Creator Science Episode #236: Mike Michalowicz – How the Author of Profit First Stays Lean by Licensing His Ideas

Host: Jay Clouse
Guest: Mike Michalowicz
Release Date: January 7, 2025

Introduction to Mike Michalowicz and His Impact

In this episode of Creator Science, Jay Clouse welcomes Mike Michalowicz, a renowned author whose groundbreaking work, Profit First, has transformed the financial strategies of hundreds of thousands of businesses worldwide, including Creator Science itself. With over 500,000 book sales across seven additional titles, Mike's mission centers on empowering small business owners to escape what he terms "entrepreneurial poverty." The conversation is structured into two main segments:

1. Mike's Unique Business Model as an Author
2. Insights into Writing Prolificly and Publishing

Mike's Unique Business Model: Licensing Frameworks

Mike delves into his distinctive approach to authoring books, which goes beyond traditional writing and publishing paradigms. Instead of solely focusing on writing, Mike partners with third-party licensees to implement and deliver the systems and methodologies outlined in his books. This strategy allows him to remain lean while ensuring his ideas are effectively deployed across various organizations.

Key Points:

• Joy-Driven Business Structure: Mike emphasizes that his business model is centered around joy—not just his own but also his team's and licensees'. This foundational principle guides the creation and implementation of his content.

• Licensing Partnerships: For each book Mike authors, he collaborates with licensees who pay upfront fees and share 15% of their revenue. This symbiotic relationship allows licensees to leverage Mike’s brand and methodologies without Mike managing the day-to-day operations.

• Lean Team: Mike's author team comprises about eight individuals, mostly part-time, enabling significant impact without the overhead of a large organization. This structure supports scalability and flexibility.

Notable Quotes:

• "The best authors aren't the masters at it. They are the biggest students of it." (00:00)

• "My job is to further the brand exposure, write more books, write better, spread the word of the books." (05:00)

Building and Managing the Author Team

Mike provides an in-depth look into the roles within his author team, highlighting a non-hierarchical structure to avoid the pitfalls of traditional titles and to promote collaboration.

Team Functions:

• Marketing Director (Andrea): Oversees marketing strategies to maintain continuity across multiple books and reach entrepreneurial audiences effectively.

• President (Kelsey): Manages relationships with licensees, ensuring that support is provided collectively rather than individually to avoid silos.

• Content Writer (Jenna): Assists with copywriting and content creation, vital for maintaining the quality and consistency of book materials.

• Internal Licensee Manager (Cordae): Handles books that remain in-house, such as Fix This Next, which serves as a launching pad for directing readers to licensed services.

• Investment Group Leader (Greg): Manages an investment portfolio supporting the author's ventures and provides additional services like the Don't Write That Book podcast.

• Personal Assistant (Erin Shazat): Manages Mike's extensive schedule, enabling him to focus on designing and writing rather than operational tasks.

Notable Quotes:

• "We don't have titles. Titles put people into domains or fiefdoms and it can become a trap." (06:16)

• "I can't coach myself out of a brown paper bag. I suck at it." (02:28)

Challenges of Scaling Through Licensing

Mike discusses the complexities and challenges of scaling his business model through licensing, including issues like brand dependency and managing diverse personalities within the licensee network.

Key Challenges:

• Brand Dependency: Licensees heavily rely on Mike's brand for lead generation, which can create an unhealthy dependency akin to addiction.

• Siloed Operations: Each licensee operates independently, leading to fragmented efforts and difficulty in maintaining a cohesive brand strategy.

• Human Nature and Management: Managing a growing network of licensees involves navigating unique personalities and maintaining alignment with the brand’s core values.

Notable Quotes:

• "The primary relationship is brand association, but the primary expectation is lead generation. And that's an incongruency." (20:07)

• "What happens a lot in the creator world right now, people have an insight, they have an idea, and that becomes what they talk about." (13:15)

Finding and Vetting the Right Licensees

Mike outlines his process for identifying and selecting suitable licensees to implement his frameworks. This involves extensive interviewing and assessing potential partners' ability to deliver value and align with his brand's mission.

Selection Process:

• Interviews: Mike conducts approximately 50 interviews per book to identify experts who can effectively implement the book’s methodologies.

• Visionary vs. Implementer: He emphasizes the importance of balancing visionary creatives with implementers who can execute ideas, ensuring a harmonious and productive partnership.

• Financial Model: Mike shares his licensing financial model, highlighting an upfront fee combined with a 15% revenue share as the optimal balance to support both the author and licensees.

Notable Quotes:

• "I do it through interviewing. And I think any creative can do that is realize that as a creative pulling a term, I think this is from Gino Wickman's work where he talks about the integrator and the implementer." (26:10)

• "The magic number to be is 15%. It's a big enough investment where there's skin in the game." (28:30)

Publishing Strategies: Traditional vs. Self-Publishing vs. Hybrid

Mike shares his evolution in publishing strategies, transitioning from self-publishing and traditional publishing with Penguin Random House to developing his own hybrid model.

Publishing Insights:

• Hybrid Model: By negotiating with Penguin Random House, Mike shifted to a hybrid model where he shares financial risks and rewards, allowing for greater control and profitability.

• Financial Justification: Mike emphasizes the importance of running the numbers to determine the most fiscally sound publishing strategy, ultimately favoring hybrid over traditional contracts.

• Brand Imprint: Establishing his own imprint tailored for entrepreneurial authors allows for greater flexibility and alignment with his business model.

Notable Quotes:

• "I've never negotiated... I couldn't fiscally justify it anymore." (31:53)

• "Every book takes me five years or so to write, but I get them out every year because I'm working on multiple frameworks." (34:05)

Idea Selection and Pacing in Writing

Mike discusses his approach to generating and selecting ideas for his books, emphasizing the importance of audience needs and disciplined writing practices to maintain quality over quantity.

Key Strategies:

• Idea Accumulation: Mike maintains a backlog of around 25 book ideas, allowing flexibility and inspiration for future projects.

• Audience-Centric Selection: Prioritizing ideas based on what his readers need next ensures relevance and demand for each new book.

• Testing and Refinement: Continuous testing of concepts with real businesses allows Mike to refine his frameworks, albeit sometimes slowing the writing process.

• Managing Hypomania: Mike acknowledges his battle with hypomania, which drives his prolific writing but also poses risks of overextension and compromised quality.

Notable Quotes:

• "The essence of writing is rewriting." (52:23)

• "Most of it won't be the final book, but at least you've gotten started." (52:23)

Writing Methodology and Framework Development

Mike elaborates on his structured approach to writing, which begins with developing solid frameworks that guide both the content and the writing process itself.

Writing Process:

1. Framework Creation: Define the transformation the reader will experience, ensuring realistic and actionable outcomes.

2. Research and Testing: Engage with the audience through surveys and direct feedback to refine concepts before writing.

3. Structured Outlining: Use a consistent framework for each book, including personal stories, early wins, challenges, and a rallying call to action.

4. Rewriting and Refinement: Embrace the iterative process of rewriting to achieve clarity and impact, acknowledging that the first draft is rarely perfect.

Example Framework:

• Transformation Focus: Starting with where the reader is and guiding them to a desired state through practical steps and real-world applications.

• Early Wins: Ensuring that readers experience measurable results early in the book to maintain engagement and demonstrate value.

Notable Quotes:

• "The best authors aren't the masters at it. They are the biggest students of it." (00:00)

• "I have to have a measurable result if my reader... got to say, holy crap, I'm seeing measurable results in this transformation for myself." (46:11)

Advice for Aspiring Authors

Mike concludes with actionable advice for individuals embarking on their first book-writing journey, stressing the importance of starting and embracing the iterative nature of writing.

Key Recommendations:

• Start Writing Today: Overcome the paralysis of seeking perfection by simply beginning the writing process.

• Embrace Rewriting: Understand that rewriting is essential to refining ideas and enhancing the book’s quality.

• Stay Disciplined: Maintain the discipline to continue writing and revising, ensuring that the final product is polished and impactful.

Notable Quotes:

• "Write the book that you need right now." (38:39)

• "If you're gonna write a book, start today, start writing and realize that most of it won't be the final book, but at least you've gotten started." (52:23)

Conclusion

Mike Michalowicz offers a comprehensive look into his innovative approach to authoring, emphasizing the importance of licensing, disciplined writing, and audience-centric content creation. His strategies provide valuable insights for creators aiming to scale their ideas efficiently while maintaining a lean operational model.

For more information on Mike and his work, visit mikemichalowicz.com.

Notable Timestamped Quotes:

• 00:00: Mike Michalowicz: "The best authors aren't the masters at it. They are the biggest students of it."
• 02:28: Mike Michalowicz: "I suck at it. I love working with people, I don't love managing people and I'm not good at it."
• 06:16: Mike Michalowicz: "We don't have titles. Titles put people into domains or fiefdoms and it can become a trap."
• 13:15: Mike Michalowicz: "What happens a lot in the creator world right now, people have an insight, they have an idea, and that becomes what they talk about."
• 20:07: Mike Michalowicz: "The primary relationship is brand association, but the primary expectation is lead generation. And that's an incongruency."
• 24:46: Mike Michalowicz: "I do it through interviewing. And I think any creative can do that is realize that as a creative pulling a term, I think this is from Gino Wickman's work where he talks about the integrator and the implementer."
• 31:53: Mike Michalowicz: "I've never negotiated... I couldn't fiscally justify it anymore."
• 34:05: Mike Michalowicz: "Every book takes me five years or so to write, but I get them out every year because I'm working on multiple frameworks."
• 42:38: Mike Michalowicz: "The best authors aren't the masters at it. They are the biggest students of it."
• 52:23: Mike Michalowicz: "The essence of writing is rewriting."

Disclaimer: This summary is based on the provided transcript and aims to capture the essence of the conversation between Jay Clouse and Mike Michalowicz. For a complete understanding, listening to the full episode is recommended.