BiggerPockets Podcast 125 with Michael Gerber Transcript

Link to show: BP Podcast 125: The Key to Business Success with Bestselling Author of The E-Myth Michael Gerber

Josh: This is the BiggerPockets Podcast show 125.

Michael: In order for it to scale is you’ve got to invent the system. This is how we do it, this is how we do it, this is who we are.

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Josh: What’s going on everybody? This is Josh Dorkin host of the BiggerPockets podcast here with my cohost Mister Brandon Turner. What’s going on, Brandon?

Brandon: What up? What up? Not much. I’m sitting down today, do you like this? Look at me.

Josh: You are, you are.

Brandon: Normally I’m at my standing desk but today I decided to be lazy and sit. That alright with you?

Josh: That is awesome.

Brandon: Alright.

Josh: All of our listeners really give two [inaudible] [00:59]

Brandon: Alright. No, today’s a cool show. We’ve got one of my all-time favorite authors of all time, if that makes sense, all time of all time?

Josh: All time of all time?

Brandon: Yeah.

Josh: Yes, yes, we do! You know, there’s definitely some insight to be delivered and we were very excited to bring this guest on board and we’re looking forward to sharing the interview with you, but before we get to that lots of cool stuff going on. As you guys know we launched the chat a few weeks ago and that’s been going super well. We’re continuing to build cool new features on the site and hopefully you guys have been checking out Brandon’s amazing webinars. There’s just a lot of great information that we’re sharing there.

Brandon: They actually are pretty amazing.

Josh: The podcast, the webinar, the forums, I mean, there’s just so much free information here on BiggerPockets it’s just crazy so go on BiggerPockets.com, if you are not already a member, and check it out.

Also, if you are a listener of the podcast, which you must be since you’re hearing me speak right now, please go on iTunes and leave us a rating and review and let people know what you think about the show. Hopefully you love it as much as we do. With that, why don’t we bring in today’s sponsor?

Brandon: Sponsor. Alright, today’s episode is brought to you by RealtyShares.com. Realty Shares is a real estate crowd-funding platform that allows accredited investors to invest in pre-vetted real estate deals online. So investors can browse and invest in both residential and commercial properties that yield returns of 8%-16% annually. As a Realty Shares member you can also passively invest in professionally managed real estate investments in a variety of asset-types and geographies for as little as $5,000 all from the convenience of your living room. So, to learn more, and to get started with a free account, visit RealtyShares.com/BiggerPockets. That’s RealtyShares.com/BiggerPockets. Moving on.

Josh: Awesome. Awesome, awesome. Alright, guys, so here it is: today’s guest he’s a bit of a legend in the world of business writing. He’s written one of the best books for small businesses that exists. He’s very, very insightful. He’s been on New York Times’ Best Seller list, every Best Seller list, you name it the book continues to grow. It’s fantastic. Brandon’s holding on to it right now, he can’t let it go.

Brandon: It never leaves my hand, actually. I go to sleep with it at night, I take it to the toilet. I mean, everywhere I go this book.

Josh: That’s great.

Brandon: I glued it to my hand, actually.

Josh: It’s called The E-Myth.

Brandon: It’s called The E-Myth.

Josh: It’s by Michael Gerber and we’ve got Michael for you today. So let’s just bring him in and get this thing going.

Brandon: Let’s do it!

Josh: Alright, Michael, it really is a pleasure to have you on the show! Thanks for coming on board and great to have you here.

Michael: I’m delighted. Josh, you’re not as cute as Hilary is, but the invitation was Hilary and I immediately said yes and had it been you I probably would have thought about it a bit more.

Brandon: That is our secret weapon right now. That’s how we’re going to get the big guests right there.

Michael: Pretty cute.

Brandon: Well, today we’re kind of going to talk about kind of your story, where you, you know, how you kind of came along this journey to be known as this influential business mind I’d guess you’d say. Just today, just to preface this, today I basically re-read the entire E-Myth Revisited. It’s been, I don’t know, probably 3 years since I read it and it’s shocking to me how much that book impacted my life in ways I didn’t even realize. Like, when I read the book I was like, “wow, that’s a really good book,” but I didn’t think about it until today reading through almost every page I was like, “oh, that’s where I got that from. Oh, that’s why I do that. Oh, that’s why I do that,” so it’s one of those books.

Kind of like I said that a while ago we did an interview with David Allen and Getting Things Done and it was a similar thing, right? Like, just that’s why I love books. So, anyway. Let’s get into it. Enough chit chat from me. Maybe you can tell us a little bit about yourself. I mean, who are you? Big question, but…

Michael: Depends upon when you ask me that question. I’m Michael Lee Gerber, I’m the author of 18 books.

Brandon: Wow.

Josh: You should work harder, Michael.

Michael: I’m trying. My books are on the Best Seller list of all Best Seller lists; New York Times, Business Week, Wallstreet Journal and on, and on, and on, and on. The reality is is those books were never promoted by us. We never went out and marketed the books. The books have been solely grown, read, by the millions of readers that we have because somebody told somebody else about it.

So it’s been a complete word of mouth phenomenon and it’s astonishing to me as well because in one respect it doesn’t stimulate my ego, it just simply says that the idea underlying the book is so genuine, so real, so authentic, and so significantly important that people just have to talk about it. So accountants tell their business clients, “you have to read this book,” and coaches tell their business clients, “you’ve got to read this book,” and attorneys tell their business clients, “you’ve gotta read this book,” and on, and on, and on, and on.

So the phenomenon of the story within the book really is at the center of everything we’ve been teaching for over 40 years now, but it didn’t just start with the book because the book was the product of the business. So we started a business called The Michael Thomas Corporation in 1977.

Josh: Nice.

Michael: That’s how long ago this was, and that business was the world’s first business coaching firm. Very few people know that, in fact, we invented the world’s very first business coaching firm and we invented the very first turn-key coaching system that had ever been created. Before coaching became coaching we had already done it; we called it consulting, but in fact it wasn’t consulting at all because it really only required a relative novice plus our intelligent system to perform the relationship that we created with our clients.

So all of this has been about that. That very, very first Michael Thomas business development program and a dream we had and the dream was to transform the state of small business worldwide. So when I started this without any experience doing this that’s what we set out to do. So that’s the story.

Josh: Right on.

Brandon: And I think you’ve done it. I mean, I think the fact that millions of people have read your books is a testament to that.

Josh: Congratulations, you are a success.

Michael: Thank you.

Josh: Hey, Michael, so what got you there? You know, did you wake up today I’m an 18-year-old kid that’s suddenly going to teach people how to run better business? Or did your experiences up until this point give you the knowledge that you needed to kind of launch this? What did you do prior to becoming the Michael Gerber that we all know as the teacher?

Michael: Well, I was everything else. I was an encyclopedia salesman, I was a saxophone player.

Josh: Alright.

Michael: I was a framer of houses, I was a beatnik when there were beatniks, I was a hippy when there were hippies, I was everything and nothing, but I’d had in my life experiences with masters. The guy who taught me how to sell encyclopedias was a master of it. The guy who taught me how to play the saxophone was one of the top 5 saxophone teachers in the world. The guy who taught me how to frame houses was a master of it. Each and every time I went through this process of being stupid, which essentially was stupid because when I started selling encyclopedias I had no idea what I was getting myself into.

When I started at 12 years old to study with Merle Johnston Merle told me that I was stupid and he hated kids and he didn’t teach kids. Most of his students were already professionals so he didn’t teach beginners at all and he said that most likely by the time we got through our first, or second, lesson I’d be out of there because I’d be a major pain in the ass. So he said the rules of the game are you’ve gotta practice, you’ve gotta practice what I tell you to practice, you’ve gotta practice exactly how I tell you to practice, you’ve gotta practice as long as I tell you to practice, 3 hours a day 5 days a week, and then you’ve gotta come up to Los Angeles from Anaheim, where we lived then, and you’ve gotta take a bus your parents can’t bring you. It’s two buses not one bus and if your parents will walk through the neighborhood you’re going to have to walk to from the one bus to the second bus they would be out of their minds if they said, “yes, you can come here,” cause you’re a cute little 12-year-old kid walking through the worst section of Los Angeles possible, but that’s all that you’ve gotta do to get here.

Then he said to my parents, who were there standing with me as I’m standing in front of this about 5-foot 400-pound strange man, and I never want to see either of you again and please when Mikey comes home and complains about what I do to him here just know it’s the truth. So that’s what my life was about.

Josh: Wow.

Michael: Long before I ever decided “to become an entrepreneur”. I never decided to become an entrepreneur, I decided to transform the state of small business worldwide, but I was already 41 years old before I ever did that.

Josh: Gotcha.

Michael: So, no, I didn’t want to be in business by myself, but I was always an independent contractor. So, meaning my whole life was learning how to do it then really learning how to do it and then going off and doing it by myself.

Josh: Makes sense.

Michael: So that’s what it was. So what brought me to do this is everything I did brought me to do this.

Josh: Right on, and that guy sounds like a real charming fella. Alright, so—

Michael: Each one of the guys who taught me were real charming fellas. Absolutely, absolutely wouldn’t put up with any backtalk from me. They knew how to do what they knew how to do and I didn’t, and if I wanted to learn how to do what they knew how to do then shut up, listen and do it. That was their style. So that was my karma, if you will. I must have been an asshole years ago in another life because it came back and haunted me.

Josh: Aw, man. I’m sorry. Well, listen, those lessons brought you to where you are today and I think it’s benefitted millions of people. So let’s get into this. We’ve got this thing The E-Myth, right? You are the man behind The E-Myth. So what is The E-Myth?

Michael: Well, The E-Myth is the entrepreneurial myth and it’s the primary cause that businesses fail. So when you think about somebody going into business instead of being an entrepreneur like everybody believes them to be they’re what I call technicians suffering from an entrepreneurial seizure.

So the cook starts a restaurant, the bookkeeper starts a bookkeeping business, the cardiologist starts a medical practice, and on and on and on and on each of them believing because they know how to do the work, they know how to create a business that does that work and it’s completely untrue.

Josh: Right.

Brandon: So why is that a problem?

Michael: Well, because they go to work in the business doing it, doing it, doing it, busy, busy, busy as opposed to what an entrepreneur does which is go to work on the business. So the entrepreneur goes to work on the business, you might say from above.

Josh: Yep.

Michael: Ray Kroc didn’t make burgers, Mcdonald’s did. Ray Kroc never worked in Mcdonald’s. Ray Kroc worked on McDonald’s to build, to design, build, launch and grow his franchise proto-type.

Josh: Yep.

Michael: Because if he didn’t design, build, launch and grow his franchise proto-type he never would be able to scale it.

Josh: Yeah.

Michael: So to the degree my business depends upon me I’m screwed. To the degree your business depends upon you, you’re screwed. Now, in a personality-driven business, which most people believe is key, meaning Trump, meaning on and on and on. In a personality-driven business everybody believes it’s the persona of the individual that’s of value, but it’s completely the opposite of the truth. It’s not the persona of the individual, it’s the persona of the system.

Josh: Yeah, that makes sense.

Michael: So the degree that you wish to scale what you do you have to turn-key what you do so that anybody can do it.

Brandon: What do you mean by “turn-key it”?

Michael: Well, just this: we’re having a conversation and that conversation is something you’re either making up, making up, making up and then you get sick tomorrow, Josh, and then Brandon’s gotta make it up, make it up, make it up and then Brandon gets sick so Hilary’s gotta make it up, make it up, make it up. Now, the good news is Hilary looks a hell of a lot better than either of you so Hilary’s got it covered for a while, you understand? But as long as Hilary keeps on thumping along making it up, making it up, making it up sooner or later it comes crashing down.

Josh: Yeah.

Michael: So what has to happen then in order for it to scale is you’ve got to invent the system this is how we do it, this is how we do it, this is who we are and nobody does it like we do it. So when you do that it will no longer be Skype. It will no longer be this or that. It will be this and only this and nobody does podcasts like we do. Not because we invite the best guests, the best guests are simply part of the system, but in the process of doing that you’re called upon to invent the system through which that best guest looks better than he’s ever looked before, the product looks better than any product looked before, the questions you ask are not the same questions every single other podcast I’ve ever been on asks me, and right now they are. They are unique questions uniquely positioned to discover a unique insight into a unique mindset that is never been discovered that way before.

Josh: Yeah, that makes sense.

Michael: So, and I always make it difficult for people to interview me because I always call them on just that. So understand you’ve become a client in the process of me being a participant in this process and my hope is that when I’m done something’s going to happen with you that will transform the way you do what you do and how you do it and you then will have been Gerberized.

Josh: Oh, man.

Brandon: Free consulting.

Josh: I’m scared, man, I’m scared. I was warned about you and clearly they were right. I like to say it’s not true what they say about you, but man, Michael, it sure as hell is true. Well, I tell you what, we—one of the things that Brandon and I have talked about for a number of years now is the working on the business versus—working in the business as a technician versus kind of the owner and I’ve built our business up over 10 years, you know, and the first I’d say 8 I was just in period. That was it. My head was down, I was just working in the business, I was focused on it and then one day it kind of clicked. I paid a consultant to kind of look over my business and he’s like, “you know, you’ve gotta take a bigger view. You can’t just be doing everything,” and I was like, “oh, you know what? That made a lot of sense. This business can’t just be about Josh. It has to be able to exist without Josh,” and so we’ve been building it up to do just that. Building this up without me and it’s been really exciting and really fun and I think as we’ve read your books we’ve gotten better at analyzing and recognizing why we’re doing that.

So our audience they’re primarily real estate investors, right? So we’ve got investors, we’ve got agents, we’ve got other folks, you know, these are small entrepreneurs; small businesses that are, you know, they’re buying 1, 2, 5 properties. Whether they’re doing it on the side or they’re doing it as a means to take over their former employment how can somebody who’s in that position build systems without first operating within the systems as a technician?

Michael: Well, this is self-serving when I say this, but you understand that over the past 40-years we’ve worked with over 70,000 business clients in 145 countries. Every imaginable kind of business so real estate, insurance, chiropractic, on and on, anything and everything you can imagine. Gas stations, graphic design, everything and so forth, and real estate investors but we’ll talk about it in that regard because essentially the platform for every single one of the folks who you’re talking about, guys who are investing in real estate buy 1 property, 2 properties, 3 properties, 4 properties, etcetera and so forth, that they most often do that stupid.

So, please, I’m not criticizing your audience. I’m just saying, “hello, stupid,” and much the same way as my saxophone teacher said it, my encyclopedia sales manager said it, my framing teacher said it to me, “hello, stupid. You really want to do this?” that’s what they’d say to me, “you really want to do this? Well, there’s only one way to do this. It’s called my way. My way or the highway,” you’ve heard the expression.

So I would say that to these real estate investors, there’s one way and only one way to begin the journey of real estate investing or investing in anything and that’s what I call the dreaming room. The dreaming room really is the platform upon which every venture, every practice, every business, every enterprise must go through to be able to say to somebody with such certainty that there’s one thing you must do.

The entrepreneur, which we’re describing as an individual who starts a business, is really four different personalities and these are critical to understand because you each possess these four different personalities. Everyone does to one degree or less, to one degree or another. Those four personalities I’m saying to your audience, I’m saying to you, I’m saying to myself, I’m saying to Steve Jobs, I’m saying it to anybody because when you recognize these four you’ll understand that they’re each here for a different purpose.

Brandon: Sure.

Michael: The first is the dreamer, the dreamer has a dream. The second is the thinker, the thinker has a vision. The third is the storyteller, the storyteller has a purpose. The fourth is the leader, and the leader has a mission. The dream, the vision, the purpose, the mission. Those words are used loosely by everybody. Martin Luther King said, “I have a dream,” well, I would say to every single person who’s sitting in your audience that they should go online right now and look up Dr. Martin Luther King the Dream and listen to it because once you listen to that you’ll understand what’s missing in your life. You’ll understand what’s missing in this picture. You’ll understand what’s missing in almost every business on the face of this earth. There is no dream. There’s a daydream, but there is no intentional dream and that dream is what I call a great result.

So essentially I’m saying is that within every human being on the face of this earth we’re born to create. We’re born in the image of God; we’re born to create. The Creator created us, human beings, to create a world fit for God and you’ll see what a lousy job we’ve done with that. You see, also, what a lousy job most people have done with their businesses.

Brandon: Sure.

Michael: Because they didn’t have a saxophone teacher like Merle. They didn’t have a sales manager like Lloyd. They didn’t have a framing teacher like the guy who between framing assignments was working in Hollywood building Hollywood sets. They never had an artist truly, truly a severe and determined and passionate artist truly take them on and take them through apprenticeship. They’ve never really gone through apprenticeship in an intelligent way they just learned sloppy. Most people just learned sloppy. You know that, I know that, we know that. That’s why most real estate sales people don’t sell real estate they just jerk around.

Josh & Brandon: Yep.

Michael: In San Diego County there are listed 28,000 plus real estate agents, but in San Diego they only did about 27,000 deals last year. So we’ve got 28,000 real estate professionals who did less than one deal a year each! Now, of course there’s the 80/20 rule which tells you that 80% of the results are produced by 20% of the people blah, blah, blah I know all about that, but what I’m saying is most people suck.

Josh: How do you not suck?

Michael: You start anew.

Josh: Okay.

Michael: You start anew meaning you start with a serious guide. That’s why I say I had a saxophone teacher who was a serious guide. I had a sales manager who was a serious guide. I had a framer who—and each time I’m attempting to do something other than what I’ve done before so I’m constantly searching for what I’m here to do, I’m speaking personally, continually searching for what I’m here to do. I didn’t find it until I was 41 years old, and when I found it when I was 41 years old my saxophone teacher, my sales manager, and my framing teacher had brought me to a point where I wasn’t here to screw around. I didn’t say I want to buy six properties, or three properties, or two properties I want to transform the world.

Brandon: Yep.

Josh: Yeah.

Michael: That’s the beatnik, that’s the hippy, that’s the student, that’s the—you understand I want to do something.

Josh: Yeah, so that makes sense.

Michael: I want to do something.

Josh: Go ahead, Brandon.

Brandon: Well, I wanted to pull it back to the apprenticeship thing you mentioned, right? So when, I mean, are you saying that when a person should want to get into any field, like real estate investing, they should find an apprentice, I mean, what do you call it? A master, right?

Michael: Yeah.

Brandon: Somebody who’s doing it who’s in, maybe hopefully in, your market something that they can attach to and learn from. Is that, I mean, that’s what you’re saying?

Michael: Absolutely.

Brandon: Love it.

Michael: I mean, period.

Brandon: Yeah.

Michael: I mean, don’t do stupid. Don’t be stupid. Recognize you are stupid and say, “I want to learn this, what do I have to do?” and when the guy tells you, “well, I don’t take many students cause they’re a pain in the ass. I hate working with novices because they have no idea what they’re getting themselves into,” you’ve just gotta accept the fact that you’re going to have to practice 3 hours a day, you’re going to have to come to Los Angeles, you have to take two buses, your parents can’t bring you…

Josh: Are we having nightmares?

Michael: Yes?

Josh: Are we having nightmares about this, the buses?

Michael: No, no.

Josh: I’m just kidding.

Michael: It was the greatest experience I ever had.

Josh: Yeah.

Michael: It set me up in a way that very few kids are ever set up.

Brandon: Yep.

Michael: I mean, I was 12 years old. So my parents are looking at me when they’re standing there and saying, “no, we’re not gonna do this. We’re not gonna do this,” so when he said, “so do you want to do that? Because the only thing I teach,” Merle said, “is people who want to become the best saxophone players in the world and this is how you do it,” so it was not a small aim it was a huge aim.

So, for example, we do these dreaming rooms and we do them online and the dreaming room is a 12-week process. Three intense 3-hour sessions each week with a dreaming room facilitator. The dreaming room is a system and it’s turn-key and the facilitator isn’t a coach or a trainer, but a facilitator meaning they’re guiding the participants in the dreaming room through the process to discover their dream, their vision, their purpose and their mission and it’s not easy, but it was not intended to be easy. It was intended to produce a great result for everybody who commits to that.

So we’re doing a dreaming room in Riverside. It’s our first city-sponsored dreaming room. We’re creating the proto-type so we can scale it to every Riverside-sized city in the United States.

Josh: That’s great.

Michael: Making it on your own in America is essentially saying you just don’t go out and make it on your own. You truly have to understand the rules of the game and the rules of the game are truly critical. So a guy who’s one of the participants in this dreaming room in Riverside that we’re, you know, working on while we’re working in it, working on it while we’re working in it, he comes to me, he dropped out after the second session, and he said, “I listened to you and I understand it but you’ve gotta understand I don’t want to create a big business. I’m going to shut my business down and I don’t want to be surrounded by a lot of people and hire a lot of people and blah, blah, blah,” and I said, “well, congratulations. You’re now finally coming to the point where you realize stupid. Meaning what you did was stupid, how you did it was stupid, and suddently you’re hearing smart but it’s challenging you to stop being stupid. In short you heard what I said, but you didn’t apply it in the way I told you to apply it. You came to the conclusion that growing a business is about a lot of people and a lot of people are really trouble and I already know that because I already experience that so I don’t want to do that again. I’m saying yeah, but stupid is as stupid does. The solution isn’t to not have people, the solution is to do it right so that when you have people people are smarter than you are right now because they’ve got an intelligent system that you brought to them,” because every small business is a school and if it isn’t it’s over.

Josh: Yeah, that’s great.

Michael: But when it is something’s happening. So these folks we’re talking to, and I’ll shut up you just say, “Michael, I want to ask you another question,” the folks we’re talking to I’m saying to them understand you will do stupid.

Josh: Yep.

Michael: So start out smart understanding you are stupid and if you wish to be stupid for the rest of your life then get somebody who is stupid to teach you how to do it, but if you truly want to be the best of the best of the best get the best of the best of the best to teach you how to do it but understand then you’re allowing yourself to become vulnerable to the lessons you’ve gotta learn. When I learned how to frame houses I made the decision I wanted to stop making money with my mouth and start making money with my hands. I wanted to become a carpenter. I was 38 years old. I had knocked on doors in remodeling companies and said, “hi, I’m from Los Angeles—I’m from San Francisco. I’ve just come down, I’d like to get a gig and start working,” “well, do you know anything about this?” “oh, yeah, yeah. I know all about this,” and so I talked my way into a job. I lost the first job in 4 minutes.

Josh: How’d you do that?

Michael: Oh, very easy. I didn’t know anything so I walked in and started looking around. Now, the thing I learned when I started looking around is first of all nobody who is good at this has new tools. So you understand I went out and bought—now I’m 38. You’ve gotta say, “what are you, stupid?” I’m going out to learn a lesson by seeing the job so the first thing I learned is: used tools.

Josh: Yep.

Michael: And it was just obvious. I’m walking in with Craftsman tools from Sears Roebuck. The minute the guys see me! I’ve got a new belt on. They see me and go, “who is this schmuck?” it was instantaneous!

Josh: Yep.

Michael: So what I’m telling you is you learn by doing, but get yourself a teacher and that’s what I got in my fourth job was that teacher and that teacher took me, this 38-year-old guy with a beard down to here, a hippy—

Josh: Looks like Brandon.

Michael: No, I mean I had a real beard.

Josh: Oh, ouch.

Michael: I looked like Rabbi Michael.

Josh: Oh, nice.

Michael: Okay, now, the first thing on the job I was his assistant so what do I gotta do? I’ve gotta lift lumber. I’ve gotta take it up to the top of the wall that this—suddenly I’m on a ladder lifting lumber on to the top of—I’m 38 years old. I’ve never done this shit before, you understand? So I’m learning it, learning it, learning it. He’s teaching me how to hold it. Teaching me how to climb it. He’s being patient with stupid, but he’s saying, “until you learn how to do this the way you need to do this I’m going to tell you the way, but you’re going to have to follow it exactly and they’re going to be laughing at you all day long here on the job. So if you’re not committed go away, but if you are I’ll take the time to teach you”.

Josh: Yeah.

Michael: So that’s what I’m saying to your audience.

Josh: That’s great. Yeah, we get the question all the time how do I get started? What do I do? And there’s, you know, we always try to point the people to you’ve got to find that guy. You’ve gotta find somebody local in your market. You know, you want to learn, you want to read up and kind of get the fundamentals, but like you said at some point you’ve gotta do it. You know, you’ve gotta get your hands dirty, you’ve gotta jump in and the way to do that is not to do it stupid it’s to do it whether it’s finding somebody you can partner with and they can kind of walk you through your first X number of deals. Find somebody who can guide you and mentor you. Just find somebody to show you the basics of this business and those people I think that do that tend to find a lot more success at least in what we hear from our users and listeners than others so yeah, I think it works.

You talk in a couple—I’ve heard a couple speeches from you on the internet and you talk about kind of changing the world, and you even mentioned it earlier in our conversation, don’t get into something unless you’re going to change the world. So if I’m looking to be a doctor, and I want to be the best doctor I can be, but I may not be thinking, “hey, how can I change the world?” If I’m looking to get into real estate and I just want to be able to pick up an extra rental property a year and build a portfolio, I still want to work my job but I don’t want to change the world, you know, but I want to find a way to go about building this business in a sustainable manner are you saying that I can’t do that? Are you calling me stupid for having that dream? Or do I have to subscribe to this way of unless it’s something that “changes the world” it’s not worth doing? I’m just trying to kind of clarify a little bit.

Michael: What I am saying, very simply, is that anybody who I just wanna, I just wanna, I just wanna is a waste of my time.

Josh: Gotcha.

Michael: You understand? Merle would never take anybody like that.

Josh: Yep. You’ve gotta be committed, right?

Michael: Yeah. My sales manager would never take on anybody like that. It’s a waste of his time. He’s a master. My framing teacher would never take on anybody like that. I was a dreamer; you understand? I was always a dreamer. I was always a dreamer even at the beginning with the saxophone I was always a dreamer. Even with the sales I was always a dreamer. Even with the framing I was always a dreamer. It wasn’t just to become a framer; I wanted then to become, then I want to become then I want to become and then—so you understand? I’m finding the channel through which I can express myself, but my expression of myself was like E. E. Cummings expressed himself, or like any great poet expressed himself, or any great artist expressed himself. I’m saying that inside everyone there is a Michelangelo waiting to come out and the problem is we have learned our lessons so well that we limit our scope to the most easily doable. We don’t risk ourselves because we learn from our parents that risk is exactly the opposite of reward and I’m suggesting the dreaming room is the first stage because until we begin to rumble a bit about what it means to be human. A dream, a vision, a purpose. Whatever your dream, your vision, your purpose, your mission might be until we rumble a bit about that, until we really engage with each other about that nothing is going to happen other than maybe I’ll get a little bit of this, maybe I’ll get a little of that like you were saying and then soon it’ll be kind of a who cares? Who’s interested?

Brandon: Yep.

Michael: Go, you know, do anything you want, but don’t bother me cause I’m 78 and I don’t have the time, or the interest, to spend with somebody like that.

Brandon: I want to drill in on that because this is something that I noticed a lot of times in my—okay, so people come to me a lot. I’m the cohost of the podcast here so people ask me, “hey, will you mentor me? Will you teach me what you know? Right? And, I mean, at least 5-10 times a week, right? You probably get it 500 times a week people wanting to learn from you. So my question is: what sets somebody apart when you’re looking at somebody who you actually want to take under your wing, and maybe you’re different because you’re running a company that does this for other people, but the average master? Your saxophone teacher, the carpenter, I guess, what do they look for in a person? Is it just that passion to want to change the world? I mean, how does somebody listening to our show who wants to learn from a master how do they appeal to the master to have them teach them? Does that make sense?

Michael: Of course it does, and you understand that’s the weak link in all of this. You know, I have the spirit but I don’t have the will. I have the spirit but I don’t have the will. Passion is insufficient. Persistence and dedication are absolutely critical because it’s not going to be easy to go through this process. Not at all because the size of the requirement is measured by the size of the dream.

Now, most people don’t have a dream, they daydream and they think of the word dream in relationship to a personal desire. I want to get a bigger house, I want to make more money, I want to get a prettier girlfriend.

Brandon: Careful.

Michael: [inaudible] [40:33] All the bulls*** that everybody thinks about.

Brandon: Sure.

Michael: So the minute I hear somebody saying stuff like that they’re driven by lust rather than love, they’re driven by greed rather than true desire, I’m not interested because they’ll never demonstrate the patience it’s going to take to learn these lessons. In short the dream doesn’t just pop up—oh! Got one. Did week one! They’ll go through 12 weeks and I’ve had people come to me when I did my individual dreaming rooms, you understand? To start this I did my first dreaming room myself, it was a 2 and a half day intensive and then I did another one, then I did another one, then I led another one, I led 59 dreaming rooms while I was working on the system that would enable me to delegate that to facilitators who I can certify to do that, but until I truly did both in it, on it, in it, on it to develop it to scale. So now have master licensees in Australia, New Zealand, Japan, Canada, the UK, and now we have dreaming room central in the United States and all the launch of all the dreaming rooms will happen out of dreaming room central here in Carlsbad California and soon to be Orange County California and then to every city Riverside-sized. You understand what I’m saying? The dream, the vision, the purpose, the mission. Transform the state of the world so I’m going to spend my time with a guy who wants to create a taco stand where he’s making tacos because he loves to make tacos? I mean, spare me.

So just by asking the right questions I’ll know whether I got the right guy.

Josh: Yeah.

Michael: And, yeah, I do mentor very few people personally, but very, very, very few and nobody can afford me. So, one they can’t afford me, and two they can’t stand me.

Josh: C’mon. What’s your rate? We got this.

Michael: I call myself the Chief Aggravator cause that’s what I do. I aggravate people. I aggravate them because they’re unwilling to truly expand the way they see the world and the way they relate to it in themselves. So it’s more than passion, it’s dedication, “I’m in this,” my mentee’s gotta say, “hell or high water”.

Josh: Yep.

Michael: “I’m not gonna quit this sucker no matter how difficult you make this for me because I want to learn what you know. Because until I know what you know, which means I can do what you know because you’ve done it, until I have that I’ll never quit this because that’s so important to me”.

Josh: But, Michael, that requires [inaudible] [43:40]

Michael: It’s not important to me just personally, it’s important to me impersonally because then I can teach that to my kids. Then I could teach that to women with three kids, but no father in the house. Then I can teach that in the inner city. Then I can teach that in Africa. Then I could teach that, you understand? So, called by something not just to make a little money like that, just drives me crazy when people talk to me like that.

Josh: So, you know, and sorry for interrupting you. I’m trying to get in there, I’m trying to time it and I can’t get it quite right here, but the average guy, gal, person, in this country on this planet in 2015 wants stuff handed to them on a silver platter. Wants to be able to come up with an idea on a napkin and have $25,000,000 in venture funding given to them for the next—

Michael: This generation is stupid.

Josh: Well, but—

Michael: And the next generation is stupid.

Josh: Exactly.

Michael: That’s stupid stuff.

Josh: Right, exactly.

Michael: Stupid stuff.

Josh: So—

Michael: Most venture capitalists will not invest in anybody listening to me right now.

Josh: Oh, sure.

Michael: You understand? They haven’t even gone through the trouble to relate to “their dream” I mean; this is a wrestling match. It’s hard work.

Josh: Well, my question is then, it’s hard work. Absolutely without a doubt you’ve got to work your backsides off to get anywhere and to really build something sustainable and scalable you’ve gotta work at it. So let’s, really quickly, turn to business plans. Not really the documents per say, but planning for the future of your business. How much planning is necessary and what do I need to do? Again, let’s take it back to the real estate investor or somebody in the business. I want to build a real estate business. I’m going to jump in and sit down and be focused. What do I need to do to plot my course and plot my path beyond the mentor?

Michael: The first thing, forget mentoring because mentoring is way down the line, the first thing they’ve gotta do is go into the dreaming room. You understand? For a long, long, long time we were coaching small business owners how to create “the franchise proto-type”. How to go to work on their business rather than in their business to produce a franchise proto-type so that that business is scalable. The purpose of that was first so the proto-type works, you understand? Because if the proto-type doesn’t work, like Mcdonald’s, if the proto-type didn’t work then the franchise wouldn’t either.

So in order for your business to work you’ve gotta turn-key it. You have to have a lead generation system, a lead conversion system, and a client fulfillment system. You’ve gotta have a management system and you have to have a financial management system. You’ve gotta have those five essential ingredients in order for you to get anywhere, but before you create those five essential ingredients you have to have a dream, you have to have a vision, you have to have a purpose and you have to have a mission. There’s gotta be a reason for doing what you’re doing, you understand?

First it’s the what and the why of it. So what do you want to do? Why do you want to do that? And for whom do you want to do that and why is that important? Because the only person important in all of this is your customer, not you. You understand? It’s not about you, it’s about them.

Josh: Absolutely.

Michael: Yeah. In fact, if it’s not about them and you don’t care about them then forget it.

Josh: Yeah. It’s funny—

Michael: Because all that is is greed. It’s stupid.

Josh: I’ve been, you know, we’re hiring. We’re constantly hiring and I was hiring for a graphic designer, somebody who can help us with our site and build out our collateral and things like that and one of the questions I like to ask for those people is: who is the most important person in the process? And almost all the other hires, interviewees, got it right and this guy just said, “well, it’s me,” and I’m like, “dude! It’s not you! It’s the customer! They are the most important person. They are all that matters. Everything else has to revolve around how to make sure your customers are the happiest, most successful, at whatever it is your service is and most satisfied. That’s it. That’s your mission,” if you can do that then you’ve built a business that kicks ass and if you’re going to hire somebody that’s going to come in and say, “yeah, I’m the most important person because I’m the guy with the brains and design,” whatever it is. Doesn’t matter what the job is. I mean, they, you know, they’re wrong and they’re not the right person to bring on board. They’re crazy!

Michael: You’re right. So it’s about them. It about them. It’s always about them, and in order for me to be really, really good at that I have to really know about them both demographically and psychographically. I have to know them and the last thing in the world I want to do is to pander to them.

So you’ll note when somebody’s selling something which isn’t authentic they’re actually pandering to the worst side of their customer. Merle never pandered to the worst side of me. Merle didn’t really care about the worst side of me. Merle was only interested in the part of me that wanted to become one of the best saxophone players in the world probably because I was called. Merle didn’t teach anybody other than those who are called. So it’s always called beyond how I am to become who I’m not and I want to know who they want to be, my customer, what is it that moves them to go beyond where they are to become who they’re not? Describe for me who you’re not. Describe for me who that is and who you desire to be and then I’ll be able to tell you whether I can help you or not. If what you want to be is insignificant meaning just getting by then I’m just not interested because it’s such a tedious, tiresome conversation because you’re not going to do the work you need to do even to get that if you’re interested in doing that!

Brandon: Sure. This is kind of, I guess, maybe this sounds like a random question, but do you still play saxophone? I’m curious of how that plays into it. Like, you went through the course, you went through training from a guy who was an expert, like, how did that play into your later on life and why didn’t you become a professional of that for the rest of your life? Why did you switch over to business?

Michael: Well, I didn’t switch over to business until much later.

Brandon: Okay. I guess that was 12 versus 40, yeah.

Michael: I switched over to becoming a sales person, I switched over to become a framer, I switched over to becoming a spirit-seeker, I switched over to become a poet, I switched over, switched over, switched over, switched over because I’m the wandering Jew. I mean, I’m looking for the—call it the Holy Grail. I’m looking for meaning in my life.

Brandon: Sure.

Michael: That’s what was driving me all the time. I’m looking for meaning in my life. So when I became really quite brilliant saxophone player, and I did very young, I began to play with small groups and as I began to play with small groups I began to turn off because the whole world of it was different than I imagined it was going to be. It was a competition and that competition was just ugly. So there’s a huge amount of ego in playing and my ego wasn’t strong enough, or my spirit wasn’t willing to, I don’t know which of the two that was, probably a bit of both. I just didn’t enjoy the world within which I’d found myself.

Brandon: Sure.

Michael: So I looked for another world and the reality is I had to make a living and so, you know, blah, blah, blah and it goes on and on and on. So all I’m saying is the realization that you’ve found yourself happens when you find yourself and it happens over time so it’s rarely something that somebody like this young guy who’s a wiz at finds himself at 18 and boom becomes a smashing success.

Brandon: Yep.

Michael: You understand? That is so rare a phenomenon for anybody to wish for that to happen is an idiot. Now, it does happen. Like Steve Jobs did create Apple. The Google boys did create Google. There is a Microsoft created by that charming little boy Bill Gates who was extraordinarily different and unique and special. So all I’m saying is to want that is to want that as a gift when in fact it’s an exercise. For the vast majority of us it’s an exercise and most people are unwilling to exercise to do the work.

Josh: Hey, Michael?

Michael: Yeah?

Josh: I was going to say, before we kind of move to the very end of the show here, I was just going to say, and I think you were kind of going in that direction, what one piece of advice then would you give to people who are looking to jump in and start something off? And I know this is—

Michael: Your vision, your purpose and your mission. That’s why—you know what I mean. I’ve got a product to sell and I’m selling it. If, in fact, it’s true that most likely all small businesses fail and they do, most relationships fail and they do, most marriages fail and they do, most jobs fail to satisfy anyone and they do then obviously there’s something wrong with the way that we’re doing it. So that’s why I created the dreaming room. To wake people up to the possibility that they can’t possibly see right now until they go through the process and that’s our commitment. That’s that first step.

The second step we called design, build, launch and grow. Design a practice, build it, launch it, and grow it. Replicate that practice to design a business which is nothing more than an aggregate of seven turn-key practices plus a management system and then replicate the business to create an enterprise which is nothing more than up to seven turn-key businesses plus a leadership system. So there’s a hierarchy of growth and we have mastered the process for doing that and that’s what we’re offering for anybody we speak to.

Brandon: That’s cool. So let me just ask about the dreaming room real quick. So I’m curious just big picture idea about the dream—I mean, are what you’re saying—you go to this… is it like a… you said this is an actual physical place, right? This isn’t like a—

Michael: It’s online.

Brandon: Okay. So it’s online.

Michael: Yeah, we do it on Zoom.

Brandon: I don’t know Zoom, is it like a video? How does that work?

Michael: We do it on Zoom. It’s like going to a meeting. We do it on Zoom and we have four different versions of it. The dreaming room can be one-to-one, one facilitator one participant, the dreaming room could be one-to-ten, that’s a small group dreaming room. The dreaming room could be one to up to a hundred, that’s a large group dreaming room. Or the dreaming room can be self-directed and that’s strictly online without a live facilitator. So there’s a way for everybody to do it.

So our intent was to be inclusive as opposed to exclusive. There are very few people who can afford to hire me. There are very few people I will ever work with, but a guy making $2 a day in Rwanda I want to be able to reach him and teach him and take him through the process. So we’ve organized it so that it’s inclusive rather than exclusive.

Brandon: Cool. Very cool. Alright, well let’s move on to the end of the show which we call our—

Famous Four:

Brandon: These are questions we ask every single guest when we come in and so we’re going to throw them at you real quick. I altered the first one a little bit because usually we ask what their favorite real estate book is, but I’m going to alter this a little bit to say what is the favorite book—do you have a favorite book that you’ve written personally? Of all the books, 18 you’ve written now, is there one that if people only read one book of yours it should be what?

Michael: The E-Myth Revisited.

Brandon: Okay.

Michael: Why Most Small Businesses Don’t Work and What To Do About It.

Brandon: There you go.

Michael: That’s the book.

Josh: There it is. What about your favorite business book? One that you haven’t written, just a business book that you’ve read?

Michael: A business book that I’ve read?

Josh: Just something that you’re not the author of that has impacted your life.

Michael: Best business book I’ve ever read?

Josh: Yep.

Michael: I read 40 years ago and that book was called Marketing for Business Growth by Theodore Levitt.

Josh: Hm. Okay.

Michael: Never read a more important business book than that book.

Brandon: I have to read that now.

Josh: I guess we gotta read it, yeah, there’s nothing else we can say about it.

Michael: It’s not been reprinted but you can find it online.

Brandon: Well, let me ask you this then: if you had to choose between somebody reading that book or The E-Myth Revisited?

Josh: Oh, boy.

Michael: Read that book first.

Brandon: Wow! It is a good book then, it must be. Alright.

Josh: Must be, yeah.

Brandon: I will have to read it now, alright.

Michael: It is a great book. It is the most intelligent business book I’ve ever read.

Josh: That’s great.

Michael: Ever.

Josh: Well, thank you.

Michael: Levitt taught this at Harvard.

Josh: Cool.

Michael: That’s not reason to read it because that would typically be the reason not to read it, but it is the most brilliant business book I’ve ever read and I don’t read business books anymore because most of them are stupid.

Josh: Sure. I give up that was it. That’s what we like to say about Brandon’s book.

Michael: So if they want to read me they can reach me at [email protected] or go to MichaelEGerberCompanies.com our website and you’ll find out more and more and more and more.

Josh: Hey, we’ve got two more quick ones for you, Michael. What are your hobbies? What do you do when you’re not businessing?

Michael: I don’t have any hobbies.

Brandon: Just work?

Michael: I read maybe 12 books a month.

Brandon: Wow.

Michael: So I relax reading and those books are either poetry or fiction.

Brandon: Okay.

Michael: I don’t read non-fiction books because they’re fiction. I’d rather read fiction that says it’s fiction than non-fiction that doesn’t.

Brandon: That’s funny.

Josh: Nice.

Brandon: Cool. Alright, my final question of the whole day and then we’ll get you out of here. If you could pick one trait that sets apart successful people from those who are not successful over all of the last, you know, since the last hundred years what is that trait that sets apart successful people from those who give up, fail?

Michael: Absolutely determined and determined to do one thing. So when I meet people who say, “well, I want to do this, I want to do this, I want to do this,” I already know it’s over. So they’re leading a life that lacks traction, it’s the shiny penny syndrome.

Brandon: Sure.

Michael: Something always looks better, something always looks better. I’ve been doing the same damn thing for 40 years. Once I found it I put everything of myself into it no matter how many mistakes I’ve made, and you’ve got to understand I have made every mistake every made by any human being on the face of this earth, but even worse. So when I say stupid you’ve gotta understand you’re talking to stupid, me, and my whole life has been about smart. Not smart clever, not smart tricky, smart smart. About one thing, and this one thing is making it on your own in America which will then become making it on your own in Japan and Canada and Australia and on and on and on because it’s the most critical ingredient that anybody can possibly learn and nobody teaches us how to do that. Nobody.

Josh: Yeah.

Brandon: Cool.

Josh: Right on. Well, Michael, how did we do? Was this just like all the other crappy podcasts out there?

Michael: No, you did fine. Probably because you just allowed me to ramble on, but two because you asked me smart questions.

Brandon: Well, good.

Michael: And I appreciate it and you’re here so oftentimes when I’m being interviewed I know they’re thinking about something else while they’re interviewing me so I’ve gotta beat them up a little bit when I do that so that’s probably what you’ve heard.

Josh: That’s great. Hey, well listen, thank you thank you so much. We really do appreciate it. Lots of really good insight and we really do thank you for your time and, again, the book’s really, really fantastic so much appreciated. You know, lots of good luck continuing to spread the mission!

Michael: Well, thank you. The dream, the vision, the purpose and the mission. I have a dream: transforming small business worldwide. I have a vision: to invent the McDonald’s of small business consulting. I have a purpose: that everyone I teach will succeed in business, and I have a mission: to invent the system so that even a novice can do it. The dream, the vision, the purpose, the mission and they’re with me deeply in everybody I speak to every single day.

Josh: Fantastic.

Brandon: Love it.

Josh: Michael, thank you so much.

Michael: Thanks guys!

Brandon: Thank you.

Josh: Alright, guys, that was Michael Gerber author of The E-Myth with some sage wisdom, lots of cool information and if you have not yet read the book we definitely recommend you check it out.

Brandon: You should. We didn’t even hardly talk, although, we didn’t talk a lot about—cause this is a 30 year old book, right? So we talked about a lot of the newer stuff, but honestly if you have not yet read The E-Myth Revisited I’d pick up that one. They have The E-Myth then The E-Myth Revisited. Pick up a copy of The E-Myth Revisited. You can get it for 99 cents used on Amazon or buy it new whatever. Seriously it’ll change your life. It changed mine.

Josh: That’s great. Awesome, and we’ve got a link to that on the show notes on BiggerPockets.com/show125.

Brandon: There you go.

Josh: With that, big thanks to Michael once again and otherwise, guys, thanks for being a part of our world, thanks for listening. Be sure to join us on BiggerPockets.com so you can interact with other successful business owners, other folks in real estate, you can find mentors and folks in your area. Local, successful people not just the get-rich-quick gurus, but the actual people whose feet are on the ground making things happen those are the people you want to link up with. Those are the people that you want to apprentice you if that’s a word or verb or whatever it is, you know, those are the masters that you want to connect with and work with. So jump on BiggerPockets.com and you can meet them, you can connect with them and you can make that happen. So, with that, I am Josh Dorkin signing off.

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