13 Lessons I've Learned about Starting a Business from Ramit Sethi

First Published: October 20, 2017

Vincent Adultman

My friend Justin recently asked me about my experiences with Ramit Sethi and his courses. I was already planning on writing up an article about this stuff, but now I owe it to him to follow through on it.

I've been following Ramit Sethi for six years, beginning with reading his book I Will Teach You to Be Rich in 2011. It was targeted at young, single people, but since I was working in insurance and investments with mostly young families, I argued with a lot of it. I didn't really get what he was about with regard to systems and targeting one demographic back then, and frankly I thought he was a little scammy. Despite that, I signed up for his email list and got what felt like a hundred emails in a week. I actually responded to one and said, "All due respect, I feel like you email me more than my own mother." I didn't expect a response, but I got one. I don't remember what he said, but it was polite, something like, "No problem. I'll take you off the list." That's it. I was pretty surprised. I later found out in Zero to Launch this is a very purposeful tactic. Nearly all snarky haters are just acting in the heat of the moment, and simply responding politely will often catch them off guard and diffuse the situation. It sure worked on me. Had he responded in kind, I may never have given him a second look - to my own detriment.

I also later learned that his first impression as a bro is a prospecting technique. I know, hear me out here. It turns out Ramit isn't a bro. I mean, yeah, he went to Stanford and his brother is a Silicon Valley dude. That's all true. But the more you dig into his content, the more you can see that he really cares about producing quality content that reaches two, and only two, types of people: top performers and people who aspire to be top performers. Then, once you actually pony up and pay for his material, you see a very different side of him. Ramit uses this marketing tactic to weed out people who don't want to be his customers. The bro facade is only the first step of that technique; it also includes being brash and unapologetic in his articles and turning down people with credit card debt. Within all of that, though, is material that actually produces results, and those of us who are obsessed with finding what works continue to push through and dig deeper. Ramit, like many others, believes it's way more important to have 1000 true fans who will love everything you do than to have 10,000 followers who don't really care either way.

It took nearly a decade, but this prospecting technique eventually worked on me. Over the last couple of years, as I was closing in on paying off my debt, I would pick back up IWT occasionally to review what he says about building systems for money. I've honestly never been good at automating my finances - I am a little too much of a control freak about my money (cough hyper nerd cough). I'm that guy who will build a spreadsheet for literally anything and enjoy every minute of it. If you want to learn more about his automation techniques, though, you can check out his Ultimate Guide to Personal Finance.

Somewhere in the last year I fell into his sales funnel. In looking for freelance developer resources, I ended up reading articles of his about side work, which piped me into his sales funnel for "Earn 1K on the Side," one of his earliest courses. His prospecting is expert level, and I was squarely in his target market. His products really are a marvel of prospecting perfection. He and his team write every single line of every email and every sales page to be extremely clear about who the course is and is not for. His courses are admittedly more expensive than those of his competitors, but if you are in his target market, they are absolutely perfectly made for you. I really admire the craftsmanship.

I signed up for Earn1K to learn more about freelancing, both in tech and outside of it, like copy-writing. Then, once I decided to make my first tech video course, I also signed up for Zero to Launch, which is an exceptionally well done course on "productizing" a service as a video course. Both Earn1K and ZTL are 8 week courses, and the sites are configured to only unlock certain parts at a time. This is brilliant, as you can't then skip ahead and just consume a ton of content without acting on it. Ramit is all about using psychology to get people to act. It's the same principle of success that everyone from my housemate to James Altucher to Tony Robbins uses. The idea is that the tiniest amount of action is worth much more than a flood of thinking. Actions not only produce results, but produce data that can then be piped back into the process for refinement.

Ramit takes this approach to every subject, from social skills to money to sales. First, focus on the minimal amount of effort required to get the desired result. In the case of freelancing, it's "first get a customer" (that's also rule C in James Altucher's business rules, by the way). This is similar to Tim Ferriss' Minimum Effective Dose in 4 Hour Body. In fact, a lot of Ramit's systems he describes in Earn1K and Zero to Launch are sort of the freelancing and electronic video course adaptation of the 4HWW business model. I see a crucial distinction between Tim and Ramit, though. Ramit is all about value, about helping others, and about crafting superior content. He says repeatedly in Zero to Launch that the goal is to use your online education business to truly serve others by producing remarkable content that pushes people to action in order to change their lives. I don't see this mindset at all in Tim Ferriss' work. I've never met Tim Ferriss. He's probably not a bad guy. But the tone of 4HWW and much of his other work is hyper-focused on me, on how I can maximize my income and minimize my work. While it is crucial to focus on yourself and on what you can control, there is a shift in Tim's tone that comes off as exploitative and selfish. Ramit's tone, on the other hand, suggests that self-satisfaction and benefiting others are bound together, not mutually exclusive.

So now, having gone through both of these courses, as well as what feels like a million other articles and videos from Ramit over the years, here are some of my biggest takeaways.

Lessons on Starting a Side Business (Earn1K)

Earn1K (E1K) is all about starting your first freelance business. It can be anything from designing PowerPoint presentations to dog-walking to assembling furniture. This course lays the groundwork for many of Ramit's other courses, both from a philosophical standpoint, and because it was one of his earliest successful courses where he started find a framework that worked for him. The look and feel is a little dated at this point, but the content is still excellent.

  1. Don't worry about finding a unique or perfect idea. One of the biggest mistakes people make when finding a business idea is being unique or magical. The truth is, you don't need a brilliant or unique idea. Ideas are cheap: execution is what matters. You can do the same thing as someone else, but be better marketing or customer service. And, aside from that, the people who resonate with you will be different than other people. I've seen a lot of Ramit's competitors, I've seen a lot of Ramit's students, and I've seen a zillion different people in the self-improvement and business development spaces. I only like a handful, because I can't stand when people are inauthentic or scammy. Being authentic is underrated, but being unique is overrated. And, furthermore, competition is a good sign, not a bad one. Don't try to create a market from scratch. This is what I tried to do in finance and it was a bad idea. I heard Nancy Cartwright say in an interview the other day: "Ride the horse where it's going." Great advice, in both life and in business.
  2. Avoid analysis paralysis: pick something and do it, then refine. This was my number one problem at the beginning of this year when trying to figure out how I could eventually go into business for myself. I wanted to find the perfect idea, one that would make me money and also eliminate world hunger and make my bed for me in the morning. Spoilers: I couldn't find it. At least not yet. I think as a culture we're obsessed with finding "our life purpose," some defining thing that will be brilliant and fulfilling and change the world all at once. I wrote about that recently in a post called I've Stopped Caring about Finding My Purpose, but the bottom line is this: make the most of the current opportunities around you. Live in the present. This what I'm doing with my tech career. Do I find tech to be the single most fulfilling thing I could be doing right now, on par with feeding orphans in India? No. But I enjoy it, I have opportunities in it to grow and get better, and it lets me make a good living. It is a craft in which I can improve little by little, day by day. Businesses can only be built one step at a time, just like houses and sandwiches.
  3. The Pay Certainty Technique. One of the bonuses of Earn1K is an old course of Ramit's called "Finding Your Profitable Idea," a PDF and some videos. For being a bonus, it's got some great content. It dives deep into something called The Pay Certainty Technique, a way to test if you're on the right track with your business idea. Test your idea by determining whether your potential customer 1) is willing to pay and 2) has the means to pay. I really could have used this when I was in finance. I desperately wanted to build a financial advising business for the underdogs, like single moms and blue-collar workers. Guess what? This (sadly) doesn't exist for a reason. These folks may want or need financial guidance, but they won't have the ability to pay for it (hence the need). So this would fall into the "labor of love" category, a pro bono effort, not a profitable business. For more on that, here's a short video from Ramit here.
  4. Don't waste time on the unimportant stuff in your business. I feel like almost every day I see a Facebook friend starting a business and immediately launching a web site and a million different social media pages. It turns out this is unnecessary until you have customers. You have to start small, and I mean very small, and then scale up. So, for example, say you want to start a pet-sitting business. Instead of wasting a bunch of time trying to come up with a clever name and setting up a web site and Facebook page, you'd just start trying to find some customers. You'd have to do your first few cheap or free in exchange for testimonials and word of mouth. But then you'd build up one customer at a time until you were certain that you were 1) good at it, 2) able to make money from it, and 3) going to enjoy it. Imagine if you had spent a week and a couple grand on marketing your non-existent pet-sitting business only to figure out that you hated it or that you were absolutely terrible at it, or that the going rate for pet-sitters wasn't enough to pay your bills. Fail fast, fail often.
  5. You build a business (or any other system) by first doing things that don't scale, figuring out what works, and refining from there. Let's stay with our pet-sitting idea since I love dogs. When Ramit says "do things that don't scale" he means things like going way, way above and beyond for your customers, especially early in the process. Maybe my pet-sitting business only has 3 customers so far. I can treat them like royalty. I can do the best pet-sitting they've ever had, and throw in surprising extra bonuses like doing their laundry or something at no charge. The goal would be to always knock the customer's socks off so they are likely to refer to someone else. So, we focus on one step at a time, refine our processes, and grow slowly.
  6. It's not a failure, it's a test. The other side of the do-things-that-don't-scale-coin applies to our inevitable failures. Let's say I did a customer's laundry as a "surprise free bonus" and they freak out on me. I ruined their sweater because I didn't realize it had special instructions. Obviously I'd replace the sweater here, but let's say that's not enough and I've now lost a third of my customer base. I could get dejected and miserable and feel like a failure, but that wouldn't accomplish anything. Instead, I can see it as a test with resulting data. "Okay," I think, "Obviously I need to either 1) not do the customer's laundry without asking or 2) just not do laundry because apparently I'm the worst at it." Then I could try both of those scenarios. Maybe with the next customer I ask them before they leave their pup, "Hey do you also want me to do some laundry for you? No extra charge." and see what they say. And then with another customer maybe I don't do their laundry, maybe I fix their leaky faucet and see what they think. Either way, I've turned a failure into a learning experience.
  7. Continuously focus on working with clients who love you. Like many things in life, building a clientele falls into the Pareto Principle: 80% of your business will come from 20% of your clients. I experienced this one first hand in my days in insurance and investments. With maybe one or two exceptions, my most profitable clients were also my lowest maintenance: the ones with whom I got along with the best, who were easy to work with, and who didn't spiral into disarray at the slightest problem. Ramit suggests continuously reviewing your business to prune away the trouble clients and focus on providing the absolute best service to your best clients. For example, once you have a sustainable business, raise your rates. People seem to be completely terrified of raising their rates. They're afraid of losing business or have some degree of impostor's syndrome ("I couldn't possibly charge that much!"). You can do this in a tactful way with plenty of lead time (he even provides scripts in the course), but inevitably your best customers - the ones who see your value and like you - will stay with you. Don't try to be all things to all people. Instead, focus on the people who want your help and who value your expertise. And, by the way, you could possibly charge that much. If you're providing a service that people want, and doing a great job, people are willing to pay.

We're 53.8% done, so let's take a puppy break:

Lessons on Building a Video Course (Zero to Launch)

Much of Zero to Launch (ZTL) builds on Ramit's philosophy laid out in E1K, but with a shift from the real world to the online world. In fact, the recommended path is to build a freelance business for a while, and then use that experience to build an online education product once you have noticed recurring patterns. Here are some of the biggest lessons I learned from the course.

  1. Make something great, build an audience for about a year, then productize. At a high level, this is the business model set forth in ZTL. Lots of places flip this on its head: write a quick $20 eBook, crank out a $30 short video course, and then market market market, promote promote promote. This flips the whole thing on its head, because instead of trying to build an audience around a product, like most people, you're doing it other way around: building a product around an audience. Be customer focused, not product focused. Get to know your audience deeply, find out what they really need and want, and then build products that will truly help them. Most people do the opposite, and try to create some need around their gimmicky philosophy or weight loss trick. That's lame, and everyone knows it's lame except for the person selling it.
  2. Front load the research to achieve 10x the results. This is the foundation of the course and of Ramit's business philosophy. Research, research, research. When you can connect to someone on a deep level and really solve their problems, and thus really add massive value to their life, price is a triviality. Before jumping right into tossing out a video product or an eBook, talk to people. ZTL introduces the Immersion Technique, in which you talk to at least 20-30 people in your target market about their problems. The goal here is not to pitch, but to listen. What are they frustrated with? What language do they use when they talk about this problem? Ramit is a master of cutting through all the meaningless phrases we use, like "I don't have time," "I should really do that," or "I should think about that." He teaches us to do the same. Break through the smokescreens we humans throw up to strangers and get down to the root of it. We talk about our problems differently to our friends than to some random marketing survey, and that's what you need to hear.
  3. Crawl, walk, run. The older I get, the more I appreciate long-term focus over short-term, quick fixes. To really be good - at anything - is a long-term, multi-year process. ZTL has a timeline of, "Year one: learn. Year two: sell. Year three: scale." Don't waste time on crazy obscure traffic techniques yet. Don't worry about A/B testing at first. First: get a student (i.e. a customer, see above). Give that student the best possible material that can help them solve their burning problem - including lots and lots of free material that actually helps. Repeat that for a while, and then fine tune from there. This also means you don't need to beat yourself up for "feeling behind" some arbitrary deadline. It takes dramatically less time to consume information about starting a business of any kind than it does to actually execute on it. I've been working on my first video course for nearly six months at this point. I'd like it go faster, honestly, but I am taking the time to do it right. I had the same experience welding a table for the first time last year. It took me what felt like FOREVER every step of the way, because I had never cut steel at angles before, I had never beveled edges before welding, and I had never welded anything that large. It was important to execute each step slowly and accurately, though. And, now I'm confident that the next table will take me way less time.
  4. Build a course around something you know about and are good at, not what you wish you were good at because it sounds impressive. Okay, this might be a mix of something Ramit said with my own experience. Here's the thing: be in the present. It's easy to look at people like Ramit or any other person who has built an impressive empire of books and courses and want to immediately replicate them. That's not how it works, though. You have to focus on what you know, grow, and build over time. It's like programming a complex system; it doesn't happen all at once. Complex systems evolve from simple systems. Maybe your current expertise is something really niche like designing dog beds, but you lie awake at night wanting to be the world's foremost expert on all things related to dogs (maybe even one day competing with my favorite Twitter account, We Rate Dogs). You can't get there overnight, nor should you. First, be the kick ass Dog Bed Guru you are, then branch out slowly as you grow, after you've executed well in the dog bed business. Maybe after a while you branch out to making dog bowls. Then to leashes. I don't know, I just like dogs. What were we talking about again? Anyway: start small, then grow your expertise over time. This is the best way to create remarkable content as an expert, which will lead to the best results.
  5. Focus on producing the best possible content and attracting the right people - quality beats quantity. Don't worry about the size of your email list, or the number of articles or guest posts you have, or the number of Instagram followers you have, or whatever other metric you're using. Just like it's better to focus on your expertise in a narrow way, it's also better to slowly and methodically build an audience of true fans (Ramit calls them "students for life") than to have a bunch of random people who don't really care about you. This is similar to Kevin Kelly's concept of 1000 True Fans. Why is this a better approach? True fans will become long term, repeat customers. I'd buy just about any course of Ramit's, I'll watch anything Gary Vee does (another one I've followed for about a decade now), and I'll buy anything Radiohead puts out (okay, almost anything, they've gotten a little out of control lately with the box sets). Most of us have someone we're a die hard fan of, whether it's Beyoncé or Allie Brosh. That's the kind of fandom you're trying to build, but it only happens slowly as you build trust and loyalty with your audience and customers. That loyalty is your number one goal, way above sales or traffic or anything else.
  6. Build systems to automate sales. Most of the lessons above are philosophical, because I'm good at distilling someone's Big Ideas and philosophies. Here's a more tactical lesson for you, though. The system you learn to build in ZTL is this: write great free content, get sign-ups for your email list, use an automated email campaign to build up to pitching your course. There are lots of details and nuances in the course about how to execute this in a way that is sophisticated, professional, and not scammy, all based around the philosophy of providing practical value to people. Once you have this system set up, though, you can start to automate. You'll start to get a sense of what content drives traffic to your site, and what traffic converts to email sign-ups and eventually sales. Ramit gives real numbers and practical strategies on this. But it's only after this point that you need to start getting sophisticated about tracking metrics and using traffic techniques. Long before that is simply writing a lot of content, guest posting, and building relationships with your audience.

So there you have it. Justin, I hope you find this helpful. For the rest of you, let me know who else you want me to talk about or any other topics about tech or business you're interested in. At the moment I've just finished James Altucher's books Choose Yourself and the Choose Yourself Guide to Wealth, in addition to his fantastic podcast. I'm working on an article similar to this one about Altucher's big ideas. I've also just started to get into Chris Guillebeau's Side Hustle School thanks to Justin. It's great stuff.

Also, I never post pictures of myself, but I took a picture with a llama who was wearing a unicorn costume last month and feel the need to share it. It has nothing to do with anything you just read.

Me with a llama

Cheers, Sam

P.S. Here's one last lesson from Ramit, but it doesn't really fit into any of the above: vulnerability only makes sense after success. He wrote a great blog post a couple of months ago called, "Please...stop writing about how vulnerable you are." Give it a read and let me know what you think.

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