Posts

MDH 71 | Passive Income Stream

MDH 71 | Passive Income Stream

 

How do you create a passive income stream with little money? God-made millionaire and investor, Edwin Carrion is here to tell you. He joins host Victoria Wieck to define passive income streams and offer tips on the many ways you can start. You don’t need to have a million dollars to start investing. Tune in to get expert advice that will help boost your financial situation.

Watch the episode here

 

Listen to the podcast here


 

How To Grow Your Money Through A Passive Income Stream With Edwin Carrion

I’m so excited to be here every week to bring you some amazing conversations with guests that are fabulous and address our needs, concerns and more than anything, hope for the future. Talking about hope for the future, one topic I hear from you from my workshops and speeches over and over again more than ever now after COVID is the idea of creating a sustainable passive income stream. Even if it’s not huge, it’s something that you can work toward.

I finally found a guest who knows how to do that and who has done that many times over. He also helped other people achieve their financial freedom by starting a small passive income strategy. Without further ado, I’m going to introduce you to our guest. His name is Edwin Carrion. Welcome to the show, Edwin.

Victoria, thank you for having me on the show and everybody, thank you. It’s a great show and you’re going to get a lot of golden nuggets.

First of all, if you haven’t subscribed to the show already, please do so. Also, please share my show with at least one other human being, so that we can amplify and elevate the expertise of every one of our guests who have put their heart and soul into what they do. Especially with Edwin, he’s an immigrant to this country. I am an immigrant myself and immigrant life isn’t easy, especially if you come here with no money.

Having done what he has done, he started his first company at age fourteen and served in the Marine Corps. Anything about Marine Corps, they’re very disciplined, honorable and honest. All those things come into play. These are the tools that I’ve used to build my business and these principles go a long way. Edwin, tell me a little bit about yourself and what you’re passionate about.

I am a loyal husband, a God-made millionaire, a United States Marine, a loving father of two beautiful girls, and that was my God-given dream as well, an investor and a mentor. I love teaching people and sharing my story of life to success in order to help other people become successful and live life to the fullest. That’s what Edwin Carrion is.

You’re preaching to the choir. My American dream was very small and simple. I wanted to be able to pay for my own apartment that I could rent, and be able to find money to pay for insurance on a car that I already owned. At that time, the whole car was $2,000. For those of us who do it and have found a systematic way to achieve our next measurable goal, we can’t wait to share the joy, knowledge and journey with somebody else who’s struggling. Am I saying that accurately?

Yes, extremely correct. The thing is, it’s good to share it, but it’s amazing when people take action on the things they hear on how you get to success. There have been many times when I share my stories or people ask me, “How do you do this? How do you become successful?” I teach them the step by step but then they don’t do anything about it.

Once you’re happy, you make everybody else happy.

We’re going to talk about that part about the action because that’s why this particular show exists. I had been interviewed on other podcasts and had been on numerous TV shows and everything. People tell you, “Your story is so inspiring and encouraging.” They walk away with these incredible aspirations and inspirations with them. If you don’t take any action, it dies. It is just inspiration. That’s it. It doesn’t transform your life or my life. The whole reason why I’m giving free speeches is so that it can transform their lives, so I can get some joy back. It doesn’t.

I talk about action all the time. It doesn’t have to be huge action. I’m not asking anybody to go to the bank, withdraw money, and invest in something new. We’re talking about small steps. Think about the one tiny little thing you can do today. Not tomorrow, not next week, not next year, not when you find some time.

It’s important and you got to take that action today. It could be small little things. It could be setting aside an hour a day to research what you want to do. In my case, learning to speak English when I first came to America was a goal. I broke it down to I don’t have money. We didn’t have ESL classes or English as second language classes when I came.

My father had a dictionary because he didn’t speak English either. I looked at every word that was under five letters. My dad would circle it. I learned English to English translation. That was the only thing a thirteen-year-old could do, so you do it. Every day there’s something you could do to impact your life for the future.

Let’s get down to the meat of this whole interview. You’re very passionate about creating passive income and I love that. If you don’t understand the importance of passive income, it’s income that comes to you whether you’re sleeping or on the beach. Whether you’re having a good day or a bad hair day, it doesn’t matter. That income comes in whether you’re working or not.

It could be small but the problem is there was this perception that in order for you to create a passive income strategy or passive income of any kind, you have to start with a ton of money. You can take an example of you could put millions of dollars in the bank, the interest that comes is passive income. Now, interest is very low and most people don’t have enough money saved to make that interest a real income. If you don’t have a whole lot of money, what are some of the things that you know how to do? I know that you didn’t start with $10 million. How did you do it?

The first thing is taking that action. It goes back to what you were saying, you don’t have to have $1 million in the bank account. You don’t have to have $1 million to start creating passive income. You could start with $100. Passive income is free money or money that you don’t have to work for. The money works for you. As we work very hard for our money, it comes to a time that we have to let the money work for us. It starts at any age. It doesn’t matter whether you’re 18 years old or 50 years old, it’s never too late to start.

The first thing to do is open an investment account, then start putting $10 a week or $10 a month, whatever you could afford to lose that’s not going to hurt you that you’re putting aside. Eventually, you’re going to see those small little returns. When you start seeing those small returns, then you get hooked to it because you’re training your mind to start putting money away and to start having your money work for you. Eventually, you’ll see that money grow. You’re like, “I’m making $100 a month without having to do anything. This is good.”

MDH 71 | Passive Income Stream

Passive Income Stream: When you train your mind and your mindset changes to passive income, then you start looking for the opportunities.

 

When you train your mind and your mindset changes to passive income then you start looking for the opportunities. “I have $20,000 in the bank. Where can I put this money that somebody else is going to work for me and is going to give me passive income?” You then start investing. There are a lot of different forms of investment. There are syndication deals in real estate.

There are new ventures. Maybe a good friend of yours could be opening a brand-new business and tells you, “Why don’t you let me borrow some money? I’ll pay you high interest, more than what you’re going to get having that money sitting in the bank.” If you know he’s reliable, it has collateral and that money is secure, and you’re going to get a good return of interest, that’s called passive income. That’s how you start. Start very little.

My mother-in-law passed away. She was 100 years old. She lived a good quality life until the very last month or so. She lost her husband at age 53. She never remarried or anything like that. When she lost her husband, the family was pretty much bankrupt because, in those days, insurance didn’t cover a lot of things. It sucked up everything and she was a housewife. She never even learned how to drive. It was a very traditional marriage. She had to learn how to catch the bus. She educated herself and went through a school after several years became a school teacher at age 58 or so.

She passed away and I had no clue. She was a good saver. She put her money away, as you said, $100, $50. She never wasted money on a Starbucks or things like that. She saved all this money. When she passed away, her accountant informed us of her estate. It’s mind-boggling. It was over $1 million that the woman saved on a teacher’s income. It’s the power of how much the compound interest was paid in her case. We still have CDs that are coming due now long after she has been gone.

You start saving, that’s the first step. The second step is you’re going to start to invest little bits of money in places where you know who they are. You’re going to check out the investment opportunities. The mistake that a lot of people make is once they have a little money, they want to make that money quickly. They don’t vet the investment. They’re going to invest money in things that you don’t know much about.

They gamble. That’s what happens. It becomes a gambling game. You could gamble too because there are some times that I gamble. What I mean by gambling is when the big companies are on it or when everybody is on it, that was a time that I gambled because I know that I’m going to make a quick return on my investment. I’m either going to lose it all or I’m going to make it all. That’s when I jumped into it, but it was with money that I could afford to lose. I then have other money which is long-term. I’m always thinking long-term. When I talk about long-term, as you said with your grandmother, there are 10 to 20-year plans. The compound interest is amazing because it started growing so much little by little.

In our case, it was like $10 a week or something. That is crazy. Let’s go to another topic that you’re very passionate about. You and I share this a lot. I don’t know about your story specifically, but for mine, the idea that I wasn’t willing to give up my family life. I wasn’t willing to give up the quality of life that I’m giving to my children and parents.

When you are an entrepreneur, working by yourself with no outside money and you’re juggling 40 different things, somehow success comes at the price of family life. I tell people every week that that’s not true. It doesn’t have to be true unless you make it true. Tell me a little bit about how you’ve done that. People have heard until they’re blue in the face how I did it. What were some of the strategies you employed to make sure that your family didn’t suffer because you were chasing the dream?

Ninety percent of young entrepreneurs that get into business fail because they don’t have a business plan.

I was fortunate enough that I went bankrupt at 27 years old. I realized that I worked so much that I put everything away, everything that mattered to me, my religion, faith, family, friends and health, which are the most important things. To top it all off, I put aside my time. I went from 22 years old to 27 years old working all the time. That time that I lost, I was never able to get back because that’s the only commodity in life we can never get back. I learned that I need to have a balance in life. I need to live life to the fullest and enjoy every single day because we only have one day. When the day is gone, it’s gone. We cannot get that time back.

How do I balance my life and running multiple different companies? What I do is set priorities. My priorities are very simple. 9:00 to 5:00 is my free time. I get to work, have fun, and do the things that I want to do. That’s my set time. That’s my priority. After 5:00 PM, family time. Every Friday on the calendar is date night. Sundays, we go to church as a family. Saturday and Sunday, I spend time with the family.

We have to start setting those priorities straight. As business owners, we think that we have to work 12 to 13 hours a day and we don’t. Sometimes they come to the office and in two hours, I’m super productive and effective that I could take the rest of the day off and do the things that I love to do. There are times that I sit down in my office the whole eight hours and I don’t do anything. I sit here and I’m twiddling my thumbs trying to be productive. Those are the days that I don’t want to do anything.

If you set your priorities straight, that’s when you start having the balance in life. Make sure that you put the same priority on the same standards for your family, work and yourself because you have to be happy. When I’m happy, I make everybody else happy. I make my family, wife, kids, employees and everybody happy. I always tell people, “Be selfish. Make yourself happy first. Once you’re happy, you make everybody else happy.”

I’m glad you said that. Setting priorities is important. When I say set priorities, what are the most important things to you? That also includes some boundaries of things that you’re not willing to do. When I started my company, I didn’t have to make a whole lot of money. I just wanted to make $2,000 a month. What I wasn’t willing to do is work more than twenty hours a week because I was a full-time mom. I drove the kids to school. I organize and track all accounts, the soccer games and everything else. I was the mom who did all that.

I wanted to have a meaningful decent income, but I also had hours that I couldn’t work. It turns out that when you set those priorities straight, you become much more productive because you don’t have a whole lot of time. If you say, “I’m not working on weekends, evenings or at the crack of dawn. You find ways to be very efficient. You cut out the trips and the chit-chats. In my mind, you end up with better quality friends because you’re going to connect with only those friends that matter to you. At that point, you’re either giving up time at work or time with the family.

You end up with better quality customers because a lot of borderline customers, I wouldn’t take them. I wouldn’t call them. If they don’t pay me on time and if they are very needy and call me in all hours day or night, I’m like, “This customer isn’t worth it.” I look at my margin and I’m thinking to myself, “I’m not making any money and they happened to be the most needy and demanding. They don’t respect my employees or my time. You don’t get rid of them right away, but you try to get a better-quality customer to replace the one that is causing 90% of your agony for 10% of the volume.

You learned that quality over quantity.

MDH 71 | Passive Income Stream

Passive Income Stream: Make sure that you put the same priority on the same standards for your family, for your work, for yourself, because you have to be happy.

 

What Edwin and I are saying is there are some entrepreneurs who will go and chase after every deal and customer at all hours of the day. If you do that, what happens is you are going to pay a price. That price could be your own health or the quality of the relationship you have with the people that are closest to you. You’re unhappy even though you’re making money, and then you start resenting yourself, “I’m doing everything for everybody else, my customers, employees, community and family, and I don’t have any time.” You end up justifying not going to church and not doing things because there’s a lot of stuff that happens.

A lot of people set priorities and they understand them. If you’re reading this and you’re like, “These people are making complete sense.” When it comes to doing it and implementing your priorities, there are seem to be a disconnect between what you know is right for you and what you are willing to do. I love that. There are four million people quitting their jobs every month. A lot of them have started their own businesses. How do I know that? It’s because of the census bureau. There are 700,000 patent applications by the American people at the USPTO. You can look at this.

There have been more applications for business licenses from 2020 to 2021 ever in our history. Those are the people that we know about. There are people that started a side hustle without even asking for a business license. What are some of the most common mistakes that you see that people are making at the startup phase of their business?

The biggest mistake that they make is they do not follow the business process. You mentioned that when you started your business, you knew what you wanted. You have clarity. You said, “I wanted to make $2,000 a month and that’s what I want.” You have your business. You have your address for your business. A lot of people go, “I want to get into business and I want to do this.” They jump right in without having a solid plan or an idea of what is it that they want. Ninety percent of young entrepreneurs or people that get into business fail because they don’t create a business plan.

To me, having a vision board in life is my business plan. In business, every time that I started something from scratch, “Here’s our business plan. This is who we are. That’s what our values are.” It goes back to what you’re saying. Your values were, “I’m not going to work more than twenty hours a week.” That’s a value. “I don’t want needy clients.” You knew what you want. You had clarity. Creating a business plan is important. Besides the business plan, the second thing that I always teach people is you need to have a business plan, and then you need to have a cashflow sheet.

You’re going to work backwards. You’re going to go from a macro to a micro-environment. Meaning if you want to make $120,000 a year, it’s going to tell you how much money you need to make per month or per day. It’s going to tell you how many clients you need per day. Ninety percent of people don’t do that and it’s so simple. That’s where they tend to fail or they stay being an employee for their business for the rest of their life.

That’s exactly true. If you have a vague goal like, “I’m going to start my business, spend more time with my family, and make a lot of money.” These are all vague words. What’s a lot of money? Is it $100 or $100 million? If you say, “I’m going to spend a lot of time with my family,” what’s a lot of time? For me, I was making more money as an employee. My rent was $1,000 at the time. I had a two-bedroom apartment. If I can make my rent and I can pay whatever I needed, I could have survived on $1,500 a month, but my whole month scenario is $2,000 a month.

How am I going to make the $2,000 a month? If I wanted to make $2,000 a month, what do I have to do to make the $2,000? I designed jewelry. I thought to myself, “If I sent 50 letters out every day to all the major department stores and I got 10% of those people back, and the average sale was $10,000, is it possible? What if my term is only 2%, can I make that number?” The answer was yes. It wasn’t a huge goal.

Everybody changes in life but not everyone improves. We have to continue improving in life. That’s what makes us better every time.

The other thing too is if I’m writing 50 letters a day because they are mostly form letters, I thought to myself, “That’s more than plenty.” If you look at right now and start a business with twenty hours a week and you were spending three hours on social media. Three hours a week is a lot of time for social media. Trust me. I could do it in 30 minutes to create a post and post it, three times a week.

Even with that, you should have a plan. I do Motivation Mondays and some quotes. On Wednesdays, I show people how to use the product. Fridays are fun Friday. You can do that. You could have it all done in three hours at eternity. If you’re writing emails to solicit, you want to do five hours, that’s eternity. If you’re sitting there doing that all day, it’s a lot of time.

If you’re doing an hour to two hours a day in follow up and that includes phone calls or follow-up emails, again, that’s plenty of time. Nobody is going to talk to you for an hour. It’s going to be a five-minute conversation with anybody. If you think about how you can run a business in twenty hours, that’s plenty of time.

If you got 25 hours, it’s more than enough because when you’re in a corporate world, you’re going to sessions and useless meetings. You’re being called to by your boss or some department that you probably didn’t even know existed and somehow, they needed your opinion. You’re going through all this crazy stuff that you’re not even doing. It’s breaking it down to bite-size information that you can act on. We’re not asking you to go out or hire an MBA to come up with one. This is a common-sense type thing.

When you and I started doing this years ago, we didn’t have all the resources that all these people have nowadays. They have so many resources. Life is so much simpler now. You go to YouTube, join a group, go to Facebook and Instagram, and you can find all these resources. We didn’t have that when we were starting. It was so much harder for us.

When I started back in ’89, we didn’t even have internet. I had to type it on an electric typewriter. People are telling me, “It was a different time back then.” Now, a small company could have the same resources for focus groups, testing your stuff, or getting opinions as any other big company. In the old days, people naturally gravitated to the known quantity and going to the biggest names. Now, Americans love the underdogs who are not perfect and try hard to help you. I feel like you do have everything in your hands now.

With all this connection that we have worldwide, the audience just got bigger. Our customer base got bigger. Before, we were restricted to that area. Growing up, I was restricted to only working in my area. Nowadays, it’s so amazing. You can be worldwide with no problem.

You can work at any hour of the day too. If you were to give young Edwin or somebody who’s 22 years old and starting out, what would that one advice be?

MDH 71 | Passive Income Stream

Passive Income Stream: The biggest mistake that they make is they do not follow the business process.

 

I will say keep doing everything that you have done. I will not change one thing in my life because if I would change one thing in my life, I don’t know how my life will be now. I love this life. I love what I have, where I am, and what I have been through. Everybody should be the same. We should not keep living with a victim mentality. We should become the victor. Those struggles made me who I am now. Everybody changes in life, but not everyone improves. We have to continue improving in life and that’s what makes us better every time.

Look for more information about Edwin and the amazing life that he has lived and is living because of some of the mistakes, misfortunes, and incredible struggles that he has gone through. He’s gone broke at age 27, which was a blessing. You don’t want to go broke at age 60, trust me. That’s pretty hard. You don’t get to have a do-over at age 60. You do and you don’t. At 27, your whole life is still ahead of you.

The moral of this story is to believe in yourself. Live the life you want to live from day one, not when you make it someday. The journey is important. Set your priorities straight and stick to them no matter what. You’re either going to succeed right there and then, or you’re going to have a detour of some sort like bankruptcy or setback. You’re going to be richer because you chose to use that experience to enrich your life for the future.

When you enrich your life, as Edwin said, you’re not only enriching your life. Even if you’re not doing it consciously, you are reaching everybody else’s life. Every business has suppliers, vendors, manufacturers, and somebody who’s going to benefit from the one business that succeeds. Keep that in mind. Check out his website, EdwinCarrion.com, and his social media, Facebook and Instagram are @EdwinCarrion78. Until next time, please stay healthy and happy. Remember, happiness is your choice. I hope you make great choices. Thank you so much for coming by, Edwin. I enjoyed this interview.

Thank you, everybody. If you don’t know where you’re going, any road will get you there, so have a plan.

 

Important Links

 

About Edwin Carrion

MDH 71 | Passive Income StreamEdwin Carrion is a God-made millionaire, family-oriented, investor, and mentor. Throughout his run, he has founded several multimillion-dollar companies that specialize in real estate development, transportation and logistics, investment, and business education and consulting.

Backed by 20 years of extensive experience in various industries, Edwin Carrion now shares his passion for entrepreneurship by mentoring others, since he realized most people don’t live a fulfilled life. Simply because people believe success comes at the cost of poor family life, unbalanced life, or compromising their values to achieve success.

Edwin guides people in the path to living life to the fullest, by having balance in all areas. Edwin says, “I am here to share knowledge with aspiring entrepreneurs and to address the problems by sharing what I know and learned from experiences.”

MDH 66 | Montessori School

MDH 66 | Montessori School

 

Montessori school is individualized learning; it allows the child to be who they truly are. Victoria Wieck introduces Brigitta Hoeferle, the Founder of The Montessori School of Cleveland. Brigitta shares how she wanted her children to go to a Montessori because she didn’t want to push them into one classroom. Since there weren’t any around when her first child came, she created one herself. Join in the conversation to discover how you can start your business ventures with your current resources. Start with a big vision in mind, but with small steps. And make sure to create a detailed business plan. Tune in to learn more!

Watch the episode here

 

 

Listen to the podcast here

 


How Montessori Schools Support Individual Learning With Brigitta Hoeferle

I’m excited to discuss some very needed topics in this day and age and someone who can speak from firsthand experience. Her name is Brigitta Hoeferle. She immigrated here from Germany with a lot of skills and had to start her life over here again. She’s taken all of the great things that she’s learned in Germany, as well as what she learned as an immigrant here, and started some amazing things. I will let Brigitta speak about her own journey here so that it will be a little bit more accurate and interesting. When she speaks about her herself, it’s a little bit more interesting than if I can read her bio. Welcome to the show.

Thank you, Victoria. Thanks for having me. This is exciting.

Tell my audience a little bit about your background. What fuels you? What it was like to come here and start your life over? What age was that when you came? You don’t have to state the age and what year but I want to know if it’s teenage years or later on.

I will give you the whole rundown. I was born and raised in a very small village in Germany. It was 600 people. Gorgeous Southern part of Germany, vineyards all around, and we played in the vineyards but it was very small-minded as well. I couldn’t wait to get the heck out of there. I went to school in Germany, all the way through my university times. I have two degrees. I started my life in Germany. I climbed the corporate ladder in Germany. I met my husband in Munich. I’m not originally from Munich but I worked there in a large publishing house.

When we met, I was in my very late twenties like 29. It was that late. We decided to get married and have children. Me, being a student that never liked being in school, although I hold two degrees, I hated school, probably because I was bullied and overweight. That’s a story for a whole other time. One of the degrees that I hold is in Social Pedagogy, and that is to be a teacher. I never did anything with it.

When it was time for us to have children, I didn’t want our children to go to a Montessori school, which is very individualized learning. It allows the child to be who they truly are and not try to push children in one classroom, and they are all in the same box, if you will. Through my education times, my university times, when I learned about the methodology of Maria Montessori, which has been around for more than 100 years now, I thought, “What an incredible methodology. How come I never went to a Montessori school?”

It was clear to me that I wanted our children that were not even born yet, weren’t even conceived yet, to go to a Montessori school. I created a Montessori school out of necessity because when it was time to give birth to our first child in Munich, the waitlist for Montessori schools was three years. I didn’t have that time because I loved what I did, and I traveled a lot through Europe into the United States, back and forth for the publishing house, with the organization that I worked with. I couldn’t do that, being a stay-at-home mom, waiting three years to have a space in a Montessori school for my child, our daughter, Emily, I said, “I have the degrees. I have the knowledge and marketing. Why don’t I start our own school?” I did that.

I was 32 at the time when we moved to the United States to grow the business because I came to a place where I needed a much bigger facility in Munich. If you know anything about Munich or German real estate it’s, A) Very hard to get and, B) Very unaffordable. For me to grow into the big vision that I had, my husband and I said, “How about we moved to the States?” We made that decision and did that. Now that I’m talking about it, it sounds very simple. It wasn’t all that simple moving an entire business and household with a small child but we did it. We started with our own child, the school, and grew rather quickly into 125 students that we have now.

 

Montessori school is individualized learning; it allows the child to be who they truly are.

 

You basically started your first Montessori school out of necessity. You had to go abroad to live out your vision of bringing that experience, an individualized learning experience, to other people.

I want to. It was a choice I made.

It’s true but if you are living in a place where you’ve got 600 people living there, it is pretty limiting. It is a choice but I would say, either way, you made that decision. It’s interesting because I come from a whole family of school teachers, and I was not a great student. As with you, I have degrees from very prestigious universities. I did get pretty good grades. I didn’t enjoy it. I didn’t like it and don’t use it. I’ve got two MBAs and all that stuff. I have never used it because I’m an artist. I make a pretty good living practicing my art.

The conventional thought of becoming a doctor, a lawyer, an MBA or whatever, to gain your freedom, didn’t apply to me. I sometimes think to myself like, “How much more successful I would have been if I was allowed to become an artist ever since I was a kid?” I never went to art school, any design school. I created an amazing business for myself. I agree with you that people, especially children, should be nurtured for their individuality and work with them. They develop at different ages, different things. They have different dreams. Not everybody fits in that same set of boxes that they put us in.

Let’s go back to what it takes to start a school. Not only start it but sustain, then grow and scale it. All those things came in handy here. By the way, I do think that in America, I wish there were more Montessori schools, more school choices because when I sent my kids to school, as you said, there were all these waitlists. We didn’t have those choices. My kids literally went to part private, part public, and part homeschool. I have one child who excelled in Literature but hated Math. That child needed specialized education to get to the national average. She excelled in Literature. She could have taught her teachers a few things.

The other one was good at Math and Science. She took after my husband, who went to Harvard with Math and Science and all that stuff. She hated Literature. They were in the same school, as you can imagine. We need a lot more of the Montessori school or types of school that you have created. I wish you all the best in the future because I’m sure you haven’t stopped helping other people. In terms of how do you start, what do you get funding for? How do you go find your target audience? How do you talk to them? How do you convince them that this is their thing?

I have funded it all through my own capital that I brought from Germany and I didn’t bring a whole lot. It varies oversee a full amount that I brought.

When you were in Germany, how did you fund the first one?

 

MDH 66 | Montessori School

Montessori School: You need to have a team, and you need to know how to delegate.

 

Through my own capital. I didn’t have any investors. Everything that I have done up until now, I have done through my own efforts. I never looked for investors. I did have some investors that wanted to be part of it. I said, “When I need you, I will let you know,” but we have organically grown from facility to facility. We started out with a small facility went into a medium facility. We moved over the pandemic in July 2021 into a very large facility and are now able to take even more students. We haven’t started high school yet. That’s a whole another can of worms that you would open.

How did I start out? I started with a business plan. Being in marketing, a smart businesswoman, I knew I had to have a very clear business plan laid out. I knew I needed to start not big with a big vision. I needed to start with a vision in mind but with small steps. What can I do with everything that I have? What can I do with the funds that I have now? What can I do with the knowledge that I have now? I knew continuously pouring into myself as the owner of the school will help me with the growth as well.

For the business to grow, I’ve got to grow as well. It’s going to have to start with me, so business plan. Starting with a handful of students. We started with seven students in Germany. Out of that, I did some market research. Who is my target client? Who sends their kids to Montessori school? What do they appreciate? For what reason would they send their kids to a Montessori school and pay high tuition rather than sending them to public school?

I did all of that research. That was all part of my business plan. With that, we left Munich, and we went to Cleveland. When we touched down in Cleveland and bought a building, and started there, I immediately became a member of the Chamber of Commerce. That was one of the first things. I became a member of the Chamber of Commerce, and I’ve also got some help from the Small Business Development Center, which most small business owners don’t even know that they are around. They are paid by our tax money, go and use their services.

They helped me tremendously, especially coming from a different country. It might be easy to cross cultures from Germany to the United States until you do it and get everything set up. If you are not familiar with the ins and outs and the banking in a different country, all of that is a learning curve. All of that takes time.

I became a member of the Chamber of Commerce, and out of that, my first students came about. A lady that I met at the Chamber of Commerce. She had twins and a little one. Her twins were a little bit older, and she had another little one. She spoke German, and that’s the connection that we made. Connections are always made with people that you sympathize with and that you know, like, and trust. There was that immediate connection of the two of us being German. She says, “I love that.”

Out of that, within the Montessori school, I then created the German language school. I was partnering with the General Consulate here in Atlanta. All of that happened organically. I continued to pour into myself, into my staff, into the business. By that, I mean in knowledge, in wisdom, in mentorship and learning, and coaches that would come in and help us grow. That’s why we are where we are now. I’m not in the day-to-day operation anymore. I live in Atlanta now, and the school is still up in Tennessee.

There’s a lot that small business people can learn from what Brigitta did. Basically, you, starting up a school or any business, it starts with identifying your target audience then finding out their need. What are they hungry for? What are the needs that are not being met? What are your competitors doing? Competitors in your case were public schools and maybe some super expensive private schools that are doing the same thing that public school is doing with a controlled environment for a little bit more money. In your bio, one of the things that you listed that stuck out right away to me and I have it highlighted here, which is active listening.

 

Start with a vision in mind, but with small steps.

 

A lot of people say listening is important. All of that becomes a buzzword. A lot of times when you are talking, and you know somebody is listening to you, especially when you meet somebody at the Chamber of Commerce or wherever like in a big function, they are listening to you. They are still looking around. You almost see their heads spinning, trying to figure out how to respond to what you are saying before you even finish what your sentence is. To listen with empathy, listening actively, listening with care, their care in mind, what their needs are that was your first step, whether that’s one person at a time or as a community of school moms who have this need.

For those of you who are reading, these are the stuff that we talk about the week in and week out, identifying your target audience. It wasn’t all school moms. Some school moms love being in public schools. They think Montessori schools are great. They don’t even know what that is. It’s fine but that was not your target audience. You went there. You look for help.

By the way, on your first remark, Small Business Development Center. There are many associations, so much help out there that a lot of small business people don’t know to look for. I, myself, volunteered at SBA. We have chapters all over here, retired people from all over the country volunteering their time, mentoring, finding money for you. That is a great resource that you mentioned. Scaling your business now, this is how you’ve got started, how you identified yourself.

Now, what did you do to scale that business? As you said, you are not there actively day-to-day. I identify as scaling your business differently than growing your business. Growing your business means you are putting more resources, working more hours, putting more money into something to grow at. Scaling your business, you are working less, fewer hours. You don’t have to put in proportionately the same amount of money to grow it exponentially. Tell us a little bit about how you scale your business.

As I already said, I’m not there at all anymore. I have meetings once a quarter, and that’s it. I have a great team that runs the business, an incredible team, and a big shout-out to them. Now that we have 125 students and we started with 7 students in Munich and 3 students here in the US and grew it from there, we started with one classroom. If you know anything about Montessori, there’s one classroom with many teachers. I had to choose to have quality teachers and train them in the Montessori method. They went and got their diploma in the Montessori method as well to put an official approval stamp on it.

There are a few components in scaling. First of all, you’ve got to have a good team. Second of all, you’ve got to know how to delegate. You’ve got to know what the big picture is. How are you going to get there? How can you reverse engineer of seeing that big picture? What do you have to do now to get to those steps?

That’s where most business owners fail because they see this big vision. They want to scale, grow but then they don’t know which next steps to take, then they get frazzled, sidetracked, and it all falls apart. They never get to the growth that they desire. We started with one classroom. As we had enough funds, we added another classroom because, organically, this is what happens. The children in our one classroom grew older, grew more mature then were ready for the next classroom.

We were organically filling our next classroom. I often ask my clients as they are scaling their business, “What do you already have that you can use to not recreate the wheel but you can use and utilize that and use it in your growth that you don’t have to go out and buy another this or do another that?” No, use that very strategically for something else. The something else was another classroom with students that we already had.

 

MDH 66 | Montessori School

Montessori School: Where most business owners fail is how they see this big vision. They want to scale and grow without knowing which next steps to take, then they get frazzled, sidetracked, and it all falls apart.

 

Constantly, we are working on getting new students in, and it was word-of-mouth. I hardly ever did any marketing other than being very involved in the Chamber of Commerce. To a point where they asked me to serve on their board, which I did. I was then asked to serve on several other boards, and that helped me to be visible. Visibility plus credibility. I had the huge credibility that I worked for. I had credibility coming in with the credentials that I brought but being in a community like Cleveland, Tennessee, there wasn’t any other probability than the official stems that I had from school.

I had to work on that. I had to work to make a name for myself. Being invited to serve on the Chamber of Commerce board was a huge credibility piece. I was the only female person around the boardroom table, and I was about a good 25 to 30 years younger than everyone else around the boardroom. All of that to say is, you’ve got to be out there. You’ve got to be visible. You’ve got to be credible to be profitable. All of that helped me in scaling my business, and that’s where I’m coaching other organizations to scale their business.

Basically, you have a great team behind you, build an amazing system, usually by testing, growing, small steps at a time. I’m going to take it a little bit even further back to your original. When you first started out, it was very similar. You started with seven students. That was a great flexible testing ground or because you were truly meeting each individual person’s need.

You know the names of every single person there, probably their parents and grandparents. You basically built and accelerated the growth a little bit when you came to America. I love that business model. Going back to a little bit about visibility. People have to like you. You have to be credible. They have to trust and respect you before you can even get visibility.

The way you do that is by getting out there like you did, meeting all people, not theoretical people. You would be amazed at the doors that open for you if you truly are authentic and giving your heart, your expertise, and your share freely. All those things come to you. Believe it or not. That’s a great lesson to learn, and you’ve got great firsthand experience in that. As I said, there was a lot of need for all types of schools. I’m not advocating Montessori. Maybe your kid needs a structure.

I have two children. My one child wanted to be in the biggest school. She went to UCLA. She thrived there. There are 100,000 kids there, and she loved it. My second child didn’t want to be in a big school. It was overwhelming, and they wanted a 3,000 school-type thing, and that’s okay, too. Not one is not better than the other. Giving accurate and tailored information, offering options that fit a lot of different kids, you are doing an amazing service for our youth. I have this one little beef. Maybe you can since you are in that position now to help. I’m not trying to pitch you on this at all but I’m passionate about it when it comes to children. I found that with my own two kids going to college and they are now older than your kids are.

I found it interesting that our schools here in America, at least, we teach Math, Calculus, Algebra, Geometry, all these things but we don’t teach any relationship with money and life. All of a sudden, they go to college and get so awestruck by the kid who can buy $100 worth of whatever. I’m actively involved here now in California, trying to bring a little spirit of entrepreneurship early on because what does entrepreneurship mean? As you said, it requires you to understand other people. When you understand who your target market is, what do they need? You’ve got to find out what they need, what are they willing to pay for it, and how often.

When you have conflict resolution between your vendor or your customer, they want to pay you, let’s say, $10 for the iPhone case. You have to charge $30. “Why are you charging me so much money? We are friends.” The kids can learn negotiating tactics and understand conflict resolution pretty early on. I wish that somebody would start doing something like that in school. Especially when they are a little bit older like a sixth grade on, that would come full circle even if they don’t become entrepreneurs later on.

 

Connections are always made with people you sympathize with, like, and trust.

 

I agree with you. Our daughters go to an entrepreneurial high school here in Atlanta, and they do that. They have to build a website for their business. They have to create a business, finding something that they are passionate about. If they might continue it after high school or not, it doesn’t matter but it teaches them how to build a business plan, how to create a budget, and how to stick with the budget. What does stuff cost?

It’s interesting that you brought that up because within building my Montessori school and being invited to speak at all conferences on that topic, I found that the work with children is easy. I love working with children. It’s the parents and adults around them. That’s why I created another educational facility for adults because we can pour into our kids over and over again.

If there are certain adults around them, thought leaders, parents, aunts, uncles, family members, religious leaders, teachers. You name them. They are not in the right mindset, then that has an impact on our kids. The work is not being done on our kids. The work needs to be done on the parents, the thought leaders, and the teachers.

I heavily pour it into and continue to pour into our staff, into our parents. That’s why I started coaching parents because I had parents come to school. They would have a meeting with me and say, “Something that I’m not getting here. You seem to have a completely different child at school than I have at home. What is up?” We said, “There are boundaries. There’s a very clear structure. Within that structure, there’s also freedom.” That beautiful balance, I’m not saying all of the kids but a lot of kids are not getting that at home.

There is no enforcement of boundaries. There’s no positive enforcement of empowerment of a child. I took it on for parents to learn that because that’s where it starts. I want to share with my child what it takes to open a bank account and what it takes to budget or make sure that we have enough money for groceries this month. It’s all about being active in the family, too.

As we close, how do people get ahold of you? Do you have any last-minute advice for young entrepreneurs, young entrepreneurial moms?

The advice that I have is don’t give up. Keep going. You are doing this for a reason. Be mindful of what the big picture is and keep going. There are no unresourceful people. There is only an unresourceful state of mind. You might at times find yourself that you are not resourceful, which is not true. You are in an unresourceful frame of mind. Find someone that can be a resource, and I would love to be that resource, Brigitta@Hoeferle.com. If you google my name, I’m the only one that comes up with that name. That’s how you get ahold of me.

Her name is Brigitta Hoeferle. I wanted to thank everyone for reading because this was very meaningful. Many of you, not only are you business people but many of you are young moms. You’ve got kids anywhere from 2 years old to 18 years old. You are not alone. You have choices. You might not know you have all these choices because I run into people who don’t think they have choices but you do have a lot of choices to give your children the education that you envisioned. Anyway, thank you so much for coming to this show. I wish you all the best in your future endeavors, Brigitta.

 

MDH 66 | Montessori School

Montessori School: The work needs to be done on the parents, thought leaders, and teachers.

 

Thank you, Victoria, for having me.

For those of you, I always sign off by saying, please stay healthy and happy. Remember, happiness is a choice. I hope you make great choices this coming week. Thank you.

 

Important Links

 

About Brigitta Hoeferle

MDH 66 | Montessori School

Brigitta was born and raised in Germany and resides in the U.S. since 2004 with her two wonderfully independent
and successful teenage daughters, and her husband, the renowned Culture Guy. She is the award-winning founder of the German Language School and the Montessori School of Cleveland.
As the Founder and Shareholder of The Montessori School of Cleveland, and as CEO & owner and Grandmaster of The NLP Center, a global institute located in Atlanta, GA she gives full credit for her success to her unique communication and listening skills, her tenacity and her never-ending desire to take something from good to outrageously great. To add even more fuel to the fire and more credibility to her work, Brigitta has created Coaching Programs for large Corporations and conducts extensive trainings for Corporate and Government Organizations,
leading The NLP Center with knowledge & heart as the CEO and master trainer.
MDH 28 | The Bezos Letters

MDH 28 | The Bezos Letters

 

If it’s better for customers, it would be better for Amazon. Amazon’s success was largely founded on this principle by its creator, Jeff Bezos. In this interview with Victoria Wieck, Steve Anderson, the best-selling author of the book The Bezos Letters, talks about how Bezos built his company based on his obsession over customers. Tackling Bezos’ business model, Victoria and Steve also look into how you should take calculated risks, the importance of writing out your business plan as if it were an essay, the four cycles every business goes through, and more. Tune in and discover the growth principles Bezos has used to get to where he is now.

 

Steve Anderson can be reached at https://www.thebezosletters.com

Watch the episode here:

Listen to the podcast here

The Bezos Letters: Amazon’s Hidden Roadmap To Success With Steve Anderson

How Amazon Was Founded Largely Upon Obsessing Over Customers By Jeff Bezos

We have an amazing guest. I’m floored with the information that he has and the book that he has written. His name is Steve Anderson. He has written a book called The Bezos Letters as Jeff Bezos, the guy who runs our world right now. In this book, he deconstructs the 21 letters that Jeff Bezos sent to the Amazon shareholders over time. Otherwise, he’s an amazing insightful person with a lot of different industry backgrounds that culminated in this book. The book was the bestseller on The Wall Street Journal, USA Today and Amazon. It’s an international bestseller. He has got thousands of followers on LinkedIn. Without further ado, I want to welcome, Steve Anderson.

Victoria, thank you. It’s so great to be here with you.

I’m sure I’ve got everybody’s curiosity peaked. First of all, why did you deconstruct the 21 letters that he wrote to Amazon shareholders? Were you one of the shareholders?

No, I’m not. I haven’t been and now it’s a bit expensive. It’s one of those things I regret not doing this years ago. I came up with the idea through my work in the insurance industry, where I’ve spent my entire career. I’ve spent helping insurance agents or brokers understand and implement technology in their organizations. What I came to the realization of was that the biggest risk businesses face now is not taking enough risk. That’s counterintuitive certainly for the insurance industry because we’re all about reducing risk and mitigating it. I started researching companies that had done it well. Meaning embraced technology and implement it and those that hadn’t.

Those that hadn’t are well-known now, Kodak, BlackBerry, Blockbuster, Sears and Montgomery Ward. There’s a whole list of them out there. I also was researching who has done it well. I came across Amazon. I say now but at that time, it was like, “Amazon has done well. I wonder how.” That was the question I started asking. I came across the letters to shareholders that Jeff Bezos started writing in 1997 when they went public. I was astounded at the amount of information he gave and talked about what his thinking is and how they operate at Amazon. That started giving me some clues as to why Amazon was and is and continues to be as successful as they are. That resulted in the fourteen principles, four cycles and all of the growth principles that I believe Bezos has used to get to where he is now.

The biggest risk businesses face now is not taking enough risk.

I read the book The Everything Store. I found the book fascinating. It goes through his early years when he was moderately successful. When you read it, you do get the sense of how he does the four different phases of building any business meaning as a bookstore then a toy store and all the different stores. When you look at companies like Blockbuster and all these other companies that are not with us anymore, do you think that it’s necessarily how much risk they took or they just forgot to evolve or reinvest?

I’m going to put it in Bezos’ speak. What he would say is that those companies became day two companies. One of his mantras is, “It’s always day one. It’s still day one.” That idea is that Bezos still thinks of Amazon as a startup. That’s crazy to think about, given how big they are. For your readers, it’s also important to understand Bezos started like every one of you reading. Meaning on his hands and knees, putting books in packages and taking them to the post office so they could be mailed out to customers. One of the phrases I use in the book is, “One of the biggest risks of success is actual success because you tend to start protecting what got you there, not looking at what’s next.” Blockbuster is a great example of that, not being able to adjust their business model or kill it when they started understanding that streaming was going to be something. Success gets business owners in a mindset of, “I got to protect what got me here, not look at what’s next.”

There’s a lot of truth to that. I came across this quote by Winston Churchill. You might have come across that too because you seem like you’re a well-read guy. It said something like, “Success is not final and failure is not fatal.” If you look at that and go, “What an interesting quote,” I wonder if success is the cause of their failure because success is not final.

Failure can be the cause of success. My first principle is called Encourage Successful Failure because Bezos has instilled in Amazon this idea that experimentation is key to invention. If you’re going to do an experiment, you don’t know if it’s going to work because if you did, it’s not an experiment. The whole nature of it is, “We don’t know what to do next. Let’s try this.” Amazon has been built on that mindset of experimenting. It’s not doing stupid stuff. It’s calculated. You protect the downside. In fact, Amazon has intolerance for incompetence. If it’s a failure because of incompetence, you’re probably gone. If it’s a failure because you’re trying to test something new then you’re probably encouraged to keep going, even in the midst of failure.

You’re protecting your downside and what’s working. Would you say that they are looking at the 80/20 Rule where the 20% that’s bringing you the 80%, they are going to always protect that but they’re going to have to look for the new 20%?

MDH 28 | The Bezos Letters

The Bezos Letters: 14 Principles to Grow Your Business Like Amazon

Yes, that’s a great way to look at it.

For my readers, would you explain that a little bit more in granular detail? That’s an important lesson. Going back to what you said about how Jeff Bezos started his company very much like everybody reading, I would go even further than that. If you look at companies like Google, Facebook, Amazon and Apple, they all started their companies with $5,000 capital doing everything themselves. This is a relevant question in regard to taking the experimental risks because when we’re talking about taking more risks, Steve is not telling you to go and take more risks for the sake of taking them.

To try and answer that question, let me give you an idea of what is one of the pivotal tools that Bezos instilled at Amazon that has led to its continued growth. That’s called the six-page narrative. In 2004, they were fairly “old” at that point. Bezos banned PowerPoint at Amazon or Keynote. Any slide-oriented presentation was no longer acceptable to pitch an idea to a new product. It developed over a few years. You were required to write out an essay. It’s called a six-page narrative. It starts with a press release called a future press release on the day the product you’re pitching is released to the public. It follows an FAQ.

Here’s the point. It requires so much thinking to write out your ideas and anticipate, “Here are the problems. Here are the questions. Here’s what we don’t know how to do that we’ll have to learn.” That’s protecting crazy ideas because you’ve got to think it through and Bezos believes in writing things out. Even if you look back at the shareholder letters, that’s the core of what he did. He wrote out for shareholders and everybody else his thought process and that’s why they’re so valuable.

What you’re saying of this whole thing is to have a pulse on your business and customers so that you understand where your business is, where your stomach is as far as how much risk you can take and where your customers are going. One thing whether you’re evolving or not, the customers are always evolving. You are always evolving. You have to have a pulse and pick an accurate thing. Also, I like the idea of writing out your business plan or anything that you’re getting into because the act of being able to write it out will get you thinking about all the execution details. When you write things out, you’re like, “This sounds stupid.”

Encourage successful failures because failure can be the cause of success.

Going back to protecting the downside is, if it doesn’t make sense on paper when you write it out, it probably won’t make sense as you implement it. It’s the whole idea of slowing down to speed up. A quote from Andy Jassy, who’s the former CEO of Amazon Web Services now becoming and replacing Jeff Bezos as CEO of Amazon. What he said is, “Too often, engineers go into a project and they work and work. They get to the end and they end up with something that doesn’t work. Whereas if they had taken the time beforehand to think through all of the issues and problems, they save more time than they waste having to write out those ideas.”

From the business point of view, like from the business planning and getting stockholders to listen to you, we’ve covered all this. When it comes to what Amazon did, in my mind, in terms of their competitive advantage, there are so many different advantages and he has built all kinds of barriers to entry, which is outside of the scope now. What I do want to mention is that the one thing from the business I come from is how he revolutionized customer service. There needs to be another word for customer service now that he had set a whole new standard because the customer service that most of us experienced before Amazon wasn’t customer service. It was an afterthought. If they gave it to you, it’s fine. There has been nobody who has built a company around that.

A key principle, it’s my principle number four, called Obsess Over Customers. Obsess is Bezos’ words. In that first 1997 letter is that, “We will obsess over customers.” You explained what the implications of that mindset have been, which is an extraordinary development of all kinds of things that are focused on the customer. You said we talked about customer experience, customer journey and customer focus but obsess over customers has a different connotation to the point where Amazon has created automated customer service. Meaning they monitor people’s interaction. If it’s not up to a standard that they have set, they might automatically refund money without the customer even knowing something was wrong.

That happened to me twice. I bought a pair of athletic leisure yoga pants. I wanted to have them for my business trip and I was leaving. Amazon Prime delivered it in two days. I ordered it three days ahead. I didn’t receive it on day two. I tracked it and it says it was delivered. I live in an area where there was no theft. I emailed and told them I hadn’t received it but the double thing says I had it. I don’t know if I was ever going to get it or not because I was leaving for a trip for fourteen days. By the time this person got back to me, they had already credited my account. Lo and behold, by the time the person got on the phone with me, I’m looking at a package in front of my door.

I told them, “I’m going to let you know.” She was like, “We can either send you another.” I said, “No.” I was looking at this thing at my door. They anticipated. They have great anticipation. The other thing I would say about Amazon with their business model, too, is that there are so many things he did that are revolutionary. I have dealt with department stores, specialty stores and in-flight duty-free. I’ve dealt with people and companies. We’re talking like Harrods and all these companies all over the world, the discussions about customer service, how obsessed they are about customer service and all the things they do for their customers.

MDH 28 | The Bezos Letters

The Bezos Letters: One of the biggest risks of success is actual success because you tend to start protecting what got you there and not look at what’s next.

 

I’ve been in large companies in America where senior management will say these things but they didn’t care for their customers. They didn’t even like the customers they have. They come up with a new campaign to get a whole new group of customers. Sometimes they think it’s one group or the other. Bezos elevated that. He blew it off the chart. The second thing that he did that was revolutionary in my mind is that he was probably the first person who has built a part of his success from collaborations. He let all third-party people come in and do all that stuff. It was a brilliant business model because he was able to get reach from everybody.

I haven’t read the 21 letters and your book yet, which I’m going to. I would highly suggest that you read Steve’s book called The Bezos Letters, where he deconstructs 21 letters that Jeff Bezos wrote to Amazon shareholders. It’s valuable because I don’t know that he would write the same letters now with that same transparency and eagerness to his shareholders because he doesn’t have to. It’s a different company now but that’s relevant. As successful as Jeff Bezos has been, there hasn’t been a lot of books written about him. There are strategies. There have been portions of it. If you are a small businessperson, I would highly recommend that you read that because he did a lot of things. The poor man struggled for the first 10 to 15 years. He struggled downright dogfight every quarter for decades. Getting back to my question about the idea of collaboration, was that part of his goal?

For him, it was obsessing over customers. In the early 2000s, two-day shipping for Prime, his senior leadership team thought he was crazy. They fought him tooth and nail to not pay free two-day shipping. What he said was, “If it’s better for customers, it will be better for Amazon and our shareholders.” Now we look back, going, “Of course.” What did free two-day shipping do? It removed a barrier and friction point. Do you remember the days when we would go online and you get all the way through the shopping cart and all of a sudden there was a $20 shipping fee? We stopped and abandoned carts. That’s one example. I’ll get to your question on the next one. Amazon Marketplace is allowing third-party sellers to sell their products on Amazon’s most valuable real estate, their website.

Back to successful failure, that was the third iteration of them experimenting with what would work. The first was called Amazon Auctions. They were trying to compete with eBay. The second was called zShops, which was third-party sellers but in a whole different section of the website, bad customer experience. The third was third-party seller, Amazon product, literally next to each other on the same page. The senior leadership team thought he was crazy but what he said was, “If somebody else can have the inventory and/or at a better price, it’s better for customers. Therefore, it will ultimately be better for Amazon.” They created a whole business around fulfillment services for third-party sellers who could never afford to do what Bezos did for those first 10 or 15 years, which is built this amazing logistics infrastructure to get packages to someone’s porch.

I’m no Bezos and neither are you. There’s only one of him out there. You can pick a lot of different things about his business model and we are now seeing some cracks of his success as well. I’m sure he’ll deal with that. For me, I’m a customer service-centric person. I work with a lot of corporations that compete with Amazon. I’ve seen their reactions like, “Amazon doesn’t exist. They don’t do our category well.” I’m like, “Give it time. They will fight,” and they have. Having that incredible customer-centric mindset and when I say that, it’s not like you’re giving them lip service.

Experimentation is key to invention.

I’m not going to mention names. I’ve been in companies where they had names for customers like, “We’re going to call our customer Megan. We’re going to call the 50-year-old customers Elena.” They got their lifestyle demographics but they are completely missing the point. They have the name, demographics, gender and income group isn’t going to solve the problem. You have to understand the mindset of the person and preferences on how they want to shop and want to be delivered. I also love how Amazon has the anticipated shipping so that if I’m going to buy for four days, you can choose your ship date. They do make it so easy that you feel like you’re an idiot if you go somewhere else to shop for something.

Several times in 2020, which for everybody has been unique and different, I can go to the store and buy that and my wife would say, “It was easier to let Amazon ship and bring it to your door.” Because they have built that up and they can fulfill that promise 99.99% of the time.

You say here there are four key growth cycles that every successful business company is always intentionally moving through. What are the four key growth cycles?

Test, cycle one. Once you figure out what’s going to work, you build it. You accelerate the growth once you see it’s working right and then you scale. Even you can look at Amazon in the early days, testing, building, accelerating and scale. One of my questions when I wrote the book was, “How in the world do they have the number of employees they have?” In 2020, they added over 450,000 employees to that company. How in the world can you do that and still maintain culture? Those are the four cycles. The fourteen principles are grouped into each of those cycles that seem appropriate for that stage.

Maybe you want to recap. In the 21 letters that he wrote to the shareholders, what do you think for a small businessperson are the top three main takeaways? We already discovered the customer service part. Any other relevant things that you haven’t mentioned?

MDH 28 | The Bezos Letters

The Bezos Letters: Once you figure out what’s going to work, build it. You accelerate the growth once you see it’s working right and then scale.

 

I’ll go back to a couple of things we talked about. Encourage Successful Failure tends to be something that resonates with people. Amazon and Bezos have had some spectacular failures, which you don’t tend to remember because they’ve had some great successes, too.

Let’s go over the failures just a couple because people would like to know.

Amazon Auctions and zShops, that’s just an example. Probably their biggest failure is the Amazon Fire Phone.

I remember that.

Most people don’t. It was released in 2014. Jeff Bezos was up on stage saying, “This is the next great thing.” In 2014, iPhone had been out for seven years. Android phones were already out. Who needed another phone? Nobody. That was Bezos’ pet project. He pushed that and thought it was a great idea. It shows you, as smart as he is, he even makes bad decisions sometimes. At the end of 2014, they wrote off $178 million in development and inventory costs. The price of the phone dropped to $0.99 and they couldn’t give it away.

Obsess over customers.

That’s a spectacular failure.

Tying this, the success out of that is that same group that created the Fire Phone was also working on another project. That project turned out to be the Amazon Echo and then Alexa. All that voice processing work that they learned about creating a phone, they were able to apply into the Echo hardware. We can agree that the combination of Echo and Alexa has been successful.

What are the things that you think that Amazon has room to improve? What are the things that they can’t do as well as other people? I’ve got my ideas on that.

There are several. You’ve hinted at this. We’ve had a bit more of some questions about their size, “Could they be too big?” About the third-party marketplace, “Are they using data from third-party sellers to create their own private label products?” Employees, it’s focused on fulfillment center workers and warehouse workers, “Could they treat them better?” Those are at least three areas and they’re working on them. The last letter is the 2020 letter. My book stops at the 2018 letter. There’s now been 2019 and 2020. We’re starting to think about writing a second edition to wrap up those last two letters into it.

One of the things in the 2020 letter that Bezos said was, “We need to rethink or improve our relationship with employees.” Here’s a downside of customer obsession potentially, which is, why do warehouse workers have a hard time? Because they’re always pushing to get it out faster. That’s because of the three customer pillars at Amazon, wide selection, low prices and fast delivery. Everything they do for their customer focuses on those three pillars. That means employees have to get things picked off the shelves and packaged out to the trucks so they can be delivered. They’ve had already made steps in helping or working on improving those work conditions.

MDH 28 | The Bezos Letters

The Bezos Letters: The three customer pillars at Amazon: wide selection, low prices, and fast delivery. Everything they do for their customer focuses on those three pillars.

 

It’s a tough job. I’ve been to two different fulfillment centers. It’s fast-paced and hard work. They were the first company to increase their minimum wage to $15 an hour in 2018. If you look at these factors, they all work together. One of the things that I’ve noticed at Amazon with Bezos and I assume that will continue is that if you show him them, you can do it better. Once they become convinced they need to, they will. It’s not just political pressure. I believe he has a concern for all employees. There’s that interesting balance. Customer obsession fast, “Is it too fast for employees? How do we balance that off?” Every company goes through those kinds of decisions.

I have dealt with them for a long time ago. I’ve known quite a few people that worked for Amazon on the merchandising side, vice president of this and that. At the buyer, vice president and director levels, the turnover are high. They burn them out. You can make a fortune but they don’t ask for more than 3 or 4 years. They’re ready to like, “Get lost.” There’s a lot of work to do on that end in terms of their employee relationships, not just at the warehouse. Even these people that are telling you, they hire them well, too. They hire people with a lot of experience but they do burn them out at a faster rate than other Corporate America pieces.

Regarding using the third-party private label, that’s going on actively. That was partly responsible for their success because they were able to get good reach. Even if they’re not making it white-label, they were able to get overall trends faster. For example, if you were selling shoes, Amazon would typically stock the bestsellers like the black, brown and off-white. A third party might have the blues, grays and pinks that Amazon didn’t want to carry but then if they see a spike in the blue then you’ll know that even in branded pieces, they will start to stock that. It looks to me like it’s happening. I’m not in there.

Because Amazon is so algorithm, robots, systems and computers-driven, things that have an emotional connection like jewelry, for example, they don’t do that all that well. They can’t sell the upper-end pieces that you need a little bit romancing because you can’t only do 150 words. Writing those descriptions out isn’t going to cause somebody to go, “I want my wedding ring to be this.” They’re still losing out on that. The thing that I wish that somebody would get done quickly is groceries. They don’t have their gig down yet but I’m sure they’ll find it. We’re going to wrap up this whole session with the main takeaways. We’ve already covered the customer obsession and the pros and the down. Is there any one thing that you haven’t covered yet that you might want to leave our audience with?

If a business plan doesn’t make sense on paper when you write it out, it probably won’t make sense as you implement it.

I can do two and I’ll do the first one quickly, which is to generate high-velocity decisions. One of the reasons as companies grow that they tend to slow is that their decision-making process gets more complicated. Bezos describes it as type-1 and type-2 decisions. Type-1 decisions are bet-the-farm big decisions. He says those should be made slowly with lots of data but most decisions that accompany are not that kind. They’re type-2 and easily reversible. By adding bureaucracy, meaning, “I have to get this decision of the supervisor and then this decision for the manager and this decision for the regional VP,” all that does is slow things down. If you believe in encouraging failure, if somebody makes a bad decision, you’re much better off changing that decision once you realize it than trying to prevent any failure at all.

Back to what we talked about as companies grow, there are reasons why they slow down and that is one of them that I see a lot. The final one is this idea of, believe it’s always day one. Continue to think like a startup.” In an all-hands meeting, Bezos was asked the question, “Jeff, what does day two look like?” He always talks about day one. Paraphrasing, he said, “Day two is stasis followed by irrelevance, followed by a painful, excruciating decline, followed by death.” He goes on to say, “What I’m interested in is, how do you fend off day two? How do you not go to day two?” He has four points there that he talks about. This is in the letters. It was in 2016. He says, “It’s customer obsession, high-velocity decisions, eagerly embracing external trends even when you don’t know what that might mean.” I can’t think of the fourth one off the top of my head now. That to me encapsulates that mindset of thinking like a startup. It’s always day one.

I have some friends who are in the restaurant business on a smaller scale. Why do restaurants fail? When the restaurants opened on opening day, they put on the best linens, clean the carpet and do all the stuff. Think of every day as opening day and the same way. He has got that similar mindset. Steve couldn’t think about the fourth one because I put him on the spot here. None of my interviews are scripted or interviewed ahead of time so these things happen. The good news is you could find him at TheBezosLetters.com for all things regarding Steve Anderson and his upcoming project, as well as the 21 letters and the book. The book is going to be a must-read.

If you’re in small business or even if you’re not in small business, aren’t you curious about how our lives have changed? I’m old enough to remember 1998 and 1997. First of all, if you order anything online, you had to call a 1-800 number. When you finally get somebody at the other end, about 30% of the time, they got your address and order wrong. There was a $30 charge for a gym outfit that costs me $29. It wasn’t even an option. I’ve got my laundry detergent and everything coming on a schedule. I’m going to have to go to the stores for any of that stuff. My daughter is expecting a baby. She ordered almost everything for post-delivery. They sell a whole pack for a post-delivery package. She’s going to be able to have the heavy stuff like the laundry and cleaning stuff delivered so she wouldn’t have to leave with the baby.

MDH 28 | The Bezos Letters

The Bezos Letters: Think like a start-up. Believe it’s always day one. Day two is stasis followed by irrelevance, followed by a painful, excruciating decline, followed by death.

 

Are you not curious as to how all of our lives, not just here in America but all over the world, have been transformed in some way? Even if you decided that you don’t want to shop at Amazon anymore, some people say, “They’re getting too big. I don’t want to shop there anymore.” Even if you are that person, Jeff Bezos has set the standard for customer service that whoever you’re shopping with now has still up the game. The whole world has changed. I’m not his agent or anything like that but I’m just curious as a human being how this all transpired and who’s going to be the next. If you’re Bezos, Mark Zuckerberg or any of these people and they started their company with $5,000 or less, you got to be lying awake at night thinking there’s going to be some new person who could do the same thing and make you irrelevant. That person might be you. Get yourself educated. I love having you here. Thank you so much for your time. Good luck to you with all your endeavors.

Victoria, thank you. It’s a great pleasure to have a conversation with you.

All of you readers, please go ahead, subscribe, rate and review. Remember, stay healthy and happy. Until next time, happiness is your choice.

Important Links:

About Steve Anderson

Steve Anderson is an expert in strategic risk and business growth. Drawing on decades of experience in the insurance industry, he wrote The Bezos Letters: 14 Principles to Grow Your Business Like Amazon, which has become a Wall Street Journal, USA Today, and international bestseller. With hundreds of thousands of followers, Steve has been handpicked by LinkedIn as one of the world’s most influential thought leaders.