These old school businesses are making millions

Key Concepts

• Growth Channels: Identifying and effectively utilizing the most obvious and impactful channels for business growth.
• Dogfooding: Using your own product or service to identify pain points and areas for improvement.
• System vs. Scale: Prioritizing the development of a functional system before attempting to scale the business.
• Decision-Making Framework: Tools and exercises to improve personal judgment and decision-making processes.
• Purple Cow: Seth Godin's concept of standing out by being different rather than just better.
• Info Diet: Curating a proper and high-quality intake of information, similar to a healthy food diet.
• Personalized Learning: Tailoring education to individual needs and skill levels, often leveraging AI.
• Alternative Schooling: Exploring non-traditional educational models that prioritize personalized learning, life skills, and student engagement.

Mobile Emissions: Growth Traps and Solutions

The speaker discusses meeting with two founders of a mobile emissions business and identifying three common traps they fell into:

1. Ignoring Obvious Growth Channels: The founders dismissed Google Ads ("we tried that, it didn't work") despite organic Google search being their primary customer source.

   • Specific Detail: They spent a small amount of free Google Ad credits without proper tracking and based their conclusion on anecdotal evidence ("lower quality leads").
   • Key Point: The speaker emphasizes skepticism towards the phrase "it didn't work" and the need for thorough testing and iteration before dismissing a channel.
   • Example: The speaker shares his experience with The Hustle, where the first Facebook ad was highly successful, leading to a flawed belief that initial failure indicates a channel won't work. He highlights the need for potentially 50-100 iterations to find a winning ad.
   • Solution: The speaker suggests a Socratic method approach using a Google Doc to question assumptions, analyze data, and expose sloppy thinking. This involves writing down what happened, looking up data, and avoiding handwavy explanations.
   • Quote: "Writing forces clear thinking. It forces clear thinking and it just highlights sloppy thinking because you can't fill in the gaps."

2. Not Dogfooding Your Own Product: The founders hadn't thoroughly tested their own service from a user's perspective.

   • Specific Detail: They weren't running Google Ads for relevant searches, weren't in the top section of Google search results, and their value proposition (saving time) wasn't clearly communicated on their website.
   • Methodology: The speaker recommends mystery shopping your own product and using tools like UserTesting.com to observe user behavior and identify pain points.
   • Example: The speaker's mother worked as a tester for UserTesting.com and received stock options when the company went public.
   • Key Point: The speaker argues that most entrepreneurs don't face the pain of their product and that the problem is often within their core flow.
   • Actionable Insight: Focus on visibility, compelling proposition, and clarity.

3. Premature Scaling: The founders were considering expanding to new counties before optimizing their existing system.

   • Key Point: The speaker advises fixing the system before replicating it.
   • Heuristic: When faced with two options, the one that seems easier is often the worse choice, as it may be driven by pain avoidance.
   • Quote: "A smart man does first what a dumb man does last." - Charlie Munger
   • Example: The speaker regrets not focusing on New York first with Hampton before scaling to other cities.

Decision-Making and Personal State

The speaker emphasizes the importance of improving one's decision-making function and investing in tools and exercises to do so.

• Tools: Writing (as discussed above), understanding personal biases.
• Bias Example: The speaker admits to being biased towards things that sound easy, fun, or cool, leading to overweighted decisions.
• Personal State: The speaker notes a significant decline in decision-making ability when sick or fatigued.
  • Actionable Insight: Abstain from making important decisions when in a poor state of mind.
  • Analogy: "You can't text your ex when you're drunk."
• The Triple Package: The speaker references a book that identifies three traits common in successful people:
  1. Superiority Complex: Feeling destined for greatness.
  2. Inferiority Complex: Feeling not good enough and needing to improve.
  3. Impulse Control: The ability to control urges and impulses.

The Onion and the Power of "Purple Cow"

The speaker discusses The Onion's revival of its print magazine as an example of Seth Godin's "Purple Cow" concept – standing out by being different.

• Specific Detail: The Onion's print magazine gained 53,000 paying subscribers within a year, tripling their revenue.
• Key Point: In a saturated market, it's better to be different than better.
• Analogy: If you split test everything, you end up with Pornhub.
• Magazine Subscriptions: The speaker and his co-host discuss their own magazine subscriptions, including Popeye magazine and Thrasher magazine.
• Newsletter Idea: The speaker proposes a high-end, physical newsletter (not magazine) on white paper, stapled together, targeting high-net-worth individuals or tech companies, sold for around $1,000 per year.
  • Key Point: Focus on curation and providing a proper "info diet."
  • Analogy: People pay a lot for a proper food diet; the same should apply to information.
  • Actionable Insight: Provide clear instructions on how to read the newsletter to create a positive experience.

Oberweis Dairy and Nostalgia

The speaker discusses Oberweis Dairy, a Midwestern milk delivery company, as an example of leveraging nostalgia.

• Specific Detail: Oberweis Dairy went bankrupt despite $120 million in revenue, but was acquired by David Hoffman.
• Key Point: The speaker believes there's an opportunity to revive milk delivery, particularly with a focus on high-quality dairy and nostalgia.
• Actionable Insight: Lean into the "made like it used to be" narrative and upsell with related products like eggs.
• Alternative Perspective: The co-host suggests focusing on building a premier dairy brand in grocery stores, similar to Alexander or Strauss Farms.
• Cracker Barrel Example: The speaker criticizes Cracker Barrel's attempt to modernize its image, arguing that its "disgusting" aesthetic is part of its appeal.

Alpha School and the Future of Education

The speaker discusses Alpha School, an innovative school in Austin founded by Joe Lamont, as an example of personalized learning leveraging AI.

• Joe Lamont: A successful software entrepreneur (Trilogy Software, ESW Capital) with a net worth of around $10 billion.
• Key Point: Lamont believes Alpha School is the best product he has ever built.
• The Two Sigma Problem: One-on-one tutoring leads to significantly better learning outcomes.
• Alpha School Model:
  • Two hours of personalized learning on an iPad using AI-powered Timeback app.
  • Timeback app monitors student engagement and provides custom lesson plans.
  • Life skill workshops (public speaking, entrepreneurship, outdoor education) for the rest of the day.
  • Focus on mastery (90%+) before progressing to new concepts.
• Impossible Missions: Students are challenged to achieve seemingly impossible goals (e.g., running a 5K).
• Mentava App: The speaker shares his experience using the Mentava app ($500/month per kid) to teach his children to read.
  • Key Point: Personalized learning can be highly effective, even with a janky app.
• Alternative Schooling: The speaker discusses his brother-in-law's "Grind Academy" in Las Vegas, a sports prep school that combines homeschooling with athletic training.
• Key Point: The speaker acknowledges the stress and complexity of navigating alternative schooling options.

Conclusion

The podcast episode explores various business and personal development topics, emphasizing the importance of critical thinking, data-driven decision-making, and continuous improvement. It highlights the potential of innovative approaches in education and the power of standing out by being different. The speakers encourage listeners to invest in their decision-making abilities and to be skeptical of conventional wisdom.