Find Money, Partners, & Deals Using The “D.A.D System” w/ Mike Michalowicz

Ashley Kehr:
This is Real Estate Rookie episode 132.

Mike Michalowicz:
If we are better in the competition yet no one finds us, they find the alternative, the clients are getting a disservice and they’re experiencing something that’s inferior because we are superior. And if our clients are experiencing something inferior that’s their problem, it’s our fault but not marketing.

Ashley Kehr:
My name is Ashley Kehr, and I’m here with Tony Robinson.

Tony Robinson:
And welcome to the Real Estate Rookie, where we give you all the information, all the inspirational, all the education you need to get started in your real estate investing journey. And sometimes we talk about the nitty gritty about real estate investing, other times we talk about things that might support your real estate investing career. And that’s what we’re going to do today.

Ashley Kehr:
So, this Saturday is a Rookie Reply as usual, but we are doing it a little bit different. Once in a while we do have a guest on for the Rookie Reply. And today we have Mike the author of Get Different and he is going to talk to us about marketing. And he will actually go into why marketing is important for a real estate investor.

Tony Robinson:
And he’s got so many really good points, just all together. Honestly, I got introduced to Mike Michalowicz through his book Profit First. I’ve mentioned in the podcast before, if you guys haven’t read that, definitely I encourage you guys to go pick it up. But today he started to talk about his book, Get Different, which is about marketing. And I know you might be thinking like, “Tony, Ashley, why are we talking about marketing on a real estate podcast?” But if you think about it, there’s so many activities in your real estate investing business that require you to stand out amongst a crowd of other investors. And that’s what the premise of this conversation is. And he goes over different frameworks that you can follow. He gives you step by step advice on how to make yourself stand out. And really just to how to start framing your own conversations with yourself about marketing, about being different, about standing out that will help you in your real estate business for sure.

Ashley Kehr:
Yeah, we actually really jam pack a lot into this short episode. We go from talking about how not to be a (beep) and don’t be a (beep), to talking about the dad marketing strategy, to talking about me coming out of the closet once again. And also, I rudely interrupt Tony. So, lots of things happen during this short episode on this week’s of Rookie Reply. So, let’s bring Mike onto the show.

Tony Robinson:
Mike Michalowicz, thank you so much for joining us, man. I am super pumped to have you on here. And before we get into it, I got to say that I’m fanboy in a little bit because I’ve read some of your other books and they’ve had a big impact on my life. But Mike, for the listeners that don’t know you, please just give us like an introduction of who you are, what you’re about, and kind of what your mission is in life.

Mike Michalowicz:
Yeah. So it’s Mike Michalowicz here. I was actually looking at the wrong camera. I have two cameras and my main camera broke. So I’m on my backup. And I was like trying to stare you down in the wrong cameras. Now, there you go.

Ashley Kehr:
Oh, there we are.

Mike Michalowicz:
Now, I got it, the backup. So I’m an author guy. I write books about small business, but my journey has been entrepreneurial. I’ve been entrepreneur my entire adult life. Today, I own two companies. I have four licensed companies. So six collectively that I’m helping manage and run. But my real… And I’m passionate about those businesses. I’m a little passionate about the entrepreneurial journey, because I’ve struggled in it and I’ve been very successful in it. And I’ve seen the highs and the lows. And I think there should be a lot more highs for entrepreneurs and a lot less lows. My goal is to eradicate what I call entrepreneurial poverty.
What I mean by that is there’s a vision that Tony, Ashley, we all had when we started our businesses. Then there’s a reality when you started. And it’s usually a pretty big gap. I’m personally free. I can do what I want when I want. I’ll be financially free. I’ll make all the money in the world. And it’s like, “Oh my God, I have no money and my life sucks. All I do is work.” That gap is what I call entrepreneur poverty. And through the work I do as an author, my mission is to eradicate entrepreneurial poverty.

Tony Robinson:
I love that breakdown, Mike and I love the concept of entrepreneurial poverty. And you’ve mentioned it in some of your books. I was initially introduced to you Mike through your book Profit First, which is really big amongst a lot of operators in the vacation rental short term rental space here. You hear a lot of people talking about it. So, today we’re actually talking about a different book, which is called and if you guys are watching this on YouTube, it’s called Get Different, another great book by Mike. But before we get into Get Different, Mike, if you can just give us like the 22nd breakdown of Profit First, for those that aren’t familiar with that process. I love that.

Mike Michalowicz:
Oh, for sure. Yeah, for sure. So, we’ve been told… Ever since the invention of modern accounting, which is about 300 years old now that profit is the bottom line. It’s the word we use. It’s the year end, and the formula sales minus expense equals profit. But what I found is the vast majority of small businesses are never profitable. So, what confused me is hold on, if this is the formula and we start a business to be profitable, that’s like one of the main reasons how come almost no one’s profitable. And I was staring at the formula one day and it hit me. I was like, “Oh my God, this formula is wrong.” I mean, mathematically yeah, it works. But behaviorally it is wrong. When something comes last, it’s human nature to categorize that as insignificant.
Like Tony, if you love your family, I strongly suspect you don’t say, “I love my family so much. I’ve decided to start putting them last.” And actually if you had a health scare, you wouldn’t be like, “Oh my God, I need rally to take care of my health. I’m going to start putting my health last.” We would never do that because last means it doesn’t matter. And in profit we’re calling it the bottom line, the final take, the year end. It doesn’t matter. So, in Profit First I teach a real simple system. We flip the formula. It’s sales minus profit equals expenses.
What happens in executions? Every time revenue new comes into our business, we take a predetermined percentage of that money as profit, allocate it away, hide it from our business, then run the business off the rest. We’re now taking profit first. It’s the pay yourself first principle applied to business. And I’m very proud and happy to report that it has over 600,000 companies now doing profit first. They are all not more, not just, I should say consistently profitable, they’re actually growing faster than their contemporaries because they’re building a healthier business.

Ashley Kehr:
That is so awesome. And congratulations on being able to share that with so many companies and helping them grow and scale that fast. That’s awesome.

Mike Michalowicz:
Yeah, that’s the ultimate, like running at the airport and it doesn’t happen often, quite the opposite, but occasionally someone’s like, “Oh my God, you’re that guy.” And I’m like, “Which guy are you thinking about?” And sometimes it’s a totally different guy. Like, “Oh, I’m not that guy.” But sometimes he’s like, “Oh, I read your book.” Profit First is usually the one, that’s my most popular. And then people share their stories that sometimes it just takes me, I start tearing up and takes me to this emotional state, just joy and happiness for these people for the transformation they’ve made in their own lives.

Ashley Kehr:
That is so cool to be on the other side of that. Like, yes, it’s awesome for those people that have that transformation. But when you realize that you had a small impact on just opening up an idea to them and then they go and implement it-

Mike Michalowicz:
Yeah.

Ashley Kehr:
… Yeah, that’s awesome.

Tony Robinson:
I was just going to say, we might have to get you back on Mike for a second, go around where we can just kind of focus on the Profit First side, because I think there’ll be a lot of value for that as well.

Mike Michalowicz:
Oh sure. Yeah, teach the system. I’d love to.

Tony Robinson:
But today again, we’re here to talk about Get Different, which is actually a book about marketing and why it’s important for small businesses to do that. Now, before we dive in just for like our Rookie listeners, you guys might be thinking marketing, why are we talking about marketing on a real estate podcast? And Mike, you actually have a really good story in here about talking to like one of your realtor friends and how it can be applied to this business. But I want to set the table for the listeners that even though you’re an investor, you still have to market. There is still a marketing aspect to your business.
If you want to find a really good deal, you’re going to have to find a way to market it. If you don’t want to just rely on Zillow. You might not have to do some direct to seller marketing. Say that you want to raise money for a big deal you’re trying to take down, you’re going to have to market for potential money partners. There are so many… So you want to sell a property and maybe it’s in a competitive market and you want to stand out, how can you be creative and how you market that property?
So there are lots of concepts, I think, that we’re going to talk about today that our rookie investors can take away from and implement it to their business. So, Mike, my first question to you is, one of the things you said in this book was that people have a responsibility to market their product, to market their business. I think that was a really unique way to phrase it. So break that down for our listeners what you meant by when you said that there’s an obligation responsibility to market your product.

Mike Michalowicz:
I get a little soap boxy here. So forgive me if I start getting all like jacked up, but it may happen. I was at an event, I started writing this book seven years ago. It takes me a long time to finish a book. I work on many in parallel. And it was about seven years ago, I’m at an event. And I remember asking people, who here in this room is better than the competition. It was like HVAC company or something and all the hands went up. And at first I was like, “Can’t we really? Is that possible?” Like, “We’re all better than each other.” And then it became apparent. Small business is better than most small other businesses and we’re better than each other in different ways. One company responds faster. One is more caring. One has far technical superiority and they don’t all compete in the same market.
So when you look at the markets they’re in, in this market, these businesses in general are better than any alternative. And the fact that they’re the learners, just like the people listening to your show right now, these are the folks who are actually looking to expand and grow, inevitably better. And then I said, “Oh my gosh, if we are better in the competition yet no one finds us, they find the alternative. This is the alternative. This is us, but we’re invisible to them. The clients are getting a disservice or they’re experiencing something that’s inferior because we are superior.
And if our clients or our prospects are experiencing something inferior, that’s their problem, it’s our fault for not marketing. The other thing I heard too, and I’ve been surveying audiences constantly, I ask them, what percentage of your opportunity comes through referrals through your network, stuff like that? And most people brag, myself included about that. Oh, almost a 100%. Actually, I don’t even have to market to your early point. I don’t even need to market because businesses flows to me. I feel like king of the hill. And I’m like, “Oh, that means our clients, our network believe in us so much that they’re carrying the marketing burden on their shoulders. They believe in us. Aren’t they just affirming we’ve responsibility to get out there?”
If the work you do in real estate is superior to the alternatives out there. Damn it, you got to bigger. You got to be discovered. It’s the only way to be of service. That’s what inspired this book. And that’s why I started to research is, what gives the better businesses an opportunity to stand out. And if we’re smaller, we can’t actually compete against these mega corporations out there with hundreds of millions, sometimes billions of dollars backing them, that they’re just throwing into advertising, but we can beat them by being different. And that’s what we need to exploit.

Ashley Kehr:
So let’s Kind of tailor this to our rookie investors here. They’re getting started in real estate investing, what some advice you can give to them to get different as maybe they only have a couple properties, they’re just starting out as a new business.

Mike Michalowicz:
Yeah. So the first thing to understand is exactly who and what are you targeting? When I was writing out the book I talked about what’s called the who, what, and when. We’ve heard of who, what, and when, but the who, what, and when is who are we serving? What are we driving or delivering to that market? And what is the win? In any transaction there’s two sides. So how do both sides come out ahead? Because if you just win for yourself, the compromise will be your reputation. And if they just win, the compromise will be your continuance. So we have to have that balanced win-win.

Tony Robinson:
And Mike, and just to clarify, you’re talking W-I-N not W-H-E-N. You’re talking win as in like scoreboard win.

Mike Michalowicz:
That’s correct. The who and I’m talking when [inaudible 00:11:57]. That’s a good point. That’s like your Jersey accent. It’s like, “What is he saying?” So we need to get a win and it’s got to be a bilateral win. Like Tony, you got to come out ahead. Actually, you got to come out ahead and I got to come ahead of any transaction. And honestly, even doing a podcast, this is a form of a transaction. Hopefully, you’re getting content that serves your community. You get more engagement. Hopefully, I’m getting exposure to a community that hasn’t experienced me. That’s my win. And anytime we have a transaction, we got to look for those wins. Once you know the who, the avatar, what, your offer or the opportunity is, and the win, then we start structuring what will attract that audience. It always has to lead off with different, hence the title Get Different in the book.
I had the good fortune of being connected with some people that are really intelligent around how our brain operates. So neuroscientists and people that work in psychology and behavioralists and all this different people, and I interviewed them and I found an interesting pattern of what triggers recognition for something, for us to see or experience something. If you ever walk down the street and you do that double take, like, “What, what.” That is our brain being triggered by something. And it’s different. In fact, our brain only recognizes three things. Everything else gets ignored.
In fact, 99.999% of stimuli that comes into the human senses are ignored. This filtered out by this gatekeeper called the reticular formation. Not trying to get too technical here, but the reticular formation is this gatekeeper that says, “Ignore that pen sitting on your desk right now, because you’re presenting.” We actually have to ignore stimuli to pay attention, but the reticular formation opens up when three things happen.
One, is when a threat presents itself. That’s the number one thing. So if I showed up to your show and I had a gun on me, like, “Hey, we should continue on a little bit longer.” I’m waving around my gun at you. I guarantee I’d have your attention, but the threat response hits the amygdala and the amygdala says, “Fight or flight.” So, the two of you punch me in the face, split in my face wide open I’m dead. It’s a combative situation. So, probably not a good move. The second approach is opportunity. Opportunity opens up the reticular formation hits the prefrontal cortex of our brain. It lights up and says, “What is this?”
So if I put like a lot of money down in front of you and say, “Hey, here’s $500,000. Can we go for a little bit longer?” Chances are I have your attention but the risk is massive on my behalf because you may say, “Thanks for the $500,000.” We’re done with the show anyway. So I put risk out there. And by the way, we’ve seen this in marketing. In direct mail campaigns, you get a letter in the mail and it says open within three days, this is FBI will hunt you down and you open up and it’s like the car salesman. It’s like scumbag, you tear it up. Other times you get into a letter and then there’s like a $5 bill pasted on nicely. It’s like, “That’s a real $5 bill. Give us a call.” You’re like, “My pocket is getting a call to go to Taco Bell. So I’m sorry.” And we take the money.
The only third way, the only way, and the most effective way into the brain when it comes to marketing is different. The reticular formation opens up. It actually illuminates multiple parts of our brain saying, “What is happening? Is this a threat? Is this an opportunity? Is this something I have to qualify as it’s something I can ignore in the future, but I don’t know what it is now.” So, the essence of when you identify that you’re better than the competition and you’ve responsibility to more market, the only way to get prospects attention is doing something different. Don’t do what everyone else is doing. That gets ignored. Is this a blue pen? Do something different.

Ashley Kehr:
That I think is such a… This is going to be so helpful for people who are using direct mail. Because right now there are so many, not even sellers, but homeowners just getting tons of letters and postcards, text messages every single day. And how do you kind of filter yourself out? And that’s the key is you want to be different so that you stand out from all 50 other postcards that they got that week.

Mike Michalowicz:
You’re right. And its wildly simple. And step one is, look at what everyone else is doing. That’s the one thing not to do, particularly in your industry. So if everyone’s marketing the same way. I remember the first time I got a hey friend email and I was like, “Oh my God, I have a friend that I haven’t been in touch with apparently in years who, the only thing they call me is friend. They don’t even call me by my first name. They’re such a great friend.” And I fell for it. I started reading through it. I’m like, “Oh this is smarmy marketing.” I deleted it. And then a day later or a minute later, the next hey friend came through, I deleted it. I’ve put those in the spam box ever since. And perhaps I’ve received hundreds if not thousands. And so have you.
And that process is called habituation. Habituation is when the reticular formation says, “Oh, I’ve seen this stimuli before. It’s ignorable. Don’t even put into the brain, reject it.” And so those mailing pieces are guaranteed to be rejected. But if you do something different, it’ll get noticed. And here’s a technique. You can look at the medium mailing pieces or you look at the method. Method is approach. So you can change the medium. If everyone’s sending out mail, why not set billboards or whatever it says, “Well, I’m looking to buy a house or something.”That would work, but if everyone’s doing billboards that wouldn’t work. Or you can stay with the existing medium, but change the method. So if everyone’s sending postcards, send a picture of your grandmother and say, ?My grandma always wanted me to own property in this area. I’m looking to buy. Would you be interested?” Now, you’ve got to be integral. Don’t freaking lie.

Ashley Kehr:
Right, If you don’t even have a grandma and you pull a picture off the internet, don’t do that.

Mike Michalowicz:
Yeah. So you’re, “Oh, my God.” Please don’t do that. Consumers are very smart. People sniff that stuff out. The second there’s an integrity inconsistency, people raise a red flag. I saw actually happened to me this morning. I was on the Zoom conference for a quick meeting. There was like 15 people on it, but we weren’t live yet. So it was like all this people pictures. And I’m looking at this one picture. I’m like, “Wow, that woman is like really young to be on this call.” I’m actually a little bit surprised. It’s not in the right context. Like it’s a glamor shot or something.
She then activated her camera. And I was like, “Oh my God, you just aged 30 years in one second.” She went from this prepubescent to like a middle aged woman in one second. And I felt lied to. I was like, “Oh, okay. You want to look one way, but you’re really another.” And what we need to do is put out our authentic self. Put out your favorite picture of who you are today. With that grandma postcard, it better be a real story. And I’m not saying don’t lean into the unique idiosyncrasies or elements of it. Play up grandma. Send some pumpkin bread from grandma, do something like that, but do something that’s different and your guaranteed to get attention.

Ashley Kehr:
Mike, can you give us a real life example of, it doesn’t even have to be real estate related, but of where somebody did and marketing different and got great results.

Mike Michalowicz:
Well, I’ll give you a real estate example because I featured it in the book. I can talk about gyms that do some cool stuff, but I have a buddy who’s a real estate agent, more than a real estate agent. He owns a real estate agency in Colorado. They’re pretty sizable. I think they got like 30 or 40 agents. He’s a private shop. That’s pretty sizable. And he was reading the book with before I released it. He’s like, “Ah, this is really interesting.” But he goes, “It’s just ethereal stuff.” He goes that, “It doesn’t apply to me. Our industry’s established.” And here’s a golden lesson. The more established in industry, the more common the marketing approach, the easier it is to stand out. The more boring in industry, the more radical the opportunity to differentiate.
One example, I used to be in the computer or technology industry and I was slugging it out with all my competition. And one day this company called Geek squad comes in. All they did was they wore flood pants, narrow tie, tape on glasses. And these guys became heroes of the computer arena. Subsequently, they’re a $1 billion valuation today after their acquisition from Best Buy. You can do that. In the real estate industry. So this guy, Greg, my buddy is like, “It doesn’t apply to me.” I said, “Well, tell me, how do people market?” He goes, “It’s all the same.” The second I hear all the same. I start salivating like that’s not opportunity to differentiate. He goes, everyone puts up that stupid sandwich sign or if it’s a fancier house, you put up that little post, you buried in there and it hangs there.
You run your listings and your make sure it’s on Zillow listed properly. And you put your charming fixed me up house and all this stuff. And I’m like, “Okay, that’s all the stand protocol. Let’s just start with the most basic thing for the drive by viewers, the people that are looking at the signs. What if we set a different sign?” He’s like, “Well you can’t.” Of course, you can. What we did is we got signs with windmills on it. These are things you put in gardens typically. And all we did was put a sign with the same placard on it, saying house for sale, under contract, all that stuff. But there’s now a windmill on top.
And it started to get noticed, because remember from the consumer, you’re driving down the road, another sign, another sign, they’re all the same, maybe a different color, but they’re basically the same. So we don’t notice. But the second there was a spinning thing, we did the double take. And if you can get the customer to do the double take, it means the reticular formation’s opened up, the brain lightens up. It’s now questioning what it is. Now, different alone gets attention. It doesn’t mean it gets the right attention. So you have to do the other elements of attracting people and directing them to do something. But stage one is due different.

Tony Robinson:
Mike, you’ve kind of alluded this already, but why can’t I just build a better widget? Why isn’t just being good or being the best in your field enough?

Mike Michalowicz:
So, being the best in your field is not necessarily noticeable. Like, say you and I, Tony have competing businesses. And I’m like, “What we’re going to do here is we’re going to enhance the phone in two rings.” Every single time you go to your team and you’re like, “What we’re going to do here is answer our phone in one ring and beat that Michalowicz guy.” You are unequivocally better. Actually, you’re a 100% better. You’re answering the phone faster, but does the client notice? And the answer is probably not, probably not. Better doesn’t necessarily mean noticeable. And we can argue for the entire day of how your business is better than all of your competitors, but we can also go do exact competitors and point out how they’re better.
When I ask people in audiences, are you better? Everyone raises their hand and it’s true, but they’re better at certain elements, but most of it is invisible to the customer. It’s when we do something that is out of the ordinary, that they pay extraordinary attention. Back to Geek Squad, I would actually argue in almost every facet my company was better, more certifications, more technical skills, faster response, we cared more. I the owner was integrated in the business. I was doing some of the work myself and here guys in costume. But to the customer, it was extraordinary. I mean, who doesn’t want to geek fixing their computer? I mean, I do, I do and it was extraordinary.
They made it into a somewhat humorous experience. Once they found that the customers resonating with it, they amplified it. They used to ride bicycles to their clients. They started out Minnesota. They expanded nationally. They went into those Volkswagen bugs that looked at the Keystone cops. So once you find a crevice of different and you see people noticing, amplify that. It doesn’t necessarily mean you are better than the competition in the generic categories. You’re just doing something so unexpected and unique that people just have to pay attention.
One last thing, I’m not saying you have to be outrageous. I’m not saying you have to be a weirdo or the funny guy. Like, you have to be the real estate agent that dresses in a gorilla suit and dances around, that’s different, but it doesn’t mean it’s going to work. Different always gets attention. Gorilla suit real estate person gets attention. Stage two is that it’s got to be attractive. The audience has to say, “Oh, that’s for me.” And the geeks, it was for the people that needed our computers repaired. We had to find, for everyone listening to the show, what’s your different, but is it compelling to the audience? Is that something to say, “Oh, that’s for me.”

Tony Robinson:
So Mike, can we dive into that a little bit? Because I think that’s an important second piece there of making it something that can appeal to the person that you’re reaching out to. We’re in the world of real estate investing and say that I’m a new investor and I have this property that I want to buy, but I don’t have the money to do it, and I need to go out and find, I need to market myself to be able to find someone to help me buy this property. How do I go about getting into the psyche of that potential partner to even understand what kind of marketing strategy might resonate with them?

Mike Michalowicz:
Yeah. So we first have to identify who they likely are. That’s the avatar. So when the who, what, and when was structured, they’re the who. We want to raise money and what’s the win for them, the win for us. So we have to identify that. Then we target them and we do testing. So get difference about marketing experiments. I’m a little bit against marketing plans in that marketing plans are great, but a plan means commitment. I plan to tour all 50 states. That’s a commitment. But before we go about a marketing plan, we need to know, are we marketing in a way that’s going to be effective? So, we want to start off with experiments and inherent to experiments is a trial and error. Some things will fail. So once we identify who we’re targeting, those investors, let’s try reaching out to them in different ways.
Now, interestingly, I’ve raised money for one of my businesses in the past. And I was looking for angel rounds. These are small investors, maybe a 100,000 to maybe 250 is what the angel investment would be. So it’s not major tranches of money, but for me, that’s a significant amount of money. If you get two or three people, now you got maybe even a million dollar raise. So I reached out and what I did was I identified about five perfect angel investors. Most people reach out, they do a blanket thing. They basically do that postcard mailing, just a little more professional spin because it’s in an envelope that seals, but it’s basically the same.
I looked at what every other entrepreneurs to raise capital. I said, “Okay, that’s what’s not, I’m not going to do.” Now, I used in this case the same medium. I sent out the professional letter, but I did a different method. The opening to my letter said, “I’m looking to raise money, but before I even tell you about the business, I want to tell you about my values.” Rule number one, no (beep) allowed. My exact words. I said no (beep) allowed. And I said, “I will never do business with someone that’s a (beep) and I will never be a (beep) towards someone. I think all humans are equal and we all deserve respect of each other.” The second line said positivity or death. And I put out my four major values.

Ashley Kehr:
And you made those values stand out too.

Mike Michalowicz:
Yeah, yeah and they’re true.

Ashley Kehr:
It wasn’t like, I just wanted someone to work with me that will be respectful and not be respectful to them. You used words to make it stand out.

Mike Michalowicz:
Yeah. And there are words that are true to me. If you meet me, like how you’re seeing me now is the same Mike if we were having a couple beers together. If we had five or six beers, I’m a little more slurry but again when, win-win, but it’s the same me. And I think I don’t want to be the Zoom character that you see me when I’m 15 and then you turn it on and you get this guy and you’re like, “Oh my God, what happened?” So I do this consistently. That’s a major tractor factor. The how you market must be true to who you are. That’s why in another saying you can’t see it behind me fully, but says, “Be you all you always, truthful throughout.” What I got back from the first investor was one day letter.
I got a certified letter back and I opened it. And in red marker, no (beep) allowed was circled like 10 times. And I was like, “Oh my God, what did I just do?” And there was a sticky note attached to, it said, “I don’t like (beep) either.” And below that was a hundred thousand dollars check. His name was Howard Hirsch, best of my company. First guy in, extraordinary investor and extraordinary value alignment. He’s been so much more than money to our organization. He’s been strategic relationships and so forth. It helps us grow extraordinarily.

Tony Robinson:
Can we… We got to pause on that because I think that is like an incredibly important lesson for people to understand. So, first let me recap what you said. You said, “Be authentic to yourself.” Be your authentic self and understand what your values are and who you want to work with. I think for a lot of people who are in our audience, people who are at the beginning of their real estate investing journey, they feel almost this imposter syndrome because they haven’t achieved the same accolades as some of the people that they see on the podcast or people whose books they read and they feel like they have to kind of puff up who they are or what they’ve accomplished-

Mike Michalowicz:
Oh, I hate that.

Tony Robinson:
… but what you did-

Mike Michalowicz:
Again.

Tony Robinson:
… but what you did, Mike was the opposite of that is that you leaned into whatever experience you had. You leaned into your values as a person, and you amplified that and it allowed you to attract people that were more closely aligned with what you really want. And that is the super important lesson, because for the rookies say that you do pretend to be, you’re going to attract the wrong type of people. If you’re not being who you are, the wrong people are going to gravitate towards you. So when you be yourself, you’re able to find the right person.

Mike Michalowicz:
And the reason that I hate that is I get why people do that. And I’ve done that too, this fake until you make it and stuff. But there is this itchiness that was dripping in size like, “Oh, that’s not really who I am.” And to your point, is tracking the wrong people. I thought I had a pound on my chest. And I’ve seen these real estate guys. You got to wear the slick suit and make sure you’re munching a cigar and when you’re going out to lunch, you’re flashing the hundred dollars bills and your shiny cards. And what if you went in the true self and you simply said, “I’m a real estate rookie. I’m the real estate virgin, or something like I have no clue what I’m doing.” That’s the advantage.
With no clue means this deal means everything to me. I am not just a 100% in, my whole life is in, like, I have to make this successful. I will be there every second of the day. That marketing is so much more powerful than another slick campaign because it’s true. Some investors say “No, I don’t want someone never done this before, I’m out.” But some people are going to say, “That’s exactly who I’ve been looking for.” I want someone’s hungry, thirsty, starving for this. This is someone I can coach and help in the process and not just invest in. And you’ll track the right people by being true.

Ashley Kehr:
That’s such a great point. And Tony and I were talking about this earlier today, is that a rookie investor, a new investor is going to be so motivational and inspirational. I think you just tagged on another aspect to it that they may even work harder-

Mike Michalowicz:
True.

Ashley Kehr:
… than any experienced investor too.

Tony Robinson:
So one of the other things you mentioned in the book and this kind of aligns what we’ve been talking about, but it’s the dad framework. Well, I thought it was a humorous kind of way to phrase that. So what exactly does that mean if we can break that down for the listeners?

Mike Michalowicz:
Yeah. So dad is the checklist, if you will, for marketing that works. We already touched on elements. The differentiate is the first D. Any marketing you do if it isn’t different than the standard noise, it’s actually invisible to a consumer. If you don’t differentiate, you don’t get noticed. So you have to check that box off. But here’s the thing, is different lasts for about one 10th of a second. And this is not just a random number. This is actual research identifies that when we notice something different, our reticular formation opens up and it hits parts of our brain. And then within one 10th of a second, we’re placing judgment.
If you ever been outside and you see something kind of squiggle and you jump back, that is the 1/10 of a second reaction of the amygdala saying, “I don’t know what’s going on, something different’s happening.” And it’s lighting up our brain to evaluate, is this a snake? Can someone turn the hose on? What’s going on? So be different. Get 1/10 of a second attention. You immediately need to transition into the attractive factor. Is this messaging for me? It’s got to be so clear that’s for the audience that you’re targeting. So speak in their language, use the elements that they recognize and solve a problem they have, or relieve a pain, or just invoke curiosity or entertain.
But there has to be a justified reason to continue on. And it’s actually usually a blend. If you can educate or whatever it is like where you educate and entertain at the same time, that becomes more powerful. If you can educate and entertain and solve a problem all at once, now it becomes more powerful. So blend those elements together, but the attractor factor, that’s the A in dad only lasts for 1/10 of second increments. And it’s happening right now, as we’re talking for the folks listening in, they’re saying in their head, subconsciously likely, am I getting value? Am I writing this down, taking notes? Is this transformative? Or is it better just to check email? Well, I’ll get more value out checking my email.
So that battle is happening in everyone’s mind, including the listeners right now, determining there’s a reason this podcast isn’t like a 48 hour just onslaught. Like, it doesn’t run for 48 hours straight, because at certain point you can’t retain that attractor factor. So be attractive, but also realize that time is ticking away. Then you must go to the direct. The direct is where you give your prospect a specific and explicit direction to take. With this key caveat, it must be reasonable. Like, say Tony you’re looking for a car and you see a balloon thing out in the parking lot, which if you recognize that… You’ve seen those, right?

Ashley Kehr:
Mm-hmm (affirmative). Yeah.

Tony Robinson:
Yeah.

Mike Michalowicz:
So those things, when they first came out, chances are actually Tony, when you first saw them, you’re like, “Oh my God, that’s so different.” The first time. They are so ubiquitous now because it worked, it’s become more noise. And we don’t actually see, we blow by and go, “Oh, there’s balloon boy again.” And we often associate saying, “Oh cheapo sale thing, used cars or something like that.” So balloon boy has deteriorated. That’s the problem with different. Different works until everyone replicates it. And then we have to find the new different, it expires. But say balloon boy brings in, that was the differentiate. You were attracted. You saw that you wanted to buy a car. And this is an alignment with what you’re looking. So it solves a pain you have, okay and buy a car. I’m the car sales guy.
I’m like, “Hey Tony, I heard your looking for a car. Let’s find your dream card, give a hundred thousand dollars deposit. We’ll find it.” And you’d be like F No pal because it’s too big of an ask. When I direct you to do something, it needs to be reasonable. But the wrong approach to is to have such a low direct, there’s no action required. It’d be like, you come into the lot. And you’re like, “Hey, I’m looking for a car.” I’m like, “Oh great, we have cars. I’ll see you later.” And walk away. You’re like, “What do I do?” “Just wander around and you’ll see us on websites.” I hate going to websites where the call to action is learn more. The whole reason I went to the freaking website was to learn more. Don’t make me do that. The right action is the reasonable action.
So you come into my car a lot. And Tony, I think the right thing would be for me to say, “Hey, you’re looking for your dream car. Would you be willing to give me your cell number? I’ll take pictures of our inventory here at this lot and other lots, I’ll text it to you so we can hone in on your dream car.” That’s a transaction. You give me contact information, your cell, I give you information for your decision. And then my job is to matriculate that to the transaction. And then at the end you have theoretically your dream car. I theoretically have my dream commission. And that’s what we’re trying to achieve together. It has to be reasonable.
The last element or the last thing I want to say about dad, is you have to check off all three. I’ve seen businesses do some really different and attractive, and then it goes to nowhere. There’s no direct. I’ve seen people say bye now, but there’s no compelling reason to do it. I’ve seen so much marketing, most marketing that isn’t different in the first place. It speaks to the audience. It tells them what to do, but no one notices because it’s unnoticeable.

Ashley Kehr:
Mike, I want to pivot here. And we’ve talked about big business, especially balloon boy in front of a business and your friend, the real estate agent, his business and the different marketing. What if you are one person, you work in a closet as per se me and you don’t have a storefront and you don’t have a huge marketing budget and you rely mostly on social media to put yourself out as a brand. So, real estate investors whether raising money or getting on buyers list or selling your flips, things like that. What are some ways that just that one person can market themselves through social media or maybe other avenues that you know?

Mike Michalowicz:
Yeah. So what we look for first is what’s called congregation points. The congregation point is where are your ideal customers, that avatar we talked about congregating? So if they’re congregating on social media, we got to refine down. Like, is there a Facebook group they’re on? Or is it more of a LinkedIn consumer? Where are they? And maybe they’re physically assembling. So maybe you got to get out of that closet and drive down to the local club or something like that. So find the congregation point. And the best way and the easiest way to find that is look at your existing best customers and say, “Hey, where do you go to meet people like you?”
I’m like, “Oh, everyone goes on Facebook or everyone listens to this podcast. Or there’s this club everyone hangs out at.” That’s your congregation point. Then we simply need to appear. And appearing simply means just being present but in a noticeable way. I’ll give you an example of this. My first company was doing computers. I was struggling. Geek Squad came in, kicked my ass. I was like, “Oh my God, I’m done.” But then I noticed my best customer was a hedge fund. I knew nothing about hedge funds, but they were my best customer. I went out and met with them and I said, “Hey, you’re my best customer honestly, I love serving you. I want to serve you better. What am I doing right?” And this is a key question when it comes to marketing and this is a Jedi mind trick, like this is level two stuff.
When I said, “What am I doing right?” He said, “The response time is really good. The last computer company didn’t respond as quickly. You respond quickly.” Whatever you’re doing right is not what you’re doing right. It’s what the customer judges you on. And that’s the thing you actually have to do better and market on. When he says you respond quickly. I said, “Oh, okay. I better start responding faster because if I’m ever slow, he’s going to be pissed because he’s telling me.” If I respond faster, I know he’ll notice. We do thousands of things. The customer can only see about 0.1% of the stuff we do.
Find out, ask them what it is by saying what you’re doing right. I didn’t start marketing fastest response times. I wore a lightning bolt on my jacket and I went to the congregation point, which was hedge funds have a conference out in long beach, California. I flew out there. I threw my little lightning bolt on and started walking around. And to me I would say, “Oh, who are you? Do you own a hedge fund?” I’m like, “No, I’m a computer guy. And they’re like, “Oh, you’re the only computer guy here.” Which is different alone. Just being the guy there when no one else is appearing.
Now, everyone wants to be your buddy. Like, “Oh you’re the computer guy, that’s amazing.” They go, “What’s the lightning bolt?” Oh I said, “Oh, we pride ourselves on response times.” Like, “You’re fast responders.” I’m like, “Yeah.” I’ll say Appaloosa, that was the company. I asked Appaloosa about response time. And we picked up 75 hedge funds over a two year period by going to the congregation points. That company was then purchased by a private equity. It lives on today and actually has being resold again. So the lesson is, even if you’re in a closet, there’s still congregation points. And maybe it’s on social media, you’re wearing your lightning bolt or maybe going out to a physical meeting, but first ask your best customer what you’re doing, right, where they’re congregating and go there and then demonstrate that right thing through your marketing.

Tony Robinson:
One follow up question to that-

Mike Michalowicz:
Was that gold?

Tony Robinson:
… No, that was great [crosstalk 00:38:11]. That was great. And like so many-

Mike Michalowicz:
That was awesome.

Tony Robinson:
… so many good questions that come out of that but I think you were able to get that insight about the response times being super important. And you’re able to kind of dive first and just run with that, but say that I’m like a solopreneur. I’m this one man or one woman show, how do I-

Ashley Kehr:
Tony, I have to interrupt you. And I’m so sorry to do this.

Tony Robinson:
First time ever on this show, an interruption.

Ashley Kehr:
I have to say something to Mike real quick before we move on about that is that as you were just talking about that as like getting out of the closet and going and finding like automatically, I started thinking about where are people that hate their jobs and want to get started in real estate investing? What conference am I going to go to and talk to those people and get them listening to the show and get them started in real estate investing.

Tony Robinson:
I love it. Did you figure out the conference?

Ashley Kehr:
Yeah, I thought that was really great. My friend that’s in construction, that’s going to be partnering with me, he hates his job [inaudible 00:39:07] construction and that they can be project managers and do rehabs. But that was my first thought.

Mike Michalowicz:
Actually, just to build on that. That technique works. I met with the, I can’t remember his name now, but the founder of Boston Chicken, which became Boston Market, ultimately. I don’t know if this still exists, but pretty big franchise. When he started his first entrepreneur endeavor as a teenager, he was selling back then they called then they called ambulators, but push baby carts or what do they call know? Carriage, baby carriage. He sold ambulators-

Ashley Kehr:
A stroller.

Mike Michalowicz:
… Sure, stroller. My kids are so old. I can’t remember that.

Ashley Kehr:
You just aged yourself right there.

Mike Michalowicz:
I Totally aged myself. I’m like what, what do we call them?

Tony Robinson:
Yeah, I was Googling ambulator. What is ambulator?

Mike Michalowicz:
All these things called cars? What do cars do? We used to horse and bulky. So, he worked in New York City and he said what he’d do is most of his competition was going door by door knocking saying, “Hey, do you have a child you’ll be having in the next nine months? We sell strollers. What he did is he went to the backside, because this is back when diapers were clothed and you’ll dry them on the lines outside and he’d count doors up or floors up and doors to the side and he’d go right to the doors.
He’s able to navigate a building in like 1/5 or 1/10 at the time and he’s hitting the prospects. I love what you were saying. Actually you’re like, where are the people who want to become real estate investors? Don’t go into the real estate investor business. That may be too late for that conference. What conference comes prior to that? Where people are getting disenchanted with what they’re doing, that could be the right spot to go. So I was just jacked about your strategy. You gave me gold. You gave me the win-win.

Tony Robinson:
Yeah, it’s a win-win. There you go.

Ashley Kehr:
[crosstalk 00:40:49] that transaction.

Tony Robinson:
Mike, I want to give you some credits because I’ve read other marketing books. You think of Purple Cow up by Seth Godin, which kind of has a similar premise. But I remember I walked away reading that book feeling like, “Okay, that’s a really good idea.” But the application wasn’t there. He didn’t really give you the steps you need to implement this in real life. So, you’re left kind of wondering what to do next. Whereas your book, not only do you give a really solid, thorough explanation of the idea, but there are tactical step by step things to do at the end of almost every chapter to work this into your business. So, with that in mind, Mike, and I guess we can kind of wrap up after this, but where do you see the most entrepreneurs fail trying to implement the action steps for strategies that you have inside of this book?

Mike Michalowicz:
That’s a great question. And thanks for pointing it out the importance of taking action. And Tony that’s where most people fail. They say, “Oh, this is great, but I’m really comfortable just sitting on social media. And even though social media is not working for me, I’m just going to stay there because everyone else is running Facebook ads maybe I’ll put some money in that. And when it doesn’t work, I get really frustrated and get angry, but I’m going to go back to doing Facebook ads anyway.” It’s a human tendency is that we are very comfortable doing what we’ve done before, even if it doesn’t work.
So, the failure point is that, is that people maybe think something different and then they talk to themselves out and they say, “Well, that’s not going to work.” How I envision is there’s a devil on our shoulder and there’s an angel. And the Angel’s saying, “You’re better in the competition, that people need you, get out there and get noticed.” The devil is like, “It’s embarrassing if you market ineffectively. You’ll be shunned from the community. Don’t do it. Just do what you’ve always done even though it’s sucks, because you suck.” And so like this devil-angel going on and they’re fighting. We have to defeat that devil.
And to overcome it, we simply have to realize a, what you do is more important to get notice than to be invisible. The world is starving for you. Secondly, start off really, really small. Buy that lightning bolt lapel and put on your pin on your shoulder. I felt so weird wearing that thing and walking around and some people noticed it and I was like, I’m already going to do like make fun of me and think I’m a pretending to be a superhero. Like, “Oh my God.” And they’re like, “Oh that’s interesting. What is that?” And one person’s like, oh, that’s kind of weird. Never seen that before.” But it invoked conversation.
And that started building my confidence. So with an experiment today. Send out the grandma postcard today. If you’re not going to do that, just start wearing something on the lapel of your jacket or outfit that is always noticed or commit to a color and just go neon green on everything you do going forward. I’m not saying that’s going to work and get results, but it’s going to start working on our mind and realize that people will start noticing and speaking about it. And the people that don’t care won’t notice. They’ll just be, “Ah, whatever.” They’ll disqualifies. I’ve never seen someone do different marketing and the consequences been like someone killed them or something. What we fear’s going to happen never happens. And if we don’t do it, our grace fear will happen in our business will just be stagnant.

Ashley Kehr:
Mike, thank you so much for all of this great information. I feel like you’ve jampacked so much value into such a short amount of time and some great takeaways. And also you’re really funny too, I think.

Mike Michalowicz:
I hope you have 3D glasses on, because look at that. Look at that. Wow, that’s pretty wild. Thanks. I had a lot of fun with you Ashley and Tony-

Ashley Kehr:
Yes.

Mike Michalowicz:
… this has been a blast. Thanks for having me.

Ashley Kehr:
Yeah. Can you tell everyone where they can find out some more information about you and reach out to you?

Mike Michalowicz:
Yeah. So let’s do it. The place to go, I’ll give you two. I don’t know why I’m waving my [crosstalk 00:44:28]. It’s my letter opener.

Ashley Kehr:
Wait, we started out the show with you talking about holding us at gunpoint and now there’s a knifepoint.

Mike Michalowicz:
This is threat technique. Now, here’s what you can do. You can go to mikemichalowicz.com, but here’s why I wouldn’t go there because you won’t be able to spell that last name. There’s an alternative. It’s Mike Motorbike. So, that’s my nickname from high school. Not because I’ve ever driven to motorcycle, just because it rhymed Mike Motorbike. If you go to mikemotorbike.com, you’ll get access to all my books. You can get free chapter downloads. The chapters that will actually help you. So you don’t even have to buy the books. I hope you do, but you’ll have to. And there’s other resources. I used to write for the Wall Street Journal, that’s there too. And there’s a couple things that will just hopefully entertain you. I like to joke around. So I think you have some fun visiting mikemotorbike.com.

Ashley Kehr:
Well, thank you so much, Mike, for joining us. This has been really great. I’m Ashley @welcomerentals and he’s Tony @tonyjrobinson on Instagram and we will see you guys next time.