The 4-Hour Workweek

 🎀 Highlights

Whenever you find yourself on the side of the majority, it is time to pause and reflect. —MARK TWAIN

What is the pot of gold that justifies spending the best years of your life hoping for happiness in the last?

Here is the step-by-step process you’ll use to reinvent yourself: D  for Definition turns misguided common sense upside down and introduces the rules and objectives of the new game. It replaces self-defeating assumptions and explains concepts such as relative wealth and eustress.1 Who are the NR and how do they operate? This section explains the overall lifestyle design recipe—the fundamentals—before we add the three ingredients. E  for Elimination kills the obsolete notion of time management once and for all. It shows exactly how I used the words of an often-forgotten Italian economist to turn 12-hour days into two-hour days … in 48 hours. Increase your per-hour results ten times or more with counterintuitive NR techniques for cultivating selective ignorance, developing a low-information diet, and otherwise ignoring the unimportant. This section provides the first of the three luxury lifestyle design ingredients: time. A  for Automation puts cash flow on autopilot using geographic arbitrage, outsourcing, and rules of nondecision. From bracketing to the routines of ultrasuccessful NR, it’s all here. This section provides the second ingredient of luxury lifestyle design: income. L  for Liberation is the mobile manifesto for the globally inclined. The concept of mini-retirements is introduced, as are the means for flawless remote control and escaping the boss. Liberation is not about cheap travel; it is about forever breaking the bonds that confine you to a single location. This section delivers the third and final ingredient for luxury lifestyle design: mobility.

D: To work for yourself. NR: To have others work for you.     D: To work when you want to. NR: To prevent work for work’s sake, and to do the minimum necessary for maximum effect (“minimum effective load”).     D: To retire early or young. NR: To distribute recovery periods and adventures (mini-retirements) throughout life on a regular basis and recognize that inactivity is not the goal. Doing that which excites you is.     D: To buy all the things you want to have. NR: To do all the things you want to do, and be all the things you want to be. If this includes some tools and gadgets, so be it, but they are either means to an end or bonuses, not the focus.     D: To be the boss instead of the employee; to be in charge. NR: To be neither the boss nor the employee, but the owner. To own the trains and have someone else ensure they run on time.     D: To make a ton of money. NR: To make a ton of money with specific reasons and defined dreams to chase, timelines and steps included. What are you working for?     D: To have more. NR: To have more quality and less clutter. To have huge financial reserves but recognize that most material wants are justifications for spending time on the things that don’t really matter, including buying things and preparing to buy things. You spent two weeks negotiating your new Infiniti with the dealership and got $10,000 off? That’s great. Does your life have a purpose? Are you contributing anything useful to this world, or just shuffling papers, banging on a keyboard, and coming home to a drunken existence on the weekends?     D: To reach the big pay-off, whether IPO, acquisition, retirement, or other pot of gold. NR: To think big but ensure payday comes every day: cash flow first, big payday second.     D: To have freedom from doing that which you dislike. NR: To have freedom from doing that which you dislike, but also the freedom and resolve to pursue your dreams without reverting to work for work’s sake (W4W). After years of repetitive

Money is multiplied in practical value depending on the number of W’s you control in your life: what you do, when you do it, where you do it, and with whom you do it. I call this the “freedom multiplier.”

So, Who Are the NR? The employee who rearranges his schedule and negotiates a remote work agreement to achieve 90% of the results in one-tenth of the time, which frees him to practice cross-country skiing and take road trips with his family two weeks per month. The business owner who eliminates the least profitable customers and projects, outsources all operations entirely, and travels the world collecting rare documents, all while working remotely on a website to showcase her own illustration work.

1. Retirement Is Worst-Case-Scenario Insurance. Retirement planning is like life insurance. It should be viewed as nothing more than a hedge against the absolute worst-case scenario: in this case, becoming physically incapable of working and needing a reservoir of capital to survive. Retirement as a goal or final redemption is flawed for at least three solid reasons: It is predicated on the assumption that you dislike what you are doing during the most physically capable years of your life. This is a nonstarter—nothing can justify that sacrifice. Most people will never be able to retire and maintain even a hotdogs-for-dinner standard of living. Even one million is chump change in a world where traditional retirement could span 30 years and inflation lowers your purchasing power 2–4% per year. The math doesn’t work.3The golden years become lower-middle-class life revisited. That’s a bittersweet ending. If the math does work, it means that you are one ambitious, hardworking machine. If that’s the case, guess what? One week into retirement, you’ll be so damn bored that you’ll want to stick bicycle spokes in your eyes. You’ll probably opt to look for a new job or start another company. Kinda defeats the purpose of waiting, doesn’t it? I’m not saying don’t plan for the worst case—I have maxed out 401(k)s and IRAs I use primarily for tax purposes—but don’t mistake retirement for the goal. 2. Interest and Energy Are Cyclical. If I offered you $10,000,000 to work 24 hours a day for 15 years and then retire, would you do it? Of course not—you couldn’t. It is unsustainable, just as what most define as a career: doing the same thing for 8+ hours per day until you break down or have enough cash to permanently stop. How else can my 30-year-old friends all look like a cross between Donald Trump and Joan Rivers? It’s horrendous—premature aging fueled by triple bypass frappuccinos and impossible workloads. Alternating periods of activity and rest is necessary to survive, let alone

1. Retirement Is Worst-Case-Scenario Insurance. Retirement planning is like life insurance. It should be viewed as nothing more than a hedge against the absolute worst-case scenario: in this case, becoming physically incapable of working and needing a reservoir of capital to survive. Retirement as a goal or final redemption is flawed for at least three solid reasons: It is predicated on the assumption that you dislike what you are doing during the most physically capable years of your life. This is a nonstarter—nothing can justify that sacrifice. Most people will never be able to retire and maintain even a hotdogs-for-dinner standard of living. Even one million is chump change in a world where traditional retirement could span 30 years and inflation lowers your purchasing power 2–4% per year. The math doesn’t work.3The golden years become lower-middle-class life revisited. That’s a bittersweet ending. If the math does work, it means that you are one ambitious, hardworking machine. If that’s the case, guess what? One week into retirement, you’ll be so damn bored that you’ll want to stick bicycle spokes in your eyes. You’ll probably opt to look for a new job or start another company. Kinda defeats the purpose of waiting, doesn’t it? I’m not saying don’t plan for the worst case—I have maxed out 401(k)s and IRAs I use primarily for tax purposes—but

1. Retirement Is Worst-Case-Scenario Insurance. Retirement planning is like life insurance. It should be viewed as nothing more than a hedge against the absolute worst-case scenario: in this case, becoming physically incapable of working and needing a reservoir of capital to survive. Retirement as a goal or final redemption is flawed for at least three solid reasons: It is predicated on the assumption that you dislike what you are doing during the most physically capable years of your life. This is a nonstarter—nothing can justify that sacrifice. Most people will never be able to retire and maintain even a hotdogs-for-dinner standard of living. Even one million is chump change in a world where traditional retirement could span 30 years and inflation lowers your purchasing power 2–4% per year. The math doesn’t work.3The golden years become lower-middle-class life revisited. That’s a bittersweet ending. If the math does work, it means that you are one ambitious, hardworking machine. If that’s the case, guess what? One week into retirement, you’ll be so damn bored that you’ll want to stick bicycle spokes in your eyes. You’ll probably opt to look for a new job or start another company. Kinda defeats the purpose of waiting, doesn’t it? I’m not saying don’t plan for the worst case—I have maxed out 401(k)s and IRAs I use primarily for tax purposes—but don’t mistake retirement for the goal.

Plan accordingly. The NR aims to distribute “mini-retirements” throughout life instead of hoarding the recovery and enjoyment for the fool’s gold of retirement. By working only when you are most effective, life is both more productive and more enjoyable. It’s the perfect example of having your cake and eating it, too. Personally, I now aim for one month of overseas relocation or high-intensity learning (tango, fighting, whatever) for every two months of work projects.

The NR aims to distribute “mini-retirements” throughout life instead of hoarding the recovery and enjoyment for the fool’s gold of retirement. By working only when you are most effective, life is both more productive and more enjoyable. It’s the perfect example of having your cake and eating it, too. Personally, I now aim for one month of overseas relocation or high-intensity learning (tango, fighting, whatever) for every two months of work projects.

Focus on being productive instead of busy.

Role models who push us to exceed our limits, physical training that removes our spare tires, and risks that expand our sphere of comfortable action are all examples of eustress—stress that is healthful and the stimulus for growth.

Role models who push us to exceed our limits, physical training that removes our spare tires, and risks that expand our sphere of comfortable action are all examples of eustress—stress that is healthful and the stimulus for growth. People who avoid all criticism fail. It’s destructive criticism we need to avoid, not criticism in all forms. Similarly, there is no progress without eustress, and the more eustress we can create or apply to our lives, the sooner we can actualize our dreams.

Most intelligent people in the world dress it up as something else: optimistic denial.

Fear comes in many forms, and we usually don’t call it by its four-letter name. Fear itself is quite fear-inducing. Most intelligent people in the world dress it up as something else: optimistic denial.

Fear comes in many forms, and we usually don’t call it by its four-letter name. Fear itself is quite fear-inducing. Most intelligent people in the world dress it up as something else: optimistic denial. Most who avoid quitting their jobs entertain the thought that their course will improve with time or increases in income. This seems valid and is a tempting hallucination when a job is boring or uninspiring instead of pure hell. Pure hell forces action, but anything less can be endured with enough clever rationalization. Do you really think it will improve or is it wishful thinking and an excuse for inaction? If you were confident in improvement, would you really be questioning things so? Generally not. This is fear of the unknown disguised as optimism. Are

Fear comes in many forms, and we usually don’t call it by its four-letter name. Fear itself is quite fear-inducing. Most intelligent people in the world dress it up as something else: optimistic denial. Most who avoid quitting their jobs entertain the thought that their course will improve with time or increases in income. This seems valid and is a tempting hallucination when a job is boring or uninspiring instead of pure hell. Pure hell forces action, but anything less can be endured with enough clever rationalization. Do you really think it will improve or is it wishful thinking and an excuse for inaction? If you were confident in improvement, would you really be questioning things so? Generally not.

Fear comes in many forms, and we usually don’t call it by its four-letter name. Fear itself is quite fear-inducing. Most intelligent people in the world dress it up as something else: optimistic denial. Most who avoid quitting their jobs entertain the thought that their course will improve with time or increases in income. This seems valid and is a tempting hallucination when a job is boring or uninspiring instead of pure hell. Pure hell forces action, but anything less can be endured with enough clever rationalization. Do you really think it will improve or is it wishful thinking and an excuse for inaction? If you were confident in improvement, would you really be questioning things so? Generally not. This is fear of the unknown disguised as optimism.

The luxury I advocate has nothing to do with money. It cannot be bought. It is the reward of those who have no fear of discomfort.

What we fear doing most is usually what we most need to do.

What we fear doing most is usually what we most need to do. As I have heard said, a person’s success in life can usually be measured by the number of uncomfortable conversations he or she is willing to have. Resolve to do one thing every day that you fear. I got into this habit by attempting to contact celebrities and famous businesspeople for advice.

Don’t only evaluate the potential downside of action. It is equally important to measure the atrocious cost of inaction. If you don’t pursue those things that excite you, where will you be in one year, five years, and ten years?

Measure the cost of inaction, realize the unlikelihood and re-pairability of most missteps, and develop the most important habit of those who excel and enjoy doing so: action.

“Would you tell me, please, which way I ought to go from here?” “That depends a good deal on where you want to get to,” said the Cat. “I don’t much care where …” said Alice. “Then it doesn’t matter which way you go,” said the Cat. —LEWIS CARROLL, Alice in Wonderland

It’s lonely at the top. Ninety-nine percent of people in the world are convinced they are incapable of achieving great things, so they aim for the mediocre. The level of competition is thus fiercest for “realistic” goals, paradoxically making them the most time-and energy-consuming. It is easier to raise $1,000,000 than it is $100,000.

It’s lonely at the top. Ninety-nine percent of people in the world are convinced they are incapable of achieving great things, so they aim for the mediocre. The level of competition is thus fiercest for “realistic” goals, paradoxically making them the most time-and energy-consuming. It is easier to raise $1,000,000 than it is $100,000. It is easier to pick up the one perfect 10 in the bar than the five 8s.

If you are insecure, guess what? The rest of the world is, too. Do not overestimate the competition and underestimate yourself. You are better than you think.

Doing the Unrealistic Is Easier Than Doing the Realistic

Having an unusually large goal is an adrenaline infusion that provides the endurance to overcome the inevitable trials and tribulations that go along with any goal. Realistic goals, goals restricted to the average ambition level, are uninspiring

Excitement is the more practical synonym for happiness, and it is precisely what you should strive to chase. It is the cure-all.

Excitement is the more practical synonym for happiness, and it is precisely what you should strive to chase. It is the cure-all. When people suggest you follow your “passion” or your “bliss,” I propose that they are, in fact, referring to the same singular concept: excitement.

The question you should be asking isn’t, “What do I want?” or “What are my goals?” but “What would excite me?”

Living like a millionaire requires doing interesting things and not just owning enviable things.

“I believe that success can be measured in the number of uncomfortable conversations you’re willing to have. I felt that if I could help students overcome the fear of rejection with cold-calling and cold e-mail, it would serve them forever,” Ferriss said.

participate in this contest every day,” said Ferriss. “I do what I always do: find a personal e-mail if possible, often through their little-known personal blogs, send a two- to three-paragraph e-mail which explains that I am familiar with their work, and ask one simple-to-answer but thought-provoking question in that e-mail related to their work or life philosophies. The goal is to start a dialogue so they take the time to answer future e-mails—not to ask for help. That can only come after at least three or four genuine e-mail exchanges.”

“I participate in this contest every day,” said Ferriss. “I do what I always do: find a personal e-mail if possible, often through their little-known personal blogs, send a two- to three-paragraph e-mail which explains that I am familiar with their work, and ask one simple-to-answer but thought-provoking question in that e-mail related to their work or life philosophies. The goal is to start a dialogue so they take the time to answer future e-mails—not to ask for help. That can only come after at least three or four genuine e-mail exchanges.”

‘Ever tried. Ever failed. No matter. Try again. Fail again. Fail better.’ You won’t believe what you can accomplish by attempting

‘Ever tried. Ever failed. No matter. Try again. Fail again. Fail better.’ You won’t believe what you can accomplish by attempting the impossible with the courage to repeatedly fail better.”

Being busy is most often used as a guise for avoiding the few critically important but uncomfortable actions.

I did this once via phone and once through e-mail. So what happened? I lost one customer, but the other corrected course and simply faxed orders, again and again

80% of the consequences flow from 20% of the causes. 80% of the results come from 20% of the effort and time. 80% of company profits come from 20% of the products and customers. 80% of all stock market gains are realized by 20% of the investors and 20% of an individual portfolio.

Being busy is a form of laziness—lazy thinking and indiscriminate action.

Being selective—doing less—is the path of the productive. Focus on the important few and ignore the rest.

There are two synergistic approaches for increasing productivity that are inversions of each other: Limit tasks to the important to shorten work time (80/20). Shorten work time to limit tasks to the important (Parkinson’s Law).

If you haven’t identified the mission-critical tasks and set aggressive start and end times for their completion, the unimportant becomes the important. Even if you know what’s critical, without deadlines that create focus, the minor tasks forced upon you (or invented, in the case of the entrepreneur) will swell to consume time until another bit of minutiae jumps in to replace it, leaving you at the end of the day with nothing accomplished.

If you prioritize properly, there is no need to multitask. It is a symptom of “task creep”—doing more to feel productive while actually accomplishing less. As stated, you should have, at most, two primary goals or tasks per day. Do them separately from start to finish without distraction. Divided attention will result in more frequent interruptions, lapses in concentration, poorer net results, and less gratification.

Use Parkinson’s Law to accomplish more in less time. Shorten schedules and deadlines to necessitate focused action instead of deliberation and procrastination.

On a weekly and daily macro level, attempt to take Monday and/or Friday off, as well as leave work at 4 P.M. This will focus you to prioritize more effectively and quite possibly develop a social life.

What information consumes is rather obvious: it consumes the attention of its recipients. Hence, a wealth of information creates a poverty of attention and a need to allocate that attention efficiently among the overabundance of information sources that might

What information consumes is rather obvious: it consumes the attention of its recipients. Hence, a wealth of information creates a poverty of attention and a need to allocate that attention efficiently among the overabundance of information sources that might consume it. —HERBERT SIMON, recipient of Nobel Memorial

What information consumes is rather obvious: it consumes the attention of its recipients. Hence, a wealth of information creates a poverty of attention and a need to allocate that attention efficiently among the overabundance of information sources that might consume it. —HERBERT SIMON, recipient of Nobel Memorial Prize in Economics8 and the A.M. Turing Award, the “Nobel Prize of Computer Science”

Reading, after a certain age, diverts the mind too much from its creative pursuits. Any man who reads too much and uses his own brain too little falls into lazy habits of thinking. —ALBERT EINSTEIN

“Tell me, what’s new in the world?” And, if it’s that important, you’ll hear people talking about it. Using my crib notes approach to world affairs, I also retain more than someone who loses the forest for the trees in a sea of extraneous details.

I used to have the habit of reading a book or site to prepare for an event weeks or months in the future, and I would then need to reread the same material when the deadline for action was closer. This is stupid and redundant. Follow your to-do short list and fill in the information gaps as you go.

Do I need to be an Ivy League graduate? Nope. Most of the role models in this book didn’t go to the Harvards of the world, and some are dropouts. Top academic institutions are wonderful, but there are unrecognized benefits to not coming out of one. Grads from top schools are funneled into high-income 80-hour-per-week jobs, and 15–30 years of soul-crushing work has been accepted as the default path.

The New Rich (NR) are those who abandon the deferred-life plan and create luxury lifestyles in the present using the currency of the New Rich: time and mobility. This is an art and a science we will refer to as Lifestyle Design (LD). I’ve spent the last three years traveling

The New Rich (NR) are those who abandon the deferred-life plan and create luxury lifestyles in the present using the currency of the New Rich: time and mobility. This is an art and a science we will refer to as Lifestyle Design (LD).

What makes this book different? First, I’m not going to spend much time on the problem. I’m going to assume you are suffering from time famine, creeping dread, or—worst case—a tolerable and comfortable existence doing something unfulfilling. The last is most common and most insidious. Second, this book is not about saving and will not recommend you abandon your daily glass of red wine for a million dollars 50 years from now. I’d rather have the wine. I won’t ask you to choose between enjoyment today or money later. I believe you can have both now. The goal is fun and profit. Third, this book is not about finding your “dream job.” I will take as a given that, for most people, somewhere between six and seven billion of them, the perfect job is the one that takes the least time. The vast majority of people will never find a job that can be an unending source of fulfillment, so that is not the goal here; to free time and automate income is.

An expert is a person who has made all the mistakes that can be made in a very narrow field. —NIELS BOHR, Danish physicist and Nobel Prize winner

The first principle is that you must not fool yourself, and you are the easiest person to fool. —RICHARD P. FEYNMAN, Nobel Prize–winning physicist

can’t give you a surefire formula for success, but I can give you a formula for failure: try to please everybody all the time. —HERBERT BAYARD SWOPE, American editor and journalist; first recipient of the Pulitzer Prize

I can’t give you a surefire formula for success, but I can give you a formula for failure: try to please everybody all the time. —HERBERT BAYARD SWOPE, American editor and journalist; first recipient of the Pulitzer Prize

It is far more lucrative and fun to leverage your strengths instead of attempting to fix all the chinks in your armor. The choice is between multiplication of results using strengths or incremental improvement fixing weaknesses that will, at best, become mediocre. Focus on better use of your best weapons instead of constant repair.

As soon as I cut through the vague unease and ambiguous anxiety by defining my nightmare, the worst-case scenario, I wasn’t as worried about taking a trip. Suddenly, I started thinking of simple steps I could take

As soon as I cut through the vague unease and ambiguous anxiety by defining my nightmare, the worst-case scenario, I wasn’t as worried about taking a trip. Suddenly, I started thinking of simple steps I could take to salvage my remaining resources and get back on track if all hell struck at once.

This is how most people work until death: “I’ll just work until I have X dollars and then do what I want.” If you don’t define the “what I want” alternate activities, the X figure will increase indefinitely to avoid the fear-inducing uncertainty of this void.

Pareto’s Law can be summarized as follows: 80% of the outputs result from 20% of the inputs.

more customers is not automatically more income. More customers is not the goal and often translates into 90% more housekeeping and a paltry 1–3% increase in income.

Parkinson’s Law dictates that a task will swell in (perceived) importance and complexity in relation to the time allotted for its completion. It is the magic of the imminent deadline. If I give you 24 hours to complete a project, the time pressure forces you to focus on execution, and you have no choice but to do only the bare essentials. If I give you a week to complete the same task, it’s six days of making a mountain out of a molehill. If I give you two months, God forbid, it becomes a mental monster. The end product of the shorter deadline is almost inevitably of equal or higher quality due to greater focus.

without fail. At least three times per day at scheduled times, he had to ask himself the following question: Am I being productive or just active? Charney captured the essence of this with less-abstract wording: Am I inventing things to do to avoid the important? He eliminated all of the activities he used as crutches and began to focus on demonstrating results instead of showing dedication. Dedication is often just meaningless work in disguise. Be ruthless and cut the fat.

We create stress for ourselves because you feel like you have to do it. You have to. I don’t feel that anymore. —OPRAH WINFREY, actress and talk-show host, The Oprah Winfrey Show

Perfection is not when there is no more to add, but no more to take away. —ANTOINE DE SAINT-EXUPÉRY, pioneer of international postal flight and author of Le Petit Prince (The Little Prince)

Simplicity requires ruthlessness. If you had to stop ⅘ of time-consuming activities—e-mail,

Simplicity requires ruthlessness. If you had to stop ⅘ of time-consuming activities—e-mail, phone calls, conversations, paperwork, meetings, advertising, customers, suppliers, products, services, etc.—what would you eliminate to keep the negative effect on income to a minimum?

What are the top-three activities that I use to fill time to feel as though I’ve been productive?These are usually used to postpone more important actions (often uncomfortable because there is a chance of failure or rejection).

There is an inescapable setup time for all tasks, large or minuscule in scale. It is often the same for one as it is for a hundred. There is a psychological switching of gears that can require up to 45 minutes to resume a major task that has been interrupted.

For the employee, the goal is to have full access to necessary information and as much independent decision-making ability as possible. For the entrepreneur, the goal is to grant as much information and independent decision-making ability to employees or contractors as possible.

It’s amazing how someone’s IQ seems to double as soon as you give them responsibility and indicate that you trust them.

Realize that bosses are supervisors, not slave masters. Establish yourself as a consistent challenger of the status quo and most people will learn to avoid challenging you, particularly if it is in the interest of higher per-hour productivity.

Replace the habit of “How are you?” with “How can I help you?” Get specific and remember—no stories. Focus on immediate actions. Set and practice interruption-killing policies.

ruminate,

Fun things happen when you earn dollars, live on pesos, and compensate in rupees, but that’s just the beginning.

Note that I asked him to respond if he didn’t understand or had questions. This is the wrong approach. Ask foreign VAs to rephrase tasks to confirm understanding before getting

Note that I asked him to respond if he didn’t understand or had questions. This is the wrong approach. Ask foreign VAs to rephrase tasks to confirm understanding before getting started.

call the Criticism Sandwich with someone. It’s called the Criticism

It’s called the Criticism

It’s called the Criticism Sandwich because you first praise the person for something, then deliver the criticism, and then close with topic-shifting praise to exit the sensitive topic. Here’s an example with a superior or boss, with keywords and phrases in italics.

It works like this: Reseller A sells the product for your recommended advertised price of $50, then reseller B sells it for $45 to compete with A, and then C sells it for $40 to compete with A and B. In no time at all, no one is making profit from selling your product and reorders disappear.

It works like this: Reseller A sells the product for your recommended advertised price of $50, then reseller B sells it for $45 to compete with A, and then C sells it for $40 to compete with A and B. In no time at all, no one is making profit from selling your product and reorders disappear. Customers are now accustomed to the lower pricing and the process is irreversible. The product is dead and you need to create a new product.

It works like this: Reseller A sells the product for your recommended advertised price of $50, then reseller B sells it for $45 to compete with A, and then C sells it for $40 to compete with A and B. In no time at all, no one is making profit from selling your product and reorders disappear. Customers are now accustomed to the lower pricing and the process is irreversible. The product is dead and you need to create a new product. This is precisely the reason why so many companies need to create new product after new product month after month. It’s a headache.

Second, if you offer someone exclusivity, which most manufacturers try to avoid, it can work in your favor. Since you are offering one company 100% of the distribution, it is possible to negotiate better profit margins (offering less of a discount off of retail price), better marketing support in-store, faster payment, and other preferential treatment.

Creating demand is hard. Filling demand is much easier. Don’t create a product, then seek someone to sell it to. Find a market—define your customers—then find or develop a product for them.

Be a member of your target market and don’t speculate what others need or will be willing to buy.

It is said that if everyone is your customer, then no one is your customer.

Besides perceived value, there are three main benefits to creating a premium, high-end image and charging more than the competition.

Besides perceived value, there are three main benefits to creating a premium, high-end image and charging more than the competition. Higher pricing means that we can sell fewer units—and thus manage fewer customers—and fulfill our dreamlines. It’s faster.

Besides perceived value, there are three main benefits to creating a premium, high-end image and charging more than the competition. Higher pricing means that we can sell fewer units—and thus manage fewer customers—and fulfill our dreamlines. It’s faster. Higher pricing attracts lower-maintenance customers (better credit, fewer complaints/questions, fewer returns, etc.). It’s less headache. This is HUGE.

Besides perceived value, there are three main benefits to creating a premium, high-end image and charging more than the competition. Higher pricing means that we can sell fewer units—and thus manage fewer customers—and fulfill our dreamlines. It’s faster. Higher pricing attracts lower-maintenance customers (better credit, fewer complaints/questions, fewer returns, etc.). It’s less headache. This is HUGE. Higher pricing also creates higher profit margins. It’s safer. I personally aim for an 8–10x markup, which means a $100 product can’t cost me more than $10–12.50.27 If I had used the commonly recommended 5 x markup with BrainQUICKEN, it would have gone bankrupt within 6 months due to a dishonest supplier and late magazine. The profit margin saved it, and within

Besides perceived value, there are three main benefits to creating a premium, high-end image and charging more than the competition. Higher pricing means that we can sell fewer units—and thus manage fewer customers—and fulfill our dreamlines. It’s faster. Higher pricing attracts lower-maintenance customers (better credit, fewer complaints/questions, fewer returns, etc.). It’s less headache. This is HUGE. Higher pricing also creates higher profit margins. It’s safer. I personally aim for an 8–10x markup, which means a $100 product can’t cost me more than $10–12.50.27 If I had used the commonly recommended 5 x markup with BrainQUICKEN, it would have gone bankrupt within 6 months due to a dishonest supplier and late magazine. The profit margin saved it, and within 12 months it was generating up to $80,000 per month.

I have found that a price range of $50–200 per sale provides the most profit for the least customer service hassle. Price high

I have found that a price range of $50–200 per sale provides the most profit for the least customer service hassle. Price high and then justify.

It Should Take No More Than 3 to 4 Weeks to Manufacture.

It Should Take No More Than 3 to 4 Weeks to Manufacture. This is critically important for keeping costs low and adapting to sales demand without stockpiling product in advance.

It Should Be Fully Explainable in a Good Online FAQ.

Purchasing an existing product at wholesale and reselling it is the easiest route but also the least profitable. It is the fastest to set up but the fastest to die off due to price competition with other resellers. The profitable life span of each product is short unless an exclusivity agreement prevents others from selling it. Reselling is, however, an excellent option for secondary back-end28 products that can be sold to existing customers or cross-sold29 to new customers online or on the phone.

I not only use all the brains that I have, but all that I can borrow. —WOODROW WILSON

First and foremost, there is a difference between being perceived as an expert and being one. In the context of business, the former is what sells product and the latter, relative to your “minimal customer base,” is what creates good products and prevents returns.

Micro-testing involves using inexpensive advertisements to test consumer response to a product prior to manufacturing.

Notice that these ads can be used to test not just headlines but guarantees, product names, and domain names. It’s as simple as creating several ads, rotated automatically by Google, that are identical except for the one variable to be tested. How do you think I determined the best title for this book?

Our goal isn’t to create a business that is as large as possible, but rather a business that bothers us as little as possible.

How do you factor in advertising cost? If a $1,000 ad or $1,000 in PPC produces 50 sales, my advertising cost per order (CPO) is

How do you factor in advertising cost? If a $1,000 ad or $1,000 in PPC produces 50 sales, my advertising cost per order (CPO) is $20.

The more options you offer the customer, the more indecision you create and the fewer orders you receive—it is a disservice all around. Furthermore, the more options you offer the customer, the more manufacturing and customer service burden you create for yourself.

The art of “undecision” refers to minimizing the number of decisions your customers can or need to make. Here are a few methods that I and other NR have used to reduce service overhead 20–80%: Offer one or two purchase options (“basic” and “premium,” for example) and no more. Do not offer multiple shipping options. Offer one fast method instead and charge a premium.

The art of “undecision” refers to minimizing the number of decisions your customers can or need to make. Here are a few methods that I and other NR have used to reduce service overhead 20–80%: Offer one or two purchase options (“basic” and “premium,” for example) and no more. Do not offer multiple shipping options. Offer one fast method instead and charge a premium. Do not offer overnight or expedited shipping (it is possible to refer them to a reseller who does, as is true with all of these points), as these shipping methods will produce hundreds of anxious phone calls. Eliminate phone orders completely and direct all prospects to online ordering. This seems outrageous until you realize that success stories like Amazon.com have depended on it as a fundamental cost-saver to survive and thrive. Do not offer international shipments. Spending 10 minutes per order filling out customs forms and then dealing with customer complaints when the product costs 20–100% more with tariffs and duties is about as fun as headbutting a curb. It’s about as profitable, too. Some of these policies hint at what is perhaps the biggest time-saver of all: customer filtering.

Offer low-priced products (à la MRI’s NO2 book) instead of free products to capture contact information for follow-up sales. Offering something for free is the best way to attract time-eaters and spend money on those unwilling to return the favor.

The 30-day money-back guarantee is dead. It just doesn’t have the pizzazz it once did. If a product doesn’t work, I’ve been lied to and will have to spend an afternoon at the post office to return it. This costs me more than just the price I paid for the product, both in time and actual postage. Risk elimination just isn’t enough. This is where we enter the neglected realm of lose-win guarantees and risk reversal.

Delivered in 30 minutes or less or it’s free!(Domino’s Pizza built its business on this guarantee.) We’re so confident you’ll like CIALIS, if you don’t we’ll pay for the brand of your choice.(The “CIALIS® Promise Program” offers a free sample of CIALIS and then offers to pay for competing products if CIALIS doesn’t live up to the hype.) If your car is stolen, we’ll pay $500 of your insurance deductible.(This guarantee helped THE CLUB become the #1-selling mechanical automobile anti-theft device in the world.) 110% guaranteed to work within 60 minutes of the first dose.(This was for BodyQUICK and a first among sports nutrition products. I offered to not only refund customers the price of the product if it didn’t work within 60 minutes of the first dose, but also to send them a check for 10% more.)

1. Don’t be the CEO or founder.Being the “CEO” or “Founder” screams start-up. Give yourself the mid-level title of “vice president” (VP), “director,” or something similar that can be added to depending on the occasion (Director of Sales, Director of Business Development, etc.). For negotiation purposes as well, remember that it is best not to appear to be the ultimate decision-maker.

1. Don’t be the CEO or founder.Being the “CEO” or “Founder” screams start-up. Give yourself the mid-level title of “vice president” (VP), “director,” or something similar that can be added to depending on the occasion (Director of Sales, Director of Business Development, etc.). For negotiation purposes as well, remember that it is best not to appear to be the ultimate decision-maker. 2. Put multiple e-mail and phone contacts on the website.Put various e-mail addresses on the “contact us” page for different departments, such as “human resources,” “sales,” “general inquiries,” “wholesale distribution,” “media/PR,” “investors,” “web comments,” “order status,” and so on. In the beginning, these will all forward to your e-mail address. In Phase III, most will forward to the appropriate outsourcers. Multiple toll-free numbers can be used in the same fashion.

3. Set up an Interactive Voice Response (IVR) remote receptionist.It is possible to sound like a blue chip for less than $30. In fewer than ten minutes on a site such as www.angel.com, which boasts clients such as Reebok and Kellog’s, it is possible to set up an 800 number that greets callers with a voice prompt such as, “Thank you for calling [business name]. Please say the name of the person or department you would like to reach or just hold on for a list of options.” Upon speaking your name or selecting the appropriate department, the caller is forwarded to your preferred phone or the appropriate outsourcer—with on-hold music and all. 4. Do not provide home addresses.

3. Set up an Interactive Voice Response (IVR) remote receptionist.It is possible to sound like a blue chip for less than $30. In fewer than ten minutes on a site such as www.angel.com, which boasts clients such as Reebok and Kellog’s, it is possible to set up an 800 number that greets callers with a voice prompt such as, “Thank you for calling [business name]. Please say the name of the person or department you would like to reach or just hold on for a list of options.” Upon speaking your name or selecting the appropriate department, the caller is forwarded to your preferred phone or the appropriate outsourcer—with on-hold music and all.

It is far better for a man to go wrong infreedom than to go right in chains.

working faithfully eight hours a day, you may eventually get to be a boss and work twelve hours a day. —ROBERT FROST, American poet and winner of four Pulitzer Prizes

By working faithfully eight hours a day, you may eventually get to be a boss and work twelve hours a day. —ROBERT FROST, American poet and winner of four Pulitzer Prizes

Step 1: Increase Investment First, he speaks with his boss on July 12 about additional training that might be available to employees. He proposes having the company pay for a four-week industrial design class to help him better interface with clients, being sure to mention the benefit to the boss and business (i.e., he’ll decrease intradepartmental back-and-forth and increase both client results and billable time). Sherwood wants the company to invest as much as possible in him so that the loss is greater if he quits. Step 2: Prove Increased Output Offsite Second, he calls in sick the next Tuesday and Wednesday, July 18 and 19, to showcase his remote working productivity.60 He decides to call in sick between Tuesday and Thursday for two reasons: It looks less like a lie for a three-day weekend and it also enables him to see how well he functions in social isolation without the imminent reprieve of the weekend. He ensures that he doubles his work output on both days, leaves an e-mail trail of some sort for his boss to notice, and keeps quantifiable records of what he accomplished for reference during later negotiations. Since he uses expensive CAD software that is only licensed on his office desktop, Sherwood installs a free trial of GoToMyPC remote access software so that he can pilot his office computer from home.

Step 1: Increase Investment First, he speaks with his boss on July 12 about additional training that might be available to employees. He proposes having the company pay for a four-week industrial design class to help him better interface with clients, being sure to mention the benefit to the boss and business (i.e., he’ll decrease intradepartmental back-and-forth and increase both client results and billable time). Sherwood wants the company to invest as much as possible in him so that the loss is greater if he quits. Step 2: Prove Increased Output Offsite Second, he calls in sick the next Tuesday and Wednesday, July 18 and 19, to showcase his remote working productivity.60 He decides to call in sick between Tuesday and Thursday for two reasons: It looks less like a lie for a three-day weekend and it also enables him to see how well he functions in social isolation without the imminent reprieve of the weekend. He ensures that he doubles his work output on both days, leaves an e-mail trail of some sort for his boss to notice, and keeps quantifiable records of what he accomplished for reference during later negotiations. Since he uses expensive CAD software that is only licensed on his office desktop, Sherwood installs a free trial of GoToMyPC remote access software so that he can pilot his office computer from home. Step 3: Prepare the Quantifiable Business Benefit

Step 1: Increase Investment First, he speaks with his boss on July 12 about additional training that might be available to employees. He proposes having the company pay for a four-week industrial design class to help him better interface with clients, being sure to mention the benefit to the boss and business (i.e., he’ll decrease intradepartmental back-and-forth and increase both client results and billable time). Sherwood wants the company to invest as much as possible in him so that the loss is greater if he quits. Step 2: Prove Increased Output Offsite Second, he calls in sick the next Tuesday and Wednesday, July 18 and 19, to showcase his remote working productivity.60 He decides to call in sick between Tuesday and Thursday for two reasons: It looks less like a lie for a three-day weekend and it also enables him to see how well he functions in social isolation without the imminent reprieve of the weekend. He ensures that he doubles his work output on both days, leaves an e-mail trail of some sort for his boss to notice, and keeps quantifiable records of what he accomplished for reference during later negotiations. Since he uses expensive CAD software that is only licensed on his office desktop, Sherwood installs a free trial of GoToMyPC remote access software so that he can pilot his office computer from home. Step 3: Prepare the Quantifiable Business Benefit Third, Sherwood creates a bullet-point list of how much more he achieved outside the office with explanations. He realizes that he needs to present remote working as a good business decision and not a personal perk. The quantifiable end result was three more designs per day than his usual average and three total hours of additional billable client time. For explanations, he identifies removal of commute and fewer distractions from office noise.

Step 1: Increase Investment First, he speaks with his boss on July 12 about additional training that might be available to employees. He proposes having the company pay for a four-week industrial design class to help him better interface with clients, being sure to mention the benefit to the boss and business (i.e., he’ll decrease intradepartmental back-and-forth and increase both client results and billable time). Sherwood wants the company to invest as much as possible in him so that the loss is greater if he quits. Step 2: Prove Increased Output Offsite Second, he calls in sick the next Tuesday and Wednesday, July 18 and 19, to showcase his remote working productivity.60 He decides to call in sick between Tuesday and Thursday for two reasons: It looks less like a lie for a three-day weekend and it also enables him to see how well he functions in social isolation without the imminent reprieve of the weekend. He ensures that he doubles his work output on both days, leaves an e-mail trail of some sort for his boss to notice, and keeps quantifiable records of what he accomplished for reference during later negotiations. Since he uses expensive CAD software that is only licensed on his office desktop, Sherwood installs a free trial of GoToMyPC remote access software so that he can pilot his office computer from home. Step 3: Prepare the Quantifiable Business Benefit Third, Sherwood creates a bullet-point list of how much more he achieved outside the office with explanations. He realizes that he needs to present remote working as a good business decision and not a personal perk. The quantifiable end result was three more designs per day than his usual average and three total hours of additional billable client time. For explanations, he identifies removal of commute and fewer distractions from office noise. Step 4: Propose a Revocable Trial Period Fourth, fresh off completing the comfort challenges from previous chapters, Sherwood confidently proposes an innocent one-d

Recently, I was asked if I was going to fire an employee who made a mistake that cost the company $600,000. No, I replied, I just spent $600,000 training him. —THOMAS J. WATSON, founder of IBM

Attempt to work for two to three hours in a café for two Saturdays prior to proposing a remote trial. If you exercise in a gym, attempt to exercise for those two weeks at home or otherwise outside of the gym environment. The purpose here is to separate your activities from a single environment and ensure

Attempt to work for two to three hours in a café for two Saturdays prior to proposing a remote trial. If you exercise in a gym, attempt to exercise for those two weeks at home or otherwise outside of the gym environment. The purpose here is to separate your activities from a single environment and ensure that you have the discipline to work solo.

Practice environment-free productivity. Attempt to work for two to three hours in a café for two Saturdays prior to proposing a remote trial. If you exercise in a gym, attempt to exercise for those two weeks at home or otherwise outside of the gym environment. The purpose here is to separate your activities from a single environment and ensure that you have the discipline to work solo.

Develop the strength to do bold things, not the strength to suffer.

if you have a one-to-two-year world circumnavigation on your resume or training with professional soccer teams in Europe to your credit, two interesting things happen upon returning to the working world. First, you will get more interviews because you will stand out. Second, interviewers bored in their own jobs will spend the entire meeting asking how you did

if you have a one-to-two-year world circumnavigation on your resume or training with professional soccer teams in Europe to your credit, two interesting things happen upon returning to the working world. First, you will get more interviews because you will stand out. Second, interviewers bored in their own jobs will spend the entire meeting asking how you did it!

if you have a one-to-two-year world circumnavigation on your resume or training with professional soccer teams in Europe to your credit, two interesting things happen upon returning to the working world. First, you will get more interviews because you will stand out. Second, interviewers bored in their own jobs will spend the entire meeting asking how you did it! If there is any question of why you took a break or left your previous job, there is one answer that cannot be countered: “I had a once-in-a-lifetime chance to do [exotic and envy-producing experience] and couldn’t turn it down. I figured that, with [20–40] years of work to go, what’s the rush?”

Would you like me to give you a formula for success? It’s quite simple, really. Double your rate of failure. —THOMAS J. WATSON, founder of IBM

There are two types of mistakes: mistakes of ambition and mistakes of sloth. The first is the result of a decision to act—to do something. This type of mistake is made with incomplete information, as it’s impossible to have all the facts beforehand. This is to be encouraged. Fortune favors the bold. The second is the result of a decision of sloth—to not do something—wherein we refuse to change a bad situation out of fear despite having all the facts. This is how learning experiences become terminal punishments, bad relationships become bad marriages, and poor job choices become lifelong prison sentences.

One cannot be free from the stresses of a speed- and size-obsessed culture until you are free from the materialistic addictions, time-famine mind-set, and comparative impulses that created it in the first place.

Purchase tickets far in advance (three months or more) or last minute, and aim for both departure and return between Tues day and Thursday. Long-term travel planning turns me off and can be expensive if plans change, so I opt for purchasing all tickets in the last four or five days prior to target departure. The value of empty seats is $0 as soon as the flight takes off, so true last-minute seats are cheap.

clearer and I was much, much happier. I asked every vagabond

3. Choose a location for your actual mini-retirement. Where to start?This is the big question. There are two options that I advocate: Choose a starting point and then wander until you find your second home. This is what I did with a one-way ticket to London, vagabonding throughout Europe until I fell in love with Berlin, where I remained for three months. Scout a region and then settle in your favorite spot. This is what I did with a tour of Central and South America, where I spent one to four weeks in each of several cities, after which I returned to my favorite—Buenos Aires—for six months.

Here are just a few of my favorite starting points. Feel free to choose other locations. The most lifestyle for the dollar is underlined: Argentina (Buenos Aires, Córdoba), China (Shanghai, Hong Kong, Taipei), Japan (Tokyo, Osaka), England (London), Ireland (Galway), Thailand (Bangkok, Chiang Mai), Germany (Berlin, Munich), Norway (Oslo), Australia (Sydney), New Zealand (Queenstown), Italy (Rome, Milan, Florence), Spain (Madrid, Valencia, Sevilla), and Holland (Amsterdam). In all of these places, it is possible to live well while spending little. I spend less in Tokyo than in California because I know it well. Hip, recently gentrified artist areas, not unlike the Brooklyn of 10 years ago, can be found in almost all cities. The one place I can’t seem to find a decent lunch for less than $20 U.S.? London.

What is the 20% of my belongings that I use 80% of the time? Eliminate the other 80% in clothing, magazines, books, and all else. Be ruthless—you can always repurchase things you can’t live without.

7. Working where you live, sleep, or should relax Separate your environments—designate a single space for work and solely work—or you will never be able to escape

7. Working where you live, sleep, or should relax Separate your environments—designate a single space for work and solely work—or you will never be able to escape it.

Not performing a thorough 80/20 analysis every two to four weeks for your business and personal life

More than a dozen lost joint-venture partnership opportunities It’s not

It’s not that I go out of my way to irritate people—not at all—but I recognize one critical fact: Oftentimes, in order to do the big things, you have to let the small bad things happen. This is a skill we want to cultivate. What did I get in exchange for temporarily putting on blinders and taking a few glancing blows?

Once you realize that you can turn off the noise without the world ending, you’re liberated in a way that few people ever know. Just remember: If you don’t have attention, you don’t have time. Did I have time to check e-mail and voicemail?

Once you realize that you can turn off the noise without the world ending, you’re liberated in a way that few people ever know. Just remember: If you don’t have attention, you don’t have time. Did I have time to check e-mail and voicemail? Sure. It might take 10 minutes. Did I have the attention to risk fishing for crises in those 10 minutes? Not at all.

Once you realize that you can turn off the noise without the world ending, you’re liberated in a way that few people ever know. Just remember: If you don’t have attention, you don’t have time. Did I have time to check e-mail and voicemail? Sure. It might take 10 minutes. Did I have the attention to risk fishing for crises in those 10 minutes? Not at all. As tempting as it is to “just check e-mail for one minute,” I didn’t do it. I know from experience that any problem found in the inbox will linger in the brain for hours or days after you shut down the computer, rendering “free time” useless with preoccupation. It’s the worst of states, where you experience neither relaxation nor productivity. Be focused on work or focused on something else, never in-between.

Time without attention is worthless, so value attention over time. Here are a few

Time without attention

Time without attention is worthless, so value attention over time.

Don’t accept large or costly favors from strangers. This karmic debt will come back to haunt you. If you can’t pass it up, immediately return to karmic neutrality with a gift of your choosing. Repay it before they set the terms for you.

You don’t have to recoup losses the same way you lose them. I own a home in San Jose but moved almost 12 months ago. It’s been empty since, and I’m paying a large mortgage each month. The best part? I don’t care. But this wasn’t always the case. For many months, I felt demoralized as others pressured me to rent it, emphasizing how I was just flushing money away otherwise. Then I realized: You don’t have to make money back the same way you lose it. If you lose $1,000 at the blackjack table, should you try and recoup it there? Of course not. I don’t want to deal with renters, even with a property management company. The solution: Leave the house alone, use it on occasion, and just create incoming revenue elsewhere that would cover the cost of the mortgage through consulting, publishing, etc.

(self-reported well-being) researchers seem to agree on one thing: Mealtime with friends and loved ones is a direct predictor of well-being. Have at least one 2-to-3-hour dinner and/or drinks per week—yes, 2–3 hours—with those who make you smile and feel good. I find the afterglow effect to be greatest and longest with groups of five or more. Two times that are conducive to this: Thursday dinners or after-dinner drinks and Sunday brunches.

thing: Mealtime with friends and loved ones is a direct predictor of well-being. Have at least one 2-to-3-hour dinner and/or drinks per week—yes, 2–3 hours—with those who make you smile and feel good. I find the afterglow effect to be greatest and longest with groups of five or more. Two times that are conducive to this: Thursday dinners or after-dinner drinks and Sunday brunches.

thing: Mealtime with friends and loved ones is a direct predictor of well-being. Have at least one 2-to-3-hour dinner and/or drinks per week—yes, 2–3 hours—with those who make you smile and feel good.

Mealtime with friends and loved ones is a direct predictor of well-being. Have at least one 2-to-3-hour dinner and/or drinks per week—yes, 2–3 hours—with those who make you smile and feel good.

Rehearse poverty regularly—restrict even moderate expenses for 1–2 weeks and give away 20%+ of minimally used clothing—so you can think big and take “risks” without fear (Seneca).

3. Don’t postpone decisions just to avoid uncomfortable conversations. If an acquaintance asks you if you want to come to their house for dinner next week, and you know you won’t, don’t say, “I’m not sure. I’ll let you know next week.” Instead, use something soft but conclusive like, “Next week? I’m pretty sure I have another commitment on Thursday, but thank you for the invite. Just so I don’t leave you hanging, let’s assume I can’t make it, but can I let you know if that changes?” Decision

3. Don’t postpone decisions just to avoid uncomfortable conversations. If an acquaintance asks you if you want to come to their house for dinner next week, and you know you won’t, don’t say, “I’m not sure. I’ll let you know next week.” Instead, use something soft but conclusive like, “Next week? I’m pretty sure I have another commitment on Thursday, but thank you for the invite. Just so I don’t leave you hanging, let’s assume I can’t make it, but can I let you know if that changes?” Decision made. Move on.

2. Don’t provoke deliberation before you can take action. One simple example: Don’t scan the inbox on Friday evening or over the weekend if you might encounter work problems that can’t be addressed until Monday.

six basic rules

More—Limiting Distribution to Increase Profit Is more

4. Less Is More—Limiting Distribution to Increase Profit Is more

4. Less Is More—Limiting Distribution to Increase Profit Is more distribution automatically better? No. Uncontrolled distribution leads to all manner of headache and profit-bleeding, most often related to rogue discounters. Reseller A lowers pricing to compete with online discounter B, and the price cutting continues until neither is making sufficient profit on the product and both stop reordering. This requires you to launch a new product, as price erosion is almost always irreversible. Avoid this scenario and consider partnering with one or two key distributors instead, using that exclusivity to negotiate better terms: less discounting, prepayment, preferred placement and marketing support, etc. From iPods to Rolex and Estée Lauder, sustainable high-profit brands usually begin with controlled distribution. Remember, more customers isn’t the goal; more profit is.

3. Pricing Before Product—Plan Distribution First Is your pricing scalable? Many companies will sell direct-to-consumer by necessity in early stages, only to realize that their margins can’t accommodate resellers and distributors when they come knocking.

3. Pricing Before Product—Plan Distribution First Is your pricing scalable? Many companies will sell direct-to-consumer by necessity in early stages, only to realize that their margins can’t accommodate resellers and distributors when they come knocking. If you have a 40% profit margin and a distributor needs a 70% discount to sell into wholesale accounts, you’re forever limited to direct-to-consumer … unless you increase your pricing and margins. It’s best to do this beforehand if possible—otherwise, you’ll need to launch new or “premium” products—so plan distribution before setting pricing.

3. Pricing Before Product—Plan Distribution First Is your pricing scalable? Many companies will sell direct-to-consumer by necessity in early stages, only to realize that their margins can’t accommodate resellers and distributors when they come knocking. If you have a 40% profit margin and a distributor needs a 70% discount to sell into wholesale accounts, you’re forever limited to direct-to-consumer … unless you increase your pricing and margins. It’s best to do this beforehand if possible—otherwise, you’ll need to launch new or “premium” products—so plan distribution before setting pricing. Test assumptions and find hidden costs by interviewing those who have done it: Will you need to pay for co-op advertising, offer rebates for bulk purchases, or pay for shelf space or featured placement? I know one former CEO of a national brand who had to sell his company to one of the world’s largest soft drink manufacturers before he could access front-of-store shelving in top retailers. Test your assumptions and do your homework before setting pricing.

Negotiate Late—Make Others Negotiate Against Themselves Never make a first offer when purchasing. Flinch after the first offer (“$3,000!” followed by pure silence, which uncomfortable salespeople fill by dropping the price once), let people negotiate against themselves (“Is that really the best you can offer?” elicits at least one additional drop in price), then “bracket.” If they end up at $2,000 and you want to pay $1,500, offer $1,250. They’ll counter with approximately $1,750, to which you respond: “I’ll tell you what—let’s just split the difference. I’ll overnight FedEx you a check, and we can call it a day.” The end result? Exactly what you wanted: $1,500.

Not all customers are created equal. Apply the 80/20 principle to time consumption: What 20% of people are

Not all customers are created equal. Apply the 80/20 principle to time consumption: What 20% of people are consuming 80% of your time? Put high-maintenance, low-profit customers on autopilot—process orders but don’t pursue them or check up on them—and “fire” high-maintenance, high-profit customers by sending a memo detailing how a change in business model requires a few new policies: how often and how to communicate, standardized pricing and order process, etc.

Deadlines Over Details—Test Reliability Before Capability Skills are overrated. Perfect products delivered past deadline kill companies faster than decent products delivered on time. Test someone’s ability to deliver on a specific and tight deadline before hiring them based on a dazzling portfolio. Products can be fixed as long as you have cash flow, and bugs are forgiven, but missing deadlines is often fatal.