421: How Authors Make Millions In The Book Business With Mike Michalowicz

00:00
You’re listening to the My Wife, Quit or Job podcast, the place where I bring on successful bootstrap business owners and dig deep into what strategies they use to grow their businesses. And today I have one of my favorite authors on the show, Mike McCallewitz. And if you don’t know who he is, Mike is the author of the hit bestseller, Profit First, which has become like the Bible for small businesses who want to generate a profit and maintain their sanity as an entrepreneur. Now in this episode, we’re to learn about the book business and how being an author can make you millions.

00:28
But before we begin, want to thank Klaviyo for sponsoring this episode. Always excited to talk about Klaviyo because they’re the email marketing platform that I use for my e-commerce store and I depend on them for over 30 % of my revenue. Now you’re probably wondering why Klaviyo and not another provider. Well, Klaviyo is the only email platform out there that is specifically built for e-commerce stores and here’s why it’s so powerful. Klaviyo can track every single customer who is shopping in your store and exactly what they bought. So let’s say I want to send out an email to everyone who purchased a red handkerchief in the last week. Easy.

00:56
Let’s say want to set up a special autoresponder sequence to my customers depending on what they bought, piece of cake, and there’s full revenue tracking on every email sent. Klaviyo is the most powerful email platform that I’ve ever used, and you can try them for free over at klaviyo.com slash my wife. That’s K-L-A-V-I-Y-O dot com slash my wife. I also want to thank Postscript for sponsoring this episode. Now, if you run an e-commerce business of any kind, you know how important it is to own your own customer contact list.

01:22
And this is why I focus a significant amount of my efforts on SMS marketing. SMS, or text message marketing, is already a top five revenue source to my e-commerce store. And couldn’t have done it without Postscript, which is my text message provider. Now, why did I choose Postscript? It’s because they specialize in e-commerce stores, and e-commerce is their primary focus. Not only is it easy to use, but you can quickly segment your audience based on your exact sales data and implement automated flows like an abandoned cart at the push of a button.

01:48
Not only that, but it’s price well too and SMS is the perfect way to engage with your customers. So head on over to postscoop.io slash Steve and try it for free. That’s P O S T S C R I P T dot I O slash Steve. And then finally, I wanted to mention my other podcasts that I released with my partner, Tony. And unlike this podcast where I interview successful entrepreneurs in e-commerce, the profitable audience podcast covers all things related to content creation and building an audience. No topic is off the table and we tell it like how it is in a broad and entertaining way.

02:18
So be sure to check out the profitable audience podcast on your favorite podcast app. Now onto the show.

02:30
Welcome to the My Wife, Quartermaster podcast. Today I have a very special guest on the show, Mike McCallewitz. Mike is actually someone who I met briefly back in 2009 when I helped him launch his first book, The Toilet Paper Entrepreneur. And since then, he’s actually released a number of best sellers, including Profit First, Clockwork, The Pumpin’ Plan, Fix This Next, and his most recent book, Get Different. He’s also sold two multi-million dollar businesses before the age of 35. He’s an amazing author and I’m a huge fan. So it’s actually my pleasure to have him.

03:00
the show today and how’s it going Mike? How you doing today? It’s going well Steve, thanks for that intro. So Mike, I actually went ahead and read the first couple chapters of your latest book, Get Different. Oh cool, thank And you actually mentioned that your first book, The Toilet Paper Entrepreneur sold horribly at launch, even though I helped you promote it. Is that true? True, true because you helped in the second launch. So I didn’t understand

03:27
what launching a book was. Like I really believed in the write it and they will come. Like I really thought that was it. So I launched it and the first day of its public availability, meaning it was live on Amazon and so forth, I sold zero copies, which means like to see if context, my own mother didn’t buy a copy that day. And then it’s like, Oh, like you actually have to market this. It wasn’t like this instant success. I started hustling. Uh, you help build a community. Um,

03:57
quickly to help me move it along. over time, you know, sold over a hundred thousand copies, but that was through raw effort and fear and panic. But I also started to understand what makes books move and what doesn’t. Which I would definitely want to talk about in this episode, but you know, back then I didn’t have a podcast. I just started the blog. I didn’t have a YouTube channel, so I promised to do a better job.

04:23
Listen, the fact you’re even willing to do anything like is a huge deal. So that, that’s wonderful. I appreciate that. So since we were kind of on this topic, so what turned things around, you mentioned like a lot of hustling, but can you be more specific? Oh yeah. So I remember at the end of the day, I was defeated. I’m like, what the hell’s going on? Like I have a new book out there and it’s, it’s great. I felt I spoke to another author. I have no idea who it was.

04:51
they said, I said, sold no books today. And he said, oh, don’t worry. Don’t worry. He said, that’s simply the quiet before the quiet. I don’t remember who it was, but it was like this daggers my heart. I’m like, oh my God, what I just get myself into. then there was something else, a foot that triggered my commitment to moving it. had purchased 20,000

05:20
copies, hardcover copies of my own book and shipped to my house because I was like, this book is so good that within the first couple of weeks, I’ll probably sell 20,000 copies. So I was all hyped up and I had to come home to my wife and family and our garage was packed with it. It was the new bed frame is under our bread. There was boxes everywhere. And, and, and say, I got to these books. It was invigorating.

05:50
uh, in that I had to make this happen. I had burned the bridges. was, there’s no alternative. I put $70,000 into it. I actually borrowed some money, uh, to, to do this. And this had to be my course. I wonder if I didn’t have those books. If I launched a book and said, I guess authorship is not for me. And gave up. I wonder if that would happen. I don’t suggest anyone buy 20,000 copies of their book. And I only knew that was way too many books when the printer called.

06:19
and said, wow, in order for 20,000 books, this must be a big deal. What book is this? The printer called me and I’m like, why do think it’s a big deal? Doesn’t everyone print this money? Many? And they’re like, no. So it was a big wake up call, but I had that burden on my back and I just started to hustle and hustle and hustle. I mean, you think about it, isn’t that like hundreds of thousands of dollars worth of books? Well, yeah, in the retail price, but the purchase price. So as an author, can pay, depending on the volume,

06:49
But a hardcover book, you can print for $2.50, $3.00. When you’re printing 20,000 units, I was getting them for like, well, no, it was about $3.50. That’s right. That’s how was about it, shipped and delivered. because I’m printing such a huge volume and they sell retail 24, 25 bucks. That means you net $11 a book on a self-pub deal. think about the aggregate. Every book I sold them, I can make $8. I got $20,000. That’s $160,000 of profit sitting here in my house. I just got to sell them.

07:19
And that was the hard part. It is really hard to sell. Just like selling anything. You got to convince a person to separate $25 from their wallet. It’s the same as having them separate $2,500. It’s literally as hard of a sale. So I had to learn how to sell that in mass volume. You know, so actually, it’s telling what I want to talk to you about is the book business. As I mentioned earlier, before we hit record, I’m actually working on a book myself, which is coming out next year.

07:47
But I was actually told upfront that books are a horrible way to make money. So I went in this process with the intention of actually not making a dime. It’s actually a bucket list item for me. And I actually want to just take my kids to the bookstore and say, Hey, that’s your dad’s book. Exactly. But clearly you make a living doing this. So I was actually hoping that you could break down how you actually make a living as an author. Like, what does it take to become like the top 1 % of book authors?

08:14
Yeah. So I first want to call BS when you do it, you can’t make money selling books. That’s why I heard too, when I was writing to a paper entrepreneur, I can’t tell you how many people came to me and said, you can’t make money selling books. I found this, anyone that says you can’t do it, ask them about their book. 90 % of people said, well, I’ve never done a book. So, okay, you don’t know. The people who wrote a book and failed and said, I made no money doing this. I asked them what went wrong. I also met people that were very successful. I ran into, and this was a great coincidence. I was invited to go on a TV show.

08:44
uh, called the big idea. And, uh, I ran in the green room into a guy named Tim Ferriss who had just launched his first book called the four hour work week. And I said, Hey, can you make my sign books? And he looks around and goes, you can make millions selling books. It’s like, okay, this is the guy I want to learn from. So I got an hour, maybe a half hour of free consulting with Tim Ferriss in the green room in New Jersey, waiting to go on the show. The big idea. Um, I would say, uh, almost

09:15
One third, one quarter to one third of the income that comes into our company is simply on royalties and advances. So if you’re with a mainstream publisher, I know you are too, they can send you a nice big check. They usually do in tranches, like three tranches. Some of them do in four tranches where they give you a segment when you sign and so forth. But also royalties, it’s called an earn out. Once you earn out your advance, you get royalties. And so I get royalty checks every six months. That’s how the big publishers work. get it once, twice a year. Sometimes they do it quarterly.

09:43
Some of the hybrids or if you self-publish, you can get it monthly or even weekly. Um, but it’s a substantial source of income. The other thing too, about building a compendium of books, that’s what I’m doing is one book. Maybe you’re going to get lightning in the bottle and you’ll write the next four hour work week. More likely statistically, it’s going to be a book that does okay. And if you hustle and grind behind it, you promote it and push it, it may, it may get some legs. But then as you start building your companion books,

10:13
You get a reader base that says, anytime Steve writes a book, I’m going to get that. And so that’s what I have now. I have collectively eight books. I think I have a children’s book too. And, um, a portion of my readers, not all of them, but 20 % of my readers buy more than just one book. And then they get involved. say, Oh, I discovered you through profit first, or I heard this new book get different. And once I learned some marketing tips was like, Oh, this was so helpful. I love this guy’s style. What else am going to buy?

10:43
So that every time you move an existing book, it’s called a backlist. Backlist means that your publisher, it’s not a primary focus of theirs. It’s something that now all they do, do is push the print button and everything else is on the entrepreneurs or the author’s shoulders. A frontlist book is one that they have a sales team that’s pushing and trying to distribute. They may participate in some of the marketing. They rarely do anything that’s effective. They may do some PR. That’s a frontlist book. So if you can get your backlist,

11:12
going and then when you introduce a new front list, it can boost your backlist. That’s where you start making some real income and that’s what I’ve been able to do. So you’re saying in order to make a living as an author, unless you hit a grand slam, you pretty much need more than one book, right? That’s I would suggest. Yeah. Yeah. That’s what I suggest. Yeah. You always try to hit a grand slam, but if you get a first or second base and you keep on hitting, you know, someone’s going to come home. And the interesting thing is when I wrote my

11:40
biggest hit book to date has been Profit First. I don’t know, maybe the biggest one I ever write and I intended not to be, but every book I put out there, like, this is the best of me. Like I put every ounce of my effort into it. So my newest book get different. Like this is the best book I’ve ever written. I believe in it so much. It can be of such great service, but it’s not selling a Profit First level. But it got on base again. So I’m like, okay, here we go. The next book, it’s going to be even better. And that’s just how I go about it.

12:08
to sell better than all of your books? mean, do you know why exactly? Yeah, I think the trigger is a few things. If you can have a title that gives the solution, that is a great book. There’s a saying, don’t judge a book by its cover because people judge books by its cover. And in two words, I explain the entire system. Take your product first. It’s pay yourself first applied to business. I have…

12:37
run into readers who aren’t even readers. say, Hey man, I love your book, Profit First. I actually remember this one instance. This person came to me and said, I love your book, Profit First. It’s changed my business. I said, Oh, I love to know what you liked about the book. He said, well, I didn’t read it. I just heard of it. I just heard of it and I started taking my Profit First and it works like magic. I was like, Oh, that’s awesome. So now what happens is that that viralness kicks in that someone’s like, Oh my gosh.

13:03
Like this person was probably telling other people about Prop First and you must read it and they didn’t read it. So big component was the title. The other thing too is it put a new spin on established idea. I don’t think there’s many new ideas. They do come about, but there’s new spins or new flavors or new combination of ideas. Therefore it is a new idea. Prop First was the pay yourself first principle. There’s books, which is man and Babylon.

13:30
You know, think and grow rich. All these, there’s millions of books talk about pay yourself first. I was like, oh, I’m just going to apply this to business. And no one had done that before. So now I took an established working concept, put a new twist on it. So it’s an old idea taught in a new way, a new application became a new idea. I think that was another component for it being so successful. Interesting. You actually mentioned that a third of your revenue is royalties. What are the other two thirds? Yeah. So, um,

14:00
And one’s growing faster. One third of it used to also then be consulting. That’s becoming one half. And soon that’s going to be 80%. And then one day it may be 99 % because those businesses are growing so quickly. What I did was I set up a model really quickly from day one. I don’t want to coach and teach. That’s not my skill set. And what I noticed is many authors who wrote a book then built a consulting business behind it. And that was where they made all their revenue.

14:30
The book became a glorified business card, if you will, and they built consulting behind it. And now they were trapped into that concept of the one book. I want to explore all elements of entrepreneurship. That’s what gets me excited. instead of building a consulting business, I sold licenses. So I go to another business and say, guys, I’m writing a book or a book called The Pumpkin Plan, for example. It’s about organic growth and business growth. And I met with someone who had a business doing that service.

14:59
didn’t have a good marketing presence. were really good, extraordinary in fact, with what they did. They didn’t have a good marketing presence. I said, I’m going to market this book and I’ll have everyone that reads this book funnel to you if you want to buy the license and you’ll be the exclusive teacher of this. So I did it for the pumpkin plan. did it for my news book, Different. I it for profit first. I did it for clockwork. I have a brand new book coming out next year. I already have a licensee in place for a year already. They paid. And what they do is they pay a licensing fee, a one-time fee, which

15:27
Every time it gets more more substantial as I get more recognition and they pay a percentage of revenue. And that’s how I built it out. The great thing is it’s very symbiotic relationship. All the leads I get, send to them. So I don’t have to worry about the marketing presence. And it gives them a sense of authority too, as my books become more popular and people recognize my name or the work they’re like, oh, that’s a Mike McCallowit’s book. There’s this perception for some people of authority, but for them, they deliver extraordinary service. So what happens is they

15:57
Say to me, Mike, simply please sell more books. We want more books in circulation. Like, yeah, that’s what I want. And like, you keep servicing people and wowing them. And that’s how I’m generating revenue. So it’s a really good relationship. I guess the only downside is you’re putting your reputation on the line with these people that you’re working with. I am, I am, right? And so there can be bumps. So readers say, I want Mike and I want Mike alone. And that becomes a real challenge. When your book comes out, they’re going to say, I want Steve. If it’s not Steve, it’s not the real guy.

16:27
not the real deal. But the reality is, at least for me, is I am not a creator of ideas. I’m a curator of ideas. I take ideas and gather them. The books I write, often I’m interviewing the people who ultimately will be the teaching arm. So Danielle Mulvey, her company is called the All In Company, acquired the rights for my next book around employee engagement, really recruiting the best five-star employees and so forth.

16:57
She already has an excellent reputation. She’s also gonna be someone I interview in the book, so she’s gonna be qualified around her reputation. I gotta vet though. I mean, if you bring a bomber on board, that’s gonna be a real challenge. So like any other business partnership, you gotta know who you’re working with. Can you give me an idea, are these license fees, are they six, seven figures? I mean, not to give exact numbers. Oh yeah, no, they’re mid six figures. Mid six figures, okay. But I did, listen, when I started out my first deal, the pumpkin plan.

17:25
$50,000, right? So that’s a five figure deal. And I said, well, what if I did a hundred thousand dollar deal? So my next deal was a, was a, a, you know, low, low, the lowest you can go with a six figure is a hundred thousand, but then I kept on bumping it up and now it’s mid six figures. And the value I would argue is absolutely there because these businesses, could try to build their presence on Facebook and all these different ways through marketing and advertising.

17:54
they’re not going to be able to instantly tap into the established reputation that I’ve been able to establish in my books. There’s that faster to market, if you will. When a new licensee comes on, it’s normal that they may get 500 to 1,000 prospects within the first week when my book launches. And these are qualified prospects, or I’m sorry, on their own, they may be dribs and drabs over the year. They may be lucky to get 1,000 prospects over a couple of years in some cases.

18:23
Yeah, so do you take multiple licensees per book? No, one license just one book. Yeah. Yeah. So now we have collectively five different licensees. Okay. And then in terms of the royalties, are we talking double digit or single? 15%. Okay. All And we do. That’s a good question. I have a little hand here. I don’t know why I just was feeling around this mini hand. But so if anyone’s watching the video, you can see his little hand. I called

18:51
I was when I set up the licensing program, I called different companies that had purchased licenses from different organizations. So Michael Gerber, for example, started Emith International. So I called people that participated in that. Traction had a thing called the EOS, the implementers and stuff. So I called those people. started calling those people and I said, what works and what doesn’t work? And what I found was the sweet spot was around 15%, maybe 20%.

19:18
But some companies took 50 % of the top line and it was devastating financially to these businesses and they couldn’t sustain. And they said it wasn’t worth it. Other companies, they had an opportunity to take some more, but they left mine on the table. I found 15 % to be the sweet spot. I want my licensee, if they make say a hundred thousand dollars this year, they’re writing a check for 15,000 to my company, but they’re keeping 85,000. I want them having the big number because that’s where confidence comes from them. They’re seeing the value.

19:49
If you sell on Amazon or run any online business for that matter, the most important aspect of your long-term success will be your brand. And this is why I work with Steven Weigler and his team from Emerge Council to protect my brand over at Bumblebee Linens. Now what’s unique about Emerge Council is that Steve focuses his legal practice on e-commerce and provides strategic and legal representation to entrepreneurs to protect their IP. So for example, if you’ve ever been ripped off or knocked off on Amazon, then Steve can help you fight back and protect yourself.

20:17
Now, first and foremost, protecting our IP starts with a solid trademark and Emerge Council provides attorney-advised strategic trademark prosecution, both in the United States and abroad for a very low price. And furthermore, the students in my course have used Steve for copyrighting their designs, policing against counterfeits and knockoffs, agreements with co-founders and employees, website and social media policies, privacy policies, vendor agreements, brand registry, you name it. So if you need IP protection services, go to EmergeCouncil.com and get a free consult.

20:47
And if you tell Steve that I sent you, you’ll get a hundred dollar discount. That’s EMERGECOUNSCL.com. Now back to the show. Plus it’s passive income for you. Oh yeah, it’s every quarter. Gosh, I love the end of the quarter. We’re recording this June 2nd. I can’t wait till July 1st because all the quarterly checks come in. And my job too is to deliver value through marketing. I also will come on and do some stuff as

21:16
I hate to use that word authority. I can’t think of a better word, but just come on and say, Hey, it’s Mike. So it’s a credibility and a link between my books and them. And I want to, I also remind them that, you know, that check you’re sending is a marketing check. That’s your marketing expense is 15%. Right. Which is actually very reasonable. you think about what people are paying for, for like Facebook ads or Google, that’s exactly right. And that’s the comparison. It’s like, I see this value of, of incident authority plus prospect flow. It’s worth it. Yeah.

21:44
So I know that you self-published a book and then you went the traditional route. Can you just kind of explain the decision-making process there? Yeah. So self-publishing with my very first book, I self-published three books in total now, but my very first book, I wanted to get a deal and didn’t really appreciate the fact I was going for ego. I wanted to be with a Simon Schuster or… Same here. I did it for ego. Ego, right?

22:13
Yeah. And then, but none of them would pick me up. And they’re like, well, you know, the questions, yes, they asked, what’s your platform? You have a platform. I had no platform, right? You know, I feel following how many people platform means that you can guarantee a certain degree of uptake from day one of book sales. You know, what’s your story? I do have a significant story. Are you, did you land a plane on the Hudson? Because we want that story, right? And like, no, Scott, Sally did, but I didn’t, you know, do you have extreme credentials? Are you a

22:43
doctorate from Harvard 10 times over, like the doctor, doctor, doctor, you know, and have any of that. So, uh, I decided self publishing was the way to go. The, once I started getting the book in the market and started selling, what was interesting is, uh, I registered with book scan and anyone who self publishes, uh, you better get in book scan. have to get your ISPN number. I spend that social security number for your book. The publishers can look at it. So then

23:12
My second book, Penguin, called me and said, hey, this toilet paper entrepreneur book, it’s moving a lot of copies. Do you want to do a book with a mainstream publisher? And I was like, yeah. So my ego was there and you get a little money upfront. Like, this is amazing. My third book though, I went back to self-publishing and it was Profit First. Profit First was a self-published book. I spoke with Penguin and they didn’t get it. They’re like, no one needs another accounting book. I’m like, this is not an accounting book.

23:40
It changes the psychology around cashflow management. And I said, we don’t get it. And instead of shopping it out, I said, I’m to do this, uh, on my own and self published it. It sold so well that Penguin came back on their hands and knees minus the hands and knees part. really didn’t. just said, all right. They talked to me again and, uh, they said, we’ll buy it. And I did what’s called a double dip double dip is where you launch a book on a self pub, uh, and you make all the income and then you sell it for a big advance, uh, back to the mainstream publisher.

24:09
And can negotiate more favorable turns because you’ve proof of sales. Right. So that’s what I did it today. You know, what’s interesting is I’ve now done three self pubs, but first went back to a penguin. I’ve done six with penguin now. What’s interesting is I’m really critical of the numbers and I don’t know if mainstream publishing is the best model for most authors.

24:37
And I question at times if it’s the best for myself. I evaluate it before I go into every single deal. There’s these new hybrid publishers that are really appealing to me. They give you a bigger royalty and they strip down some of the services. But the big thing is they don’t give you an advance. Some of them require you to pay them upfront, but some don’t. And I prefer not paying upfront. want them to have skin in the game. And that may be a better model. Self-publishing is fantastic. It just puts all the onus, all the responsibility on you. You can come to market faster.

25:06
can get the book to be exactly how you want it. And you can make a lot more money. But you got to make sure you do it right. But to give context, readers don’t know the source of the book anymore. They don’t know if it’s self-published or not. I mean, it’s a really chintzy crappy book, like as a self-pub. But I have yet to visit a reader or meet with any reader. And I’m blessed to have hundreds of thousands that has ever said to me, oh, I’m so happy you’re with Penguin or, your books with Penguin. They don’t even know who it’s with.

25:36
There’s like, oh, it’s a great book or not.

25:40
So the value, what is the value that a traditional publisher provides you that you don’t get self-publishing? The number one thing you from a traditional publisher that no one else will give you is the advance. And if you, it’s money upfront. So if you measure the time value of money, for example, if I came to you, Steve said, wow, I love your book idea. I’ll give you $1 billion for this. You’d be foolish to ever self-publish or do anything else, a billion dollars.

26:09
will likely never, ever, ever sell that volume. don’t know any books that’s made a billion dollars, maybe one hat. You’ll never sell that volume. So you are winning. Now, if we put this on a scale, there’s a certain point that reduces numbers where it’s no longer viable. A million dollars, maybe still worth it. A hundred thousand, maybe still worth it. But we may hit a number, 20,000, 10,000 advance where you’re like, oh, I can just make more money within a few weeks by doing a self-pub. So the advance is the biggest benefit. it’s

26:37
It’s our responsibility to negotiate that to the highest level. I once was having a lunch with Ryan Holiday and we were talking about advances and he said something really eye-opening to me. said that your advance should be so high that is unlikely that you will sell the volume to cover that advance because then you won. The second you earn it out is you could have gotten more upfront. So it was really kind of an interesting perspective.

27:06
you don’t necessarily want to earn out, but you do want to earn out because of your son’s volume of books. if you don’t earn out, the publisher next time is a little gun shy and says, I don’t know if we should do this again. They’re not moving the right volume of books to justify this. So you advance the biggest thing. other thing that a mainstream publisher can do for you, which is a little bit harder, but you can do it on your own is international distribution. have the networks. They can probably get distributed quicker on self-pub deals. have international deals. You can do it on your own.

27:36
takes longer and harder to do it, but they can do that. Often they have just a really sophisticated expert team. So when it comes to the editorial work, a mainstream publisher will often elevate your book quality significantly through the developmental and the line edit process. You can hire, can outsource to do that, but you have to be really knowledgeable about the people you’re bringing on board. If you have a ghostwriter that you’re working with or a co-writer you’re working with,

28:04
that’s a big starting point to elevate your game. But the editorial side is often something that’s not really considered as such an important part, but it is. It’s a third set of eyes or a second set of eyes looking at your book from a whole different perspective, a reader perspective, and that’s critical. Okay. What about in terms of just marketing and sales? almost the point of useless. here’s what the mainstream publisher will do. They’ll put you in the queue and they’ll say, okay,

28:34
We have 200 podcasts that you could appear on. We’re going to notify these podcasts about your book. That’s great. They’re notifying that same podcast list about five times a week, all the other books that are being launched. So they’re setting out 250 notices to these podcasts. You may get picked up by one or two and you could have done better on your own. They’re not going to put dollars into it. There’s no way they’re going to put money into running Facebook ads or maybe Amazon ads to market it because

29:03
It’s an unknown quantity and it sounds crazy. You write a book and then they don’t market it. The irony is they will market after a book’s success. Penguin puts more marketing dollars into Profit First today than they ever have. I actually got a call, this is about a month ago. said, hey, we want to double down on Profit First and put more money into it. I’m like, now? They’re like, yeah, because we know it works. We know people want it. I’m like, oh, that’s why. So their PR and their marketing, they’ll make an effort, but you’re just a cog in the wheel.

29:32
I would say 99.99 % of the marketing effort is the author. And the day you start writing is the day you better start working on marketing, preparing for the launch and the subsequent backlist build. I often wonder how publishers make money. Cause I was just doing some back of the envelope calculations with my advance. And I was like, that’s actually a lot of books before they even break even, right? Yeah. How do they make money? How does the economics work? They keep the lights on with the audible and, uh,

30:00
electronic book. So depends on this, deal you got, you know, that they structured that you’re, did you have an agent negotiate for you? did. I had an agent too. I wanted to ask you about that too, but yeah. Yeah. So I, I’m, I’m agent free, which makes me an anomaly. Um, I, agents are wonderful, but I think unnecessary if you do certain things. So I don’t have an agent, which your agent probably charges, uh, 15 % of your royalty. So every thousand hours comes in, they’re getting 150 bucks and that can get a little bit painful when you get

30:30
royalty check-in gross for a hundred thousand, but now it’s actually 85,000 because they took 15,000 and they’re, not doing anything. Right. So that 15 % is different than the 15 % of charge. My licensees I’m marketing their businesses for life, but the agent got you the deal. You may never hear from them again, unless you do another book. So that’s a little painful. So they keep the lights on with the electronic versions, the audio and the, um, the Kindle. Yeah. So here’s how it works. If I sell a print,

30:58
book was right there for say $25 retail. The retailer, Amazon’s the 800 pound gorilla sells it and they get at what’s called discount price. So instead of buying for $25, they only have to buy the book for say $12. So $12 goes to your publisher. Now Amazon has the right to sell the book at any price so they can sell it for 24, 23. They can adjust the prices. Whatever that gap is between $12 they pay for the book.

31:26
25 or 24, 23, they sell it for, so they make. Amazon may drop it all the way down to $13. Amazon may drop it to $5 that they wanted and lose money in every transaction because their algorithm says, anyone buys Steve’s book, they’re also buying a grill for their house because they want more family time. so we actually make money by having a loss leader. Your publisher will always get the $12 period so you don’t get compromised. Then your publisher

31:56
We’ll give you and what you negotiated somewhere on the lowest end, uh, maybe 15 % on the higher end, 40 % depends how well you negotiate with your publisher, but the big mainstream publishers, they say, we’re not going to negotiate individually. We’re going to give you a fixed deal that we give for everyone, which maybe it’s 25%. So if it’s $12, you’re netting $4 per buck on print books. And that’s how it on the audible books.

32:24
They give you maybe 25 % of the proceeds, but what’s interesting is there’s no costs associated with it. So if they do your print book, they got printed distributed sale, move it, the audio book, every dollar comes in, they keep, and you get your 25%. So they would get in $10 there. They get seven 50 or whatever the number is, you get your two 50, but they keep every single penny. So all the profit is there. And the same thing is with Kindle too, because there’s no distribution. Uh, there’s no printing costs.

32:54
There’s no warehousing, none of that stuff. Interesting. I was, uh, for my book, I was debating whether to try to go for a bestseller list. Like the New York times, for example, do you have any insight on that? I’m so opinionated on this. just, just bear with me. Okay. Useless, a hundred percent use list. Uh, I’ve been on wall street journal bestsellers for two of my books, zero value because you don’t know that. And do you care about that? Probably not. You know, what I care about is what the

33:24
reader consumes. It is great for my fat, stupid ego. I’m like, Oh my God, I am a Wall Street Journal bestselling author. does nothing, almost nothing for me. The publisher then said, well, you anytime this book prints, we’re going to on the dust cover. It’s a Wall Street Journal bestseller. No one cares. What people care most about is people recommending a book to them. Word of mouth is everything. And that’s what we care about. So going for the list and sadly,

33:54
it can be gimmicked. And there’s sadly authors that do that. wait, listen, everyone has their own prerogative. Maybe there’s a business justification behind it, but you can buy your way onto a New York Times bestseller. can buy your way onto a Wall Street Journal bestseller. That’s not for me. I don’t care about it. I don’t want it. I don’t not want it. If it happens, naturally it does. And it’s happened now for two of my books, just based on the volume I sold. But no one bought more books because of that. So I have no motivation to get it. And for my ego,

34:24
I take it back. When I had dinner with my mom and dad and said, Hey, I’m a Wall Street, your best seller. said, Oh boy, finally you’ve arrived. That was the only reward. I had an extra cookie. I deserve it’s important for Asians by the way. Oh yeah. Right. Right. Approval from parents. Yeah. So that’s a big deal then. Then I go all in on it. But one thing I’d invite no one to do is, is, um, is, is by their way on, you can pay.

34:51
$50,000 or a hundred thousand dollars. What happens is there’s these companies. I’ll take that money. They will get all these people to buy your book and then reimburse them for buying the book. It is totally artificial. And you get the wall street journal or whatever best seller status because you achieved this over a couple of weeks. And then your book is a flat dud. I think there’s nothing more. I don’t know the word’s embarrassing, but when someone sees if a reader is influenced that by this.

35:18
sees that you have a Wall Street Journal bestseller, but no one’s ever heard of it. Now there’s confusion for the readers. I think it actually can work against us. This is a New York Times bestseller and I never heard of it. No one in this room has heard of it. What’s going on here? I see speakers go on stage and I know I’m soapboxing here. I see people go on stage and they’re like, New York Times bestseller author, so-and-so. And people are like, never heard of this person. New York Times bestseller Stephen King’s walking on stage. Oh, okay.

35:47
I think that’s the success, as I define it, I wanna have a book that everyone knows about and then that as a result deserves to Yeah, of course. mean, buying it is actually ridiculously priced too. Yeah. Yeah. And I don’t see any value in it. So I soapbox there, but. Sure. There’s like grey hat ways to game it too from the people that I talked to also. Totally. Yeah. Totally. That are legit, like you’re actually selling the book, you’re just having someone physically go buy it instead

36:17
Right. How those ranking systems work and they’re kind of clouded in mystery intentionally is Wall Street Journal and New York Times and other ranking systems look at where the books are being purchased, the volumes being purchased, the number of individuals purchasing them over a period of time. And if you move say 10,000 books a week for three or four consecutive weeks, at least in the non-fiction space, you’ll absolutely be a New York Times bestseller as long as they were individual purchases.

36:45
Some people are like, but I moved 10,000 books. I spoke at a major conference and the company bought 10,000 books. That doesn’t get ranked. so there’s a lot of things to do around it. I might for me, if it happens, great. If it does not care. Well, let’s just talk about marketing. What moves the needle for you in terms of books. Yeah. So that’s a great question. So when it comes to the launch process is getting individual readers to buy multiple books and then gift them to other people.

37:15
So these multi-book campaigns are, at least for me, very successful. Someone’s motivated by one book. Well, if they’re in the Amazon shopping cart, maybe they’ll buy four or 4D. And buying that does not help with the rankings, nor does it matter. But what it does is your publisher sees your moving book volume. They see the dollars flowing and that’s a big deal. The second thing- incentives to buy multiple books? Oh, so I do really unique things. Basically,

37:45
The that are less effective, it used to be effective was if you buy 40 books, get this video of me and get this other chapters from other people’s books and the total value is a $7,000 value. There was a time that stuff worked, but people are smart and like, is it really value or is this stuff that you don’t have any current in cost and you’re giving away, you’re putting a fake value on it. So what I do is I try to do one-off experiences that are inaccessible. For example,

38:14
Uh, when people bought quantity of my book, I’d said, Hey, get a backstage pass to my next speaking engagement. And what happens is when I go for a speaking gig, uh, in the green room, I can bring in an administrative person. So instead of bringing admin, I bring a reader and they buy into it. Now they’re sitting with me in the green room. We’re talking, I go on the main stage. Uh, and then afterwards we’re talking and it just feels like this exclusive access to things that you wouldn’t normally have. Um, I also, couple other tips, I learned this one from James clear.

38:44
works like magic is I do, I call it the lost content. He had a different term for his, but when he was writing atomic habits, uh, there was a lot of stuff that he didn’t include, but he clipped it and saved it. Every time I write a book, there is a lot of stuff that gets ditched. Uh, it doesn’t make the final cut. So I call that the lost content. And I say, Hey, if you buy multiple books, you’ll get access to my lost content. It’s a very voyeuristic thing.

39:10
And ironically, it’s the stuff that the editor said is not good enough to be printed. No one wants it. And that’s the stuff they want the most because you can’t get it. So stuff like that. that. I like that. Yeah. That was a really good one. Okay. So those are marketing tactics to move books. What about just marketing? Like is podcasts, podcasts are good, but podcasts are kind of going the way of blogs. Right. So 15 years ago, if you can get on all the main blogs, you’re to move a boatload of books.

39:39
Uh, today, if you go all the main podcasts, very, very, very difficult. may not move below the books. And the thing is people become attuned to that approach. Um, it’s not as novel anymore. What I found the best way now to move books is if you’re going to do an approach, uh, a broadcast type approach is through webinars. So how that podcaster hosts a live webinar and be on that webinar with, with 50 or a hundred or whatever.

40:08
guests, they can get on there, talk about your book and then invite them to get a copy of the book. When I do that, 20 to 30 % of the audience buys the book on the spot. And that’s a big deal. So podcasts still kind of work, not nearly as well as they did five years ago. So I’m moving more to webinars. I think doing a webinar where you teach something and then you give away a book or they buy a book. Buy a buy. Okay, so I’ll teach.

40:37
So like my newest book was get different. I did, think 50 webinar appearances. There are other people’s audiences. say, Hey, listen, I’m going to teach the principles of get different and empower your people. And with your permission, while I’m doing that broadcast, I’ll just ask them to get a copy if they’re interested. And you teach, you ask people to get a copy. Now what’s nice is you can get immediate affirmation. say, Hey, in the chat, once you get supposed in the chat, you got it. I started thanking people. You start seeing the rankings dropping, which is a dropping is good on Amazon. see the numbers.

41:07
You can see it. They don’t rank instantly, but within hours, you start seeing the numbers dropping. So you can see the impact and nothing can touch webinars right now. listen, and that will die out. And maybe it already is dying out, but that was the best thing in the last couple of years for me.

41:25
I just wanted to take a moment to tell you about a free resource that I offer on my website that you may not be aware of. If you are interested in starting your own online store, I put together a comprehensive six-day mini course on how to get started in ecommerce that you should all check out. It contains both video and text-based tutorials that go over the entire process of finding products to sell all the way to getting your first sales online. Now this course is free and can be attained at mywifequitterjob.com slash free.

41:54
just sign up right there on the front page via email and I’ll send you the course right away. Once again, that’s mywifequitterjob.com slash free. Now back to the show.

42:05
Let’s say I don’t know you, and you come up to me and you say, hey, I’d like to give a webinar to your audience. What’s my incentive for doing that? Oh, you may not have one. The biggest thing, and that’s why marketing starts to stay before I write my next book, and this is what I do every day, is build that network. I am constantly reaching out to other influencers and just building rapport. What can I do to serve you? How’s life going on? Just building genuine friendships.

42:34
There’s a couple of people I just, I just text like total nonsense stuff, just cause I really genuinely just like them. Um, and then support happens. There’s one name. This guy’s pretty big. name is Jeff Walker and just, know, Jeff. Yeah. So just like that. And I was at my house and we have a trail back there. I sent some nonsense stuff and he busted my chops a little bit. And I am, I’m not strategically planning one day is like, Jeff, can you help me in this book launch? But I do know that, um,

43:04
we have a level of rapport. I’ve never actually met face to face yet, but we have a level of rapport that if Jeff emailed me and said, Hey, can you promote my book? Yeah. In a heartbeat, asking, it will be done. And I have a feeling, a sensation that if I asked the same, that you would perhaps do the same for me. Okay. Yeah. So it’s just, I mean, you gotta dig your well before you’re thirsty, basically. Right. mean, all the contacts that you’ve had, these are favors that you’re calling in. Yeah. Yeah. I get emails.

43:34
I feel like daily, I get emails regularly of people saying, Hey, I’m a fan of your books. Can you promote me? Or, you know, I bought one of your books a long time ago. It was great. Now I have my own book coming out. Can you promote me? And it’s like, I can’t, um, I would love to serve everyone, but if I did all these requests, I totally dilute my entire community. So I have to be selective and protected. And that’s true for all of us. We have to be very careful. And you know, the people that I will be of service to are the people.

44:02
have the most rapport with. It’s just the natural bifurcation of your own network. Okay. So we talked about webinars, we talked about podcasts. What else has been working? Yeah. if I had to pick kind of the top five, so webinars, all right. Well, the first thing is your own list. That’s the number one thing. I don’t care if your list is 100 or 100,000. It doesn’t make a difference, but you got to, those are people that chose to be in your list. I’m not a fan of it.

44:32
adding people to your list, frustrates me when I’m just to add someone’s list randomly, but invite people to join your list, your email list or whatever, and start communicating with them through valuable content. Just be of service, of service, of service. And that’s probably the number one thing. I feel, maybe this is, maybe I’m overly confident, but if I need or wanted to move a few thousand books today, I could through my own list. But there’s no other way I could do that.

45:01
that’s the number one thing. The second thing is the influencer network. Build that network and be of service to those folks. Just build genuine, true relationships. Third then is the webinars. Multi-book offer is a big one. think I always try look for something that’s out of the box that no one else does. One thing did in my last campaign is I did a pay it forward. And the pay it forward was

45:30
I said, if you get, was, this was to my own list, but it was just an interesting technique. said, if you buy my book, I will gift another book to a recipient of your choice as a gift from you. won’t even mention my name. And so, um, so what we did, we had an inventory of books that our publisher helped out. We told them it was a marketing campaign. So they just remember it for them. costs like cost me two 50 or three 50 to print a book for them. It costs probably 50 cents. They print such a high volume. So books are like,

46:00
like cheap candy for them. So like, here you go. Here’s the thousand bucks. And so then people are sending in the fact that they bought a book and then they were giving me the name and address of someone they want to ship a book to. And we ship a book as a gift. So say, Hey, this came from Steve to whoever. I hope you enjoy this book. So now they’re receiving as a gift, but now we also built our list through new readers, the book, um, that we were able to reach out to them and say, Hey, we heard you were a gift to this book. We hope you enjoyed it. Um, let’s tell you about our community.

46:29
So was something really cool and effective. And everyone felt like they were winning. The person sending it gave a gift without any cost and they felt great. They paid forward. The recipient felt great. And we were building a list of new, new readers. What about ads? Do you ever run ads? Paid ads? we, we, yep. We test them. We run, we’ve ran Amazon ads. The net effect is they don’t work. And I cannot find a way. I wish, I wish they did.

47:00
Um, but what was so interesting in our analysis and we, we probably spent tens of thousands of dollars testing ads over a couple of years. What we found is that the people who are clicking and buying the book on the ads were already seeking the book to some degree and we’re buying the book anyway. So what we did is we would run an ad for a month for a book, and then we’d stop it for a month and watch and see the book volume and the book volume of sales didn’t change. We do it on and off.

47:29
We did over two years and nothing changed. We tried different, we tried all my books. So we tried books with different popularity, less popular, more popular, made no difference. We tried it with different ad placements. There’s you can, I think it three or four options of ad placements didn’t make a difference. So our final conclusion was not to do it. It’s interesting. It was backed by our publisher too. Our publisher gave us a co-op money and he said, Hey, how do you want to spend this? We can, you know, you can have this money.

47:57
How do you want to it? And we said, well, one option is run Amazon ads. What’s your experience there? And they said, no return. And we said, maybe Facebook ads. Ironically, I Facebook ads were better because it didn’t sell books. You could build a list and you can market that list, all your other books. So that’s the way we went. So what is your typical marketing budget when you launch? Obviously you have to put some of your own money in this, right? I guess you can spend your advance. Yeah, you can spend your advance. Um,

48:27
It’s really hard to say what our marketing budget is because my author team here, have 10 people. I’m number 10. So there’s 10 of us in total here, like literally every day. And every day we’re marketing books. So when we launch, it’s just where we’re concentrating our existing resources. So I don’t know, we don’t say, okay, we’re gonna spend X dollars. We just know we’re gonna devote our resources, our people here to.

48:55
Yeah, that makes sense. Yeah. Actually 10 people sounds like quite a lot. We’re I think we’re one of the bigger. Yeah. Okay. Well, what we’re managing is these these 10 folks are not just selling books. We have our licensee program. So they manage our licensee program. We have sponsors. That’s another source of income companies that say, hey, we want to get on the gravy train. So we had like this phone company who said every time Mike speaks, we want to get our name out there circulating. He’s in front of audiences we’d never have access to.

49:25
Can we get our name out there? And they became a sponsor and we structured a way where the host these events like it. We also have small programs that we do run in-house. We started a mastermind group that we run and with different programs we run in-house. And I was telling you off air too, we were testing out and we just launched a program. helping other authors and supporting them through their marketing.

49:54
for the life of the books through the royalties that we generate. So that’s part of this little business too. Sure. Mike, I wanted to give you some time to talk about your latest book. Like I said, everyone in the audience, they’re entrepreneurs, typically in e-commerce, but all of the things that you teach definitely apply to all businesses. Oh yeah. Let’s talk about Get Different. Yeah, so Get Different, I realized that most businesses market the same way as mostly everybody else.

50:23
The hot thing is to run Facebook ads and it was hot until it didn’t work and it kind of got exhausted. And what we saw was that when something wasn’t working, the belief was, oh, you just weren’t doing enough of it. So those Facebook ads aren’t working, buy more Facebook ads. The reality is, my research is that when something disrupts a pattern, when a prospect human being sees something that’s unexpected, it engages every time it has to, it’s a survival mechanism. So our

50:50
advertising or marketing once it’s disruptive, it’s different than the common noise actually has the most potential. So the book Get Different is a system, it’s a three stage system on getting noticed, engaging the prospect and then having him take the action. Yeah, actually, that’s the way I found everything. I mean, I’ve been an entrepreneur since 2007. And everything that I do always fizzles out over time. And then you got to find the next thing. That’s right. Next thing. Yeah, everything has a shelf life. Right. Yeah.

51:20
Or you just do something fundamentally different with the platform. Like let’s say you do Facebook ads, but you just do some off the wall videos or something that works. And then it just, it kind of trickles down and then you gotta come up something new. Yeah. So yeah, there’s, there’s, there’s a syndrome syndrome, but there’s an effect called habituation. So our brain is designed to ignore repeated stimuli. That’s irrelevant. Um, and it’s part of the reticular formation, whatever, but habituation is,

51:49
example is if you ever received a Hey Friend email, the very first email you got that started off Hey Friend, I was like, Oh my God, like who’s this friend who’s so friendly? They don’t even use my first name. I love them. But then the second one was like, Oh, this is probably cheesy marketing. And the third one, I’ve never paid attention again. Hey Friend was a great different strategy for the first day, but then it fizzled out because so many people did it. The balloon boy thing, if you ever drive down the street and you see that balloon thing flapping around.

52:13
first time you saw it, like, Oh, my God, what is this? What’s going on? You’re looking at the store. Now it’s like, it’s probably another used car lot. I go blown by. So there’s a shelf life because our mind is wired to ignore the irrelevant. The beauty though, is if you simply disrupt that pattern and introduce something different to your community that they haven’t seen before, they’ll notice again, they’ll engage them again. So just just break the pattern. then when it’s no longer working, break the pattern again.

52:42
I haven’t finished that book yet. have it, but your book provides a framework on how to do this. That’s right. It’s called dad, D A D differentiate attract direct. Right. Right. So you guys should check out his book. Uh, profit first is, is, I correct that that’s your best seller probably currently? Yeah. Yep. Yep. Best seller. Check out that book. Definitely. Uh, just the principles I completely agree with. It’s the way I’ve actually always structured my business before you came out with that book. Um, but Mike, where can people get ahold of you if they have any questions for you, if they want to

53:11
buy a book or check out what you got. I’ll give you two options. You could go to Mike McAloitz.com. No one, no one can spell it. Right. So here’s the other option. Go to Mike motorbike.com nickname from high school, actually grade school. It’s the only G rated one. I had a lot of X rated ones, Mike motorbike, Mike motorbike. can say, if you go to Mike motorbike.com, you’ll get all my books, free chapter downloads. I used to write for the wall street journal for a few years. You can get those articles and I have a podcast there too. Mike motorbike.com.

53:42
Awesome. Well, hey, Mike, it was great having you on. It’s great to finally meet after all this time with the toilet paper entrepreneur and all that stuff. So thank you. Thank you, brother. You are Steve.

53:56
Hope you enjoyed that episode. Now, many of you don’t know this, but I’m actually working on a book right now that is set to release next year. So Mike’s story is extremely inspirational to aspiring authors just like myself. For more information about this episode, go to mywebquaterjob.com slash episode 421. And once again, I want to thank Postscript, which is my SMS marketing platform of choice for e-commerce. With a few clicks of a button, you can easily segment and send targeted text messages to your client base. SMS is the next big own marketing platform and you can sign up for free.

54:26
over at postscript.io slash Steve. That’s P-O-S-T-S-E-R-I-P-T dot I-O slash Steve. I also want to thank Clavio, which is my email marketing platform of choice for eCommerce merchants. You can easily put together automated flows like an abandoned card sequence, a post purchase flow, a win back campaign, basically all these sequences that will make you money on autopilot. So head on over to mywifequitterjob.com slash KLAVIO. Once again, that’s mywifequitterjob.com slash KLAVIO. Now I talk about how I these tools on my blog,

54:56
And if you are interested in starting your own eCommerce store, head on over to mywifequitterjob.com and sign up for my free six day mini course. Just type in your email and are sent to the course right away. Thanks for listening.