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Clip #54
Michael: Vanish, it’s Michael
Senoff.
Vanish: Hi, Michael how are you
doing?
Michael: I’m doing well. How are
you doing?
Vanish: Very well. What are we
going to talk about today?
Michael: I’d like to talk about
some more joint venture stuff,
and I’d like to pick your brain
on some of the stuff you’ve
done.
Vanish: Let’s talk about joint
ventures because I think one of
the interesting things I find is
that as you spend more and more
time becoming a master and a
student of marketing, the less
you worry about actually owning
the product. One of the things
I’ve previously mentioned to
you, in essence what I know is
this. There are three things you
need to make business happen,
you have to have a product or a
service, you have to have a
group of customers and you have
to have a process be able to
communicate to that audience.
One of the big things that
people forget is those three
separate things; you do not need
to own them to make business
happen. What often happens is if
you take for example, in an
information product, people feel
that they have to write the
product and they have to sell
it. They have to own it and go
out and get their own customers,
and they have to sell their own
products.
Michael: Why is that? It’s like
we’re brainwashed into thinking,
and it never occurs to us that
this just doesn’t have to
happen. What do you think it is
that makes us automatically
believe that we have to create
it and that we have to get our
customers? Is it an ego thing
where we want to be in control
or what?
Vanish: I think partially it’s a
knowledge thing because what
happens is this. If I said to
you, “Michael, the product that
you are going to go out and make
money on is in the movement of
cars.” You wouldn’t control
that, going out and building
your own car. The amount of
capital and expertise and
everything, that’s why there are
only a few car manufacturers
because you need millions and
millions of pounds and you need
lots and lots of expertise in
order to go out and build your
own car. The problem with
something a small service type
business is it is relatively
easy to enter that market. To
become an author, if that is
your expertise, write a few
pages it’s relatively easy and
people fall into the trap of
becoming an author first and not
becoming a publisher. One of the
interesting things to think
about is what you find a lot of
times is people forgetting which
activity is actually producing
the best results. You can be
very busy in business but if you
sit down and say, “What activity
actually produces money for me?”
The activity that actually
produces you money is getting
your product in front of the
customer and explaining its
benefits, etc. That’s the sales
or the marketing process. Ninety
percent of business activity is
spent maintaining and doing all
of that. For example, if we take
a restaurant business, we
understand what the product or
service is, it’s food. Assume
the restaurant is good at
producing its food. If I wanted
to make money, a very simple
statistic is here in the UK
forty percent of the average
person’s weekly spend on food is
on take away or on restaurants.
Have you been to a restaurant in
the last thirty days? Pretty
much everybody has been to a
restaurant in the last thirty
days. There is money being
spent. Now if you can channel it
through a venture that you’re
dealing with you get to keep a
slice of it. For me, if I was
going to say, “I want to make
out of the restaurant business”
I have to locate a property,
build my restaurant, go through
it with appropriate staff that
can cook the food, do all of
that, pay their wages. A lot of
hassle. What I find is the
easiest way to make money is to
find the three processes
separately and then do a joint
venture deal. The reason is
this; the person that you see
running the restaurant is
usually very good at serving
customers. They are very good at
taking customers that walk in,
step into the premises, and
going from that point to the
point where the person pops his
money. What they’re not very
good at is getting people to
come in. So their weakness is
the marketing process and their
second weakness is audience,
having customers. The only
customers they get are from the
little bit of advertising they
may do or whatever. So what
happens is that if I can go to
somebody that has staffed a
restaurant, review the business,
see if the product is good, then
I can approach that person and
simply say this, “I have found
that you deliver a good product.
What I’d like to do is show you
a way whereby we can deliver
more customers for you. It’s not
going to require very much of
your time.” All you have to do
is find an audience and find
somebody that’s got a lot of
customers but hasn’t got much
product. What I would do in this
case is generally I find
somebody that’s got a big
audience and has some loyalty
and some connections and get the
two to set things up. By doing
that, what I’ve got is a
customer bank that now has
another product. In the case of
the restaurant business a very
simple thing to do is to go and
find another business that has a
loyal customer base and say, “We
can supply you another product
which you can then communicate
to your audience base and you
can make some extra revenue, but
you won’t have to deal with or
manage that product.” Do you see
where I’m coming from Michael?
Michael: Yes, I do. It’s
matching the product to the
market, and I hear it all the
time.
Vanish: The trick is actually to
find people that have good
product but lack an audience and
then find people that have a
product with a very large
audience, but lack product. The
typical case I have is where I
find people with a very large
customer base but maybe only a
few products. My background, I’m
actually what’s classed as a
business angel, or an angel
investor, which is I invest in
start-up companies, growth
companies, companies that are
getting going. I typically see
around 200 businesses a year. We
see everything, food companies,
manufacturing companies,
advertising companies, so what
that has enabled me to do is
over time, I’ve been able to see
lots and lots of different types
of businesses. What I find now
is that through that experience
you see lots of inefficiencies.
What you will find is somebody,
like in the manufacturing end,
is very good at serving
customers but they’re not very
good at getting their audience
or communicating to an audience
base. You see other
organizations that have lots and
lots of customers, but what they
don’t have is they have a very
thin product line. If you
imagine McDonald’s, if all it
did was burgers, what’s the
level of that business going to
be? It’s relatively easy for me
to come along and say, “Do you
think your customers would like
some fries, or perhaps a
milkshake?” That’s the trick of
finding somebody that’s already
got a customer base but usually
one product oriented, or they
have a handful of products. By
introducing another product, you
can relatively quickly increase
the sales. You can also go to a
manufacturer who will make his
product and then try to find
individually customers one by
one, which is very time
consuming and very capital
intensive. It’s much better to
go and find somebody that’s
already got a big established
customer base and form a
relationship with them. When you
put that person’s product in
front of them, there’s going to
be a higher uptake, and there’s
going to be less effort. Does
that make sense?
Michael: It makes sense. This is
very helpful, I think. From my
experiences, I’m asking myself,
let’s say I find a guy or a
business with tons of customers
and then I have an idea for a
product. How do I approach this
guy in the simplest way
possible? What am I going to say
to him to get his attention?
Give me three or four examples
of openings that I can call this
guy on the phone, or in an email
message say to him that’s going
to get his attention.
Vanish: Usually, what you will
generally find is that somebody,
if you’ve done your research
well, with a large audience base
but a handful of product, let’s
say two or three. You will
contact the individual and say
to them very simply, “How would
you like to make an extra
thousand pounds a month from
your existing customer base?”
Usually, what you’ll get back
are a couple of questions, like
“Well how?” I very simply will
say, “Well, I have a product
that I believe your customer
base will be very interested in.
I can supply it to you. All
you’ve got to do is communicate
that message to them, and you
will get a cut. You will not
have to deal with any of the
handling of the product. I can
arrange for another company to
do that.” Therefore, what you’ve
done is you have basically said,
“I’m going to give you a
product, you promote it, and
I’ll get somebody else to deal
with the order fulfillment.”
He’s going to then ask, “What’s
the product? What’s the price?
What’s the quality?” Then you
can just tell him about the
other business, the product and
the quality. If you’ve done your
homework well, you should find
that product would be a good
match. It doesn’t take that much
research to know that it’s a
good product. You don’t have to
test it or anything. At the
restaurant, we could say, “Look,
you’ve got 10,000 customers that
would be interested in going to
these types of restaurants.” So
simply all you would do is
arrange for that CEO to visit
that restaurant, try out the
product free, and see how he
feels, and then you can get him
to say, “Do you feel that is a
product that your customers will
be interested in?” And you get a
“yes” or a “maybe,” and this is
the thing that really amazes me.
After you put two people
together, they could then go off
and do their own deal, couldn’t
they?
Michael: Yes, they could.
Vanish: The point is this; the
ability to market and deal with
all of the emotion and
everything, most CEO’s don’t
have the time. They would much
rather handle it with somebody
else. What I could do is if both
parties are interested and
accept each other as business
owners and say, “Yes, we’d like
to do business with each other”,
then the third step which I told
you is the marketing process,
when you bring the value in, you
can say, “I can show you how to
promote this product in the best
light to give you the maximum
view. You can give it your own
go and you’ll probably generate
this amount of income.” But
being a student of marketing,
you know how to take a higher
yield to get more depth
penetration and perhaps more
repeat sales. You can say to
them, “We’re going to generate
some extra revenue. Have you got
an issue if I take a try at it?”
Most people will say, “Great,
you’re going to generate more
money for me, I’m going to give
you a cut and you’re going to
manage it all. I don’t have to
do very much. All I’ve got to do
is decide whether or not I
approve of that product.” An
example that I’ve done recently
is I’ve got a company that has a
large readership. In the
publishing world, most of the
income is made from advertising.
Michael: We’re talking about a
website now, right?
Vanish: Right, a website, pop-up
advertising or banner
advertising or that type of shit
or whatever. I approached the
company, and I said, “What
activity are you doing? How are
you generating revenue?”
Basically they had four or five
ways in which they were making
money with their readership. I
said to them, “I’ve got three
products which I can put into
your organization and I can show
you a way whereby we can promote
another three products, which in
my estimation will generate this
amount of extra revenue.” What
happened here was, and this was
interesting I think, this is an
online website so everything
that it is doing is through
advertising or online
deliverables. What I did was I
saw three off-line products.
These are products that
effectively are deliverable in
the normal way of business. Most
online companies are focusing on
doing everything online. But I
sought a couple of very simple
products that would be
interesting to that sort of
readership. I then sat down with
them and told them how they
could do the marketing, etc. and
what they could generate. I
sought three suppliers with whom
I had relationships previously
and worked out what their
pricing was and a very simple
deal was whatever went through
the till, I’ll take ten percent.
Now, what do I have to do? I
just have to get one company to
manufacture the product, which
they’re already doing. I got the
manager of that company to check
the quality of the product, and
he was happy with it. I created
the sales copy and the marketing
message for which the publisher
would then promote the product,
and that added value because we
were able to show how just doing
a simple letter would generate
this amount of revenue. I sat
down and thought about how
developing a good process that
could double or treble the
amount of volume that was being
generated, and from that, I get
a simple ten percent. In terms
of effort, how much effort is
actually involved? In terms of
the way that contract was
written, I get ten percent of
whatever goes through that
business between those two
relationships. The whole thing
took about one month or six
weeks to set up.
Michael: And that’s an ongoing
residual.
Vanish: That’s ongoing, and all
of that was done out of my home.
I didn’t need to have an office;
I didn’t need to set up very
much. I had three meetings, one
with the MD, and one with each
of the individual suppliers, and
we sent a few emails back and
forth. I’ll give you an example
of the kind of product we did to
give you an idea of how simple
it is. The publishing company is
an online news service.
Michael: Are there a lot of
these online publishing
companies out there?
Vanish: There are hundreds.
Michael: What is their biggest
weakness?
Vanish: Their biggest weakness
is that the only revenue stream
that they have is online
advertising.
Michael: How is the online
revenue streamed in this day and
age in the marketplace?
Vanish: At the moment,
advertising as a general market
is down, and so is online
advertising down. The thing that
is interesting is obviously, as
with your hardtofindseminars,
Jay Abraham has a very simple
philosophy. He always talks
about building income streams,
having different avenues from
which you can generate income.
Most businesses that I’ve seen
have maybe one or two forms of
income. They may have different
names for the ways that they do
it. For example, in online
advertising, you may have banner
advertising or email or
whatever, it’s all the same form
of advertising. Your money is
coming from one audience, which
is your advertiser. There’s only
so much that you’re going to be
able to generate. By going to
these people and saying, “We can
add another income stream,
another way of generating some
money, it’s very simple. You’ve
got Company X that is doing
news. In the printing press,
obviously the easiest way is to
do this for products and
services through advertising.”
What I did was went to a
company, and said, “I can sell
mouse mats to your audience.”
They have “x” thousands of
readers coming every day looking
at the news. I said, “It’s very
simple, we’ll create a little
store and we’ll do some touchy,
feely products.” Everything else
they’ve been doing has been by
banner advertising, etc. I had a
company that manufactured mouse
mats; I had somebody to do the
pricing. I put the two together
and they set up a store, and
they sell those. I said, “Maybe
we can go into some other
products, sell some tee-shirts
and a few other products of that
nature.” Do you see how by just
finding other products for
another audience, finding a
manufacturer of the product and
saying, “Look, let me go find
you another audience,” how you
could make some extra income?
Michael: Oh, yes.
Vanish: In terms of the things
that you sell, one of the things
I think is always very
interesting is that a lot of
people are always trying to
reinvent the wheel. If you had a
choice, what would you rather
have, would you rather have
customers where you have a great
product, or would you rather
have an excellent marketing
process?
Michael: I’d rather have an
excellent marketing process.
Vanish: An excellent marketing
process, because you can always
find somebody else who has
customers, and you can always
find somebody else who has an
excellent product. The key is
having the process. People are
spending too much time trying to
create income and create wealth;
they’re trying to create a big
market and trying to create a
big customer base. Somebody has
already got them.
Michael: Right, it’s right under
your nose.
Vanish: Right, you’re already a
customer of somebody else’s
business. There’s already
somebody else who’s developing
or creating a fantastic product.
What you find is if you’ve got
an excellent marketing process,
you can profit from more than
that activity by just doing it
on a bit of volume. You find
somebody with a big audience
base, you find product
manufacturers that address that
audience base and put the two
together and you just take a
slice of what happens in
between. Because the customer
base is trusted by whoever owns
that customer base, the ability
to use the marketing process is
much higher. You do not have to
cold sell someone your ideas. If
they are a customer of some
other business, then product
number two is relatively easy to
sell. All you have to do is
provide product number two. The
hard part is finding the first
product to sell to. Products
two, three and four are the
easiest to sell. You’ve got
customers for your pens,
correct?
Michael: Right.
Vanish: You’ve got an already
established customer base. Let’s
assume that you’ve got a big
database of people that buy your
pens from you on a regular
basis. It’s relatively easy to
approach them and say, “I’ve got
another product that I think
would fit your audience. What
I’ll do is supply it to you, and
all you have to do is market it.
We’ll provide you the marketing
materials and strategies and
follow that through, and all we
ask is that we get ten percent
of whatever goes through your
business.”
Michael: I’d do that in a
heartbeat. I mail to my
customers so few times, and I’m
just waiting for someone to
approach me and say that.
Vanish: Exactly, because what
happens is this, you can only
spend so much time talking about
your own product. The reason
that Wal-Mart is the largest
retailer is because Wal-Mart has
thousands of people approaching
them saying, “You’ve got a
fantastic audience base. We’d
like to put our products through
there.” Now Wal-Mart will demand
a high rate of return. The
person that’s in between is
likely to make very little money
in between, but you can find the
Wal-Mart equivalent of an
audience base and get a decent
deal. It doesn’t take that much
to go and find somebody with a
complementary product.
Michael: That’s a great example.
Wal-Mart is an example of a
business with tons of customers
and all they’re doing are joint
ventures with every single
product in that store.
Vanish: Exactly, and what
Wal-Mart does is they simply
have open bays for all of the
manufacturers, “Come in, show us
your wares, and we’ll talk about
price.” They are a fantastic
example of a joint venture,
because Wal-Mart doesn’t have to
produce anything. It’s got
manufacturers knocking on its
doors, and it just says, “We’ll
take that product because that’s
one that’s going to address our
audience, and we’ll pay you
this. Do you want to take the
deal, yes or no?” If you can
imagine that’s what Wal-Mart can
do with its marketing, you can
find other examples of that,
much smaller, but people who do
have that audience base and
they’ve only got one or two
products, and they’re so busy
running that business servicing
that handful of products, they
haven’t even sat down and
thought about product three and
product four. If you’re in, for
instance, the information
publishing business, most of the
people in information publishing
produce a product. In the music
business, it’s the old classic
seven/seven year deal, seven
albums in seven years. That’s a
requirement of the band. The
publisher doesn’t want to
produce an album; they want to
produce seven albums over seven
years and turn it out because
once somebody is a fan of the
band, they’re going to buy the
next album and then the next one
and so on. In information
publishing, most people write a
book, and then they spend two
years setting up the website,
selling it, and they never get
around to writing product two.
What I do is find someone who’s
got a great product and say,
“Hey, I can get you product
three.” Then I’ll take somebody
else’s product and put it in and
take a cut in the middle. All
you have to do is review good
markets, find big audiences and
then find appropriate products.
You are just becoming in effect
their personal trucker. It
didn’t take that much work to
know that audience base was
going to like those products.
That’s what I do now. I do some
other activities, investing etc.
But it’s a very simple thing to
do, and you can do these sorts
of things for years and years.
Michael: Once you have somebody
who is interested, let’s talk
about more of the details about
contract. Do you sign a
complicated contract? Is it a
simple agreement? What are some
of the things to caution about
when you want to get everything
written down to protect
yourself? What is your
philosophy on that part of the
business?
Vanish: My philosophy is the
first contract is more a moral
one, especially when you’re
dealing with someone you like to
deal with. If they are of good
character, you get a good vibe,
and they are interested in your
ideas and open to your
suggestions, then the contract
you have to write, relatively
speaking, is very simple and it
works. If they are the kind of
person who isn’t going to
disclose much information about
their business, then that’s
usually an early warning signal
for me that we’re not very
likely to do very much business.
I can only help somebody if I
really understand their
business. In the marketing
process, you’ve got to know
their customer base very well,
you’ve got to know information
about them, you’ve got to know
how they’re going to market it.
Otherwise, all I’m really doing
is just kind of is referring
agencies and letting them do his
marketing process. Sometimes I
do that; sometimes I kind of
walk away and say, “Hey, we’ll
get straight to the fees. I
referred you to this customer.
Just give me a finder’s fee,”
and that’s it.
Michael: When do you ask for the
finder’s fee?
Vanish: I estimate what the
value of that business contract
is going to be worth. That’s the
reason I do the research on the
customer base, what that
customer is going to buy and how
much money they are going to
spend. What I try to do is track
these things where they’ve got
effectively an online store
where they’ve gone through a
credit card processing provider
because those statements are
very easy to provide. Then I
simply have a contract that says
whatever is done through that
store, I get a certain
percentage of these products’
sales on an ongoing basis.
Typically, I’ll do it for twelve
months, renewable thereafter. If
you’ve got a good relationship
with the entrepreneur, they’re
usually happy to have that
happen because as far as you’re
concerned, you’re paying
somewhere in the region of, for
every pound I put into your
business, would you have an
issue with giving me one-tenth
of that back? This is a pound of
money for their business, and
usually they will spend so much
time running their own business,
they haven’t got time to sit
down and think. Once you’ve got
that going, you can introduce a
third product, a fourth product
and again that contract covers
it all.
Michael: I would think most
people are pretty honest. If you
have a gut feeling that someone
is going to screw you, no matter
what contract you have, they’re
going to screw you. Use your
intuition, and if you have a
good feeling…
Vanish: What I find is this, if
somebody wants to “steal your
idea,” they’re going to figure
out what you have to manage or
agree. If I said to you in the
same contract, “Hey, you know
what? I’ll do 50/50 deal.
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