Monday, February 21, 2022
This NEVER happens! Two of modern marketing’s greatest legends get together for a RARE chat, where Dan interviews Jay on high level strategies and principles. On this episode, Dan gets Jay to reveal:
Listen in as these two giants rip the doors off of these closely guarded marketing secrets.
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Russell Brunson: Welcome to episode number two of the Magnetic Marketing Podcast. And this is a special episode that I am so excited to bring to you. There are two of the biggest legends in direct response marketing. Obviously, they are Dan Kennedy and Jay Abraham. And this is one of the rare times we got both of them in a room together where Dan was actually interviewing Jay about some of his strategies and concepts and principles. And listening in on this interview, for me, was one of the most amazing things I think I've ever experienced. I hope you enjoy it as well. This is something that's very rare and very unique and a gift we wanted to give to you guys. So, with that said, I hope you enjoy this week's episode of the Magnetic Marketing Podcast.
Dan Kennedy: Good afternoon, everybody. Welcome to the diamond call. I have with me, as most of you know, and who I will get to in just a few seconds, Jay Abraham. He arguably needs no introduction, but I'm going to give him a brief one anyway, but I apologize for being a few minutes late. Jay and I don't talk to each other often enough. And we got involved in a meaning of life on this planet conversation for old lions. And it really was not appropriate for everybody's consumption.
I have no real commercial announcements. For those of you who were just at the big June midyear mind hijacking event, thank you very much. We had a great event. As a side note, whether you were there or not, and you will see it in a newsletter, but we had our biggest year or midyear event ever in terms of contributions to our charities. We raised over $77,000 from a relatively small group. So, that was cool. And for those of you who participated, even if you were not a direct donor in that particular activity, your participation and attendance and support of the event made it possible.
And I believe we are at 63 or 64 preregistered for next June. So, that's cool, too. And thank you for that. Next GKIC thing coming up of big significance is the info summit and to my knowledge, there is no real information about it yet posted at the site. So, I don't need to tell you to go look, let alone do anything else.
So, I think that's all the commercial stuff that I have to do. And so, we will get to Jay and allow time for Q&A. Global traveler, he has just rattled off countries he's been at recently and more power to him.
As most of you know, Jay has a long history of probably best known as a strategist in developing really sophisticated marketing strategies for companies large and small spanning thousands of businesses and hundreds of separate industries and professions and product categories and service categories. God only knows how many multi-day seminars and trainings and all of that over the years. He's very well known for concepts of risk reversal, kind of as a king of joint ventures, which is one of the specific things I'm going to ask him to talk about.
His media plaudits are a long, long, long list: New York Times, USA Today, Entrepreneur, Success, Inc., Forbes. And he and I have known each other and occasionally been on the same dance cards for more time than either of us cares to count. And he has graciously agreed to, with no particular agenda, be with us and let his brain be probed. So, Jay, thank you very much.
Jay Abraham: That's my honor. Come on. My admiration for your work is equivalent. So, this is a delight and a treat for me.
Dan Kennedy: Well, I don't believe you play golf, but I'm sure you had something else you could have been doing. And so, it is much appreciated.
So, let me start, if I may, with a Jay Abraham, I think, uniquely languaged concept, which you have referred to as ambivalent uncertainty.
And I think that we live in an increasingly fragmented media environment and a confused consumer environment and massive amounts of choice in front of them in every category. And yet, I think this refers to a choice that marketers often overlook, they don't think of as being in their way. And so, I wonder if you just talk about that a little bit.
Jay Abraham: Sure. And I'll approach it from a multiplicity of vantage points. So, the first thing is everyone thinks they're competing against direct competitors. In actuality, you're competing against direct competitors. You're competing against alternative competitors, but you're really competing against apathy, ambivalence, procrastination, equivocation, contemplation. And it is a huge, huge ... What we call it? It's an anchor that most people don't recognize. I don't know if you know Mary Lou Tyler. Do you know her?
Well, she did work for Salesforce and she does a lot of sophisticated work and she came up with four categories of buyers. One is basically unaware, uninterested. One's aware, uninterested, one's aware, interested, but not really compelled. One's aware, interested, compelled, but not decisive. And you have to realize there's a lot of gradients in the world. When I was about 40, I did a lot of work with a couple of very bright people who ... I've been blessed, Dan, truthfully, because I've had mentors that were way above my intellectual skill set and they've shared perspectives to me. And one of them was the formation of this concept that I think I'm known for called the strategy of preeminence and the whole premise is you got to put words into people's minds that for the first time crystalline what it is they're trying to get away from, what they're trying to get close to, what the outcome is, what they want, what they're afraid of. You've got to then show them an alternative to where they are that is so compelling. And it's all based on a role of taking leadership.
And I've been very well skilled in that because I've had to deal with it. And I have to find ways to make it easier for people to take a step forward and feel not just safe, but that they won't be embarrassed. There's so many different levels of risk that most people don't think about. And they think about monetary risk as opposed to looking bad risk, reflective regrets that I didn't do this instead of that. And I factor all that in. I don't know if I'm taking you down the right road of response or whether I'm taking a tangent. Is that what you wanted or do you want to stop?
Dan Kennedy: Yeah, no. I think, first of all, I take a lot of people start further along the path toward acquiring a customer than any of their prospects are positioned at.
Right. And so, there's this assumption, as you said, that we need to deal with their competitive options, but they're not even close to that point yet. And I also think that most marketers, I would say they, when we go look at ourselves in the mirror in the morning, we don't see scary monsters, but our prospects do. And the longer we do what we do, the more we take for granted the fact that we're not scary or intimidating to anybody when in fact, just the act of Bob and Martha, 63-year-old retirees, getting in a car and driving to a Holiday Inn they've never been to before on the opposite side of town to come to a free financial advisor workshop is as scary as you or I deciding that we're going to go vacation in Iran.
Jay Abraham: Yeah. That's wonderfully stated and you're right. And most people don't recognize it.
Dan Kennedy: No. And the third thing that you hit on is the emotional risk, the esteem risk, looking bad to sell for others that people often leave out of the equation. A lot of dentists get it now, that somebody that hasn't been to a dentist for a long time is reluctant now to come to the dentist because they're going to look bad to the dentist and maybe they're going to get a lecture. And they're not going to be handled well. And that has nothing to do with fear of pain or fear of price or all the stuff that most people normally sweat, but you went right to where I was going to go next, which is your whole approach to preeminence to ... It's almost hackneyed to call it positioning, but a category of one, all of that kind of terminology. I wonder if you just talk a little bit more about that. And maybe even a client, a situational example.
Jay Abraham: Sure. Absolutely. Yeah, absolutely. So, it normally takes about three hours to explain. And by the way, anything that you broach upon that you want, Dan, I will be glad to send you so it can reside on your website, that people don't have to even come to me for this, because some of this stuff is really profound and we've done hours and hours on it. But I've had a number of pivotal sort of epiphanies and attitudinal shifts in my life based on being catalytically impacted by different people. And about 20 years ago I was working with ... Well, I tell you, it was Phillips Publishing. And at that time were just killing it. And I was close to the guy that ran it and I was trying to figure out what they were doing so much different.
And I did a trade. I gave them a half a million dollars of my services and they let me hang out and interview everybody for about, I don't know, three weeks. And I just took notes and I had a thousand pages of notes and I distilled it. And then I'd shift it and moved it around and tried to figure out what the hell it was telling me. And from that I evolved a thesis, a strategic philosophy, a philosophical strategy that becomes, in my mind, the guiding foundation for which I create everything for clients. And I call it the strategy of preeminence. And it's designed to bake and position you as the only viable choice, the most trusted advisor for life. Even if what you sell is a singular product or service, it's designed to help you connect in a most authentic and penetrating way and a level that transcends superficial copy. It becomes the foundation of your advertising, your selling, your cultural.
And I'll give you just some of the easy parts about it. So, the first thing is you start with ... Well, I'll tell you ... We'll do it ass-backwards because the biggest insight in it is most people in business fall in love with either the business or making money or the product or service or the category. When you're preeminent, you fall in love with the client and you actually ... Let's see if I can just use the right word. You're very aware and comprehensive the transformative or the protective or the enriching or the entertaining impact your product or service or company at work in their lives is going to have. You spend time trying to understand, examine, evaluate, appreciate, acknowledge, and recognize how they see life because no two people see life at the same way. No two people define a word the same way.
You start very methodically working on being able to present yourself as having an alternative position because most people think the system sucks. It's trying to take advantage. And if you look at most generic people or competitors they are, you establish that there is a better alternative and you have it. You are totally externally focused.
You basically, now you've got a moral obligation. I'm giving you a lot of things compiled together. You have a moral obligation. If you're going to be the most trusted advisor to never let a client or a prospect buy less than they should, in less combination they should, in less quality than they should, in less frequency than they should, in less progression than they should, not because you're going to lose money, but because they're not going to get the maximum outcome and you have the moral obligation to explain it to them.
And I'll give you two really interesting examples that are rapid. Let's say that I had Jay Abraham's bottled water shop and water bar. And you came in, Dan, and you asked for a half a glass of water. And I just served it to you without at least respectfully and not arrogantly or admonishing, but just, just heartfelt saying, "Dan, you need to have seven and a half more of those every day so that your brain chemistry works, your your mind is operating at perfection, your cellular structure is working, your stress level is down, your life is ..." And I have an obligation to tell you what is in your best interest. Then, if you don't want to opt for it, at least I have exercised my obligation as opposed to just taking your sale.
Number two is when you want to be the most trusted advisor, you do not want to refer to a buyer, I don't, as a customer. I want to refer to them as a client. And there's a reason why. If you look at Webster's Dictionary's definition of a customer, it's somebody who buys a commodity or a service.
In a world where there are three factors trying to basically commoditize and marginalize you, the competition, the alternative competition, and the consumer, for you to concede is lunacy. You want to refer to them as a client for three reasons. Number one, if you look up the definition of a client, it basically is someone under the care, the protection, the well-being of another, it has a very higher and more elevated context. You live that. You have a tendency to operate at a much higher level. You tend to want to contribute more. Everybody thinks, and this is going to be default because a lot of people are into copy that how much more do I have to say to get the sale? And it's not the right question. The question is how much more do I have to contribute or give a value and a value that is acknowledged and appreciated by them, since there's value on our side doesn't mean anything to the recipient. Remember, there's just a lot of elements, but it's a very elevated way of operating and it tends ...
So, some examples. Years ago, when I did investment rarities, a very big gold company, everybody else was selling gold direct. Our deal is we wouldn't even let you buy gold until you first got the case for it. Then, if you wanted to buy it, we wouldn't let you buy all you wanted. You had to buy junk gold first or bullion, just so that you were comfortable. And you got, you saw and you felt, and the mystique and the reason why. And if you didn't like it, you're down 2% or 3%. Then, we'd let you buy junk silver. Then we'd let you buy other things. And we were much more slow and methodical, but we did about 10 times the amount of business than the average sales.
I used to do, as you said, very large seminars. Here's how we did our seminars. They were 15,000, $20,000, 25 years ago. First thing we would do is we would send everybody, this long before anyone ever did this, a two-hour interview of me that was purely content and get about 12 things people could do immediately. If they were interested, they would call and they would be invited to sign up, but we would not bank their check or deposit their credit card. We would, however, send them 2,000 or $3,000 worth of materials for anyone that ever did that. And our proposition was, if you can't use that before you even come to make more money than the program, we insist on you canceling, and you can keep the materials. Then when they came to the program, we wouldn't deposit their check or a credit card until 2:00 on the third day of a five-day program. And we couldn't repossess.
So, we did lots of things that were different. For a lot of clients, we will buy. I don't believe that I've done a lot of comments on this. I don't believe in free. I know free is really the universal forever bromide for everything. But I think, in today's world, with so much crap that's free, you're much better buying somebody something that has value.
For example, just in preeminence. When I started out, my price is very high. It's a hundred thousand dollars a day, but I don't really care if I do a hundred thousand dollar day. I want it to be a contrast to somebody wanting to do a longer-term deal where I get a fair fee, but I get to participate in the variable. But when I used to do exploratory conversations, it was $2,000 a day. And I'd say, "Sure. I'll buy." I wouldn't say ... I'd say, "Come on. You can have 15 minutes on the phone with me free." And that would be very ineffective.
And then, I started changing the perspective. I got a huge, huge hourglass that was 15 minutes. And I would tell people, "Look, I'll buy you $500 of my time and we'll explore it." And the moment they walked in, I would turn the hourglass over and they're watching the grains fall.
But I giving you lots of examples. I mean, is that enough or you want more?
Dan Kennedy: Yeah. Well, what it does, I mean, so in many of those examples at the very kind of grainy tactical level, you've got the risk reversal.
But bigger. It is about this focus on the on ... And you rattled off the categories of the transformational experience of the client, not on the product service proposition, value proposition, et cetera.
I have an internal Disney document that actually was tucked inside an old Disney training manual that I bought at an auction. And it's handwritten. I don't know whose handwriting it is, but it has the page divided in the middle. I've done this at some of my books coincidentally. And in this case, our website, it has the business people think we're in. And then on the other side, it has the business we're actually in. And then, on the business people think we're in, the person wrote, "Movies." And then, on the side, the business we're really in, there's 22 or 23 items, the last one of which is movies. And the other items are reinforcing the morals and values that parents want their kids to have. And there's 22 of those. And finally arriving at, yeah, oh, by the way, we do all this with movies. And I think very few people ever really make that list. They confuse their deliverable, as I usually put it, with the business they're in, when in reality, those are two very different things. And you got to it brilliantly. And a lot of people just miss it entirely.
Jay Abraham: Yeah. Well, if I can respectfully interrupt, when I teach it informally, I say, even if you're an ice cream vendor, you're doing it because you have the joy of knowing that an adult who's getting an ice cream cone is getting a reprieve from the insanity of their life for 15 minutes there, getting a nostalgic reinforcement of a better, easier, less stressful time. And you're able to make that possible not just by scooping it and vending it, but by being there, by smiling and people don't realize that they think that's a lot of ... I don't know if the word I want to use is tangential or wasteful, but there's something. And whether you hit on this or not, I probably should preemptively say one of the things I think I am, it's not arrogant, it's clinical, more focused on than most is nuances. I don't think most people understand nuances.
Dan Kennedy: Well, in part, I think they don't understand them. And in another part, I think they're in a hurry and they don't slow down to think about them.
Well, I mean, the point I was about to make is that everybody's in a big hurry to get to the damn copy and I have to slow clients down, so that I can slow down because all of the stuff you do before you write the copy is infinitely more important. And one of those things has to do with all these nuances is trying to understand what the recipient, prospect, customer, client, patient, what they're all about out and trying to understand what the provider of the product or service is really all about or should be all about. But everybody wants to jump to the features, benefits, differential, advantage, price, offer list, and let's get this done. And I think the internet has not helped this.
There's enormous pressure to be instant and that just tramples over any nuanced consideration.
Jay Abraham: And yet I can tell you that when you take the time ... Let me give you a very interesting example and extrapolate because it's one of my references. I had a client a couple years ago, and it was really a complex client and I'd spent months struggling over how to articulate. They were competing with ADP and they were competing with QuickBooks. And it was not just a competitive proposition, but it was a whole cultural change. They had to get accountants to make, and then accountants would have to get their clients to make. It was very challenging and it needed a lot of perspective. And I had a meeting with the client, let's say on Monday, and I'd been working on this, honestly, mercilessly and far beyond the compensation for six weeks. And I destroyed about seven different versions. And I'd been studying everything I could. And I come from the Claud Hopkins school that you study 10,000 pages looking for a paragraph, and I'm exhausted. And I got an inspiration that was really cool, but I got it two days before the meeting. And I started redoing everything.
And I called my assistant two hours before and said, "Please tell the client that I've been working on this incessantly for," what I just said, "Six weeks. I've got 17 drafts I've thrown away. I've read 25,000 pages. I finally found a breakthrough I think will resonate with the accountants and move them to be able to persuade their clients, but it's taken a lot longer. I'd like to move the meeting to Thursday so I'll be ready to deliver." And her message to the client is, "Jay doesn't have time to talk today. Maybe Thursday," and all the nuances were lost.
And that's what I'm saying. It's one of the things that were very interesting to me that ... I mean, I love this about Gary Albert. He had the story about the tugboat. You know that one.
And I always go, "People don't really understand that very well." And it's same thing with the Panama Canal or the Suez Canal. And most people try to get right to the pay dirt in their copy or their sales approaches.
Dan Kennedy: Well, even and to your point about your assistant. Even in communication, I mean, it's one of the reasons I absolutely stubbornly refuse to let anybody email me, let alone tweet me because it invites thoughtless communication.
Jay Abraham: And unintentionally offensive communication.
Dan Kennedy: Yes. And when somebody has to slow down at least long enough to put it on a page and put it in a fax machine, it helps them.
Somebody's voicemail that you sure wish you hadn't left. And it just goes on all the time. Yeah. I have a very sort of ... And then I want ask you about joint ventures.
Jay Abraham: You can ask me anything you want.
Dan Kennedy: Well, in between, because he's from so far away, I'm going to accommodate him, even though this winds up self-aggrandizing for both of us. A guy on the call, a member of ours, Ellery, not sure how you say the last name, L-E-U-N-G, Leung, maybe, is in Hong Kong. So, I don't know what time it is over there. I don't know if it's the middle of the night or last week.
Okay. So, he wants you to answer what are the one or two ideas that are Dan's that you admire most and wants me to answer the same thing about you. So, do you want to go first, or you want me to go first?
Jay Abraham: Yeah. I think that you are ... And I've said this to people behind your back with a laudatory admiration. You understand human nature at a deeper and more honest level. And you're not pandering, patronizing, superficial, or veneer about it. And you understand the self-servingness of humanity. You understand the shortsightedness of humanity. You understand, I won't use the word ignorance, but the naivete of humanity. Well, let's call it the ignorance and the arrogance. And you understand very masterfully how to deal with that. And I think that cleverly concealed beneath a facade of curmudgeon-ness is a very compassionate person who doesn't want ... You're a tough love guy who wants people to take action and take shit seriously. And I admire that. I mean, there's a lot of other things, but is that okay?
Dan Kennedy: Well, that's wonderful. That's wonderful. I'll transcribe it and use it.
I often tell people that you are not only a far deeper thinker about business in general than most, but about leverage and sort of finding and unearthing the ways to make more out of what's already flowing through the system, whereas everybody tends to be focused on how to go externally and get or create more. And more beneficially to people who really pay attention to you, you make deeper thinkers out of them. I think that your content, your material. I just reread last night The Sticking Point book. So, and of course I have your stuff dating back to when we got it on stone tablets.
Jay Abraham: If you want another supply of the new stuff, tell it. It's yours, man.
Dan Kennedy: But, see, I think you challenge people more than almost any other speaker, trainer, author, consultant. You can't really breeze your stuff. If you are going to pay attention to your stuff, you actually have to be thoughtful and analytical.
Jay Abraham: So, I mean, those who don't know my background, it was very accidental. I have no education. I got started young, two kids and nobody would give me a paying job. So, I only got people who'd let me sit in the corner and get pieces of deals or so much a sale or whatever. And when you only eat when you earn, you figure out what works and then what works better. But I was bored and I changed industries, not jobs frequently.
And after about 10, I realized that people in one industry didn't have a clue how people in another industry thought, how they marketed, the strategy, business model, access model, anything. And I started being able to borrow integrations from other industries and apply them to industries that didn't know them. And my performance, just for those companies, just double redouble it. So, it was very phenomenal. Concurrently, over the course. I mean, I really work mostly with real clients on the front lines of commerce. Dan knows this when we were at our peak, I think we did a quarter billion dollars and I sort of burnt out on doing that, but I'll tell you three things that were interesting.
First of all, I had clients that forced me to understand leverage. One of them was the Deming organization, the father of optimization process improvement that was designed for manufacturing. But I was able to understand all the variation and extrapolate it and see how it applied to the revenue side.
Then, I had another company called QualPro. They were the largest multi-variable testing organization in the world, and they did back then for millions of dollars clients. Now, you can get the freemium online and get a lot of the same thing. But I got to look at billions of dollars of variation tests on everything from customer service, to putting retail SKUs, different facings, positions, things like that.
Then, I had the largest strategic litigation consulting firm, which is called Decision Quest. And I got to look at billions of dollars they had done and 50 PhD psychologists, sociologists, and I got to look at all the differentiation on things like venue, on issues, all the mock juries plus they had a graphic division and I got to see it's almost like a forensic accountant, whether you're depicting pain and suffering or not.
Then, I had a standing offer. I've done about two or 300 of the top experts in the market. None of them came to me for help with their basic methodology. They came to raise the perception to command greater preeminence, to maybe develop either higher level variations. But I had to learn the short course on all their methodology.
So, I got that. And then I've been in 460 industries. And I spend my days untangling Gordian Knots. So, you get an understanding of stuff that is much deeper and you realize how much more is possible. And finally, I don't want to say something to the man, in Hong Kong, it's very relevant, towards your comment, oh, shoot, about leverage. I realized after a few years that I was able to see infinite tangible and intangible points internally and externally of leverage. And that the average company has 25 to 50 impact points, leverage points going on internally that they don't even recognize, measure, quantify, let alone know how to enhance. And then somebody taught me, well, basically the power of geometric thinking. Finally, just to the man in Hong Kong ... My voice is going. So, let me just get a quick sip of water and I'll shut up after that.
I've done an enormous amount of work in China and I'll use a story from China. It's a great one about relational capital or joint ventures. Japan, Malaysia, just came back from Bangkok. They have an advantage over us, and we have an advantage over them. Their advantage is they have a very impressive work ethic. They're more driven, I think, to achieve right now than we are. The disadvantage is their educational system is based or has been based on rote training, which basically is memorization.
That's why I'm very beloved in China, because I teach critical thinking. But if I say to somebody a hundred divided by 300 plus 12 divided seven square root plus 22, they'll give me the answer instantly. But if I say, "This is to this as this is to that, what's the implication and what's the correlation," I get deer in the headlights. So, it's just an aggregate response probably much more than you wanted.
Dan Kennedy: That's all right. Let's get a little grainy on joint ventures.
And then we're going to go to Q&A. So, you have a terrific track record and a great reputation of sort of making deals. I mean, putting two parties together who don't see. And I have a preparatory story first, real quick, because you'll appreciate it. And it even goes to your people in two industry side by side, don't know what the other ones are doing and you take from one and give to the other. Years ago, I had a client who, one of the signs he had on his wall was never underestimate the sloth of the American people. And so, one day he said, "Let me show you why nobody has an excuse ever to be broke."
And this was in a relatively small town. He took the newspaper and he opened it up to the classifieds and he found dogs for sale. And there were eight or 10 ads of dogs for sale. And then he said, "Look over here. Next column over," is dogs wanted. And there's eight, 10, 12 ads in there of people describing dogs they want, and they're literally on the same page of the newspaper.
And so, he circles three of them and he gets on the phone and he says, "I see you got XY, you got this dachshund for sale. And how much do you want for the dachshund and tell me about the dachshund." He says, "I'll call you right back." And he now calls somebody out of the other column and says, "I see you want a dachshund. Tell me about the dachshund you want. How much will you pay for the dachshund?" He says, "Great. I'll call you right back." Calls the other one and says, "I'll take the dachshund." Calls them back, says, "I got the dachshund and you can have it." And he made a hundred bucks on the spread. And this is really how blinders on people are, is they're in whatever business they're in. And right next to them can be a model that they could borrow liberally from and they never even notice it's there.
And it's remarkable when you think about in your, in my career times. I mean, we're both pre-internet.
I think we're both probably pre-FedEx.
So, but you think about all the visibility now of what once was relatively invisible and still people have the same blinders on and they don't see much. So, some of it's a precursor. So, you're a great deal maker. You're a great, "Gee! Party A doesn't know they could match this up with party B and party B doesn't know party A's got it. And I'll put them together." You're a great leverage, even kind of barter guy. So, give me your five minutes on all of that, on JVs.
Jay Abraham: Okay. Most people, if you think about advertising, you think about external promotion. Most people are going to the outer periphery of a prospective or a suspective market trying to start the very first stage of trust. Would you agree to that?
Dan Kennedy: Yeah. Yep.
Jay Abraham: Okay. When in fact, if you take a deep breath and think about it, there are an enormous number of organizations, publications, influencers, complementary, competitive companies that already have the trust. And if you can make alignment with them, you have shortened the trust-building credibility process enormously, number one. You've not wasted money on advertising or marketing, you've moved your structure to a result-based compensation, and you get to leverage off of millions, tens of millions, hundreds of millions of dollars of historic investment in relationship and infrastructure, and whether it's product/service that these other companies have. So, that's one point. The other point is whatever you're selling there, the question to ask is who all has the same buying influence right now?
The next question is what have my people buy before, during, after, instead? The next question is how can I be basically the tail that wags the dog?
And I can go on and on. But the point is that there's always somebody that has the market you want or the problem you're trying to solve is solving a bigger problem for someone else, but they don't always know it. This is almost like, pretty much, you got to explain it. So, let me give you some examples real quickly, and I'll go through them rat-tat-tat. And I'll end up with one that happened in Asia. So, you'll get a kick out of it.
So, when I started, we didn't have any money so I'll go with Icy Hot. Icy Hot, we had no money. So, I went to a thousand radio stations, television stations, and we made deals where whenever they had unsold time, they made it available to us. They sold our product. We gave them not a hundred percent of the revenue, but more than a hundred percent, let them keep all the product. We just wanted the name so we could have the second sale. And we got a thousand people doing it. We got $25 million worth of exposure. We accidentally forced retail, created a product that was instead of a mail order company, a consumer product, sold it for $60 million to Searle. That was 40 years ago. When I did-
Dan Kennedy: Hopefully without derailing you, I must make this point because I fight with people about this all the time. The most important thing you said is you gave them more than a hundred percent of the money and the product.
You didn't care anything, but give me the name of the box. People get so cheap about this and they're constantly trying to get by with giving the other side as little as they can.
Jay Abraham: And we're the opposite. We'll give them ... I mean, we play a long game and I think you ... But for example, most people, and I don't want to go there and as this, but, well, I'll tell you, lifetime value was pretty interesting.
So, well, I'll go through it, but most people don't have a clue what a buyer's worth, what a different caliber buyer's worth, what a source is worth, what a category of buyer's worth. And if you don't know that, basically you either spend too little or too much, but like with Icy Hot, just to go back to it, we had ascertained something, that every time we got 10 new buyers, eight of them stayed literally forever and back then it was so cheap. We were spending 55 cents in the mail bulk, and we were making 2.45. So, we gave away 3.45 for everybody who would bring in $3, but we could have literally given away $20 or 30.
And if we didn't have the cash flow, we could have borrowed it from any source because we had plenty of metrics that showed that every time we brought in 10, we were accruing $40 in profit a year forever. And that didn't count the 40% that bought other products. And that didn't count the 20% that bought bulk products. But most people don't look at that and you're right. They're shortsighted.
And I'll tell you three or four other examples like that, but to go through it. So, that was the first thing I did. Then I did investment rarities. We talked about the fact that we didn't let people buy, but instead of running ads in Wall Street Journal, in all the financial ones, we went to all the financial newsletters and became the recommended provider. We would be included in their welcome pack. We would pay for four special issues every year they would put out on us. We would underwrite the cost of regional seminars where we'd bring great people and they'd charge. And we'd give all the money to the newsletter. We did it with seminar companies. At the same time we would, if a newsletter had a mailing piece that stopped working, we would do one of two things. If it was hard-money oriented, we would buy it and we would repurpose it as a lead generator because we were acquiring leads on the open market for $200. If it was a newsletter that wasn't good copy, I would fix the headline. I would increase the bonuses. I would increase the risk reversal. And we would take over marketing it because we were basically participating. We got joint tenancy of the name and we built ... Well, they did $2 billion over two years, but the biggest year was a little over 500 million.
When I got in the seminar business, everyone was selling seminars for 500. And you know, I always started at 15,000 and it's because I went to Tony Robbins, I went to Nightingale-Conant, I went to Success magazine, I went to every financial newsletter out there and I got them to endorse me and they had the trust of the entrepreneurs.
Let's think of some really cool ones. And I got a couple really great stories. There was a woman who was the ad agency for Hawaiian Bread, which is a big company on the West Coast. She was their ad agency. They were premium bread that was all over the West Coast and Hawaii. She had a really high end chocolate chip cookie formula and she wanted to get it out there. Hawaiian Bread didn't have anything in that category. This woman didn't have any real resources. She went to a bakery, first of all, and said it was a bakery that was underperforming. And she said, "If I can get you payment certain, or is, will you give me credit to make my product? And if I become at least 40% of your volume, can I get equity for nothing?" She locked that up.
She went to Hawaiian Bread and got them to agree to label her cookie through them and put it through their distribution with their guarantee. She basically turned it into a multimillion dollar product. Hawaiian Bread bought it out from her for millions of dollars and a percentage.
Oh, I got to tell you this story with Icy Hot too. It was great. When the product, we actually got $25 million worth of advertising in each year for two years. And that was a lot 45 years ago. We forced retail distribution. It was sold to G.D. Searle, which was at the point, a large pharmaceutical company who was subsequently absorbed by somebody else, but they didn't even want the mailing list of 500,000 ongoing buyers. We got to keep that and our only prohibition was we couldn't directly compete back at the ranch.
So, I did all these seminars with everybody and I had a model that was great. We would go to everybody first on a list and we would offer a $50,000 one-day consult. We would be very happy if anybody would respond. I mean, we'd break even, I'd be exhilarated. Then we'd go behind with a letter from the endorser that said ... So many people were incredulous, fascinated, stunned by somebody who could charge that much money, but the testimonials and the track record looked interesting. And they asked us, "Is there any way that they could get access in an affordable way?" And we asked. Janie said, "Sure. Get 500 people together and economies of scale, get them each to pay five grand and it'll do that." And we filled that all over the place. Then we picked those names off and we went back and said, "So many people said they really wanted to, but either time or even the money. Still is there any way?"
And we asked. Janie said, "Sure. Let them have a home study and let them make payments. I don't care." And then we went down-market after that. So, now the next joint venture that's really cool. And I've done so many of them that it is almost laughable.
And then one that everyone should know, one of the greatest stories of all time. And you probably know it. It's old, but it's AARP and Colonial Penn. Colonial Penn was an insurance company set up to do group policies. And they were having great trouble creating really clients and competing. And all of a sudden, somebody basically said, "Well, why don't you create your own organization?" And they created AARP to have a captive client. That's pretty cool. And there's a lot of stories like that.
I'll give you one that's really cool. And then I'll come back and give you a couple other ones about-
Dan Kennedy: Now, you don't get the couple other ones because I want to get ... You only get one more now.
Jay Abraham: And it's worth giving, and then I'm sorry, I go on a roll and Dan, you have to be a diligent taskmaster. So, thank you.
So, eight years ago, I started going to China and I had a very large first seminar and a young man came to the mic and said, "What do you do if you're too small and the banks won't lend you money?" And I said, "Well, okay, what would you do with the money if you had it?" That's a big question. People think they need money. All they need is access, assets, resources of other people, distribution, et cetera.
But he said, "Well, I'm a small local motorcycle company." Only in China would you have a small ... They're a hundred million population. And if I had the money, I'd go to other parts of Asia, I would open a factory. I'd hire salespeople, get distribution and go over Asia. And I said, "Okay. Why do you need money?" He goes, "To do all that." And I said, "No, you don't." All you have to do is find somebody who's complimentary, not competitive who's got a factory that's underutilized, who's got salespeople, whose got distribution, who's got retailer and make a partnership with him. That was three minutes. I came back a year later. This guy comes back to the mic and he looks like the Cheshire Cat. And he said, "I did what you said." And I didn't even remember because of the three-minute throwaway.
And he said, "I went to Kuala Lumpur. I found a huge lawnmower manufacturer who was in eight countries. He had a second shift. He was almost not using it all. I had to bring the tools and dies. I had to do the training. We already had the sales people. We already had the distributors. We already had a eight or 900 lawnmower manufacturers. We split $10 million in profit in one year." I can tell you a hundred like that, but those are some starters.
Dan Kennedy: All right, if you will, you undoubtedly have a website where people can go see stuff, find stuff, connect with you, give out whatever you are willing to give out or want to, please.
Jay Abraham: Oh, yeah. I'd be happy to. We have a website, it's called abraham.com and the best part of it is abraham.com/50shades. I think it's the number 50. It's got a thousand hours of video. It's got five hours of preeminence. It's got interviews and it doesn't sell anything and you don't even have to opt in. So, we do a lot of contributions and a lot of investment in the entrepreneurial world, because I think it's very important. So, there's a lot of very qualitative things there that will help you and they're not selling ... We sell a few things, but you're very welcome. And Dan, anything you want to reside on yours, I'll be happy to lend you.
Dan Kennedy: Cool. So, abraham.com/50shades.
Jay Abraham: I think it's that or it's the word fifty shades, but it's one or two. And that's the best one, because it's got enormously provocative and eclectic and very deep stuff on it, written, video, audio, all kinds of things. Interviews of people that are really profound, very profound. So, stuff you would enjoy.
Ron: Hi, gentlemen. I had a question in regard to Jay's, what I think was his first book is Getting Everything You Can Out Of All You've Got. What was the inspiration for that?
Jay Abraham: Truthfully and Dan knows this because he and I have had a lot of private conversations. I've had three midlife crises because this is sort of, I reevaluated. And I thought that was going to be my swan song. And I wanted to make sure that for its genre, it was so powerful because I think it has 336 different examples, case studies. And I wanted to do something that was unlike anybody else. And I wanted to give people such clarified real world reference examples and that they could use. And I collaborated with it with somebody who was a famous, a comedy writer. So, it would be eminently readable. And it would be very, very easy for anyone to grasp applications, implications, adaptations.
If you read it today, it's laughable in terms of two things. First of all, the internet stuff is a joke because it's evolved so much. And secondly, some of the things on telemarketing probably are outdated, but it still has some very profound ... I mean, it's a wonderful read. And we actually give ... There's four books you can have for gratus fully on the website, that one, Sticking Point, one called The CEO Can See Around Corners. We got two new ones we're going to give out that just to be contributing that are pretty cool in a couple of weeks.
But yeah, just ... I mean, I've been very privileged to understand universal principles that with slight modification will work in any environment and I've done it around the world and I have a perspective.
I'm not deep in tactical and I'm definitely technologically impaired, but what I ... No, terrible. I don't turn my computer on. I still use AOL and I pay for it. So, it's ludicrous. But, yeah, that book was designed to make it harder to discount and reject than to embrace and effect. It was designed to move people to action.
Dan Kennedy: It was an inspirational answer. See, if the same question directed at be, I would've said because a publisher offered an advance.
Gabriel: Thank you. I've been a great fan of both of you for a long time. Dan, you actually introduced me to Jay several years ago. So, I have several of your preeminental strategy notebooks and they've actually helped us greatly too, so, thank you, Jay, for that.
My question for both of you, actually, is we have a unique opportunity now to acquire a complimentary company that will, one, double our income-producing asset and inventory as well, but it won't double the value of our company. The reason for that is because he grows half of what we did last year. The current owner is more of a doer than a marketer, so he's been kind of struggling, but he does have 10 more years of experience than I do. He does have a plethora of industry contacts, people that I don't know, have never known, and probably won't know otherwise. And he does have a desire to become an employee because he wants the stability and not the rollercoaster income.
So, we've been peers for 15 plus years. We would have a beer, I guess, if we could, but we're not really friends. So, that's a nice thing about that. He is willing to finance a buyout in a monthly payment, if you will, plus a salary, but the trick here is, he's asking for this, 20 to 25% on the clients and events that he brings to us. Plus he's also asking for a 5% minority ownership in the company.
Jay Abraham: So, tell me what the two businesses do.
Gabriel: Well, our company is more of a corporate event services company. His is a life production company.
Jay Abraham: Okay. Now, there's a compliment. And are you buying it just to sustain it? Are you buying it to grow it? Does it have either high growth profit potential or high growth strategic, as we were just talking about, reference and connectivity potential. What's the method to your madness in wanting to buy it, even if you can buy it on terms? What's it going to do for you? And what are you going to do for it?
Gabriel: Everything you just mentioned. One, the growth is there because all the events he does, don't compete with what we do already. So, there's that. Two, the contacts and the ability to go back. And since I'm more on the marketing side now, 90% of my time, which is great because he's still more of the doer and that's what he wants to do.
So that could be a good marriage made there per se. He wants to be in the field. I'd rather be out there marketing, sending offers and marketing in general. So, yeah, he would bring the clients, he would bring the inventory. We could do a straight out buyout. I'm not really crazy about giving him, even if it's small ownership, I suppose. I like the idea that he would have a vested interest in the company because he would be looking for a net profit. All of the expenses he's had or has are kind of gone away now because he moved out of his last office.
Jay Abraham: So, you can absorb it in your overhead. Let me ask you a different question. So, how much profit does it bring now? And even if it's deferred and you're paying on a payout, what are you paying for it? Is it multiple or just is it, what's the rate?
Gabriel: See, that's just it. I don't think he has a ... I'm going on what he has grossed as well as what he's netted.
Jay Abraham: What's he grossing? What's he netting?
Gabriel: Oh, he grossed 350, 350 last year.
Jay Abraham: How many clients?
Gabriel: That's something I don't know because I asked him to bring that to me. So, this is all preliminary. We had a meeting two days ago here in my office.
Dan Kennedy: So, now you going to see some more deep due diligence.
Jay Abraham: So, is he regional, local, national, international?
Gabriel: He is regional. He is based here local, but he does do regional shows. We are nationwide. We're based locally too, but we do events nationwide.
Jay Abraham: Okay. Well, can you expand what he does nationwide or is that impractical?
Gabriel: Actually, I want to take some of his assets now, the inventory, and put them into constant use by put some of it on tour.
Jay Abraham: Okay. So, he's got inventory can be leveraged far more and you can get much more utilization and revenue out of it, right?
Gabriel: Exactly. Well, here's the thing. See, he grossed about 350 last year, but the total value of his assets are only between 200 to 250.
Jay Abraham: You're talking about the value of the assets, including ... Are you imputing any value for the business itself?
Gabriel: No. See, that's what we have not done. He had an agreement similar to this that fell apart earlier this year with another company that's more of our competitor that actually filed bankruptcy because they owe sums of money and back taxes and what have you.
Jay Abraham: So, let me ask you a different question. What did he earn?
Gabriel: I would say his take home was probably a hundred K.
Jay Abraham: Okay. And what does he want for that business?
Gabriel: Well, that's what we haven't discussed because I asked him to bring numbers. We want to do a full look through the books and QuickBooks and everything and get an actual net for what he has, because I'm also looking at long term value of all these annual events he does.
Jay Abraham: Yeah. And what you have to say is, I mean, he might have equipment that's worth that, but you might be better off just buying the ... I don't know if what you're buying, the relationship, selling the equipment and leasing it or ... I mean, the question is just because it's worth that, is it worth that? Is it easier to deploy that stuff or is it easier to rent or ... I mean, there's a lot of questions that I would ask and I don't think I can probably give you an answer right now, but what would your question be? What's your question?
Dan Kennedy: See, those questions that you just raised, Jay, are, and I'm going to have to end the call on this. They are the most important thing of all in that ...
So, when I was working with Weight Watchers, Heinz had bought them and H.J. Heinz owned them. And they hated the whole business. They did it only because they wanted the brand to slap on grocery store products. They already made frozen dinners. They wanted Weight Watchers frozen dinners. Everybody would've been better off doing a licensing deal than Heinz buying the company and Weight Watchers selling the company because Heinz wound up with something they didn't like, couldn't run, hated. The seller wound up giving up something, kind of to Jay's story about keeping the list in the Icy Hot sale, they gave up something they didn't need to give up.
So, alternative deal structures here should be one of your big takeaways from this call. It should be yes, let him bring you all the information, get real gritty and grainy about what's there, also about what he is really trying to accomplish for himself financially and emotionally. And then think about this much more creatively than just Joe sells his company to Bob. What other structures might get both parties to where they want to be without necessarily this being a sale? That will also lead you to being able to avoid your little sticking point of him voicing an interest in somehow having a piece of equity in the whole enchilada.
But, I'm not even going to let Jay prescribe because neither one of us should be prescribing at this point. We should be diagnosing and we can't. So, you have to.
Jay Abraham: Yeah. We're meeting again tomorrow here today.
Dan Kennedy: But that direction Jay just gave you, it's kind of like what he said about the way they react to him in China, is you say, "One plus one," everybody says, "Two." Nobody says, "Why the hell does it have to be one plus one?" And that's now what Jay has brilliantly suggested to you is the question nobody thinks to ask, why does this even have to be one plus one in the first place? And with that, I'm going to let you go. Jay, I profusely thank you.
Jay Abraham: This is fun. I'm privileged to do this with you.
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