Ramit Sethi (TW/IG: @RAMIT, IWILLTEACHYOUTOBERICH.COM) graduated from Stanford University in 2005 with bachelor’s and master’s degrees in technology, psychology, and sociology. He grew his personal finance blog to more than 1 million readers per month, then turned this college side project into a multi-million-dollar business with more than 30 employees. Some of his weeks now break $5 million in revenue. In a finance space saturated by “gurus” of dubious credentials, Ramit has always been willing to share real numbers.
Spirit animal: Common swift
“My actual birth name was Amit, which is a much more common Indian name. About 2 days after I was born, my dad woke up, rolled over, and told my mom, ‘We cannot name him Amit because his initials will be ASS.’ And the best part is, like true immigrants—my parents are from India—they went to the hospital, and they didn’t want to pay the $50 change fee, so they told them that they had forgotten to add an R and they got it for free. Thanks, Mom and Dad.”
TF: On a related note, I recently got this text from Ramit: “Btw I think I told you how my sisters wanted to get a dog for 15 years. We couldn’t because my dad is allergic. Only … we found out he’s not. He just lied to us because he hates pets.”
“We send millions of emails a month with multiple-million [combinatorial variants] of email funnels, and we generate roughly 99% of our revenue through email.
“[My emails] look like plain emails…. I am not J. Crew. J. Crew is selling a brand, so their emails have to be beautiful. My emails look like I am writing to you because I want to be your friend … at scale. That is why my emails appear to be really simple. Behind the scenes, there is a lot of stuff going on, but they appear … like I just jotted you a note.”
TF: One of the reasons I put off using email newsletters for years was perceived complexity. I didn’t want to have to craft beautiful templates and ship out gorgeous, magazine-worthy missives. Ramit convinced me to send plain-text email for my 5-Bullet Friday newsletter, which became one of the most powerful parts of my business within 6 months.
Infusionsoft: Complete sales and marketing automation software for small businesses, with a particular focus on “funnels”
Visual Website Optimizer: A/B testing software for marketers
“Tactics are great, but tactics become commoditized.”
TF: If you understand principles, you can create tactics. If you are dependent on perishable tactics, you are always at a disadvantage. This is why Ramit studies behavioral psychology and the elements of persuasion that appear hardwired. One of his most-gifted books is Age of Propaganda by Anthony Pratkanis and Elliot Aronson, and his favorite copywriting book is an oldie: The Robert Collier Letter Book, originally published in 1931.
For some godforsaken reason, I asked Ramit, “Do you remember the last time you were punched in the face?” He answered with the above.
“[‘1,000 True Fans’ by Kevin Kelly] was one of the seminal articles that inspired me to really build amazing material, rather than just recycling what else was out there. I knew that if I had 1,000 true fans, then not only would I be able to live doing the things I wanted, but I would be able to turn that into 2,000, 5,000, 10,000—and that is exactly what happened.
“In terms of getting my first 1,000 true fans, you can look at my posts. They tend to be very, very long [and definitive]. In some cases, 15, 20, 25 pages long…. If your material is good, if it is engaging, there is almost no maximum you can write…. My point is not ‘write longer.’ It is ‘do not worry about space.’
“Second, I cannot recommend guest posting enough. I did one for you [‘The Psychology of Automation’]—that probably took me 20 to 25 hours to write. It was very detailed. It included video, all kinds of stuff, and to this day a lot of the people I meet, I ask, ‘How did you hear about me?’ and they say, ‘Oh, through Tim Ferriss.’”
TF: For the launch of The 4-Hour Workweek, I used this same guest posting strategy on Gigaom, Lifehacker, and other sites.
TF: I have mirrored Ramit’s approach to pricing and selling. I rarely sell high-ticket items, but when I do, I charge 10 to 100 times what “competitors” might. In general, I split my content in a very binary fashion: free or ultra-premium.
“Free” means that 99% of what I do is free to the world (e.g., podcast, blog) or nearly free (books). I write on topics that A) I enjoy and want to learn more about, and that B) I think will attract intelligent, driven, and accomplished people. This is what allows ultra-premium.
Ultra-premium means:
An openness to indirect paths means I don’t obsess over selling my “content,” and I never have. My network, partially built through writing, is my net worth. If you want to increase your income 10x instead of 10%, the best opportunities are often seemingly out of left field (e.g., books → startups).
Ramit and I are both obsessed with checklists and love a book by Atul Gawande titled The Checklist Manifesto. I have this book on a shelf in my living room, cover out, as a constant reminder. Atul Gawande is also one of Malcolm Gladwell’s (here) favorite innovators. Ramit builds checklists for as many business processes as possible, which he organizes using software called Basecamp. Google “entrepreneurial bus count” for a good article on why checklists can save your startup.
• Who do you think of when you hear the word “successful”?
“I think of a guy I recently met named Mark Bustos. He has an awesome Instagram account (@markbustos) and is a very high-end hairdresser in New York. He works at a top salon, and on the weekend, he goes and he cuts the hair of homeless people around New York. He records it, and he writes about their stories. I think it is so amazing that he is at the top of game as a hairdresser, working with celebrity clients and things like that, and then on the weekend—on his one day off—he goes around and is of service to people who ordinarily would never have the chance to get their hair cut, especially by somebody like him.”
• Two people Ramit has learned from (or followed closely) in the last year
Jay Abraham and Charlie Munger.
TF: Jay Abraham is one of Daymond John’s (here) mentors and the author of Getting Everything You Can Out of All You’ve Got, which is one of Ramit’s most-gifted books. I often recommend Jay’s work to people who ask about how to structure “JVs,” or joint ventures.
“If you are overweight and you get off the plane [in India], the first thing your family is going to say is ‘Wow, you got fat.’”
TF: If you want to be this brutally honest in the U.S., I suggest first reading my friend A.J. Jacobs’s Esquire piece titled “I Think You’re Fat.”
I have recommended Kevin Kelly’s “1,000 True Fans” to literally millions of people. Many guests in this book have done the same. “If you only read one article on marketing, make it this one” is my common wording. Here’s a highly simplified synopsis: “Success” need not be complicated. Just start with making 1,000 people extremely, extremely happy.
Kevin’s original piece has grown outdated in a few places, so he was kind enough to write up a newer summary of core concepts for readers of this book.
Since I first read the original nearly 10 years ago, I’ve tested his concepts across dozens of businesses, many of which are now multi-billion-dollar companies. I’ve added some of my core learnings and recommendations at the end.
Enter Kevin
I first published this idea in 2008, when it was embryonic and ragged, and now, 8 years later, my original essay needs an update—by someone other than me. Here I’ll simply restate the core ideas, which I believe will be useful to anyone making things, or making things happen.—KK
To be a successful creator, you don’t need millions. You don’t need millions of dollars or millions of customers, clients, or fans. To make a living as a craftsperson, photographer, musician, designer, author, animator, app maker, entrepreneur, or inventor you need only 1,000 true fans.
A true fan is defined as “a fan who will buy anything you produce.” These diehard fans will drive 200 miles to see you sing; they will buy the hardback and paperback and audio versions of your book; they will purchase your next figurine, sight unseen; they will pay for the “best-of” DVD version of your free YouTube channel; they will come to your chef’s table once a month; they will buy the superdeluxe reissued hi-res box set of your stuff even though they have the low-res version. They have a Google Alert set for your name; they bookmark the eBay page where your out-of-print editions show up; they come to your openings. They have you sign their copies; they buy the T-shirt, and the mug, and the hat; they can’t wait till you issue your next work. They are true fans.
If you have roughly 1,000 fans like this (also known as superfans), you can make a living—if you are content to make a living, but not a fortune.
Here’s how the math works. You need to meet two criteria: First, you have to create enough each year that you can earn, on average, $100 profit from each true fan. That is easier to do in some arts and businesses than others, but it is a good creative challenge in every area because it is always easier and better to give your existing customers more, than it is to find new fans.
Second, you must have a direct relationship with your fans. That is, they must pay you directly. You get to keep all of their support, unlike the small percentage of their fees you might get from a music label, publisher, studio, retailer, or other intermediate. If you keep the full $100 from each true fan, then you need only 1,000 of them to earn $100K per year. That’s a living for most folks.
1,000 customers is a whole lot more feasible to aim for than a million fans. Millions of paying fans is just not a realistic goal to shoot for, especially when you are starting out. But 1,000 fans is doable. You might even be able to remember 1,000 names. If you added one new true fan per day, it’d only take a few years to gain 1,000. True fanship is doable. Pleasing a true fan is pleasurable and invigorating. It rewards the artist to remain true, to focus on the unique aspects of their work, the qualities that true fans appreciate.
The number 1,000 is not absolute. Its significance is in its rough order of magnitude—3 orders less than a million. The actual number has to be adjusted for each person. If you are able to only earn $50 per year per true fan, then you need 2,000. (Likewise, if you can sell $200 per year, you need only 500 true fans.) Or you many need only $75K per year to live on, so you adjust downward. Or if you are a duet, or have a partner, then you need to multiply by 2 to get 2,000 fans, etc.
Another way to calculate the support of a true fan is to aim to get one day of their wages per year. Can you excite or please them sufficiently to earn what they make from one day’s labor? That’s a high bar, but not impossible for 1,000 people worldwide.
And of course, not every fan will be super. While the support of 1,000 true fans may be sufficient for a living, for every single true fan, you might have 2 or 3 regular fans. Think of concentric circles with true fans at the center and a wider circle of regular fans around them. These regular fans may buy your creations occasionally, or may have bought only once. But their ordinary purchases expand your total income. Perhaps they bring in an additional 50%. Still, you want to focus on the superfans because the enthusiasm of true fans can increase the patronage of regular fans. True fans are not only the direct source of your income, but also your chief marketing force for the ordinary fans.
Fans, customers, patrons have been around forever. What’s new here? A couple of things. While direct relationships with customers was the default mode in old times, the benefits of modern retailing meant that most creators in the last century did not have direct contact with consumers. Often even the publishers, studios, labels, and manufacturers did not have such crucial information as the names of their customers. For instance, despite being in business for hundreds of years, no New York book publisher knew the names of their core and dedicated readers. For previous creators, these intermediates (and there was often more than one) meant you need much larger audiences to have a success. With the advent of ubiquitous peer-to-peer communication and payment systems—also known as the web today—everyone has access to excellent tools that allow anyone to sell directly to anyone else in the world. So a creator in Bend, Oregon, can sell and deliver a song to someone in Kathmandu, Nepal, as easily as a New York record label (maybe even more easily). This new technology permits creators to maintain relationships so that the customer can become a fan, and so that the creator keeps the total amount of payment, which reduces the number of fans needed.
This new ability for the creator to retain the full price is revolutionary, but a second technological innovation amplifies that power further. A fundamental virtue of a peer-to-peer network (like the web) is that the most obscure node is only one click away from the most popular node. In other words, the most obscure, under-selling book, song, or idea is only one click away from the best-selling book, song, or idea. Early in the rise of the web, the large aggregators of content and products, such as eBay, Amazon, Netflix, etc., noticed that the total sales of *all* the lowest-selling obscure items would equal, or in some cases exceed, the sales of the few best-selling items. Chris Anderson (my successor at Wired) named this effect “the Long Tail,” for the visually graphed shape of the sales distribution curve: a low, nearly interminable line of items selling only a few copies per year that form a long “tail” for the abrupt vertical beast of a few bestsellers. But the area of the tail was as big as the head. With that insight, the aggregators had great incentive to encourage audiences to click on the obscure items. They invented recommendation engines and other algorithms to channel attention to the rare creations in the long tail. Even web search companies like Google, Bing, and Baidu found it in their interests to reward searchers with the obscure because they could sell ads in the long tail as well. The result was that the most obscure became less obscure.
If you live in any of the 2 million small towns on Earth, you might be the only one in your town to crave death metal music, or get turned on by whispering, or want a left-handed fishing reel. Before the web, you’d never have a way to satisfy that desire. You’d be alone in your fascination. But now, satisfaction is only one click away. Whatever your interests as a creator are, your 1,000 true fans are one click from you. As far as I can tell there is nothing—no product, no idea, no desire—without a fan base on the Internet. Everything made or thought of can interest at least one person in a million—it’s a low bar. Yet if even only one out of a million people were interested, that’s potentially 7,000 people on the planet. That means that any 1-in-a-million appeal can find 1,000 true fans. The trick is to practically find those fans, or, more accurately, to have them find you.
One of the many new innovations serving the true fan creator is crowdfunding. Having your fans finance your next product is genius. Win-win all around. There are about 2,000 different crowdfunding platforms worldwide, many of them specializing in specific fields: raising money for science experiments, bands, or documentaries. Each has its own requirements and a different funding model, in addition to specialized interests. Some platforms require “all-or-nothing” funding goals; others permit partial funding; some raise money for completed projects; some, like Patreon, fund ongoing projects. Patreon supporters might fund a monthly magazine, or a video series, or an artist’s salary. The most famous and largest crowdfunder is Kickstarter, which has raised $2.5 billion for more than 100,000 projects. The average number of supporters for a successful Kickstarter project is 241 funders—far less than 1,000. That means if you have 1,000 true fans, you can do a crowdfunding campaign, because by definition a true fan will become a Kickstarter funder. (Although the success of your campaign is dependent on what you ask of your fans).
The truth is that cultivating 1,000 true fans is time-consuming, sometimes nerve-wracking, and not for everyone. Done well (and why not do it well?) it can become another full-time job. At best, it will be a consuming and challenging part-time task that requires ongoing skills. There are many creators who don’t want to deal with fans, and honestly should not. They should just paint, or sew, or make music, and hire someone else to deal with their superfans. If that is you, and you add someone to deal with fans, a helper will skew your formula, increasing the number of fans you need, but that might be the best mix. If you go that far, then why not “subcontract” out dealing with fans to the middle people—the labels and studios and publishers and retailers? If they work for you, fine, but remember, in most cases they would be even worse at this than you would.
The mathematics of 1,000 true fans is not a binary choice. You don’t have to go this route to the exclusion of another. Many creators, including me, will use direct relations with superfans in addition to mainstream intermediaries. I have been published by several big-time New York publishers, I have self-published, and I have used Kickstarter to publish to my true fans. I chose each format depending on the content and my aim. But in every case, cultivating my true fans enriches the route I choose.
The takeaway: 1,000 true fans is an alternative path to success other than stardom. Instead of trying to reach the narrow and unlikely peaks of platinum bestseller hits, blockbusters, and celebrity status, you can aim for direct connection with 1,000 true fans. On your way, no matter how many fans you actually succeed in gaining, you’ll be surrounded not by faddish infatuation, but by genuine and true appreciation. It’s a much saner destiny to hope for. And you are much more likely to actually arrive there.
Kevin distinguishes between “making a living” and “making a fortune,” which is an important starting point for the discussion. However, it’s worth noting that these aren’t necessarily mutually exclusive. Creating 1,000 true fans is also how you create massive hits, perennial mega-bestsellers, and worldwide fame (be careful what you wish for). Everything big starts small and focused (see Peter Thiel, here). 1,000 true fans is step #1, whether you want a $100K per year business or the next Uber. I’ve seen this with all of my fastest-growing and most successful startups. They start laser-focused on 100 to 1,000 people, nicheing down as necessary with their messaging and targeting (demographically, geographically, etc.) to get to a manageable and cost-effectively reachable number.
So, you may ask yourself, “Why aim for a mere $100K when I can try to build a billion-dollar business?” Two reasons: 1) Aiming for the latter from the outset often leads to neglecting the high-touch 1,000 true fans who act as your most powerful unpaid marketing force for “crossing the chasm” into the mainstream. If you don’t build that initial army, you’re likely to fail. 2) Do you really want to build and manage a big company? For most people, it’s not a fun experience; it’s an all-consuming taskmaster. There are certainly ace CEOs who thread the needle and enjoy this roller coaster, but they are outliers. Read Small Giants by Bo Burlingham for some fantastic examples of companies that choose to be the best rather than the biggest.
And, as Kevin noted, the number of your true fans can actually be far fewer than 1,000. This is particularly true if you A) produce content that attracts a niche but well-heeled group, and then B) invite and look for indirect revenue opportunities not based on onsite transactions (e.g., paid speaking, investment opportunities, consulting). These can be far more lucrative than most advertising, tip jars, and the like.
One reasonably common critique of “1,000 True Fans” comes from musicians, for instance, who say something along the lines of, “But I can only sell an album for $10, and I can only produce one per year. That’s only $10K and not enough to live on. ‘1,000 True Fans’ doesn’t work.” Scores of book writers have a similar argument, but it’s flawed. Remember, a true true fan will buy whatever you put out. If they refuse to purchase above $10, you haven’t done the work to find and cultivate real true fans. If you have true fans, it’s your responsibility to consider (and test) higher-priced, higher-value options outside of the $10 paradigm. Don’t be locked in the pricing model of the incumbents. In 2015, Wu-Tang Clan sold a single bespoke album at auction—in a handcrafted silver and nickel box made by British-Moroccan artist Yahya—to one person for $2 million. There are a lot of options between $10 and $2 million. See my “free or ultra-premium” approach here, which has provided me with complete creative and financial freedom.
You do not have to sacrifice the integrity of your art for a respectable income. You just need to create a great experience and charge enough.
Not sure what to charge? Perhaps you should figure out your Target Monthly Income (TMI) for your ideal lifestyle and work backward. For examples and a simple worksheet exercise, visit fourhourworkweek.com/tmi
The below is written by Mike Del Ponte, one of the founders of Soma, a startup I advise (FB/IG/TW: @somawater, drinksoma.com). He raised $100K on Kickstarter in 10 days, and I asked him to share some of the best tools and tricks you can use to replicate his success.
Note that “VA” in the below refers to “virtual assistant,” which he finds through Upwork or Zirtual.
Enter Mike
How many times have you dreamt of launching a new product, only to let your dream fall to the wayside?
I don’t have the money to even get started! What if it fails?
In the past, these excuses held some weight, as bringing a new product to market could be incredibly expensive. Oftentimes, you had to prototype, build, and then hope the world wanted what you were selling. If not, you could end up with a warehouse full of debt: unsellable inventory.
Now, there are new options. Crowdfunding platforms like Kickstarter and Indiegogo allow you to introduce (test) a new product before you start manufacturing, removing a huge amount of risk. If people like what you’re proposing, you can pull in thousands or even millions of dollars to fund your dream. At the very worst, you were able to test your idea without investing much time or money.
But planning and running a Kickstarter campaign is often done in a haphazard fashion.
To prepare for ours, we didn’t want to leave anything to chance, so we interviewed 15 of the top-earning Kickstarter creators.
I’ve worked with PR firms that charge $20K a month and spend 3 months planning a launch. Follow our advice—based on what we learned—and there’s a good chance you’ll get better results without spending anything.
Using virtual assistants, growth-hacking techniques, and principles from Tim’s books, we raised more than $100K in less than 10 days. Having accomplished our goal with almost 30 days to spare, we were able to relax for the holidays.
Here are just a few of the non-obvious keys we learned.
Find the MED for Kickstarter Traffic
If you want to raise a lot of money on Kickstarter, you need to drive a lot of traffic to your project. And you want that traffic to be comprised of prospective backers of your project. Applying the concept of MED (“minimum effective dose” from The 4-Hour Body), we knew we needed to discover and focus on the best traffic sources.
My friend Clay Hebert is a Kickstarter expert. One of the things he taught me is a simple trick using bit.ly tracking. Bit.ly is a link shortening service used by millions of people … and Kickstarter. If you add a + to the end of any bit.ly URL, you can see stats related to that link. For example: Here are stats for the shortlink Kickstarter generated for our campaign: http://kck.st/VjAFva+
[TF: This will blow your mind. Go to any Kickstarter project, click on Share, and pick a social network, like Twitter. A pre-populated tweet will appear with a shortlink. Copy and paste the link alone into a new tab, add + to the end, and hit Return. Voilà.]
To discover the top referral sources, we gave our VA a list of Kickstarter projects similar to ours and asked her to list the referrers for each project. Based on this data, we decided to focus all of our attention on just two goals:
We knew that if we did this, we would be listed in Kickstarter’s Popular Projects sections, which is how you get people who are browsing Kickstarter to check out and back your project.
Find Relevant Bloggers Using Google Images
Start by looking at who covered Kickstarter projects similar to yours. You can do this by using a simple Google Images hack. If you drag and drop any image file into the search bar at images.google.com, you’ll be shown every website that has ever posted that image. Pretty cool, huh?
Here’s the process your VA will use:
Research Site Traffic on SimilarWeb.com or Alexa.com
Bigger is not always better, but it is helpful to know the size of each blog’s readership. Have your VA research how many unique monthly visitors each blog has and add that data to your spreadsheet. TF: I personally use the SimilarWeb Chrome extension.
Identify Relationships on Facebook
This may be the most important part of your PR efforts. For us, 8 out of 10 valuable blog posts resulted from relationships. When we pitched a blogger without a relationship, less than 1% even responded. With introductions, our success rate was over 50%.
How do you identify relationships? Facebook. Have your VA log in to your Facebook account, search for bloggers in your media list, and add mutual friends to your spreadsheet. You can also search on professional networks like LinkedIn.
Use the Right Tools
TextExpander allows you to paste any saved message—whether it’s a phone number or a two-page email—into any document or text field, simply by typing an abbreviation. This is extremely helpful for repetitive outreach. It’s a must-have app that probably saved us 1 to 2 hours a day in typing.
One tool that we did not use, but should have, is Boomerang, a Gmail plug-in that allows you to schedule emails. We crafted emails to our influencers and in-the-know friends the day of our launch, using TextExpander, then slightly customized each one. What we should have done is written and saved these personalized emails a few days before we launched. That way, we could have scheduled them to be automatically sent by Boomerang the second we launched. This would have freed up many valuable hours on launch day.
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TF: For perhaps 10 additional tips, as well as a half dozen email templates that Soma used for their PR outreach and launch (this alone could save you more than 100 hours), visit fourhourworkweek.com/kickstarter