![#236: Mike Michalowicz – How the author of Profit First stays lean by licensing his ideas [Greatest Hits] — Creator Science with Jay Clouse cover](/_next/image?url=https%3A%2F%2Fmegaphone.imgix.net%2Fpodcasts%2F2e48ba2c-0b77-11f1-a1f8-43e2ccacdcf9%2Fimage%2F238d0059683ee4d4dfb22b194d41e4aa.jpg%3Fixlib%3Drails-4.3.1%26max-w%3D3000%26max-h%3D3000%26fit%3Dcrop%26auto%3Dformat%2Ccompress&w=1920&q=75)
An author with a unique business model I’m obsessed with shares what he’d do differently
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Jay Clouse
Lifelock.
Mike Michalowicz
How can I help? The IRS said I filed my return, but I haven't. One in four tax paying Americans has paid the price of identity fraud. What do I do? My refund though. I'm freaking out. Don't worry, I can fix this.
Jay Clouse
Lifelock fixes identity theft guaranteed and gets.
Mike Michalowicz
Your money back with up to $3 million in coverage. I'm so relieved.
Jay Clouse
No problem.
Mike Michalowicz
I'll be with you every step of the way. One in four was a fraud paying American. Not anymore.
Jay Clouse
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Mike Michalowicz
Visit lifelock.com podcast Terms apply this episode is brought to you by FX's Love Story. John F. Kennedy Jr. And Carolyn Bassette join host Evan Ross Katz on the official podcast for FX's new series Love Story, John F. Kennedy Jr. And Carolyn Bassette and go behind the scenes with cast and special guests featuring Sarah Pigeon, Paul Anthony Kelly, Grace Gummer and Naomi Watts. FX's love story John F. Kennedy Jr. And Carolyn Bessette. Wherever you listen to podcasts, this episode is brought to you by Redfin.
Jay Clouse
You're listening to a podcast, which means.
Mike Michalowicz
You'Re probably multitasking, maybe even scrolling home.
Jay Clouse
Listings on Redfin, saving homes without expecting to get them. But Redfin isn't just built for endless browsing.
Mike Michalowicz
It's built to help you find and own a home with agents who close twice as many deals. When you find the one, you've got a real shot at getting it.
Jay Clouse
Get started@redfin.com own the dream when we.
Mike Michalowicz
Teach, we have to steep ourselves in that knowledge so effectively and know it so intimately that we can actually repackage it so it's consumable. The best authors aren't the masters at it. They are the biggest students of it.
Jay Clouse
Foreign. Hello my friend. Welcome back to another episode of Creator Science. Today I am talking to a man who's had a major impact on my business and his name is Mike Michalowicz. Mike is the author of Profit first, which is used by hundreds of thousands of companies across the globe to drive profit. Creator Science is one of those companies. Profit first has been huge in helping me develop very sound financials and in this business. Mike is also the author of a powerful method to make any business run on automatic. Read that if you're trying to get yourself out of the Day to Day, and seven other books as well. With more than 500,000 book sales, all of Mike's books have had the same goal to help small business owners and eliminate what he calls entrepreneurial poverty. Simon Sinek once called Mike the top contender for the patron saint of entrepreneurs. This conversation is divided into halves. The first half explores Mike's unique model as an author. For each book Mike writes, he partners with a third party to license the frameworks from that book and serve as the done for you service provider to implement the ideas. This is super uncommon and part of the reason he's been able to be so prolific while also running a very lean team. So we dig into how that works and what he would do differently if he was starting over today. And then the second half of the conversation is all about writing books. Mike has published nine books since 2008, including seven in the last eight years. So we dig into how he determines what ideas to turn into books and how to write them so quickly. We even dive into his thoughts on publishing traditional versus self publishing, which I know is always a hot topic. I'd love to hear what you think about this episode. You can tag me Clouse on whatever platform you enjoy the most. But now let's talk with Mike. So you've written nine books that I could count to this point.
Mike Michalowicz
Yeah.
Jay Clouse
And you've run several different types of businesses. As a starting point here, how would you describe your business model today?
Mike Michalowicz
I'll give you kind of the esoteric theoretical and then I'll give you the kind of structure. So I would say it's modeled around what brings me joy and everyone else involved, they have to speak for themselves. I sense is they're in a space of joy. And I think that's the ultimate organization is are people doing what makes people happy. And I'm one of the people. The technical structure is this. I love to create content, particularly contrarian beliefs. So my model is I'll look at something and say, what's the intended outcome we have? I want to start a business and make tons of money. Okay, what's the actual outcome we have? I started a business, I'm working my ass off. I don't have a penny in my own name. Well, when there is a gap between desire and actual, that means to me there's something wrong in the middle. And it's rarely mindset. It's usually the system that we just believe we need to follow. If we fix those systems, we can continue to be who we are, but get the outcome that we always intended. So that's what I do. And I like to discover it, experience it for myself. And if it works, I like to codify it in a book. I suck, Jay. I suck at the execution on the long term basis. I'm Not a coach, a business coach. I've tried. I can't coach myself out of a brown paper bag. I suck at it. I love working with people, I don't love managing people and I'm not good at it. So I said okay. Once you have a book, you may want to deliver services behind it. It's a good way to monetize further beyond a book, but it's also a great way to be of service. Many people will buy a book, few will read it, and even fewer will execute on what they read. So these people that are reading the book or at least purchasing the book, have a desire for an outcome, but many are not actually executing on it. Even though it's in their hands, they need someone to guide them through it. It's like you can join a gym, but maybe having a trainer is better. So that's what I built behind every. Most of the books there is a dedicated training organization. And so what I do is I have a group of licensees. They buy the rights to teach within the confines of the book or expand on the concepts within the book, but to stay within that parameter to leverage the brand name. My most popular book is called Profit First. So there's Profit First Professionals. Clockwork is another one of my books about business efficiency. It's become popular and there's a business called Run Like Clockwork. Each one is owned by a licensee who's paid for that and then they share in the royalties. My job is to further the brand exposure, write more books, write better, spread the word of the books. And that's what I like to do. Not perfect at that, but that's what I like to do. My licensees, their job is, is help the people that need help at the highest level by providing services behind it. The great thing for me, Jay, is it's been a powerful revenue source for me without me putting in more effort. I do have a small team, my author team. There's about eight of us there, that includes me. So there's seven other folks, mostly part time. But our companies have had extensive impact. We've worked with tens of thousands, maybe hundred thousand more businesses. We have one and a half million books collectively in circulation. I bet you if I did this alone or tried to build it, maybe I'd have one struggling service organization. Because my joy is not in the doing, it's in the designing.
Jay Clouse
This has opened up so many loops already. So I'm going to close the fastest ones first. You said you have an eight person author team, most of them part time.
Mike Michalowicz
That's right.
Jay Clouse
What are the functions on an author team?
Mike Michalowicz
Okay, so we don't have titles. And that's actually one of my theories is titles puts people into domains or fiefdoms and it can become a trap. It can also trigger entitlement. But we have Andrea, who serves as our marketing director. We'll say she channels our marketing and getting the messaging out. The biggest need. When you write multiple books, even if it's for one domain. I write for entrepreneurs. You need to show the continuity for the consumer base and the connection between all of the organizations that we're supporting. So we have that. We have our president. That's Kelsey Kelsey's job is to really maintain the relationships with our licensees. To always ask, how do we serve not the individual licensee, but the whole licensees and elevate everyone. How do we rise the tide as opposed to trying to pick up boats? We have a content writer. Her name is Jenna. I write a lot of the book content, but I too have a co writer in my books. It's too much for me to lift and admittedly it's a labor of love, but it is a labor. It takes me a long time to get out words succinctly on written paper. Jenna is better at it than I am, so she does a lot of our copywriting when it comes to email communications or blogs. We have another person who manages a couple of the book titles we have that really weren't suited for a licensee and we wanted to maintain in house. So it's almost like an internal licensee. One of my books is called Fix this Next and something that it just made sense that we managed it internally due to it's a starting point to channel people in directions of our licensee. So Cordad manages that. Interestingly, a couple of spinouts came. So we have this guy Greg who leads an investment group. It's been surprising how many people come to me and say, mike, I wish you were my partner. I'm like, I'm not a good partner, but I'd love to partner in business. I can see the idea. I can support you, but I'm not going to be working in the business. That's not my talent. So we started an investment group and now we have, as of end of the next week, we will probably have about 20 investments actively out there. And this guy Greg is our portfolio manager. He's managing it. There's a lot of authors seeking help and so we started a podcast around helping authors called Don't Write that Book. I'M really proud of that podcast. Well, Adela manages our podcast and makes sure that people we can serve just through our journey can also be served. So that's kind of the author team, I'm sure, missing some people. Oh, oh, oh, my God. One last thing. The most important person for me is Erin Shazzat. She is my schedule, my personal assistant. I'm very fortunate. There's a unbelievable amount of speaking opportunities that have come my way over the years. I travel extensively, I enjoy it, but there's a lot of coordinating things. I have to do some television oriented stuff pretty soon, which is wonderful. I'm excited about it. But getting all those pieces in the schedule managed is almost a full time job. Erin too, though, is part time and she manages that to the point where just one little antidote or vignette here I'm doing a speaking event up in Montreal, Canada, and I'm speaking with the event providers, like, oh, we can't wait to see you in March, I think it is. And I said, I can't wait to be there. I'm like, oh, your wife's really going to enjoy the place. I'm like, oh, my wife's, My wife's got one. You don't know. I'm like, no. And I sound like the biggest idiot. And I'm like, I got to do a disclaimer. I'm an idiot. But the schedule, the routine is Erin will book a site. She will call my wife and say, do you want to go? And so I got a gig in North Dakota. And my wife's like, I'm out. I got a gig, Montreal. She's like, I'm in. So I know usually like a week before, every Monday, I come in, there's itineraries, I grab the piece of paper, I'm like, oh, my wife's joining me for this trip. This will be amazing. We'll get a little vacation time. So Erin has that degree of authority and control over my schedule. And it's not abandonment, it's not abdication. It is necessary. But it's taking years to get to that trust level that she's actually better at managing me than me managing me.
Jay Clouse
You said a few things that there's somewhere in between self aware and self deprecating where you said like, I'm not a manager or you said, like, I'm an idiot. I don't do this.
Mike Michalowicz
Yeah, yeah, yeah.
Jay Clouse
Tell me, in this process where you've built this team around you and you have these licensees, where do you see your zone of Genius that you're really saying. This is what I'm spending all my time on, given the opportunity.
Mike Michalowicz
Yeah. Yeah. In self deprecation, I got to be careful, right? So I'm not pandering and saying I'm an idiot. I don't think I'm an idiot. But self deprecation is also important in the way I communicate in all my books, all my work. In that, Jay, you and I are not so different. Anyone listening? We're not so different. We're on different experiences, and we're all human. We all f things up. We all have these moments of celebration. We all will get some form of 15 minutes of fame, whatever it may be, in a small community or large. But the power is if we share the best of what we know with each other, we elevate each other. That's why I'm pumped about your show. Self deprecation, to me, is a great bridge of human connection. That's why I do it. But I also realize that you can go too far, and then people discount your authenticity. And I never want that to happen. I would argue my zone of genius. One thing we do in our office is we call them POMs or POMs Personal Operating Manuals. We have a physical office. It's a hybrid environment. I'm working from my home office today, but everyone's in every Tuesday and Thursday. Everyone's in the office. We only work a four day a week. No one works on Friday. And we'll come in and next to Erin's desk, which is right across the hallway from where I sit, it says her palm and what she likes and doesn't like and what her zone of genius is and her style, even her appreciation language. I like words of affirmation. She likes acts of service. It's a great way to learn how to communicate with each other. Well, on mine, my zones of genius, or zone of genius is definitely cheerleading because it's real. I really believe in my colleagues. I really believe in entrepreneurs more than anything. I can see the opportunity in some folks that don't even necessarily see themselves yet. So I'm effective as a cheerleader. Ideation and my specialty in ideation is taking these concepts that are large or confusing or inevitably complex and bring it down to a degree of profound simplicity. I see it. Profit first is perhaps a good example. We're laden with all these documents and balance sheets and all these different things trying to find out how to get our numbers right. And I'm like, you know what? That's not serving us. That's extreme complexity. The profound concept is if you take your profit first, like the pay yourself first principle in your business, if you take profit and hide it from yourself, you're going to be forced to live off the remainder, and you'll be guaranteeing profitability. So I have a talent in those areas. And then the last part, this sounds weird because I'm kind of rambling here. I'm okay at communication, too. Maybe not succinct, but I'm okay at communication too. So those are the three I'd pick.
Jay Clouse
This is the perfect context I wanted to lay, because what is so fascinating to me about your body of work is you find these gaps like you described. You explain a new approach, a contrarian approach, in this profound simplicity, and then you kind of build a structure for that thing to thrive without that becoming your identity for the foreseeable future, if that makes sense.
Mike Michalowicz
Yeah.
Jay Clouse
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. They build their own company behind it. It is them forever, as far as they know at this point. So I'd love to just get your reaction to that, because I'm sure you've seen this in the marketplace, the landscape, and you've made a very intentional decision not to go that direction. I'd just love to hear how you arrived there. And if you think that's a missed opportunity for folks.
Mike Michalowicz
I don't know if it's a missed opportunity for folks. Just my measurement is, is this giving me joy? And it's not necessarily the exact question I asked myself, but. So a prior career life of mine, I picked the one lane and tried to do the best I could in that lane. And it worked, but it didn't serve me. And to me, that's not working. Then it made money. It was a means, but it was a means to the end. It wasn't the end. So I'm like, I want to live the end. I didn't plan this out. I didn't bake in like, oh, here's the steps to actually living in joy through the work I do. It just started naturally happening. And when it was working, I was like, oh, that's the way to lean more. So I used this kind of beacon of listening to the joy driver and leaning toward it. So some folks definitely in the creative space, find their thing and they double or triple down on it if that gives them joy. Holy shinoli. You found it like, go, go, go. But I have some found creatives that become resentful of where they've come trapped. I'm into hair bands from the 80s, so that's one of my non zones of genius. There was a band called Warrant and they wrote this song called Cherry Pie. It was their big hit. I think his name was Janie Lane was the lead singer who sadly committed suicide. It was not part of his suicide note, but it was part of his decline. He says, I wish I never wrote that effing song because it became a trap. He created this song that was the hit and then forced to perform it. He was the Cherry Pie guy and he never wanted to be that. He just wanted to be expressing himself. There's another story, just music wise, because it's an interest of mine. The guy Gauthier who wrote the one hit that's massive.
Jay Clouse
Somebody that I used to know.
Mike Michalowicz
Yeah, somebody I used to know. I don't know if you know this. The millions that he made off of that he's given away to charity. He abandoned it and he's like, I don't want to be famous. I want to create. And for some people on the outside, it's like, you idiot, you hit the lottery. But what we from the outside don't realize is that's not the life he wants. Kudos to him for being disciplined. To turning away Simone Biles, an athlete who's, by the way, an extraordinary speaker and just seems to be the most positive energy on the planet. I wish she was the beacon for all of us. I saw her speaking and she was the first athlete that I ever was aware of that said, I'm stopping doing gymnastics at the Olympic level because my mind needs the clarity. I am overwhelmed mentally. And she opened this gateway to realize what's going on in here is everything. So my experience is, if it isn't feeling right, it probably is not right. Don't do it. Because that's what the expectation of others is of. You just lean into who you naturally are. And if you see it working for someone else and you want to dabble in it like the way I'm doing it, freaking dabble or do. And if it starts landing, crush it. If you can do it better than I can, my God, double down. Because then I want to learn from you.
Jay Clouse
I like that answer a lot because I think a lot of people, it's easy for us to get this grass is greener effect. When we see other people doing things a certain way, we look at that and we say, that might be nicer than the way that I'm doing it. And I Kind of have this belief that there's not right or wrong, there's just trade offs. So in your approach of I write the book, I have a licensee behind it, servicing the book, I move on to the next book. What do you think are the trade offs that you have in that design?
Mike Michalowicz
Yeah, definitely is. So watch out for the grass is greener syndrome. One of the trade offs is for my licensees. In some, actually, maybe all the cases, this is their career bet they're all in on this thing they're doing. So therefore there's this, as I say, codependency. I mean, that is the right word. There's a codependency. If I'm not elevating books, it does impact them to some degree. Conversely, them doing something independent of the brand, there is a incongruency that confuses the customer. So they're all in on the brand. Well, one of the consequences is, what have you done for me lately, Mike? And I get it. Like, there's this need for me to be of service to them. And so the problem I ran into is each licensee has their own silo. And I'm realizing this later than I should have, that there's got to be more of a congruency, a more collective. But it didn't land in my head to realize, oh, we can work in concert much more effectively than building these independent silos in reverse. I would have never gotten to this point if I didn't have these independent silos. That's how it started. I started with one licensee, and then two, and then three and so forth. So that's been a challenge and human nature. There's unique personalities. I'm a unique personality and so is every one of my colleagues. And the bigger we get, we have eight people internally, but we have five or six active licensees. They have employees maybe on average of three to five each for each licensee. So now you're talking. There's like 30, 40 voices involved in the at least one degree of separation domain. And that becomes a little harder to manage. I originally, when I started my first business, had this belief that bigger is better. I want to have the next Hewlett Packard back in the day, but now it's like, I want to be the next Amazon. I realized a little ways back now I don't want the next Amazon. Good for Jeff Bezos, but that isn't me. I love small business. I don't aspire to have this mega corporate thing. And yeah, it gives me the heebie jeebies. Now, but I just assumed that's what I should do because that seemed like the script to follow. As these licenses grow, there's becoming more of a formality. There has to be. There's no avoiding that structure. And so I can't say it's icky, but it's just like, oh, that's the space I don't want to be in so much. And so I have to deal with that. And is the solution adjusting or finding better fits for my team to serve that so I can be removed from that? Is that being selfish or is it just the necessary evil? Or stop growing and just go with what's going because I'm in this happy space? Those are the challenges, and they're very first world challenges, but those are the challenges I'm facing.
Jay Clouse
So I think implicitly what you're saying there is, you as the author are lead generation for basically all of the books and the associated services that go with it. So that is the primary function of the relationship you have with these licensees. So if that's not true, that becomes a friction point.
Mike Michalowicz
The primary relationship is brand association, but the primary expectation is lead generation. And that's an incongruency. That's a problem. Yes, leads come out of this. People read books and they want to engage. And so therefore, the more books that sell, the more leads. But if a licensee gets dependency on that, now it's the crack cocaine. They're like, where's my lead, man? Where's my lead? It's brand affiliation. The brands are bigger than the lead generation. The domain of people that are aware that there's a book called Profit first supersedes the people who are aware of Profit first and have read it. How can we leverage that brand? The brand can become this kind of icebreaker into new markets, new communities. The perhaps parallel size brand is the character Mike Michalo. It's the guy who wrote the book. And the affiliation can be leveraged to significant advantage. We've gotten into some doors. My licensees have gotten to some doors that would been difficult to knock through or break down or whatever without that affiliation with the Mike Michalowicz author brand. And I have to make sure that our structure supports the leveraging and use of that as opposed to a dependency on the crack cocaine of where's my lead, man? Where's my lead? And I don't mean that negatively. I just realized the addictive nature of that, and it happens. But to be dependent on that becomes a real problem for everybody.
Jay Clouse
After a quick break I talk with Mike about how he finds the right licensees to implement his methods and frameworks. So stick around. We'll be right back. I'm sure I don't need to tell you this, but being a creator is really hard. It's hard to attract an audience. It's hard to build and sell an offer that truly helps people. It's hard to fit in with people who aren't creators. And it's hard to weather all the challenges and periods of uncertainty that come your way. And that's why we build the Lab, our membership for professional creators like you. Think of the Lab like a group chat of friends who all happen to be doing the same thing you are. Not only do we share notes and pass along what's working for us, but we also cheer each other on and lift each other up when things are hard. Education is changing, which means your business may be changing. And the way you need to learn is changing, too. With the current pace of change, you need to learn by experimenting and sharing notes with others who are experimenting too. I've been doing this creator thing for almost 10 years now, and things have never been changing so quickly. It feels crazy. And yes, the Lab has continued to help me grow, but more importantly, it's helped to keep me feeling sane. It's as much a part of my social life now as it is my professional life. We just announced our next Lab Offline event in June ahead of kit's Craft and Commerce Conference. It's going to be bigger and better than last year, and we'd love for you to join us, learn more, and get started@creatorscience.com lab. That's creatorscience.com lab.
Mike Michalowicz
We heard you. Nine years of bring back the snack wrap and you've won. But maybe you should have asked for more. Say hello to the Hot honey snack wrap. Now you've really won. Go to McDonald's and get it while you can.
Jay Clouse
And now back to my conversation with Mike Michalowicz. Let's say you write a new book and you go out to the marketplace and say, I have a new book coming. I'm looking for a licensee. How do you make that known? How do you vet the right partner and ultimately make a decision?
Mike Michalowicz
Yeah, this happened naturally. And this is the method. I interview a lot of people for books. I would say on average 50 interviews, maybe even more now per book. And some of those are users of the systems or ideas I'm creating, by a large portion are experts in that space. I actually don't consider myself A creator of ideas. I consider myself a curator of ideas. And there's these extraordinary experts out there. So one of my colleagues, her name is Adrienne Dorsen, she's a licensee and I was looking at how to deploy business efficiencies and stuff, and particularly these contrarian methods and through a network. Was this introduced to Adrian and other experts, this guy Kevin Fox, and I interview them because I need content for the book. But behind that, and it was subconscious then, now it's conscious, is, is this person delivering these services? Would a partnership, a one plus one equal 11 here, where there's an amplitude of exposure for them and they already have the ability to deliver on this stuff plus some. And Adrian was like a no brainer. So I approached her and I said I got this crazy idea. And she's like, that's so funny because that crazy thought went through my mind and that was how we structured that one. So 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 and that's probably not the exact term.
Jay Clouse
Visionary and integrator.
Mike Michalowicz
Yeah, there it is. Visionary and visionary creators are visionaries. We can and sometimes literally draw things out. But God, if we have to do that exact same drawing 50 times in a row for the next two weeks, we go mad. It's the freshness. Well, there is an equal number of people that get joy and energy from actually repeating the process over and over again. And for the visionary, it's hard to imagine how can anyone exist like that. And for the implementer, what's up with these manic visionary folks? They're crazy. Can't they ain't get anything done? No, we can't. So what we need is to find that complement to us and we exist, I think in equal numbers. So if you're a creator, there is your doppelganger implementer out there. It's another individual and you can seek them out because they're seeking out the vision and you're seeking out the person that can actually get the work done and you're actually seeking each other out. And I found these interview processes a great way to find each other when.
Jay Clouse
You'Re building these relationships. How does the structure work? And I don't mean you have to give me any specific numbers, how does that back and forth work?
Mike Michalowicz
So we have an upfront fee, that one I do want to keep confidential because the fee has increased over time. But you could start off with a whatever you can confirm the size of a low number, whatever that may be. And over time, as your brand exposure grows, the fee you can dictate is much bigger because the leverage that person has, it's greater. I remember there was a website, I think it was called Pixel. This is back, like when the Internet was just becoming popular. So we're always talking like mid-90s, and it was 100 pixels on a webpage. And each pixel you could buy an ad. So you pay, say it was a dollar for the pixel, but the next ad was like say $2. And they started doing this amplitude. The first person that buys the pixel just took on massive risk, but it cost nothing. So he did it. And you'd highlight over this pixel and it would say Joe's T shirts. And the second person was minimal risk. But as it moved along, this website became so popular because it was so unique. The last pixel sold for a million dollars. And it's the same idea with this brand. There's this amplitude as you gain exposure. What's beautiful is there's this natural synergy that as a licensee grows the brand that they have licensed, they build exposure back to the mothership brand, if you will, and that benefits the next brand licensee. We also share in a 15% override of revenue. Now, I did want to share that number because it took me a while to figure this out. I called upon all different organizations that have licensing programs or memberships and so forth, and I don't want to share their names, but found that one organization went up to 50%. So if you, the licensee, made a thousand dollars, you'd give 500 back to the mothership. And I found that someone as low as 1 or 2%, you made $1,000, you give back a dollar or $10 or $12 to the mothership. What was interesting was on the extreme scenario of the high end, the licensee was buried. It caused them to be choked out financially. They couldn't afford to maintain it, became resentful of the organization and actually couldn't grow. The other extreme, the low end, where it was like a dollar or 1% or 2%, those licensees said, I don't need the mothership, and the mothership doesn't even generate enough money to care about me. It became this ignore each other scenario. I found the magic number to be 15%. It's a big enough investment where there's skin in the game. The mothership can use that income to support further growth of the brand. And the licensee isn't choked out. They can actually make a really good living out of it. So that became the magic number. And that's the two things. We have an upfront fee. You are now part of our family and you're going to benefit from leveraging it. And as your business grows and we're aligned with you, we want to grow, we're going to share 15% of the revenue.
Jay Clouse
Yeah. Such an interesting model and I think it's so unique and such an interesting opportunity. Knowing some of the challenges you have now, would you counsel somebody who's also interested in doing this multi book approach? When would it make sense to do licensees versus basically building a separate team that you own but you're not involved in?
Mike Michalowicz
If I went back through this process, how it's worked out for me has been appropriate for me. But I think the way to do it in retrospect is a licensee starts winning only when the brand gets to a certain size. The creative person's name, in this case Mike Michalowicz or the brand Collective Profit First Clockwork, the pumpkin plant. In the very beginning, there's not much leverage. So I actually had someone that followed this model and she wrote a book. She said, I'm going to go right into this. From day one, she wasn't a known author and she hasn't gotten to that stage yet. And the licensee had to do a lot of lift and it became a conflict. There was no strong push out of the gate. I think when you can give your licensees a big push out of the gate, you can't sustain it. But if you can give them a big push out of the gate, then you're in a position to have a licensee because you can deliver immediate benefit to them. I would build my own organization first, almost like a franchise model. Figure it out for myself if I can hire the team, if I can, just to get to a certain level. And this is exactly what franchises do. The first McDonald's was owned by the McDonald's brothers or Ray Kroc, but it was owned. And every franchise you look at, they usually have a pilot store or two. And they don't even call it that. They're just trying to run the operation. But once they find out they can start replicating it, then they say, let's bring in other people that can leverage this and now we can grow it much faster. So I would build the team first. If you have the means and ability and the mental fortitude for the period of time long enough to understand how this works. Secondly, I'd make sure my brand is big enough that the licensee comes on. They're getting an immediate win out of the gate, because that's the biggest thing you offer besides the brand equity.
Jay Clouse
What's your take on publishing these days? You traditionally publish.
Mike Michalowicz
Actually, I did, and that's the big change for me. So I did up to my most recent book. So I've self published. I then published with Penguin Random House, I want to say six or seven books. And I made the decision to go into Hybrid. I actually have my own imprint now. That was part of the impetus. So I have an imprint for entrepreneurial authors. It's funny, about three books back, I started to really say, does it make sense to do traditional publishing for me? And the only offset, I'll never forget this, I ran all the numbers. I said, hybrid is a better model. There's a fee up front for Hybrid to mitigate the risk of that publisher. Some of them have left and built the exact same structure, but in a hybrid model, where you share the financial risk upfront in the traditional, they pay in advance. So I ran all the numbers, and I'm like, where does it make sense to do a traditional publishing deal? And I came up with a big number and said, if my publisher, my traditional publisher pays me this in advance, it substantially offsets the risk of not earning out as many royalties as I could through a hybrid. And I called my publisher and I said, here's the next book deal, and here's what it's got to be. And they're like, why are you asking that? That's ridiculous. I said, I get it, but if it's one penny less, it doesn't make fiscal sense. And the publisher came back and they said. They offered something that was like 20% less. I said, okay, I got to go now. And they said, well, why? They said, we're negotiating. I said, oh, sorry, I don't negotiate. Like, hey, where's the mill? I actually gave you my best deal. I ran the numbers. I said, this is the best deal if you want to go above it. I'd be flattered if you want to negotiate that way, but you can't go less than this otherwise. And this is not. They were an amazing publisher. I love Penguin Random House. I just said, I can't fiscally justify it anymore. And they said, okay, we'll match that deal. And they did, and it was amazing. And then I came to him again and said, now the deal's Got to be even bigger or I have to go to hybrid. And they said, I think we're done. I said, I think we're done. The only thing I regret about that is they said, I think we're done before I got a chance to say, I think we're done.
Jay Clouse
So this model you put together, I'm guessing this is on the projections of what you thought you could sell in a hybrid or self publishing world based on the size of your brand and the previous book sales.
Mike Michalowicz
Correct. I think numbers are always important. And the only reason I like to share is because I wish everyone would share their numbers because then you have full context and not theory. For me, I know every book I write minimally will sell 100,000 books in its lifetime over a five year period, I should say. And some live beyond that. My intention is the million book bookseller, but that's like 0.01% of authors do that. I have one book that surpassed a million books, so I've sold 1.5 million books. I've sold 1.2. All formats, all languages of one book, which is profit first. So profit first is. Is the Bell Cow. Nine of these other books, I collectively have done 300. Actually, it's probably more than that. It's probably 500,000 of the other nine books are eight bucks. So it's that classic. Not bell curve. I don't know what the curve is, but like bell curve of some sort. Yeah, whatever. One carries you and the rest don't. I always consider it. Like when I see a concert, I saw the Eagles perform. They were, my God, amazing. If they don't play Hotel California, I will be pissed. It's their hit song and they know it too. So of course that's, well, actually how they did it. They opened it up and closed the thing with it because they know that's the one we want and they have all these amazing hits in between. And the uber fan knows, take it easy, it's going to blow your mind. But the general fan says, you better play Hotel California. And that's what it is for all creatives. That's the dispersion of what you create. Something's going to be more popular than something else. Once you have that popular thing, you better fall in love with that. Like, if I'm not talking profit first, if I'm not speaking on it, I'm of disservice to my consumer base. This is what people want. That's my Hotel California. I like saying that's Hotel California because it isn't Even close to Hotel California. But that's my version at least. And the other ones are the B sides for now. I am desperately trying to write something that's bigger than Hotel California, my anthem, and I haven't gotten there yet, so I better keep on performing that.
Jay Clouse
I love this door that you've opened for me. So how do you think about the cadence of how frequently you publish or when you choose an idea? I'm sure you have more ideas than you end up actually writing. So what does idea selection and pacing look like to you?
Mike Michalowicz
Yeah, for me, I have 25 ideas that are half baked, quarter baked, not even baked, just raw dough right now. And it's accumulating. So once I have these ideas, I'm like, these are things that interest me. Then sequencing is what does my reader need next? That's the best question to ask yourself. If you're writing your very first book. The question should be, what do I need now? That's the one to start with, because you are the only reader that you're guaranteed, so you better serve you real well. But after that, what does my reader need next? Really get attuned to that. I can just query my audience. That's actually what I do. I meet people in person or through a survey or email and listen for common threads. The bigger your consumer base, listen for what the common thread is, the pacing. I guess in retrospect, I've done it too fast because some of the ideas, they're fully thought out, but they're not fully deployed. Where it's in those nuances of actually testing with audiences that the subtle refinement happens. But that's where you get the right note at the right spot at the right time. And that's when the music becomes musical and beautiful. And I think I've missed some of that. My in laws are both psychologists. And I'll tell you, there's nothing you want in your life than in laws who are psychologists, because I am diagnosed all the time and they both said independently. Oh, you have hypomania now. A lot of people say, I have ADHD and all that stuff. Wonderful on you. I got hypomania. Hypomania means I got this crazy energy that if I don't express it, I'm in trouble. And you're probably even feeling it now. I'm hyped up like, let's go, man. Hypo is sub mania, by the way. It's just sub mania. I'm almost a maniac. But you can channel things to your advantage and for me, it's this output in production. I was up at 5 this morning. Writing that has become a powerful tool, but it's a double edged sword. It's my also biggest risk. I have this compulsion to get another book out, to get another book out. And when I start putting out books out for the sake of putting books out, that's when I'm in trouble. And I did it once and I'm trying to be disciplined in avoiding that and it's a struggle for me. This next book I'm writing right now won't come out until 2026. This is, I think the first time I'm having a two and a half year gap between books when I've been pacing it one per year. And I think for me at least that's too much. I can do it, but I'm compromising quality if I continue that.
Jay Clouse
Yeah, that pace is crazy. And if I'm channeling the listener, hearing you say I have 25 half baked book ideas, they might be thinking you have 25 things you could write a book on. But then you also said, you know, if you're writing your first book, write the book that you need right now. So implicitly it sounds like what you're suggesting is a lot of the learning of what is taught in the book happens in the writing of the book. It's not that you have a fully formed, fully learned thing that you're now just putting onto the page. Am I hearing that correct?
Mike Michalowicz
Yeah, that's right. That's what's so fascinating is for me, the best content I've produced is first, have a system, second, start testing with others. And I'm an owner or investor in many companies now, so we can test out in our companies deliberately collaborate for entrepreneurs primarily. Not only, but primarily, then start writing it. What I found is during the writing process, some of the stuff that I was able to express through the practice, the effort doesn't translate to the word. And it's in the word that I need to actually retest it. I remember I have a friend who owns a cookie factory. They make a massive volume of cookies. And I looked at the recipe to make cookies at home, you know, half dozen or a dozen, whatever the recipe, while the ingredients are the same, the proportions actually change when you get to volume. It's the weirdest thing. Like you don't just take one cup of sugar to make a dozen cookies, I don't know how many, whatever. And if you want to make 10 times that, you only use 10 times the amount of sugar. Actually, the ratios and stuff change and some of the ingredients need to change a little bit too at scale, which I don't. I can't even like logically comprehend. But it happens in books too. It's what works in practice doesn't necessarily work in print. There's these little modifications to the ingredients you gotta make. So to your point, Jay, as I'm writing a book and it's happening as I'm writing this book, I'm deep in the writing season right now, meaning I'll be writing about four hours per day, every day until this book is done. I'll actually go back and test. I'll have someone read this and say, follow this script if you don't mind. And people will do it. And they say, I don't get it, or I'm confused or this didn't work the way it was intended. I'm like, what? And the recipe has to change. So yeah, there's actually modification while writing, which is frustrating because then I have to go back all the way to the very beginning and say the sequence isn't right again. But yes, the recipe does change.
Jay Clouse
After one last break, Mike shares what all the best authors have in common and what might be holding you back from getting started. So don't go anywhere. We'll be right back.
Mike Michalowicz
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Jay Clouse
And now please enjoy the rest of my conversation with Mike Michalowicz. It sounds like you're saying, I mean, we'll take me as a very specific Example, I want to write books. I think haven't written a book, can't hold that story for much longer without actually starting to write a book. The hang up I've always had is, what is it that I know so well I can write a book on? Yeah, but it sounds like you might be giving me some permission to release that as a story instead of saying, what is it I know so well? And instead adopt, what is it that I want to learn and know so well that I could write a book on it?
Mike Michalowicz
Dude, you found the secret. I remember I was walking down, I was going to a speaking engagement with a friend, and he did this cheesy thing with me. But it became a profound moment. I was at a university, I was speaking, and we're walking past classrooms, getting to the auditorium, and he points. He goes, oh, there's the best student. And I'm, like, racing through papers, trying to prepare for my presentation. We go by another room, he's like, oh, best student by the third one. I'm like, dude, what's going on? Who's the best student? You know, he's totally playing me. And he goes, can't you tell? I'm like, is it the one who sits up front? The one who takes most notes? He goes, no, no, no. He goes, the best student is the teacher, Mike. It's always the teacher. And that became the profound moment. When we teach, we have to steep ourselves in that knowledge so effectively and know it so intimately that we can actually repackage it so it's consumable. And I'm like, oh, the best authors aren't the masters at it. They are the biggest students of it. That's the key.
Jay Clouse
What does that mean for the way.
Mike Michalowicz
We position the book when it comes to communicating it? I think we have the right to say, I'm a student of the subject. And that's why I want to share with you what I've discovered. We have to be authentic and integral. We can't say this has worked for hundreds of companies or whatever your target audience is when it hasn't been deployed. But I think part of the learning is doing it does delay books. It's funny, I was talking with a guy, he's an amazing author, Michael Bungay Stanier. He wrote a book called the Coaching Habit. Millions of copies sold. It's an extraordinary book. I sat down with him, I said, hey, Michael. And he's written many books, probably more than I have. I said, what does it take to make a bestseller? And he goes, if you've lived it. He goes, you got a lot better shot than if you simply curate it. And I'm like, oh, my God, it's true. Back to that component of the ingredients change at scale. There's these nuanced learnings that happen if you've lived it. And that was a reminder. And I'm not disciplined enough to slow my roll. Take the time for this to mature, to breathe a little bit by living it myself and deploying it with others. Now I work in the space of prescriptive nonfiction. This is where you're teaching other authors when it comes to fiction and so forth. Maybe you got to start touring the world and visit the spaces you're writing about. I know an author who was writing about World War II and Normandy, and they went there and the book became that much better because they walked where the soldiers walked. They saw where people lay to dying. And I think we got to live it more. The funny thing is, with AI and stuff, bullshit now costs nothing. You want to write a book in 20 minutes, tell AI to write the book for you. You can get this crap out, but it can't live it. And it's in the few words. It's the few emotions that will come across that makes a book transformative.
Jay Clouse
When you're starting to research this and then deploy the tests of this, and you get to the written word part of how you explain it. Where do frameworks live in your mind? How much are you saying, I want to create a specific framework or not?
Mike Michalowicz
There's a framework to the writing, and there's a framework to what I'm teaching. There always is. It's the skeletal structure. So the written word becomes kind of the muscle, flesh, and skin around it. But I absolutely have a framework. That's actually what I work on first. So one of my books is called Fix this Next. This is actually the interesting part about writing a book. I actually do spend years preparing the framework, and that's I consider part of the writing process. So each book takes me five years or so to write, but I get them out every year because I'm working on multiple frameworks. I'm working on about four or five frameworks right now. And some of them testing very deliberately. Other ones, when they present themselves, are haphazardly. That's the baking process. So Fix this Next. I was testing out and finally got to the framework of, oh, this is how a business can identify what it needs to do. Most people arbitrarily do it, but there is actually a sequence. Then I had the framework for the system. There's also a framework to the book. I follow the same framework every single time. So you'll see me start off with a personal story, usually of self deprecation, which is the awareness moment. I thought this. I tried it. It failed miserably. I found there's a fix and let me reveal it. I'm trying out for the first time ever, here's a great success I had, and then here is how I got to it, which is atypical. Usually I go through this. I call it the Phoenix effect. The claps I had for relatability, and they're all true. But I think that builds a relation. This one, the book. It's better to show the success first because the reader of the next book, I think, will be so thirsty for it. They don't want to hear about the miserable idiocy I've had. They just want to know, will this work for me? Whatever. So I go through this framework chapter by chapter two. I have to have a measurable result. If my reader, most readers don't even get past page two. So by chapter one or chapter two, the latest, they got to say, holy crap, I'm seeing measurable results in this transformation for myself. I call it the early win. And then I build out and so forth. The very ending, inevitably, in my books, is the call to arms, is the rallying call. You got this. I don't think I'm a great author by aspire to be. I think Malcolm Gladwell, he's one of my favorites, is a great author in this genre. All his books are framed the exact same way. And that's why it's so great. You'll see creatives do this. You look at music, the Eagles, all their music, while different songs, is similar. It's country rock, which is different than Metallica. You can imagine Metallica comes out with literally a Hotel California, and then, you know, Enter Sandman. Like, it's just. It's jarring. So I think we can have our all have our own stylistic framework. And adhering to it actually serves you.
Jay Clouse
The framework of the method that you put into these books, if you can. How do you get there? If I were to sit down and talk to a friend about how to do any given thing, it's unlikely that I spit out a framework of how to do that thing right away. Right. So how do I get to the crystallized best version that I feel like this is going to go into print now?
Mike Michalowicz
Okay, I'll give you the shortcut first and I'll give You the longer action, so the shortcut. There is a great book called Write a must read by A.J. harper. It is in my opinion the definitive book on frameworks for bugs. So write a must read. And I think there is a kind of standard template that all authors need to consider. It's the 30,000 foot view and that book outlines it better than any other book I've read. And there's great books on writing. The framework I've used or fleshing it out was first knowing what the transformation is, where is the reader entering the book, state of mind, experience, and where do you want them exiting the book. I also realize if you over promise on the transformation and don't deliver, your book is done. And yet that's the most common thing. You read my book, you're going to be a millionaire by the end of this book. Instant Millionaire, it's called. You can become a millionaire in 30 days. And it's such a sizzling snake oil salesperson presentation. You may convince the person to buy it the first time, but your book will not become a backlist hit. People won't say you got to read this book because you're not delivering on what it promises. So where are they now and where can you reasonably move them now they may have a desire of that instant millionaire and you have to acknowledge that. But where can you really move them too? That is the starting thing. There's also in many books a belief or mindset they're coming in that they think the solution is, but it's not the solution. And the reason I know this is they wouldn't be buying your book otherwise if they were already a millionaire. Whatever they're doing got them there. They don't need to consume anymore. Figure that one out. But they're consuming your book. But we also know that they have a common belief. So this is where the research plays out. You got to know what that common belief is. Perhaps you had it yourself. Now some people say, I'm just making this up. To become an instant millionaire, you should bet the lottery or invest in real estate or buy Bitcoin. If that's the common belief, what's the actual results? If the actual results are not those people coming instant millionaires, is there another method? And it could be the compounding effect or whatever it is. Just every day put a dollar down and you'll see it amplify and instant may not happen tomorrow, but you've established a method instantly to become a millionaire for the rest of your life or something. Those are the key foundational frameworks. And then I start building an outline that builds toward it, like a good movie scene or a good movie. You start off with the vision and promise. You talk about the struggles, and you start the build. Getting there. But you can't have a perfect build, like, do this, then this, then this, and life is perfect. Do this. But this could happen. And you have to beat the first boss at level one, and then you're here and this is great, but then you may collapse again and here comes boss number two. And that's typically the trajectory of a great book. It builds to a crescendo moment. They learn throughout, but their struggles and stuff are acknowledged and presented to them, too.
Jay Clouse
I think to close. I would love to just hear whatever advice you have for someone who is going into writing their first book to help them move into the action of enough momentum to follow the project all the way through.
Mike Michalowicz
Okay, I'll paraphrase another book, which I think is. I think it's called On Writing well, but the opening line, I unline circle. I said, oh, my God, the whole book is delivered in the first sentence. And this is a paraphrase. It's not exactly it, but it said the essence of writing is rewriting. And I was like, bingo, Circle. That's it. And I think there's this belief that we spit out perfection. You gotta write and rewrite and rewrite. And Maybe it's version 6 or 16th or 16,000th, but it will get there. But you have to have the discipline of getting there. Hotel California was not written. I suspect one time they had a hook. They tried something, they tested, they moved, they changed. I bet you that was rewritten countless times before they got that perfect assembly of that song. And that's. If you're going to 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. And as you go through it, it's the starting clay. You are going to build something magnificent if you keep on writing and rewriting.
Jay Clouse
If you enjoyed this episode, and I know I did, please consider leaving a rating or review on Apple Podcasts or Spotify. I bring it up in every single episode because it makes a huge difference. I read all of them, and it also has a major impact on the show's growth. So consider leaving a rating review on Apple Podcasts or Spotify, if you haven't already. You can learn more about Mike and all of his books@mikemcalowitz.com, which I have linked in the show notes, thank you for listening and I'll talk to you next week.
Mike Michalowicz
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Mike Michalowicz – How the Author of Profit First Stays Lean by Licensing His Ideas
Released: February 17, 2026
Host: Jay Clouse | Guest: Mike Michalowicz
In this episode, Jay Clouse sits down with Mike Michalowicz, acclaimed author of Profit First and several other business books, to explore his unorthodox approach to content creation and business structure. Mike shares how he scales impact using a licensing model, enabling his frameworks to reach more entrepreneurs while he keeps his team lean and focus on high-impact work.
The conversation covers two main themes:
Through candid stories and actionable frameworks, Mike reveals the trade-offs of building a sustainable creator business aligned with personal joy rather than external expectations.
“My joy is not in the doing, it’s in the designing.” (07:06, Mike)
“For some folks... [an] idea becomes a trap. … The power is if we share the best of what we know with each other, we elevate each other.” (15:23, Mike)
"If you're a creator, there’s your doppelganger implementer out there. ... You can seek them out because they're seeking out the vision." (26:46, Mike)
“The best authors aren’t the masters at it. They are the biggest students of it. That’s the key.” (44:43, Mike)
“The essence of writing is rewriting… Start today, start writing and realize that most of it won’t be the final book. But at least you’ve gotten started.” (53:01, Mike)
On building a joyful business:
"I would say it’s modeled around what brings me joy ... I love to create content, particularly contrarian beliefs." (03:56–04:10, Mike)
On staying out of the “doing”:
"I suck at execution on a long term basis. … I’m not a coach, I can't coach myself out of a brown paper bag." (05:43, Mike)
On the evolution of the author-entrepreneur:
"If it isn't feeling right, it probably is not right. Don't do it because that's what the expectation of others is of you. Just lean into who you naturally are." (17:57, Mike)
On the licensing model’s challenge:
"If a licensee gets dependency on that [leads], now it’s the crack cocaine. … It’s brand affiliation. The brands are bigger than the lead generation." (21:55–23:18, Mike)
On the author’s real secret:
"When we teach, we have to steep ourselves in that knowledge so effectively ... the best authors aren’t the masters at it. They are the biggest students of it." (43:46–44:43, Mike)
On the writing process:
"The essence of writing is rewriting. … Most of it won’t be the final book. But at least you’ve gotten started." (53:01, Mike)
Mike Michalowicz’s approach to content entrepreneurship blends rigorous framework development, a licensing/business partnership model, and an alignment with personal values and joy. He gives candid, actionable advice for both authors and creators looking to scale impact while safeguarding autonomy and energy.
For creators:
Don’t just chase trends or lock yourself into one success—systematize your learning, test rigorously, and partner where others can out-execute you. Most importantly, get started, rewrite, and let teaching deepen your expertise.
"Start today, start writing... you are going to build something magnificent if you keep on writing and rewriting." (53:01–54:08, Mike)
Links: