Categories
Books Business

The Mom Test: How to talk to customers & learn if your business is a good idea when everyone is lying to you

Buy on Amazon

Author: Rob Fitzpatrick 

My recommendation: 4/5

Summary: Great book full of specific and concrete tips entrepreneurs can leverage to have better conversations with prospects and customers. This book is full of great info for startup founders looking to have better product focused conversations.

My Takeaways:

The measure of usefulness of an early customer conversation is whether it gives us concrete facts about our customers’ lives and world views.

The big mistake is almost always to mention your idea too soon rather than too late.

If you just avoid mentioning your idea, you automatically start asking better questions. Doing this is the easiest (and biggest) improvement you can make to your customer conversations.

The Mom Test: Talk about their life instead of your idea

Ask about specifics in the past instead of generics or opinions about the future Talk less and listen more

It’s called The Mom Test because it leads to questions that even your mom can’t lie to you about. When you do it right, they won’t even know you have an idea.

Rule of thumb: Opinions are worthless.

Rule of thumb: Anything involving the future is an over-optimistic lie.

Rule of thumb: People will lie to you if they think it’s what you want to hear.

The value comes from understanding why they want these features. You don’t want to just collect feature requests. You aren’t building the product by committee. But the motivations and constraints behind those requests are critical.

Rule of thumb: People know what their problems are, but they don’t know how to solve those problems.

Rule of thumb: You’re shooting blind until you understand their goals.

Rule of thumb: Some problems don’t actually matter.

Learn through their actions instead of their opinions.

Rule of thumb: Watching someone do a task will show you where the problems and inefficiencies really are, not where the customer thinks they are.

“What else have you tried?” Good question. What are they using now? How much does it cost and what do they love or hate about it?

Rule of thumb: If they haven’t looked for ways of solving it already, they’re not going to look for (or buy) yours.

Rule of thumb: People stop lying when you ask them for money.

Rule of thumb: While it’s rare for someone to tell you precisely what they’ll pay you, they’ll often show you what it’s worth to them.

Rule of thumb: People want to help you. Give them an excuse to do so.

You aren’t allowed to tell them what their problem is, and in return, they aren’t allowed to tell you what to build. They own the problem, you own the solution.

Avoiding bad data

There are three types of bad data: Compliments, Fluff (generics, hypotheticals, and the future) Ideas

With the exception of industry experts who have built very similar businesses, opinions are worthless. You want facts and commitments, not compliments.

Rule of thumb: Compliments are the fool’s gold of customer learning: shiny, distracting, and worthless.

Ask good questions that obey The Mom Test to anchor them back to specifics in the past. Ask when it last happened or for them to talk you through it. Ask how they solved it and what else they tried.

While using generics, people describe themselves as who they want to be, not who they actually are. You need to get specific to bring out the edge cases. Anchor them on the life they already lead and the actions they’re already taking.

Startups are about focusing and executing on a single, scalable idea rather than jumping on every good one which crosses your desk.

When you hear a request, it’s your job to understand the motivations which led to it.

Just like feature requests, any strong emotion is worth exploring.

Questions to dig into feature requests: “Why do you want that?” “What would that let you do?” “How are you coping without it?” “Do you think we should push back the launch to add that feature, or is it something we could add later?” “How would that fit into your day?”

Questions to dig into emotional signals: “Tell me more about that.” “That seems to really bug you—I bet there’s a story here.” “What makes it so awful?” “Why haven’t you been able to fix this already?” “You seem pretty excited about that—it’s a big deal?” “Why so happy?” “Go on.”

Rule of thumb: Ideas and feature requests should be understood, but not obeyed.

Rule of thumb: If you’ve mentioned your idea, people will try to protect your feelings.

Rule of thumb: Anyone will say your idea is great if you’re annoying enough about it.

Rule of thumb: The more you’re talking, the worse you’re doing.

3. Asking important questions

Every time you talk to someone, you should be asking at least one question which has the potential to destroy your currently imagined business.

Rule of thumb: You should be terrified of at least one of the questions you’re asking in every conversation.

You want the truth, not a gold star.

Rule of thumb: There’s more reliable information in a “meh” than a “Wow!” You can’t build a business on a lukewarm response.

Zooming in too quickly on a super-specific problem before you understand the rest of the customer’s life can irreparably confuse your learnings.

The premature zoom is a real problem because it leads to data which seems like validation, but is actually worthless. In other words, it’s a big source of false positives.

“Does-this-problem-matter” questions: “How seriously do you take your blog?” “Do you make money from it?” “Have you tried making more money from it?” “How much time do you spend on it each week?” “Do you have any major aspirations for your blog?” “Which tools and services do you use for it?” “What are you already doing to improve this?”

“What are the 3 big things you’re trying to fix or improve right now?”

Rule of thumb: Start broad and don’t zoom in until you’ve found a strong signal, both with your whole business and with every conversation.

Pre-plan the 3 most important things you want to learn from any given type of person (e.g. customers, investors, industry experts, key hires, etc).

Rule of thumb: You always need a list of your 3 big questions.

Keeping it casual

Rule of thumb: Learning about a customer and their problems works better as a quick and casual chat than a long, formal meeting.

Rule of thumb: If it feels like they’re doing you a favour by talking to you, it’s probably too formal.

Rule of thumb: Give as little information as possible about your idea while still nudging the discussion in a useful direction.

Commitment and advancement

By giving them a clear chance to either commit or reject it, you can get out of the friend-zone and identify the real leads.

Rule of thumb: “Customers” who keep being friendly but aren’t ever going to buy are a particularly dangerous source of mixed signals.

Every meeting either succeeds or fails. You’ve lost the meeting when you leave with a compliment or a stalling tactic.

Rule of thumb: If you don’t know what happens next after a product or sales meeting, the meeting was pointless.

Rule of thumb: The more they’re giving up, the more seriously you can take what they’re saying.

Rule of thumb: It’s not a real lead until you’ve given them a concrete chance to reject you.

Rule of thumb: In early stage sales, the real goal is learning. Revenue is a side-effect.

Finding conversations

Rule of thumb: If it’s not a formal meeting, you don’t need to make excuses about why you’re there or even mention that you’re starting a business. Just ask about their life.

Rule of thumb: If it’s a topic you both care about, find an excuse to talk about it. Your idea never needs to enter the equation and you’ll both enjoy the chat.

Rule of thumb: Kevin Bacon’s 7 degrees of separation applies to customer conversations. You can find anyone you need if you ask for it a couple times.

Framework for cold outreach to gather customer feedback: Vision / Framing / Weakness / Pedestal / Ask

Examples:

Hey Pete, I’m trying to make desk & office rental less of a pain for new businesses (vision). We’re just starting out and don’t have anything to sell, but want to make sure we’re building something that actually helps (framing). I’ve only ever come at it from the tenant’s side and I’m having a hard time understanding how it all works from the landlord’s perspective (weakness). You’ve been renting out desks for a while and could really help me cut through the fog (pedestal). Do you have time in the next couple weeks to meet up for a chat? (ask)

Hey Scott, I run a startup trying to make advertising more playful and ultimately effective (vision). We’re having a load of trouble figuring out how all the pieces of the industry fit together and where we can best fit into it (weakness). You know more about this industry than anyone and could really save us from a ton of mistakes (pedestal). We’re funded and have a couple products out already, but this is in no way a sales meeting–we’re just moving into a new area and could really use some of your expertise (framing). Can you spare a bit of time in the next week to help point us in the right direction over a coffee? (ask)

Hey Tim, thanks so much for taking the time. As I mentioned in the email, we’re trying to make it easier for universities to spin out student businesses (vision) and aren’t exactly sure how it all works yet (framing & weakness). Tom (authority) connected us because you have pretty unique insight into what’s going on behind the curtain and could really help us get pointed in the right direction (pedestal)… (introductions continue) I was looking at your spinout portfolio and it’s pretty impressive, especially company X. How did they get from your classroom to where they are now? (grab the reins and ask good questions)

Rule of thumb: Keep having conversations until you stop hearing new stuff.

Choosing your customers

Before we can serve everyone, we have to serve someone.

Rule of thumb: If you aren’t finding consistent problems and goals, you don’t have a specific enough customer segment.

Rule of thumb: Good customer segments are a who-where pair. If you don’t know where to go to find your customers, keep slicing your segment into smaller pieces until you do.

Running the process

Rule of thumb: If you don’t know what you’re trying to learn, you shouldn’t bother having the conversation.

Meetings go best when you’ve got two people at them. One person can focus on taking notes and the other can focus on talking.

Rule of thumb: Notes are useless if you don’t look at them.

Conclusion

The Mom Test: Talk about their life instead of your idea Ask about specifics in the past instead of generics or opinions about the future Talk less and listen more

Deflect compliments Anchor fluff Dig beneath opinions, ideas, requests, and emotions

Asking for and framing the meeting: Vision—half-sentence of how you’re making the world better Framing—where you’re at and what you’re looking for Weakness—where you’re stuck and how you can be helped Pedestal—show that they, in particular, can provide that help Ask—ask for help

The big prep question for each customer feedback session: “What do we want to learn from these guys?”

Resources:

Categories
Books Business

So Good They Can’t Ignore You: Why Skills Trump Passion in the Quest for Work You Love

Buy on Amazon

Author: Cal Newport

My recommendation: 3/5

Summary

The author illustrates a good way of creating a framework for how to find the work you love to do. This idea itself isn’t inherently groundbreaking, but I thought the author’s thoughtful approach was clearly communicated and resonated with me. My take is that the author is essentially saying: put in the hard work now to have better options later. 

My Takeaways:

Compelling careers often have complex origins that reject the simple idea that all you have to do is follow your passion. 

Steve Jobs actually didn’t know what his passion was. 

Focus on becoming better – Steve Martin

Being better takes more time than people think. 

“The tape doesn’t lie” Nashville studio musician quote. 

Adopt a “craftsmen mindset” that takes an output-centric approach to work. 

Craftsman mindset: what you can offer the world vs the traditional “passion mindset” what the world can offer you. 

Adopt a mindset shift of approaching your job like a performer. 

Traits that define great work: Creativity, impact and control 

Focus on developing skills that are rare and valuable, as this will give you the career capital to have a job with all great work traits. (Supply and Demand)

The traits that define great work are rare and valuable. 

The craftsmen mindset of becoming so good they can’t ignore you is a strategy to acquire startup capital. This trumps the passion mindset if the goal is to create work you love. 

Serious study that puts you out of your comfort zone and appropriately challenging as well as a minimum of 10,000 hours of practice will get you to mastery level as well as immediate feedback. (Chess example. Also see similar thoughts for my book review on ‘Outliers: The Story of Success”)

Deliberate practice focused on carefully chosen difficult activities that stretch your ability and comfort will lead to mastery and to becoming so good they can’t ignite you.

Everyone in any type job hits a plateau.

Dedication to deliberate practice at our jobs is the way to successfully adopt a craftsmen mindset that blows past our peers. 

Feedback is extremely important to get better.

5 Habits of a Craftsman:

  1. Decide what capital market you are in. 
    1. Winner take all market vs auction market
  2. Identify your capital type. 
  3. Define Good
  4. Stretch and destroy. Get out of your comfort zone and get direct feedback. 
  5. Be patient. 

Giving people more control over what they do and how they do it increases happiness, engagement and a sense of fulfillment. 

Rule 1: You need career capital to have control in your work and lifestyle. 

Avoid the trap of “courage culture” by doing what people are willing to pay for. 

Manage your time by tracking it in a spreadsheet. (See similar takeaways from my book review on ‘The Effective Executive: The Definitive Guide to Getting the Right Things Done’)

Rule 2: Traits that define great work are rare and valuable, and if you want these, you need to first build up rare and valuable skills to offer in return. 

Rule 3: leverage your career capital by gaining control over what you do and how you do it. Since control is the trait that shows up often in the lives of people who love what they do. 

Have a mission in your working life.

Place little bets to get feedback to maximize chances of success.

Have a mission-driven project that is remarkable and launched in a venue that supports remarkable projects. (Open source example)

The best ideas for missions are just beyond, on the cutting edge or “adjacent possible”

Working right trumps finding the right work.

Categories
Books Business Investing

Building Wealth one House at a Time 

Author: John W. Schaub

My Rating: 3/5

Summary: Practical advise for building wealth by investing in single family homes.

My Takeaways

Buying houses let’s you diversify your investment across price ranges, locations 

Commercial building’s value is tied to the cash flow it generates, a well located house will appreciate at a greater rate.

When investing in commercial buildings, you are negotiating with other sophisticated investors as opposed to homeowners.

Starter houses rent well and rent fast. During hard economic times, tenants often downsize to these houses to save money. 

Larger houses will produce larger capital gains, but can reduce taxable income. 

If income is important, start with lower priced houses in a good neighborhood.

Buy in the best neighborhood you can afford. 

Majority of renters prefer 3 bedroom two bath house. Demand is higher than 2 bedroom house. 

Find a house with a garage or basement. Tenants need storage. 

Yards are a big selling point. Look for an average sized yard

An investment house should be big enough to attract a normal-sized family with their belongings, but not much bigger.

Buy a house that is functional and well located, then keep in good operating condition. Don’t buy houses with fancy items like trim and elaborate landscaping

Don’t get houses with pools or hot tubs. 

Avoid lots on busy streets or odd shapes

Avoid corner lots

Before you buy a house, research propert taxes to see if they will change when you buy the house. 

Tenants can be too rich or too poor.

There are six reasons why single-family houses make better investments than any other asset class:

  1. Houses can make more money with less work.
  2. Houses provide cash flow, but their value doesn’t depend on the income generated.
  3. Homeowners sell because they have to and aren’t experienced investors like those found with commercial real estate.
  4. Lenders prefer to make loans on single-family houses because they’re lower risk and easier to manage.
  5. Diversifying is simplified with individual houses, leading to increased investment safety and higher profits.
  6. Easier to identify trending factors that make a market good to invest in: population growth, demographics, local government regulations and zoning laws, and inflation.

The first step is to set a goal for the number of free and clear houses that you want to own. Work backwards into this goal by first setting an income goal and then asking how many free and clear houses you will need to produce that target income.”

  1. Set a goal by deciding how much monthly net cash flow you want and determining how many houses you need to get there.
  2. Buy one good house at a time, at the right price and terms, and hold while it appreciates in price and cash flows.
  3. Own your houses free and clear by using the cash flow to pay off debt quicker, strategically sell some houses to pay down the debt on others, or refinance some houses to pay off other.

If you have two houses, it’s better to have a debt of 80% on one and 0% on the other, rather than a 40% LTV on both. 

That’s because as a real estate investor, you have more negotiating power with the lender with a conservative 80% loan-to-value. Conversely, the more equity you have the less likely the bank is willing to work with you, because they know you’re highly unlikely to walk away from the property. 

Categories
Books Business

The Effective Executive: The Definitive Guide to Getting the Right Things Done

Buy on Amazon

Author: Peter Drucker

My recommendation: 5/5

Summary

A classic business book that everyone should read regardless of where they are in their career. This book is full time-tested approaches to being an effective leader.

My Takeaways

Up until recently, the problem of an organization was efficiency in the performance of a manual worker who did what he was told. Knowledge workers were not predominant in an organization. 

Working on the right things is what makes knowledge work effective. 

Knowledge work is defined by its results. 

No matter what position you are in a knowledge work position, you must act as an executive within your sphere to achieve results for the organization. 

Executives in corporations have to cooperate with the inevitable. These realities pressure executives towards non-results. 

The flow of events determines what an executive is focused on unless he or she deliberately changes this.

Events don’t tell the executive anything unlike a patient visiting a doctor.

If executives lets the flow of events dictate what they do, then they will simply be “operating” and be wasting his knowledge.

Executives need criteria that enable them to work on what is truly important to get results, even though the criteria are not found in the flow of events. 

Executives’ perceptions of the real world can be distorted and filtered through the lens of the organization they are within. 

The higher up in the organization, the more inside focused the executive becomes. 

The truly important events on the outside of an organization are not trends. They are changes in the trends. 

Effective executives differ widely in abilities, what they do, personalities, knowledge and interests – all they have in common is the ability to get the right things done. 

5 habits of the mind that have to be acquired by effective executives:

  1. Know where your time goes. Systematically manage time to bring under their control. 
  2. Focus on outward contribution. Gear efforts towards results rather than work. Start out asking “what results are expected of me?” How can I contribute?
  3. Build on their own strengths and the strengths of coworkers. Build on the strengths of what they can do in a situation. Do not start out with building on weakness. 
  4. Concentrate on a few major areas where performance will produce outstanding results. Set priorities and stick with them. 
  5. Make effective decisions by designing a system of the right steps in the right sequence. Effective decision making is based on dissenting options and not consensus of facts. The right strategy vs razzle dazzle tactics. 

Focus time in chunks to be more productive. 

The larger the organization, the less actual time the executive will have. This means it’s more important for him/her to know where time goes and manage the little time he/she does have at their disposal. 

The best way to manage your time is to record where it goes. We do this for manual labor type of work but not for knowledge work. 

Effective executives systematically manage time by identifying and eliminating things that do not need to be done at all. These things are not tied to results. 

Ask yourself which activities can be done by someone better?

Don’t be afraid to ask others if the executive is wasting their time. 

Mitigate recurring “crises”.

Time spent in too many meetings is a sign of misorganization and should be re-examined. 

Focusing efforts on downward is a subordinate no matter the title. 

Focus on the contribution and hold yourself accountable for the performance as a whole. 

Performance of an organization is direct results, building of values, reaffirmation and developing people for tomorrow.

Knowledge workers that are specialists should relate their narrow knowledge to the whole. 

Effective human relations:

  • Communication 
  • Teamwork
  • Self development 
  • Development of others. 

Focus on hiring based on strengths, not to minimize weakness. 

Look for excellence in one major area and not for performance that gets by all around. 

Effective executives are objective about filling jobs with people that meet the objective requirements. 

Organizations need diversity to make better decisions. 

Building teams of strength requires having a non/friend relationship. 

Don’t be afraid to redesign job requirements

When designing a job, it should be big in scope for someone to grow into and evaluate performance.

Remove people quickly if they are not performing. 

Staff a position based on strengths. Ask what this person can do instead of focusing on weaknesses. (General Marshall example.)

Help make the strengths of your superiors productive. 

Build on strength to make weaknesses irrelevant.

Effective executives themselves should know what they are good at. 

Don’t change human beings, but multiply the performance capacity by putting strength to use in people. 

Executives concentrate the time they have on leveraging their strengths to focus on one thing at a time.

Effective execs do not race or rush important tasks. They put in the time necessary to complete each task effectively – for themselves and their organization.

Programs and processes in an organization often outlive their usefulness. It is important for the executive to constantly evaluate and remove yesterday’s programs that are no longer productive.

Move people into new positions within an organization that have a proven strength rather than hire a new person.

Execs bring in people just below the level off top leadership into an activity that is already defined and reasonably understood

Do not let the pressure dictate the important tasks an exec should concentrate on, because the pressure always favors yesterday. Do not favor urgent vs. relevant.

The reason why it’s hard to concentrate is because it’s hard to set “posteriorities” – what tasks not to tackle and sticking to that decision. (See similar takeaways from my book review on ‘Steve Jobs’)

How to identify priorities:

  • Pick the future against the past.
  • Focus on opportunity rather than on problem.
  • Choose your own direction, rather than climb on the bandwagon.
  • Aim high for something that will make a difference instead of something safe and easy to do. 
    • It is just as risky to do something small that is new, as it is to do something big that is new. 
    • Execs focus on making a few strategic decisions on the highest level, rather than simply solving problems. 

Effective decision making criteria:

  • Is the problem generic (can it be solved by applying a rule/principle) or specific (treated as a one-off)
  • Think through the “boundary decisions” of what is right vs. what is acceptable and what the decision has to satisfy.
  • Convert decisions into action with specific steps and identify people with the right behaviors and strengths to carry out and “operationalize” the new decision.
  • Feedback has to be built into the decision to provide continue testing against actual events of the expectations that underlie the decision.
  • Most people start out decisions with opinions – untested hypotheses and then find the fact to support their opinion.
  • The effective executive asks  “what do we have to know to test the validity of this hypothesis?”
  • The effective decision maker assumes that the traditional measurements are not the right measurement. Otherwise there would generally be no need for a decision; a simple adjustment would be acceptable (yesterday’s decision) (Beginner’s mind)
  • Effective executives insist on alternatives of measurement so they can choose the one appropriate one.
  • Effective decision making comes from dissension and conflicting views. One does not make a decision unless there is disagreement. (Similar views as Ray Dalio in his book ‘Principals’)
  • Think through the alternatives and have a backup plan. This stimulates imagination.
  • The effective exec organizes disagreement, it gives him the alternatives to choose from
  • Execs use conflict of opinion as a tool to make sure all major aspects of important matter are looked at carefully.
  • One should evaluate if a decision even needs to be made at all.
  • Everyone in an organization should be an effective decision maker.

Summary:

  1. An executive’s job is to be effective
  2. Effectiveness can be learned 
  3. The needs of a large-scale organization have to be satisfied by common people achieving uncommon performance
  4. Organizations need to feed opportunities and starve problems.
  5. Organizations need to set priorities instead of trying to do a bit of everything
Categories
Books Business Hacks Investing Marketing Technology

Tools of Titans

Go to Amazon page

Author: Timothy Ferris

My recommendation: 5/5

Summary

Insightful book that deconstructs how world-class performers across different industries and professions are able to achieve success. I skipped around this book and read the chapters that seemed most interesting to me.

My Takeaways

  • Raise prices. (Marc Andressen)
  • Stress test ideas with a red team. Bash the sh*t out of an idea and if you still believe it, then commit to that idea. (Marc Andressen)
  • “Be so good, they can’t ignore you.” (Marc Andressen)
  • Wear something unique so people remember you. (Chris Sacca)
  • Try to trade the short term gain for the long term upside. (Arnold Schwarzenegger)
  • It’s often the tiny detailed things that grow your business rather than the large things. (i.e. Derek Sivers’ funny CDbaby email.)
  • Give lots of damns. (i.e. Alexis Ohanian’s example of making the copy on Reddit’s error page funny.)
  • Being busy is a form of laziness and often used as a guise for avoiding the few critical important but uncomfortable actions. (Tim Ferris)
  • On commonalities of famous investors interviewed by Tony Robbins:
    • Always cap the downside.
    • Find investing opportunities that have asymmetric risk and reward. 
  • Daily vlogging leads to massive growth. (Casey Neistat)
  • “Tell me something that’s true that few people agree with you on.“ (Peter Theil)
  • First Ten Principal:. Tell ten people, show ten people and share with ten people who already trust and like you. (Seth Godin)
  • Generate a list of 10 bad ideas as a daily exercise to refine the creativity muscle. (James Altucher)
  • If you can’t be first in a category, set up a new category you can be first in when launching products. 
  • Think categories, not brands when marketing a product or service. 
  • Everyone wants what’s new, not better. 
  • When you’re first in a new category, promote the category. In essence you have no competition. Tim applied this concept by coining the term “Lifestyle Design” in his book ‘The 4 Hour Workweek’. 
  • Don’t be afraid to do something you’re not qualified to do. 
  • Rainy Sethi sends simple text emails to make a more personal connection. 
  • Focus on acquiring 1,000 true fans (super fans) who will pay you directly for anything and everything you sell. 1,000 true fans are your direct source of income and chief marketing force for ordinary fans. 
  • Take “the coffee challenge” by asking for 10% off your cup of coffee at a coffee shop. This gets you in the habit of asking for what you want in life. 
  • Have a backup plan. (Jocko Willink)
Categories
Books Business

Outliers: The Story of Success

Go to Amazon page

Author: Malcolm Gladwell

My recommendation: 5/5

Summary

Amazing book that sheds light into the hidden aspects of how people blame successful across all industries and professions.

My Takeaways

  • There is a strong correlation between a person’s culture and how they behave. 
  • Being born in the right place at the right time is a more likely explanation of a person’s success than simply just hard work. It’s a combo. 
  • Slowing down allows teachers to cover more in the NYC public school example. Not feeling rushed for time allows more “practice reps”.
  • Putting in 10,000 hours of work is the magic number to be considered a master in a specific skill. 
  • Successful people had more opportunities to practice and get better at what they were doing. (i.e. Bill Gates, Bill Joy and The Beatles) to get to the magic 10,000 hours of practice.
  • Our societal structure has systems and process in place (and has been for years) that don’t give equal opportunities for all people to reach a successful level and prosper.
  • Successful people are very much the products of particular environments and circumstances that occur throughout history – as well as the culture that was handed down to them.
Categories
Books Business Technology

Trailblazer: The Power of Business as the Greatest Platform for Change

Book cover image of Trailblazer: The Power of Business as the Greatest Platform for Change by Marc Benioff
Go to Amazon page

Authors: Marc Benioff and Monica Langley

My recommendation: 4/5

Summary

Overall, I felt this book to be an interesting exploration into Marc Benioff’s thought process on how he set out to create such a largely influential company. He argues that the growth of Salesforce is tied to how well a company creates and executes on its core values. He also argues that the business rules have changed where companies need to “go good” by serving the greater world and not just their customers and shareholders. 

Marc and Salesforce believe that companies today have a responsibility to look beyond profits by impacting positive change on society. Data suggests that consumers and customers now expect this in today’s business climate.

My Takeaways

  • A company with values creates value. 
  • Company values should not only be the guiding principles for a business, but that CEOs should actively try to operationalize values into every aspect of their businesses. 
  • High stakes business initiatives are a stress test that often lead to insights that only drill values deeper into your culture. 
  • Trust is the most important value a company can instill within its culture. Salesforce was one of the first companies to have a trust site and open line if communication with customers.
  • Salesforce acts as a trusted partner to customers. The success of the customer is embedded within Salesforce core value of “Customer Success”.
  • Trust improves customers loyalty, employee productivity, employee retention and overall profitability.
  • Transparency is essential to building trust.
  • Data shows that a culture of safety and trust as well as speaking up, results in better risk taking and problem solving within an organization.
  • Studies also suggest that companies that commit to doing good for society have stronger customer loyalty – especially with Millennials and that this translates to an increased willingness for customers to pay more for products and services. 
  • Marc places a strong emphasis on not only treating customers well, but also the employees within Salesforce.
  • Company culture should be continually cultivated and that “culture eats strategy for breakfast.” 
  • Marc enabled outside innovation via App Exchange, which was a new method of innovating as opposed to the old way where businesses would hire more scientists and employees to develop new products internally.
  • Giving back to the communities Salesforce serves is purposefully woven into the company culture at Salesforce via the 1-1-1 model. (1% Equity, 1% volunteer time and 1% product)
  • Giving back has been linked with improved productivity and employee satisfaction. 
  • An “Activist CEO” is becoming the norm within business today. Gone are the days of leaving other beliefs outside of business. Employees as well as customers demand business leaders to take a stand on issues that affect the broader community.
Categories
Books Business Investing

Tax Free Wealth: How to Build Massive Wealth by Permanently Lowering Your Taxes

Author: Tom Wheelwright

My Rating: 4/5

Summary: Practical advise to legally pay less in taxes and grow your wealth.

My Takeaways

  • Include tax planning on your wealth strategy, because taxes are the largest expenses.
  • The fastest way to make more cash is reduce taxes
  • The tax is primarily written to reduce your taxes legally
    • 99.5 of the tax law exists to save you money on taxes
    • Stop being average by doing what Congress incentives in tax subsidies
  • The Tax law is a stimulus package for entrepreneurs and investors.
    • Want to encourage job creation.
    • Affordable housing for real estate investors
  • Change your facts to change your tax
  • Invest where you travel because almost any expense can be deductible
    • IRS says you must spend at least half the time (4 hours working) on business
    • Meals are business expenses that can be deducted. 20-30%
  • Learn how an LLC can be whatever it wants to be for taxes, gives best of asset protection and tax reduction. (S-Corp, C-Corp, LLC or LLP)
    • Make sure to select which tax entity you want to be on the IRS Entity election form.
    • You can change the entity form at any time. (i.e from Sole proprietor to C-corp to reduce employment taxes)
  • Everything you do increases or lowers your taxes.
  • Change your personal expense to a business expense.
    • Expense must have a business purpose
    • Must be ordinary – typical of what would be spent in your industry (i.e. price)
    • Must be necessary. Make more money for business
  • Make your business a family business.
    • Families’ travel is deductible when traveling for business
    • Shift income from higher tax bracket to lower business.
    • Shift income to children by having them work in the family business
      • Tax deduction at higher tax bracket for payroll for Dad
      • Kids report income at lower tax bracket
      • No social security tax for dad
      • Educational benefits for kid
    • Keeps money in family and business going
  • Shift income to “Big Business” and “Investor”
  • Almost any expenses can be deductible
    • Must be business or investment
    • Purpose must be to produce more income
    • Business expenses are best, then real estate
    • Must be entrepreneur or investor
  • Must be an “active” investor that invests for passive income, not earned income.
    • Income from dividends, rent and business. Taxes at a lower rate than earned income.
    • Actively involved in creating wealth
  • Make sure bookkeeping is up to date. Document everything!
    • Think about your business as a big business the way Microsoft does.
  • Depreciation is Magic and can be applied to assets in a business
    • For real estate – you can a deduct the entire amount of the building over a set period of time. This includes your money and the bank’s money.
    • Get money as quickly as you can with more deductions as soon as possible.
  • Tip: Properly document all values of the depreciated items in a cost segregation or chattel appraisal.
  • Portion of house that use for office.
  • Amortization is used for intangible business assets that depreciate. Such as software. .
  • You must elect to deduct amortization in your tax return
  • Cost Segregation must be done by a professional engineer or CPA
    • Can catch up on previous years depreciation
  • Most income on the B and I side of the quadrant is from business or investments, not salary since that’s taxed at the highest rate.
  • Think of your income in 5 buckets 
  • Earned income (wages that have high tax)
  • Ordinary income (pensions, 401k)
  • Investment income (cap gains, interest and dividends, 1031 exchanges)
  • Gift or inheritance tax
  • Passive income. (Business or real estate income)
  • The more money you make, the more concerned you should be where it’s coming from
  • Ordinary income is taxed higher than passive income. 
  • In kind exchanges are a way to minimize taxes
  • It’s not how much you own, but control
  • Leverage Tax credits to lower taxes. Refundable and non refundable 
  • When you want to reduce your tax, reduce the base on which it’s measured. 
  • Set up a LLC company so that you are the owner and employee of the company and set your salary to the lowest possible, and dividends and distributions of the companies earnings to the highest possible. 
  • Must be reasonable salary and rate in your industry. Don’t pay too much or too little so you don’t get audited. 
  • Get rid of assets to avoid state tax
  • Create a trust and a will 
  • Limiting your estate tax through limited partnerships
  • Collect sales tax
  • Combine tax strategy with asset protection strategy. Minimize ways you can get sued. 
  • Have assets protected from financial predators in an LLC.  
  • You should not contribute to government approved retirement accounts because they don’t keep up with inflation and assume you’ll be poor at retirement age
Categories
Books Business Investing

Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth

Book cover image of Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth
Go to Amazon page

Author: T. Harv Eker

My recommendation: 3/5

Summary

Although this book was a bit preachy, I found that there were worthwhile tips and tricks that one can adopt to develop a wealth mindset. This book is the kick in the pants you need in order to start transforming your thoughts and habits around money.

My Takeaways

  • People’s past experiences subconsciously influence money decisions 
  • People who blame others and act as victims self sabotage themselves. 
  • Choose to think and play big. Thinking small will get you a comfortable living. Thinking big will help you get wealthy. 
  • Wealthy entrepreneurs solve people’s problems on a large scale. 
  • Don’t be afraid of self promotion. If you’re confident that your product can help people, then share it. 
  • Rich people focus on solutions, poor people focus on problems. 
  • Wealthy people should be open to receive in order to give to others. 
  • Get paid based on business results. Not hourly wages.
  • Take advantage of tax write incentives as a business owner
  • Rich people think in terms of abundance instead of scarcity. 
  • Learn how to manage money by properly saving and investing. 
  • Have a “spend” account to balance the savings account. 
  • Be comfortable with being uncomfortable.
  • Rich people learn from other rich people who have real world results. 
  • Rich people are constantly learning to grow and don’t think they know everything.
Categories
Books Business Hacks

The Miracle Morning: The Not-So-Obvious Secret Guaranteed to Transform Your Life (Before 8AM)

Go to Amazon page

Author: Hal Elrod

My recommendation: 2/5

Summary

Self-help book written by someone who experienced a near death experience and improved his life through a morning ritual that he refined over time. This book was a bit preachy for me and the author could have cut out about half the book to convey his key points. Nevertheless, the ‘The Miracle Morning’ does have some great practical tips for developing morning habits that lead to more productivity.

My Takeaways

  • The last thought at night is the first thought in the morning
  • Keep the alarm clock across the room. Movement creates energy. 
  • Brush your teeth and use mouthwash. 
  • Drink a full glass of water. 
  • Get dressed or take a shower 
  • Bedtime affirmations are important. Set intentions. 
  • Set timer for bedroom lights. 
  • Set timer for bedroom heater – warm for waking up. 
  • Set motivational alarm clock messages that are positive. 
  • Follow the SAVERS ritual in the morning to be more productive throughout the day.:
    • Silence: Be silent in a separate room for clarity. Practice meditation by silencing the mind. This has scientific health benefits. 
    • Affirmations: Affirmations are crucial for framing your thoughts and bringing positivity into your mind. Update affirmations regularly.
    • Visualization. Have a clear picture of the end result.
    • Exercise: Practice exercising by doing activities such as yoga.
    • Reading: Read to stimulate your mind.
    • Scribe: Write in a journal to note your thoughts.
  • Eat healthy. 
  • Habits take roughly 3 weeks to develop.