#236: Mike Michalowicz – How the author of Profit First stays lean by licensing his ideas

Mike Michalowicz [00:00:00]:
When we teach, we have to steep ourselves in that knowledge. So effectively and know it's so intimately that we can actually repackage it so it's consumable. The best authors aren't the masters at it. They are the biggest students of it.

Jay Clouse [00:00:27]:
Hello, my friend. Welcome back to another episode of Creator Science. Today, I am talking to a man who's had a major impact on my business, and his name is Mike Michalowicz. Mike is the author of Profit First, which is used by hundreds of thousands of companies across the globe to drive profit. Creator Science is one of those companies. Profit First has been huge in helping me develop very sound financials in this business. Mike is also the author of Clockwork, a powerful method to make any business run on automatic. Read that if you're trying to get yourself out of the day to day, and 7 other books as well.

Jay Clouse [00:01:02]:
With more than 500,000 book sales, all of Mike's books have had the same goal, to help small business owners and eliminate what he calls entrepreneurial poverty. Simon Sinek once called Mike the top contender for the patron saint of entrepreneurs. This conversation is divided into halves. The first half explores Mike's unique model as an author. For each book Mike writes, he partners with a third party to license the frameworks from that book and serve as the done for you service provider to implement the ideas. This is super uncommon and part of the reason he's been able to be so prolific while also running a very lean team. So we dig into how that works and what he would do differently if he was starting over today. And then the second half of the conversation is all about writing books.

Jay Clouse [00:01:46]:
Mike has published 9 books since 2008, including 7 in the last 8 years. So we dig into how he determines what ideas to turn into books and how to write them so quickly. We even dive into his thoughts on publishing traditional versus self publishing, which I know is always a hot topic. I'd love to hear what you think about this episode. You can tag me at jklaus on whatever platform you enjoy the most. But now let's talk with Mike. So you've written 9 books that I could count to this point. Yeah.

Jay Clouse [00:02:20]:
And you've run several different types of businesses. As a starting point here, how would you describe your business model today?

Mike Michalowicz [00:02:28]:
I'll give you kind of the esoteric theoretical, and I'll give you that kind of structure. So I would say it's modeled around what brings me joy and everyone else involved, they have to speak for themselves. I sense is they're in a space of joy, and I think that's the ultimate organization is, are people doing what makes people happy? And I'm one of the people. The technical structure is this. I love to create content, particularly contrarian beliefs. So my model is, I'll look at something and say, what's the intended outcome we have? I wanna start a business and make tons of money. Okay. What's the actual outcome we have? I started a business, I'm working my ass off, I don't have a penny in my own name.

Mike Michalowicz [00:03:13]:
Well, when there is a gap between desire and actual, that means to me, there's something wrong in the middle. And it's rarely mindset. It's usually the system that we've just believed we need to follow. If we fix those systems, we can continue to be who we are, but get the outcome that we always intended. So that's what I do, and I like discover it, experience it for myself, and if it works, I like to codify it in a book. I suck, Jay. I suck at the execution on the long term basis. I'm not a coach, a business coach.

Mike Michalowicz [00:03:46]:
I've tried. I I can't coach myself out of a brown paper bag. I just I suck at it. I love working with people. I don't love managing people, and I'm not good at it. So I said, okay. Once you have a book, you may want to deliver services behind it. It's a good way to monetize further beyond a book, but it's also a great way to be a service.

Mike Michalowicz [00:04:10]:
Many people will buy a book, few will read it, and even fewer will execute on what they read. So these people that are reading the book or at least purchasing the book have a desire for an outcome. But many are not actually executing on it even though it's in their hands. They need someone to guide them through it. It's like, you know, you can join a gym, but maybe having a trainer is better. So that's what I built behind every most of the books. There is a dedicated training organization. And so what I do is I have a group of licensees, they buy the rights to teach within the confines of the book, you know, or expand on the concepts within the book, but to stay within that parameter to leverage the brand name.

Mike Michalowicz [00:04:56]:
My most popular book's called Profit First, so there's Profit First Professionals. Clockwork is another one of my books about business efficiency has become popular, and there's a business called Run Like Clockwork. Each one is owned by a licensee who's paid for that, and then they share in the royalties. My job is to further the brand exposure, write more books, write better, to press further word on the books, and that's what I like to do. Not perfect, but that's what I like to do. My licensees, their job is is help the people that need help at the highest level by providing services behind it. The great thing for me Jay, is it's been a powerful revenue source for me without me putting in more effort. I do have a small team, my my author team is about 8 of us there.

Mike Michalowicz [00:05:39]:
That includes me, so there's 7 other folks, mostly part time. But our companies have had extensive impact. We've worked with tens of 1,000, maybe 100,000 more businesses. We have 1 and a half 1000000 books collectively in circulation. I bet you if I did this alone or tried to build it, maybe I'd have one struggling service organization because it's not my my joy is not in the doing. It's in the designing.

Jay Clouse [00:06:05]:
This has opened up so many loops already. So I'm gonna close the fastest ones first. You said you have an 8 person author team, most of them part time.

Mike Michalowicz [00:06:13]:
That's right.

Jay Clouse [00:06:13]:
What are the functions on an author team?

Mike Michalowicz [00:06:16]:
Okay. So, we don't have titles. And that's actually one of my theories is titles puts people into domains or fiefdoms, and they can become a trap. It can also trigger entitlement. But we have Andrea who serves as our marketing director, we'll say. She she channels our marketing, and getting the messaging out. The biggest need when you write multiple books, even if it's for one domain or referral entrepreneurs, you need to show the continuity for the consumer base, and the connection between all of the organizations that we're supporting. So we have that.

Mike Michalowicz [00:06:48]:
We have our president, it's Kelsey. Kelsey's job is to really maintain the relationships with our licensees to always ask how do we serve not the individual licensee, but the whole licensees and elevate everyone. How we rise the tide as opposed to trying to pick up boats? We have a content writer, her name is Jenna. I write a lot of the book content, but I too have a co writer in my books. It's too much for me to lift, and admittedly, it's a labor of love, but it is a labor. It takes me a long time to get out words succinctly on written paper. Jenna is better at it than I am. So she does a lot of our copywriting when it comes to email communications or or blogs.

Mike Michalowicz [00:07:30]:
We have another person who manages a couple of the book titles we have that really weren't suited for a licensee, and we wanted to maintain in house. So it's almost like an internal licensee. One of my books is called Fix This Next, and something that it just made sense that we managed it internally due to it's a starting point to channel people in in directions of our licensee. So Cordae manages that. Interestingly, the couple of spin outs came. So we have this guy, Greg, who leads an investment group. It's been surprising how many people come to me and say, Mike, I wish you were my partner. I'm, like, I'm not a good partner, but I'd love to partner your business.

Mike Michalowicz [00:08:02]:
I I can see the idea. I can support you, but I'm not gonna be working in the business. That's not my talent. So we started an investment group. And now, we have as of end of next week, we we'll probably have about 20 investments actively out there. And this guy, Greg, is our portfolio manager. He's managing it. There's a lot of authors seeking help.

Mike Michalowicz [00:08:19]:
And so we started a podcast around helping authors called Don't Write That Book. I'm really proud of that podcast. Well, Adela manages our podcast, and make sure that people we can serve just through our journey can also be served. So that's kind of the author team. I'm sure I'm missing some people. Oh, oh, oh, oh my God. One last thing, the most important person for me is Erin Chazat. She is my schedule, my personal assistant.

Mike Michalowicz [00:08:43]:
I'm very fortunate. There's a unbelievable amount of speaking opportunities that have come my way over the years. I travel extensively. I enjoy it. But there's a lot of coordinating things. I have to do some television oriented stuff pretty soon, which is wonderful. I'm excited about it. But getting all those pieces in the schedule managed is almost a full time job.

Mike Michalowicz [00:09:03]:
Erin too though is part time, and she manages that. To the point where, just one little antidote or vignette here, I'm doing a speaking event up in Montreal, Canada. And I'm speaking with the event providers, like, oh, we can't wait to see you in March, I think it is. And I said, I can't wait to be there. Like, oh, your wife's really gonna enjoy the place. I'm like, oh, my wife's my wife's going. You don't know? I'm like, no. And I sound like the biggest idiot.

Mike Michalowicz [00:09:25]:
And I'm like, I gotta do a disclaimer. I'm an idiot, but the schedule the routine is Erin will book a site. She will call my wife and say, do you wanna go? And so I got a gig in North Dakota. My wife's like, I'm out. I got a gig in Montreal. She's like, I'm in. So I know usually, like, a week before, every Monday come in, there's itineraries. I grab the piece of paper.

Mike Michalowicz [00:09:46]:
I'm like, oh, my wife's joining me for this trip. This will be amazing. We'll we'll get you a little vacation time. So Erin has that degree of authority and control over my schedule. And it's not abandonment. It's not abdication. It is necessary, but it's taking years to get to that trust level that she's actually better at managing me than me managing me.

Jay Clouse [00:10:06]:
You said a few things that I there's somewhere in between self aware and self deprecating where you said, like, I'm not a manager or, you know, you said, like, I'm an idiot. I don't do I don't do this.

Mike Michalowicz [00:10:15]:
Yeah. Yeah. Yeah.

Jay Clouse [00:10:16]:
Tell me, in this process where you've built this team around you and you have these licensees, where do you see your zone of genius that you're really saying, this is what I'm spending all my time on given the opportunity?

Mike Michalowicz [00:10:29]:
Yeah. Yeah. In self deprecation, yeah, I gotta be careful. Right? So I'm not pandering and saying I'm an idiot. I don't think I'm an idiot. But self deprecation is also important in the way I communicate in all my books, all my work, in that, Jay, you and I are not so different. Anyone listening, we're not so different. We're on different experiences.

Mike Michalowicz [00:10:45]:
We're all human. We all laugh things up. We all have these moments of celebration. We all will get some form of 15 minutes of fame, whatever it may be in a small community or large. But the power is if we share the best of what we know with each other, we elevate each other. That's why I'm pumped about your show. Self deprecation to me is a great bridge of human connection. That's why I do it.

Mike Michalowicz [00:11:05]:
But I also realize that you can go too far and then people discount your authenticity. And I never want that to happen. I would argue my zone of genius, one thing we do in our office is we call them POMS or POMS, personal operating manuals. We have a physical office. It's a hybrid environment. I'm working for my home office today, but everyone's in every Tuesday Thursday, everyone's in the office. We only work a 4 day a week, no one works on Friday. And we'll come in and next to Erin's desk, which is right across the hallway from where I sit, it says her palm and what she likes and doesn't like, what her zone of genius is, and her style.

Mike Michalowicz [00:11:41]:
Her even her appreciation language. I I like words of affirmation. She likes acts of service. It's a great way to learn how to communicate with each other. While mine, my zones of genius or zone of genius is is definitely cheerleading. Because it's real, like I really believe in my colleagues. I really believe in entrepreneurs more than anything. I can see the opportunity in in some folks that don't even necessarily see themselves yet.

Mike Michalowicz [00:12:05]:
So, I'm effective as a cheerleader. Ideation, and my specialty in ideation is taking these concepts that are large, or confusing, or inevitably complex, and bring it down to a degree of profound simplicity. I see it. Profit versus is perhaps a good example is is we're laden with all these, like, documents, and balance sheets, and all these different things trying to find out how to get our numbers right. And I'm like, you know what? That's not serving us. That's extreme complexity. The profound concept is, if you take your profit first, like the pay yourself first principle in your business. If you take profit and hide it from yourself, you're gonna be forced to live off the remainder, and you'll be guaranteeing profitability.

Mike Michalowicz [00:12:45]:
So I have a talent in those areas. And then the last part, this sounds weird because I'm kind of rambling here. I'm okay at communication too. Maybe maybe not succinct, but I'm okay at communication too. So those are the 3 I'd pick.

Jay Clouse [00:12:57]:
This is the perfect context I wanted to lay because what is so fascinating to me about your body of work is you find these gaps like you described. You explain a new approach, a contrarian approach, in this profound simplicity and then you kind of build a structure for that thing to thrive without that becoming your identity for the foreseeable future

Mike Michalowicz [00:13:22]:
Yeah.

Jay Clouse [00:13:22]:
If that makes sense. Yeah. What happens a lot in the creator world right now, people have an insight. They have an idea. And that becomes what they talk about. They build their own company behind it. It is them forever as far as they know at this point. So I'd love to just get your reaction to that because I'm sure you've seen this in the marketplace, the landscape, and you've made a very intentional decision not to go that direction.

Jay Clouse [00:13:50]:
I just love to hear how you arrived there and if you think that's a missed opportunity for folks.

Mike Michalowicz [00:13:55]:
I don't know if it's a missed opportunity for folks. Just my measurement is is this giving me joy? And it's not necessarily the exact question I asked myself, but so a prior career life of mine, I picked the one lane and tried to do the best I could in that lane, and it worked, but it didn't serve me. And to me, that's not working then. It made money. It was a means, but it wasn't it was a means to the end. It wasn't the end. So I'm, like, I wanna live the end. I didn't plan this out.

Mike Michalowicz [00:14:25]:
I didn't bake in like, oh, here's the steps to actually living in joy through the work I do. It just started naturally happening. And when it was working, I was like, oh, that's the way to lean more. So I use this kind of beacon of listening to the joy driver and lean toward it. To some folks, definitely in the creative space find their thing, and they double or triple down on it. If that gives them joy, holy shit, Noli. You you found it. Like, go go go.

Mike Michalowicz [00:14:51]:
But I have silent found creatives that become resentful of where they've come trapped. I'm into hair bands from the eighties, so that's one of my non zones of genius. There was a band called Warrant, and they wrote this song called Cherry Pie. It was their big hit. I think his name was Janie Lane, was the lead singer who sadly committed suicide. It was not part of his suicide. Nope. It was part of his decline.

Mike Michalowicz [00:15:17]:
He says, I wish I never wrote that effing song because it became a trap. He created this song that was the hit and then forced to perform it. He was the cherry pie guy and he never wanted to be that. He just wanted to be expressing himself. There's another story, it's just music wise because it's in the interest of mine. The guy, Gauthier, who wrote the one hit that's massive.

Jay Clouse [00:15:38]:
Somebody that I used to know.

Mike Michalowicz [00:15:39]:
Yeah. Somebody used to know. I don't know if you know this, the millions that he made off of that, he's given away to charity. He abandoned it, and he's like, I don't wanna be famous. I want to create. And for some people on the outside, it's like, you idiot. You hit the lottery. But what we, from the outside, don't realize is that's not the life he wants.

Mike Michalowicz [00:15:58]:
Kudos to him for being disciplined to turn away. Simone Biles, an athlete, who's by the way an extraordinary speaker, and just seems to be the most positive energy on the planet. I wish I wish she was the beacon for all of us. I started speaking, and she was the 1st athlete that I ever was aware of that said, I'm stopping doing gymnastics at the Olympic level because my mind needs the clarity. I am overwhelmed mentally. And she opens gateway to realize that what's going on here is like everything. So my experience is if it isn't feeling right, it probably is not right. Don't do it because that's what the expectation of others is of you.

Mike Michalowicz [00:16:39]:
Just lean into who you naturally are. And if you see it working for someone else and you wanna dabble in it like the way I'm doing, freaking dabble or do. And if it starts landing, crush it. If you can do it better than I can, my god, double down because then I wanna learn from you.

Jay Clouse [00:16:51]:
I like that answer a lot because I think a lot of people it's easy for us to get this grass is greener effect. When we see other people doing things a certain way, we look at that and we say, that might be nicer than the way that I'm doing it. Yeah. And I kinda have this belief that there's not right or wrong. There's just trade offs.

Mike Michalowicz [00:17:08]:
You know? So

Jay Clouse [00:17:09]:
in your approach of I write the book, I have a licensee behind it servicing the book, I move on to the next book. What do you think are the trade offs that you have in that design?

Mike Michalowicz [00:17:20]:
Yeah. There definitely is. So watch out for the grass is greener syndrome. One of the trade offs is, you know, for my licensees in some, actually, maybe all the cases, this is their career bet. Like, they're all in on this thing they're doing. So, therefore, there's this I was about to say codependency. I mean, that is the right word. There's a codependency.

Mike Michalowicz [00:17:44]:
Like, if I'm not elevating books, it does impact them to some degree. Conversely, them doing something independent of the brand, there is a incongruency that confuses the customer, so that they're all in on the brand. Well, one of the consequences is, what have you done for me lately, Mike? And I get it. Like, there's this need for me to be of service to them. And so, the problem I ran into is each licensee has their own silo. And I'm realizing this later than I should have that there's got to be a more of a congruency, a more collective, but it didn't land in my head to realize, oh, we can work in concert much more effectively than building these independent silos. In reverse, I would have never gotten to this point if I didn't have these independent silos. Like, that that's how it started.

Mike Michalowicz [00:18:33]:
I started with 1 licensee, and then 2, and then 3, and and so forth. So that's been a challenge. And then, you know, human nature there's unique personalities. I'm a unique personality and so is every one of my colleagues. And the the bigger we get we have 8 people internally, but we have 5 or 6 active licensees. They have employees, maybe on average of 3 to 5 each for each licensee. So now, you're talking, like, now there's like 30, 40 voices involved in the at least one degree of separation domain. And that becomes a little harder to manage.

Mike Michalowicz [00:19:07]:
I originally, when I started my first business, had this belief that, you know, bigger is better. I wanna have the next Hewlett Packard back in the day, but now it's like, I wanna be the next Amazon. I realized, a little ways back now, I don't want the next Amazon, good for Jeff Bezos, but that isn't me. I love small business. I don't aspire to have this mega corporate thing and, yeah, yeah. It gives me the heebie jeebies now, but I just assumed that's what I should do because that seemed like the script to follow. As these licenses grow, there's becoming more of a formality. There has to be.

Mike Michalowicz [00:19:37]:
There's no avoiding that structure. And so, I can't say it's icky, but it's just like, oh, that's the space I don't want to be in so much. And so, I have to deal with that. And is the solution adjusting or finding better fits for my team to serve that, so I can be removed from that? Is that being selfish? Or is it just the necessary evil? Or or stop growing and just go with what's going because I'm in this happy space? Those are the challenges in the very first world challenges, but those are the challenges I'm facing.

Jay Clouse [00:20:07]:
So I I think implicitly what you're saying there is you as the author are lead generation for basically all of the books and the associated services that go with it. So that is the primary function of the relationship you have with these licensees. So if that's not true, that becomes a friction point.

Mike Michalowicz [00:20:27]:
The primary relationship is brand association, but the primary expectation is lead generation. And that's a that's an incongruency. That's a problem. Yes. Leads come out of this. People read books and they want to engage. And so therefore, the more books to sell, the more leads. But if a licensee gets dependency on that, now it's the crack cocaine.

Mike Michalowicz [00:20:44]:
They're like, where's my lead, man? Where's my lead? Mhmm. It's it's brand affiliation. The brands are bigger than the lead generation. The domain of people that are aware that there's a book called Profit First supersedes the people who are aware of Profit First and have read it. How can we leverage that brand? The brand can become this kinda icebreaker into new markets, new communities. The, perhaps, parallel size brand is the character Mike Michalo. It's the guy who wrote the book. And the affiliation can be leveraged to significant advantage.

Mike Michalowicz [00:21:16]:
We've gotten into some doors. My licensing have gotten to some doors that would have been difficult to knock through or break down or whatever without that affiliation with the Mike Michalowicz author brand. And I have to make sure that our structure supports the you leveraging and use of that as opposed to a dependency on the crack cocaine of where's my lead man, where's my lead? And and I don't mean that negatively. I'm just realized the the addictive nature of that. And it happens, but to be dependent on that becomes a real real problem for everybody. After a quick break, I

Jay Clouse [00:21:51]:
talk with Mike about how he finds the right licensees to implement his methods and frameworks. So stick around. We'll be right back. And now back to my conversation with Mike Michalowicz. Let's say you write a new book and you go out to the marketplace and say, I have a new book coming. I'm looking for a licensee. How do you make that known? How do you vet the right partner and ultimately make a decision?

Mike Michalowicz [00:22:19]:
Yeah. This happened naturally, and and this is the method. I interview a lot of people for books. I would say, on average, 50 interviews, maybe even more now per book, and some of those are users of the systems or ideas I'm creating, but a large portion are experts in that space. I actually don't consider myself a creator of ideas, I consider myself a curator of ideas. And there's these extraordinary experts out there. So, one of my colleagues, her name is Adrienne Dorris and she's a licensee. And I was looking at how to deploy business efficiencies and stuff and and particularly these contrarian methods.

Mike Michalowicz [00:22:56]:
And through a network was this introduced to Adrian and the other experts, this guy Kevin Fox. And I interview them because I need content for the book. But behind that, it was subconscious then, now it's conscious is, is this person delivering the services? Would a partnership or 1 plus one equal 11 here? Where there's an amplitude of exposure for them, and they already have the ability to deliver on this stuff plus some? And Adrienne was like a no brainer. So I approached her and I said, I got this crazy idea. And she's like that's so funny because that crazy thought went through my mind, and that was how we structured that one. So I do it through interviewing, and I think any creative can do that is realize that as a creative pulling a term, I think this is from Gino Wickman's work, where he talks about the the integrator and the implementer. And that is probably not the exact terms.

Jay Clouse [00:23:42]:
Visionary and integrator.

Mike Michalowicz [00:23:43]:
Yeah. There there is visionary and yeah. Okay. Visionary. Creators are visionaries. We can and sometimes literally draw things out. But, God, if we have to do that exact same drawing 50 times in a row for the next 2 weeks, we we go mad. It's the freshness.

Mike Michalowicz [00:23:57]:
Well, there is an equal number of people that get joy and energy from actually repeating the process over and over again. And for the visionary, it's like hard to imagine how can anyone exist like that. And for the implementer, like, what's up with these manic visionary folks? They're crazy. Can't they ain't get anything done? No, we can't. So what we need is to find that compliment to us. And we exist, I think in equal numbers. So if you're a creator, there is your doppelganger implementer out there. It's another individual.

Mike Michalowicz [00:24:25]:
And you can seek them out because they're seeking out the vision and you're seeking out the person that can actually get the work done, and you're actually seeking each other out. And I found these interview processes a great way to to find each other.

Jay Clouse [00:24:36]:
When you're building these relationships, how does the structure work? And I don't mean you have to give me any specific numbers. How does that back and forth work?

Mike Michalowicz [00:24:46]:
So we have an upfront fee. That that one I do wanna keep confidential because the fee has increased over time. But you could start off with a whatever you can confirm, the size is a low number. Right? Whatever that may be. And over time as your brand exposure grows, the fee you can dictate is much bigger because the leverage that person has is greater. I remember there was a website, I think was called Pixel. This is back like when the internet was just becoming popular. So we're not talking like mid nineties.

Mike Michalowicz [00:25:13]:
And it was a 100 pixels on a web page, and each pixel you could buy an ad. So you pay, say it was a dollar for the pixel, but the next ad was like say, $2. They currently use Amplitude. The first person that buys the pixel just took on massive risk, but it cost nothing. So he did it, and and you'd highlight it with pixel, and it would say, you know, Joe's t shirts. And the second person, it was minimal risk. But as it moved along, this website became so popular because it was so unique. The last pixel sold for a $1,000,000.

Mike Michalowicz [00:25:40]:
And it's the same idea with this brand. There's this amplitude as you gain exposure. What's beautiful, is there's this natural synergy that as a licensee grows the brand that they have licensed. They build exposure back to the mother ship brand, if you will, and that benefits the next brand licensee. We also share in a 15% override of revenue. Now, I I did wanna share that number because it took me a while to figure this out. I called upon all different organizations that have licensing programs or memberships and so forth. And I don't want to share their names, but found that one organization went up to 50%.

Mike Michalowicz [00:26:13]:
So if you, the licensee made a $1,000, you to give 500 back to the mothership. And I found that someone as low as 1 or 2 percent, you made a $1,000, you give back a dollar or $10 or $12 to the mothership. What was interesting was on the extreme scenario of the high end, the licensee was buried. It caused them to be choked out financially. They couldn't afford to maintain it, became resentful to the organization, and actually couldn't grow. The other extreme, the low end, where it was like a dollar or 1% or 2%. Those licensees said, I I don't need the mothership, and the mothership doesn't even generate enough money to care about me. It became this like ignore each other scenario.

Mike Michalowicz [00:26:51]:
I found the magic number to be 15%. It's a big enough investment where there's skin in the game. The mothership can use that income to support further growth of the brand, and the licensee isn't choked out. They can actually make a really good living out of it. So that became the magic number. And that's the 2 things. We have an upfront fee. You're now part of our family, and you're gonna benefit from leveraging it.

Mike Michalowicz [00:27:13]:
And as your business grows and we're aligned with you, we want to grow. We're gonna share our 15% of the revenue.

Jay Clouse [00:27:19]:
Yeah. It's such an interesting model, and I think it's so unique and and such an interesting opportunity. Knowing some of the challenges you have now, would you counsel somebody who's also interested in doing this this multi book approach? When would it make sense to do licensees versus basically building a separate team that you own Yeah. But you're not involved in?

Mike Michalowicz [00:27:44]:
If I went back through this process, how it's worked out for me has been appropriate for me. But I think the way to do it in retrospect is a licensee starts winning only when the brand gets to a certain size. The the creative person's name, in in this case Mike Michalowicz, or the brand collective, Profit First, Clockwork, The Pumpkin Plan. In the very beginning, there's not much leverage. So I actually had someone that followed this model, and she wrote a book. She said, I'm gonna go right into this from day 1. She wasn't a known author, and and she hasn't gotten to that stage yet. And the licensee had to do a lot of lift, and it became a conflict.

Mike Michalowicz [00:28:24]:
There was no strong push out of the gate. I I think when you can give your licensees a big push out of the gate, you can't sustain it. But if you can give me a big push out of the gate, then you're in a position to have a licensee because you can deliver immediate benefit to them. I would build my own organization first, almost like a franchise model, figure it out for myself if I can, hire the team if I can, just to get to a certain level. And this is exactly what franchises do. Like the first McDonald's was owned by the McDonald's brothers or Ray Kroc, but but it was owned. In every franchise you look at, they usually have a pilot store or 2. And they don't even caught that, they're just trying to run the operation.

Mike Michalowicz [00:29:01]:
But once they find out, they can start replicating it, then they say, let's bring in other people that can leverage this, and now we can grow up much faster. So I would build the team first. If you have the means and ability, and the mental fortitude for the period of time long enough to understand how this works. Secondly, I'd make sure my brand is big enough that the licensee comes on, they're getting an immediate win out of the gate. Because that's the biggest thing you offer, besides the brand equity.

Jay Clouse [00:29:26]:
What's your take on publishing these days? You traditionally publish.

Mike Michalowicz [00:29:31]:
Actually, I did. And that's the big change for me. So I did up to my most recent book. So I self published. I then published with Penguin Random House. I want to say 6 or 7 books. And I made the decision to go into hybrid. I actually have my own imprint now, that was part of the impetus.

Mike Michalowicz [00:29:51]:
So I have an imprint for entrepreneurial authors. It's funny, about 3 books back, I started to really say, is it make sense to do traditional publishing for me? And the only offset I'll never forget this. I ran all the numbers. I said hybrid is this is this a better model. There's a fee upfront for hybrid to mitigate the risk of that publisher. Some of them have left and built the exact same structure, but in a hybrid model where you share the financial risk upfront. In the traditional, they pay in advance. So I ran out of numbers and I'm like, where does it make sense to do a traditional publishing deal? And I came up with a big number and said, if my publisher, my traditional publisher pays me this in advance, it substantially offsets the risk of not earning out as many royalties as I could through a hybrid.

Mike Michalowicz [00:30:35]:
And I called my publisher, and I said, here's the next book deal, and here's what it's gotta be. And they're like, why are you asking that? That's that's ridiculous. I said, I get it. But if it's 1 penny less, it doesn't make fiscal sense. And the publisher came back, and they said they offered something that was like 20% less. I said, okay, I gotta go now. They said, well, why? They said, we're negotiating. I said, oh, sorry.

Mike Michalowicz [00:30:52]:
I don't negotiate, but hey, where's the mill? I I actually gave you my best deal. I ran the numbers. I said, this is the best deal. If you wanna go above it, I'd be flattered if you wanna negotiate that way. But you can't go less than this, otherwise, and this is not they were an amazing publisher. I love Penguin Random House. I said, I can't fiscally justify anymore. And they said, okay, we'll match that deal, and they did, and it was amazing.

Mike Michalowicz [00:31:14]:
And then I came to him again and said, now the deal's gonna be even bigger, or I have to go to hybrid. And they said, I think we're done. I said, I think we're done. The only thing I regret about that is they said, I think we're done before I got a chance to say, I think we're done.

Jay Clouse [00:31:26]:
So this model you put together, I'm guessing this is on the projections of what you thought you could sell in a hybrid or self publishing world based on the size of your brand and Yeah. The previous book sales.

Mike Michalowicz [00:31:39]:
Correct. I think numbers are always important. And the only reason I I like to share is because I wish everyone would share their numbers because then you have full context and not theory. For me, I know every book I write minimally will sell a 100,000 books in its lifetime, over a 5 year period I should say, and then some of it might beyond that. My intention is the million book bookseller, but that's like point o one percent of authors do that. I have one book that surpassed a 1000000 books. So I've sold 1,500,000 books. I've sold 1.2, all formats, all languages of 1 book, which is Profit First.

Mike Michalowicz [00:32:13]:
So Profit First is the bell cow. Now, these other books, I collectively have done 300 actually, it's probably more than that. It's probably 500,000 of the other 9 books or 8 books. So it's that classic not bell curve. I don't know what the curve is, but like Power curve

Jay Clouse [00:32:27]:
of some sort.

Mike Michalowicz [00:32:27]:
Yeah. Whatever. If one carries you and the rest don't. I always consider it like, when I see a concert, I saw the Eagles perform. It was they were my god. Amazing. If they don't play Hotel California, I will be pissed. It's their hit song and they know it too.

Mike Michalowicz [00:32:43]:
So of course, that's well, actually how they did it. They opened it up and closed the thing with it because they know that's the one we want. And they have all these amazing hits in between. And the Uber fan knows, you know, Take It Easy. It's gonna blow your mind. But the general fan says, you better play Hotel California. And that's what it is for all creatives. That's the dispersion of what you create.

Mike Michalowicz [00:33:02]:
Some things will be more popular than something else. Once you're that popular thing, you better fall in love with that. Like, if I'm not talking profit first, if I'm not speaking on it, I'm a disservice to my consumer base. Like, this is what people want. That's my Hotel California. That's a I like saying that's Hotel California, because it isn't even close to Hotel California. But you that's my version at least. And the other ones are the b sides for now.

Mike Michalowicz [00:33:25]:
I am desperately trying to write something that's bigger than Hotel California, my anthem. And and I haven't gotten there yet, so I better keep on performing that.

Jay Clouse [00:33:33]:
I love the store that you've opened for me. So how do you think about the cadence of how frequently you publish or when you choose an idea? I'm sure you have more ideas than you end up actually writing. So what does idea selection and pacing look like to you?

Mike Michalowicz [00:33:49]:
Yeah. For me, I have 25 ideas that are half baked, quarter baked, not even baked, just just raw dough right now. And then it's accumulating. So once I have these ideas, I mean, these are things that interest me. Then sequencing is what does my reader need next? That's the best question to ask yourself. If you're writing your very first book, the question should be what do I need now? That's the one to start with, because you are the only reader that you're guaranteed, so you better serve you real well. But after that, what does my reader need next? To really get attuned to that. I can just query my audience.

Mike Michalowicz [00:34:21]:
That's actually what I do. I I meet people in person or through a survey or email and listen for common threads. The bigger your consumer base, listen for what the common thread is. The pacing, I guess in retrospect, I've done it too fast. Because some of the ideas, they're fully thought out, but they're not fully deployed where it's in those nuances of actually testing into audiences that the subtle refinement happens, but that's where you get the right note at the right spot at the right time, and that's when the the music becomes musical and beautiful. I think I've missed some of that. My in laws are both psychologists, and I'll tell you there's nothing you want in your life than in laws who are psychologists, because I am diagnosed all the time. And they both said independently, oh, you have hypomania.

Mike Michalowicz [00:35:10]:
Now a lot of people say, I have ADHD and all that stuff. Wonderful on you. I got hypomania. Hypomania means I got this crazy energy that if I don't express it, I'm in trouble. And you're probably even feeling it now, like, I'm like, I'm hyped up, like, let's go, man. Hypo is sub mania by the way. It's just sub mania. I'm almost a maniac.

Mike Michalowicz [00:35:31]:
But, you can channel things to your advantage. And for me, it's this output in production. I was up at 5 this morning writing, that has become a powerful tool but it's a double edged sword, it's my also biggest risk. I have this compulsion to get another book out, to get another book out. And when I start putting out books out for the sake of putting books out, that that's when I'm in trouble. And I I did it once, and I'm trying to be disciplined in avoiding that, and it's a struggle for me. This next book I'm writing right now, won't come out until 2026. This is the, I think the first time I'm having a 2 and a half year gap between books when I've been pacing it 1 per year.

Mike Michalowicz [00:36:06]:
And that's, I think for me, at least that's too much. I can do it, but I'm compromising quality if I continue that.

Jay Clouse [00:36:12]:
Yeah. That pace is crazy. And if I'm channeling the listener, hearing you say I have 25 half baked book ideas, they might be thinking you have 25 things you could write a book on. But then you also said, you know, if you're writing your first book, write the book that you need right now. So implicitly, it sounds like what you're suggesting is a lot of the learning of what is taught in the book happens in the writing of the book. It's not that you have a fully formed, fully learned thing that you're now just putting onto the page. Am I hearing that correct?

Mike Michalowicz [00:36:48]:
Yeah. Yes. Right. That's what's so fascinating is for me, the best content I've produced is first have a system. 2nd, start testing with others, and I'm an owner or investor in many companies now, so we can test out in our companies deliberately. Because I work for entrepreneurs primarily. Not only, but primarily. Then, start writing it.

Mike Michalowicz [00:37:11]:
Well, what I found is during the writing process, some of the stuff that I was able to express through the practice, the effort, doesn't translate to the word. And it's in the word that I need to actually retest it. I remember, I have a a friend who owns a cookie factory. They make a massive volume of cookies. And I looked at the recipe to make cookies at home, you know, a half dozen or a dozen whatever. The recipe, while the ingredients are the same, the proportions actually change when you get the volume. It's the weirdest thing. Like, you don't just take 1 cup of sugar to make a dozen cookie.

Mike Michalowicz [00:37:47]:
I don't know what how many. But if you wanna make 10 times that, you only use 10 times the amount of sugar. Actually, the ratios and stuff change, and some of the ingredients need to change a little bit too at scale, which I don't I can't even like logically comprehend. But it happens in books too. It's what works in practice doesn't actually work in print. There's these little modifications to the ingredients you gotta make. So to your point Jay, as I'm writing a book and it's happened it's happening as I'm writing this book, I'm deep in the writing season right now. Meaning, I'll be writing about 4 hours per day every day until this book is done.

Mike Michalowicz [00:38:18]:
I'll I'll actually go back and test. I'll have someone read this and say, follow this script if you don't mind, and and people will do it. And they say, I don't get it, or I'm confused, or this didn't work the way it was intended. I'm like, what? And the recipe has to change. So, yeah, there's actually modification while writing, which which is frustrating because then I have to go back all the way to the very beginning and say, the sequence isn't right again. But, yes, the recipe does change.

Jay Clouse [00:38:40]:
After one last break, Mike shares what all the best authors have in common and what might be holding you back from from getting started. So don't go anywhere. We'll be right back. And now please enjoy the rest of my conversation with Mike Michalowicz. It sounds like you're saying I mean, we'll take me as a very specific example. I want to write books, I think. Haven't written a book. Can't hold that story for much longer without actually starting to write a book.

Jay Clouse [00:39:10]:
But the hang up I've always had is what is it that I know so well I can write a book on? But it sounds like you might be giving me some permission to release that as a story instead of saying what is it I know so well and instead adopt what is it that I want to learn and know so well that I could write a book on it?

Mike Michalowicz [00:39:29]:
Dude, you found the secret. I remember I was walking down. I was going to the speaking engagement with a friend, and he did this cheesy thing with me, but it became a profound moment. I was at a university that I was speaking. And we're walking past classrooms getting to the auditorium and he points. He goes, oh, there's the best student. And I'm I'm, like, racing through papers trying to prepare for my presentation. We go by another room, he's like, oh, best student.

Mike Michalowicz [00:39:50]:
By the third one, I'm, like, dude, what's going on? Who's the best student? You know, he's totally playing me. And he goes, can't you tell? I'm, like, is it the one who sits up front? The one who takes most notes? He goes, no. No. No. He goes, the best student is the teacher, Mike. It's always the teacher. And that became the profound moment. When we teach, we have to steep ourselves in that knowledge so effectively, and know it so intimately that we can actually repackage it so it's consumable.

Mike Michalowicz [00:40:17]:
And like, oh, the best authors aren't the masters at it. They are the biggest students of it. That's the key. What does

Jay Clouse [00:40:25]:
that mean for the way we position the book?

Mike Michalowicz [00:40:28]:
When it comes to communicating it, I think we have the right to say I'm a student of the subject and that's why I wanna share with you what I've discovered. We have to be authentic and integral. We can't say this has worked for 100 of companies or whatever your target audience is when it hasn't been deployed. But I think part of the learning is the doing. It does delay books. It's funny. I was talking with a guy. He's an amazing author, Michael Bunge Stanier.

Mike Michalowicz [00:40:51]:
He wrote a book called The Coaching Habit. Yeah. Okay. Millions of copies. Sold. It's an extraordinary book. I sat down with him. I said, hey, Michael.

Mike Michalowicz [00:40:58]:
And he's written many books, probably more than I have. I said, what does it take to make a best seller? And he goes, if you've lived it, he goes, you got a lot better shot than if you simply curate it. And I'm like, oh my god. It's it's true. That's that component of the the ingredients change at scale. There's these nuanced learnings that happen if you've lived it. And that was a reminder, and I'm not disciplined enough to slow my role. Take the time for this to mature, to breathe a little bit by living it myself and deploying it with others.

Mike Michalowicz [00:41:32]:
Now, I work in the space of prescriptive nonfiction. This is where you're teaching. You know, other authors when it comes to fiction and so forth, maybe you gotta start touring the world and visit the spaces you're writing about. I know an author who's writing about World War 2, and Normandy, and they went there. And the book became that much better because they walked where the soldiers walked. They saw where people laid dying. And, I think we gotta live it more. The funny thing is, with AI and stuff, bullshit now costs nothing.

Mike Michalowicz [00:42:02]:
You wanna write a book in 20 minutes? Tell AI write the book for you. You can get this crap out. But it can't live it. And it's it's in the few words, it's the few emotions that will come across that makes a book transformative.

Jay Clouse [00:42:14]:
When you're starting to research this and then deploy the tests of this and you get to the written word part of how you explain it, Where do frameworks live in your mind? How much are you saying I want to create a specific framework or not?

Mike Michalowicz [00:42:31]:
There's a framework to the writing and there's a framework to what I'm teaching. There there always is. It's the skeletal structure. So, the written word becomes kind of the muscle, flesh, and skin around it, but I absolutely have a framework. That's actually what I work on first. So, one of my books is called Fix This Next. This is actually the interesting part about writing a book. I actually do spend years preparing the framework.

Mike Michalowicz [00:42:53]:
And that's I consider part of the writing process. So each book takes me 5 years or so to write, but I get them out every year because I'm working on multiple frameworks. I'm working on about 4 or 5 frameworks right now. And some of them testing very deliberately. Other ones, when they present themselves or haphazardly. That's that's the baking process. So fix this next, I was testing out and finally got to the framework of, oh, this is how business can identify what it needs to do. Most people arbitrarily do it, but there is actually a sequence.

Mike Michalowicz [00:43:21]:
Then I had the framework for the system. There's also a framework to the book. I follow the same framework every single time. So you'll see me start off with a personal story, usually of self deprecation, which is the awareness moment. I thought this, I tried it, it failed miserably, I found it's a fix, and let me reveal it. I'm trying out for the first time ever, here's a great success I had, and then here is how I got to it, which is atypical. Usually, I go through this, I call it the phoenix effect. The collapse I had for relatability, and they're all true, but I think that builds a relation.

Mike Michalowicz [00:43:57]:
This one, the book, it's better to show the success first because I think because because the reader of the next book, I think will be so thirsty for it. They don't wanna hear about the miserable idiocy I've had. They just wanna know will this work for me? Whatever. So I go through this framework. Chapter by chapter 2, I have to have a measurable result. If my reader most readers don't even get past page 2. So by chapter 1 or chapter 2 the latest, they gotta say, holy crap, I'm seeing measurable results in this transformation for myself. It's the I call the early win, and then I build out and so forth.

Mike Michalowicz [00:44:28]:
The very ending inevitably in my books is the call to arms, is the rallying call, you got this. I don't think I'm a great author by aspire to be. I think Malcolm Gladwell, he's one of my favorites, is a great author in this genre. All his books are framed the exact same way, and that's why it's so great. You'll see creatives do this. You look at music, the Eagles, all their music, while different songs is similar. It's it's country rock, you know, which is different than Metallica. Like, you can imagine Metallica comes out with literally a Hotel California, and then, you know, enter Sandman.

Mike Michalowicz [00:45:01]:
Like, it's it's just it's jarring. So I think we can have our all have our own stylistic framework and adhering to it actually serves you.

Jay Clouse [00:45:10]:
The framework of the method that you put into these books, if you can, how do you get there? If I were to sit down and talk to a friend about how to do any given thing, it's unlikely that I spit out a framework of how to do that thing right away. Right? So how do I get to the crystallized best version that I feel like this is gonna go into print now?

Mike Michalowicz [00:45:30]:
Okay. I'll give you the the shortcut first and I'll give you the longer action. So the the shortcut, there is a great book called write a must read by AJ Harper. It is the, in my opinion, the definitive book on frameworks for books. So write a must read. And I think there is a kind of standard template that all authors need to consider. It's the 30,000 foot view. And that book outlines it better than any other book I've read.

Mike Michalowicz [00:45:56]:
There's great books I'm writing. The framework I've used or fleshing it out was first knowing what the transformation is. Where is the reader entering the book, state of mind, experience, and where do you want them exiting the book? I also realize, if you over promise on the transformation and don't deliver, your book is done. And, yeah, that's the most common thing. You read my book, you're gonna be a millionaire by the end of this book. Instant millionaire, it's called, and you can become a millionaire in 30 days. And it's such a sizzling snake oil salesperson presentation, you may convince the person to buy the first time, but your book will not become a backlist hit. People won't say you gotta read this book, because you're not delivering on my promises.

Mike Michalowicz [00:46:41]:
So where are they now? And where can you reasonably move them to? Now, they may have a desire of that instant millionaire, and you have to acknowledge that. But where can you reasonably move them to? That is the starting thing. There's also, in many books, a belief or mindset they're coming in, that they think the solution is, but it's not the solution. And the reason I know this is they wouldn't be buying your book otherwise. If they were already a millionaire, whatever they're doing got them there, they don't need to consume anymore. Figure that one out. But they're consuming your book. But we also know that they have a common belief.

Mike Michalowicz [00:47:16]:
So this is where the research plays out. You gotta know what that common belief is. Perhaps you had it yourself. Now, some people say, I'm just making this up, to become an instant millionaire, you should bet the lottery, or invest in real estate, or or buy Bitcoin. If that's the common belief, what's the actual results? If the actual results are not those people coming into millionaires, is there another method? And it could be, you know, the compounding effect or whatever it is, you know, just every day I put a dollar down and you'll see it amplify. And instant may not happen tomorrow, but you've established a method instantly to become a millionaire for the rest of your life or something. Those are the key foundational frameworks. And then the then I start building an outline that builds toward it.

Mike Michalowicz [00:47:56]:
Like a good movie scene or a good movie, you start off with the vision and promise, you talk about the struggles, you start the build to getting there. But you can't have a perfect build, like, do this, then this, then this, and life is perfect. Do this, but this could happen, and get have to, you know, beat the first boss at level 1, and then you're here. And this is great, but then you may collapse again, and here comes boss number 2. And that's typically the trajectory of a great book. It it builds to a crescendo moment. They learn throughout, but their struggles and stuff are acknowledged and presented to them too.

Jay Clouse [00:48:28]:
I think to close, I would love to just hear whatever advice you have for someone who is going to writing their first book to help them move into the action of enough momentum to follow the project all the way through.

Mike Michalowicz [00:48:43]:
Okay. I'll paraphrase another book, which I think is I think it's called On Writing Well. But the opening line I unline it circles. I'm like, god, the whole book is delivered in the first sentence. And this is a paraphrase. It's not exactly it. But I said, the essence of writing is rewriting. And I was like, bingo, circle, that's it.

Mike Michalowicz [00:49:03]:
And I think there's this belief that we spit out perfection. You gotta write, and rewrite, and rewrite. And maybe it's version 6 or 16th, or 16 thousandth, but it will get there. But you have that discipline of getting there. You know, Hotel California was not written, I suspect, one time they had a hook, they tried something, they tested, they moved, they changed. I bet you that was rewritten countless times before they got that perfect assembly of that song. And that's If you're gonna write a book, start today, start writing, and realize that most of it won't be the final book, but at least you've gotten started. And as you go through it, it's the starting clay.

Mike Michalowicz [00:49:41]:
You are gonna build something magnificent if you keep on writing and rewriting.

Jay Clouse [00:49:50]:
If you enjoyed this episode, and I know I did, please consider leaving a rating or review on Apple Podcasts or Spotify. I bring it up in every single episode because it makes a huge difference. I read all of them, and it also has a major impact on the show's growth. So consider leaving a rating or review on Apple Podcasts or Spotify if you haven't already. You can learn more about Mike and all of his books at mikemichalowicz.com, which I have linked in the show notes. Thank you for listening, and I'll talk to you next week.