning and it is good for first time speakers. And one of the other things is to stand still. It drives me insane seeing rookies running…they burn a hole in the dance floor, it’s called. They run up and down the stage because they’re so nervous, that energy’s dribbling out.

Pat: Yeah. My very first presentation, I was just pacing back and forth in a little five-foot area.

James: It’s very common. That’s the one thing. I mean, I put up speakers who’ve never spoken before at my events all the time, and the one piece of advice is, check out the room before you speak, so if you’re comfortable with it, it’s not a surprise, and the other thing is, just stand still. And I give them the speaker’s stance. Feet shoulder-width apart, and just plant them into the stage like a tree.

Pat: I mean, moving’s okay in certain points, and I actually use movement to emphasize certain moments during the presentation. But yeah, at first it was… Like I watched myself, I recorded it and I watched myself, which I also think is a really important thing to do if you really want to start doing this more often.

James: Yes, absolutely. Much better than practicing in a mirror. Because you’re never going to speak to a mirror, and you don’t look the same in a mirror. Record yourself and playback the recording same as they do in sports teams.

Pat: Yeah, totally.

James: What else scares you, Pat?

Pat: What else scares me? Spiders.

James: Why?

Pat: I don’t know if we want to talk about…I had a really….

James: No, we should, we should. I went to Taronga Zoo, a few weeks ago. We have six of the top ten deadliest spiders in the world, apparently. But even with the funnel web, there hasn’t been a fatality since 1960 or 70 something. And there’s antivenom. Like the chance of dying from a spider is almost nil.

Pat: Yeah, but you could still get really hurt, right?

James: Well, look, they bite you – so what? Yeah, you’d better not come to Australia.

Pat: I mean, I have family in Brisbane, so I’ll probably be there soon. But I had a sort of traumatizing experience when I was little. I mean it wasn’t…when you hear it, you’re going to be like, “What? That’s lame.” I used to actually collect spiders for class, and I had put them all into a bucket. I had maybe two hundred in there, and then I forgot about them.

And I went back, and maybe a month later, in this bucket, there were…I want to say tens of thousands of baby, random types of baby spiders in there, and just crawling around and I just kicked over the bucket because I was scared. I was just really scared. And that same night, for whatever reason, a spider was crawling on my blanket. When I woke up in the middle of the night, it was right in front of my face.

James: That’s like a “Brady Bunch” episode in Hawaii.

Pat: Yeah.

James: Tarantulas.

Pat: I remember that. I don’t know why those two things happened in the same day but they did, and ever since then…My wife has to go and kill the spiders in the house for me.

James: Don’t kill them. They’re killing all the insects – the flies, the mosquitoes – they’re good for the environment.

Pat: Well, I don’t know what she does. I leave the room, so maybe she just puts them outside.

Success In Business
James: Good, I hope so. What do you think the most successful thing you’ve done to date is? I know you’ve done all sorts of things. You’ve done the course, you’ve had a book, I think, and you’ve spoken. I know you’re probably going to say you got married or had kids. But I mean business-wise.

Pat: Okay. Well, I’m glad you said that, because I was going to say, being able to stay home while raising my kids, was going to be what I was going to say.

James: That’s still, I think, sort of half business. The not having to work for someone else… Did you get terminated, or something, you lost your job?

Pat: I got let go, yeah.

James: Right. So that would be a massive kick in the guts, I could imagine. My dad got let go and they lost all their money when I was a kid and it kind of traumatized me and I fought like hell not to be in that situation. I managed to escape employment without being sacked, which actually felt like it was a big achievement, and lucky.

But I remember almost shedding a tear when I realized that I could no longer be sacked. That amount of control, that grip, that vise grip that an employer can just squeeze on you at any time was a huge factor for driving me, and I imagine you had a similar motivation.

Pat: Yeah. I mean definitely. And it reminds me of a story after I got let go and after my business started to take off, selling these guides and practice exams in the architecture industry. My old boss, who had let me go, called me back a few months later. He was let go too, and he started his own firm with a couple of other people who were in the firm who were still there after he left. He wanted me back. He wanted me to come back.

He said, we’ll pay for your move, we’ll increase your salary. And it was the best “No” I had ever said in my life. Just knowing that I was on this path of work of my own for now. And even with the opportunity to go back and do even better, I knew that that wasn’t the right thing for me.

James: That is awesome. That’s kind of like you finally got to leave your job, in a way.

Pat: It was. It was closure, actually.

James: Yeah. For me, closure was ending up…I was just minding my business, one of the guys at this old place that I used to work, the first Mercedes-Benz dealership that I worked, called me up for a website.

And then I just asked him if he had a car there in stock for my wife. He said “Yes.” We went in, had a look, bought a nice Mercedes-Benz for my wife, and she said, “Isn’t that the one you like?” And she pointed to the AMG. I said “Yes.” She said, “You should get it.” So I said, “Okay.”

So I bought two brand new Mercedes-Benz from the place that I started selling Mercedes-Benz in 1997 when I had a little baby…I had two kids back then, I have four now. And the closure, this was like three years ago, sitting on the other side of the desk. Instead of being the salesperson, being the customer. Because all these people buying the cars were business owners, not employees, and they were all smart and nice people, too, interestingly.

A lot of them were very humble and nice. The people with money weren’t trying to tell everyone about it. And it just felt nice to transition onto that other side of the desk and to be the customer. You know, to hand over the key and you drive out.

Pat: Yeah, that’s awesome.

James: You know, I’d watched that for a decade. On the other side of the desk. I suggest an action step for our listener would be to identify something that you have a yearning to close, and see if you can close it.

Pat: I like that.

James: Okay, so if I could sit someone here who was complaining to you that you’ve given all this free stuff and that you’ve sold out, what would you like to say to them?

Pat: I’m going to continue to provide all the same free stuff. You’re not losing out on anything, nothing has changed. I’ve just sort of added something else and if you don’t want to pay for it then fine, don’t pay for it. I mean, no pressure at all. I’m not forcing you to. I’ve told you what it’s about, and if it’s not for you and you can’t afford it, that’s fine. That’s fine. I’m still going to provide like I always have. Nothing had changed.

James: That is good tips. Now Pat, do you do a lot of advance planning?

Pat: I do, I do. Can you better specify or sort of clarify what you mean exactly?

James: Okay, well just from my observation, you have a high attention to detail, you don’t like to leave things to chance. And I imagine that you have a little future map in your mind and I’m wondering if you want to share some of that with the listener.

What does the future look like for you? Have you got a fixed idea of that? Have you got steps laid out, have you laid your train tracks, as I talk about in my business mastermind, or are you chancing it to the breeze?

Pat: Yeah, you know, it’s interesting. I think it’s important to strive for goals, long term goals like that, five or ten years out. But also I think it’s important at the same time, this is something I live by…

I am pretty open to change, and I know that you could plan all you want, things happen, and the most important part is understanding how to adapt to different situations that happen around you. I mean, that’s something that I feel I’m very good at, especially since I learned that I can do that after getting let go.

But I do have certain things that I want to shoot for, and a couple of those things are, for instance, a traditional book. And as much as, you know, the ebooks are starting to reign the throne now, I have always wanted to, ever since I was little, to publish a traditional book, and go to the bookstore with my kids and be like, “Check it out. That’s Daddy’s book.”

And I want it to be that example for them that you can follow your dreams, you can do things like this, as long as you work hard and are patient with it. I’ve always wanted to just go to the bookstore and see my own book there. So, writing a traditional book.

And I have, thanks to the ebook that I came out with recently and also the podcast that I have, I’ve recently hooked up with a few people who are going to help me be able to do that and realize that goal, which I’m very very thankful for. You know, literary agents and publishers and things like that.

So, a traditional book, and I just want to continue to grow my audience and be the example of someone who is doing business in the way I think most people feel business should be done, especially online. I’ve sort of unintentionally got put into this leadership role online, and I’m embracing it.

And I understand the responsibilities that come with it and I appreciate that so many people are watching what I do because it’s going to make sure that I continue to go down the right path. And that’s why it was so interesting, you know, coming back to this product development that I just did.

A lot of people feel that that’s going down the wrong path. But from a business perspective, if you want to create a long term, lasting business, you have to create stuff of your own.

Because like we talked about earlier, Bluehost could change its model and be a company that I don’t want to promote or they can just end our affiliate relationship or a company would buy them out and get rid of the affiliate program, whatever. I have to create something of my own.

And it allows me to better communicate the experience. It allows me to better communicate and control the customer experience of people in my audience.

For a while, I was….It’s so funny, that I got this backlash. And there was a very little amount of backlash, but you know, it should be talked about and heard. But it’s so funny that I got this backlash after for so many years promoting other people’s products.

The moment I have my own and I feel like I can better control the customer experience and continue to work with them after they’ve purchased this product, I get backlash. Whereas before, I would just send them to someone else and then that’s it, I wouldn’t hear back from them or I wouldn’t know how they were being treated exactly.

So, you know, continuing to develop this product, I guess, going back to your original question, is what I’m going to be doing. You know, the product I have now is closed, it was only open for three days, and I’m working closely with the people in there now, with the members, to just improve the heck out of it, writing features every week, writing new lessons, and content, and I’m going to probably be reopening it later this year if not early next year, and it will be something amazing.

I took a very lean approach with it. Obviously it was enough to provide value and do everything it said it was going to do and more, but I didn’t do a lot of things I initially wanted to do in there.

A lot of the features, and you know, the vanilla and the icing on the cake type of stuff, because I wanted to make sure and speak with the people that were in there, to make sure that’s something they would want. And I was very inspired by a lot of reading on lean startup models that I’ve been doing lately, like Eric Ries and The Lean Startup.

James: Absolutely. And Ash. And Noah Kagan, and all those guys. It’s a terrific way to go about it, and here’s the great truth. As I’ve had forums now for five years, that it’s not about having more stuff in there.

It’s actually if you could deliver the least amount possible, then you’d be doing your listener a favor. Dean Jackson put this beautifully. If you gave me a thousand dollars today, and tomorrow I give you two thousand dollars and you had to do nothing, would that be a good deal?

Pat: If I gave you a thousand…and then you gave me two thousand?

James: You give me a thousand dollars today, and then I give you two thousand dollars tomorrow.

Pat: Yeah.

James: And you don’t have to do anything. Is that a good deal for you? Right, so it just proves that it’s not about having to do stuff or having a lot of things to consume. The result you want is the return on your investment. And if you can deliver that with the minimum amount of stuff, you’re actually helping people.

I found by archiving a lot of my training in my community, it’s encouraged the member-to-member contributions. And it’s quite interesting. But you can really do a lot more with a lot less. And I think to some extent, you’ve proven that on your blog. Because you haven’t been…I wouldn’t say you’re prolific with your content. You have a lot of content, but you’ve been doing it for a long time.

Your frequency isn’t as high as others, like John or other podcasts. But you have such a solid customer base, and that’s because you’re delivering the message in the content. You’re moving people with what you do put. When you put something out, it’s high caliber. And I think, back to the hosting scenario, it’s not a case of “if”. It’s a matter of “when”. You have to think as a business owner.

If your responsibility to your primary shareholder, which is probably you and your family, is to stay in profit, that means you have to get and retain a customer. And yeah, a lot of that is outside your control when it’s an external party. And the chances of you still promoting that specific product in years from now would be slim.

Pat: Yeah. I mean just think about that. Will I be still able to make thirty grand a month promoting Bluehost ten years from now, you know?

James: No way, bacon. No way, it’s not going to happen. So, the underlying strategy that I would recommend would be to assume it doesn’t exist. Just to put it up on a whiteboard, write down where all your income comes from, pick the biggest one that you have the most risk as a percentage or actual dollar profit, and put a line through it and answer this question: “What will I do if I no longer have Bluehost income?” And the answer to that is what you should be doing now anyway.

Pat: Absolutely.

James: That’s a constraints exercise. Well, Pat, you’ve been super generous. We’ve been all over the place but I really wanted to touch that topic of customer buck back when you provide a lot of stuff for free.

I think, thinking out loud, I think I can see you migrating to more of a control position where you’re creating your own universe, and dialling in the levers that make that work well, and it’s the next growth phase, and it certainly will be more profitable for you in the long run.

And it’s much harder for people just to come and cut and paste you, which I imagine must happen an awful lot. It’s like, “Oh, this is how Pat makes money. I’ll set up a hosting offer and do some free training and blah blah blah.”

Pat: Right. But I think people forget how much hard work has been put into creating this community.

James: Into creating a passive income?

Pat: Yeah. You know, creating the passive income is not passive. It takes a lot of work. You know, a lot of people, with the free content that I provide, it’s so good, I feel, and I’m told, that people would pay for that.

So the moment I come out with something of my own, most of my audience were more than happy to purchase this product, the people who were interested. There were some people who emailed me in the past, who were like, “I don’t care what you create. Just, whatever it is, I want to pay you back somehow.”

And I’ve had a few people who…I mean, I don’t know why they did this, but they would actually…I mean, this is insane, but they would say, “Here’s my credit card number, whenever you come out with something, just make it easy on me, just charge it. I don’t care what it is.” I mean, that just sort of exemplifies the sort of relationship that I have with my audience and you know, the idea of reciprocation.

And I think that’s really what my business model’s all about, is sharing so much, giving so much value that people want to pay me back. And for a while, and still now, the opportunity to do that was through affiliate marketing, and now I’m just giving them another opportunity through an even more value add which is the products that I’m creating.

James: Wait till you get the confessional emails, in a year or two from now. It will be, “Hi Pat, just want you to know I feel really guilty. I downloaded your product from a torrent and I used it and my business went really well and I’ve felt bad about it ever since and I want to apologize to you and also send you money for the course.” Because that’s what I get now.

Pat: Yeah, I mean, I’ve had people send me money through PayPal for no particular reason, just because they….you know actually, this was back when I first started with Green Exam Academy, when I had all that free information before I sold my ebook in October of 2008. People were sending me donations just because they felt like they needed to pay me something.

James: That’s like the tip jar, blogging culture.

Pat: Yeah.

James: Nice. That is good. Yeah, I think you’re going through a massive phase here. It’s very interesting to watch, and I do hope we can come back and talk about an update in the future.

Pat: I’d love to.

James: That’s nice of you to put me into the schedule, because I’ve been aware of you. I’ve also been inspired by how lean you’ve run that affiliate side of the business. It’s very good, and I think that a lot of listeners can take some cues from that. You pay a close eye to the numbers, which does not happen enough in business. It’s essential, and onwards and upwards, hey? Great success to you.

Pat: Hey, thanks, and I can only say the same thing to you, James. It’s been great to connect and finally chat with you. I don’t know why we haven’t chatted before this, but I hope we can even outside of the podcasts connect with each other and just see how we’re doing.

James: Absolutely, since we seem to have all the exact same friends!

Pat: Right!

James: Alright, Pat. Well, I’ll let you go, have a nice evening, and we’ll speak soon.

Pat: Alright, take care, James. Thanks.

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