um very excited to welcome Josh Kaufman this afternoon Josh is a an independent business professor an education activist and the author of the personal MBA Master the art of business Josh also runs an extremely popular blog the personal mba.com highly recommend you check it out tons of great business tips video and he also does book summaries which are awesome in exciting news Josh's book is the number one international bestseller in terms of business training books which is really exciting and another fun fact is that he recently welcome Daughter Leela Christine into the world who is
s weeks old and he lives with his family in Fort Collins Colorado so without further Ado Josh Kaufman thank you hello everybody uh thanks so much for inviting me here um as Jenny said I'm Josh Kaufman I run a website called personal mba.com and just came out with a book uh the personal MBA Master the art of business and effectively I am a business teacher I teach business skills and business principles to people who really need them and can use them but don't necessarily want to take two years and spend a lot of money going
back to school to get a degree so I work with entrepreneur and Craftsmen and professionals and programmers and designers and people who know something that's valuable but they just don't have a very clear picture about necessarily what a business really is or what a business really does or how it works or how they can start one or if they're working for a company what they can do to actually improve the business to make it better and so the purpose of the personal MBA is to help people learn essential business skills the very small set of
Concepts that you really need to understand in order to do well in business no matter who you are or no matter what you're up to but as far as business teachers go I'm a little odd as you can see I am not an old man I am 29 years old I am not a former Fortune 50 CEO um I'm not here to tell you that the the route to success is to do what I did and become just like me and you will be successful um that's not what I'm about I'm also not a business
academic um I don't have a PhD I don't work at a business school but I do teach business the story of the personal MBA is a story of exploration and it it's a very personal one um I did not start out in business I have a technical background in Computer Engineering and information systems design and as I was graduating from the University of Cincinnati uh in the business information systems program I had a very unique opportunity uh the University of Cincinnati has a wonderful thing called a uh called Cooperative education a co-op program and as
a result I spent about a year and a half while I was still in school working for a very large company Proctor and Gamble and I was responsible for helping uh one of the very first teams in Proctor and Gamble uh dip their toes into the water in Digital internet uh relationship marketing I worked on a website called homemade simple which is kind of uh these these big Home Care brands clean Swift for Dawn uh Cascade and for Breeze all pulled their money and and said you know how do we Market these uh these consumer
products online it was very new territory and they needed technical help in order to do that so that's how I started working uh at at Proctor and Gamble and as as I uh as I was going I started working on things that were a little less Technical and a little more marketing related and so by the time I graduated from the University of Cincinnati I had a full-time job as an assistant brand manager at Proctor and Gamble uh on the uh Mr Clean brand uh which was very ironic because I had just shaved my head
at the time and people thought people thought I was really really into my job it was great uh so what I found was I was in a job all of my peers had mbas they had graduate recently graduated from top 15 Business Schools that's the the the clear clearest and most direct path to becoming an assistant brand manager and I didn't have that so I was in the middle of this massive Corporation one of the the largest business structures in the world learning a ton about how big companies work and I was also taking what
I had learned in and uh comparing that with what I had learned uh starting businesses on my own I ran a web design company for a number of years and could see a future in which I would want to do my own thing have my own company be My Own Boss and so I became uh mildly obsessed with learning how the business side of things worked I really wanted to understand how large companies function how small companies function what makes them similar what makes them different and what are the core things that everybody needs to
know in order to do well and so I I started where uh most people uh start which is I considered going back to school um I looked into the GMAT I got the nice glossy brochures from from lots of Business Schools and I started investigating okay if I want to learn business maybe the best thing for me is to go back to school and and learn as much as I possibly can that way but the more I researched the more I realized that this wasn't really a good option for me because Business Schools have effectively
over the past several decades become less about education and more about getting a very expensive social signal so Business Schools are expensive they take a lot of time they take a lot of money you are leaving your job and you're going in and going to school for for a number of years and the benefit of that is yes there are some companies who if you have the MBA stamp on on your diploma will give you an interview that is a benefit but that's a benefit that wears out very quickly and the more I researched in
the end the more I tried to figure out if business school was was a good thing for me I kept hearing things like you don't go to Business School for the education you go to business school for the stamp on your diploma that gets you an interview and so by effectively uh buying yourself $150,000 interview there's a massive cost to that there's a cost uh not not just the direct cost of actually paying money but most people Finance business school with debt and that debt is an enormous drag on your freedom and your flexibility to
explore and do things that you care about there was a great book that was published a couple years ago called ahead of the curve uh curve two years at Harvard Business School by Philip Del's Bron and he talks about what he calls the MBA hamster wheel where you go to school and you borrow a lot of money and then you have to work this very intense job to pay back the money that you borrowed in the first place and it's kind of like the Red Queen syndrome right you're running and running and running running just
to stay where you already are and so for me in my situation I just wanted to learn this stuff I didn't necessarily need the stamp I didn't necessarily want the stamp I wanted to learn all of this by myself and so as I was collecting all of this information and trying to figure out what to do I talked to one of my associate directors at PNG a man by the name of Andy Walter who is now one of png's top it managers and is is responsible for for some of png's largest projects and he said
Josh here's how it is if you would spend the same time and the same energy that you would get going back to school and getting a degree if you would take that time and energy and just funnel it into your job and do the best work you can and learn as much as you can on your own you will do just as well if not better than going to business school and that made a lot of sense to me so that's what I chose to do I chose to instead of going to school bootstrap my
own business educ as far as I possibly could and the best place to do that is the library and the bookstore and uh you remember that scene in in Goodwill Hunting where you know you spent $150,000 on on an education that you could have got for a buck 50 at the public library I literally did the buck 50 part I walked myself down to the Cincinnati public library and the pretty much every Barnes & Noble in the greater Cincinnati area and I walked myself to the business section and I picked up a book and I
started reading and reading and reading and reading and by the time um I had by the time I started in my first full-time job at PNG I had read hundreds of business books in management in marketing statistics accounting uh corporate strategy everything that I could get my hands on I read and I learned a lot and it was rewarding and if you think about it authors spend an enormous amount of time and energy taking this this vast array of of knowledge and experience that they've gained over the years and they put a lot of work
into condensing it down to the to the smallest possible form and they put it in a book and you can walk into a library or into a bookstore and either read it for free or you know read it for less than $20 there's an amazing amount of information out there in the world about how businesses worked and I just decided to tap into that directly now fortunately in the business category there's also a lot of uh I'm sure we've all read business books that you know you get to the end it's like I wasted an
hour to read that there are approximate according to to bker which is uh the agency that assigns uh ISBN numbers the unique identifier for books something like 11,000 business books published every year that's a lot of information and it's very confusing when you see all of these books turn over every year um it's hard to to separate what are the good Investments of time and what are the absolute complete and utter wastes of time and so as I was going through this process of educating myself I was learning a lot not just about business but
about which resources were really valuable and which weren't and so I decided to start my website personal mba.com to help other people uh essentially do the same thing to direct them to the resources that were valuable and to steer them away from the resources that really weren't as valuable now when you read thousands of business books it's amazing because the same patterns the same Concepts the same theories keep coming up over and over and over again and this is actually a consequence of something we've all heard of the 8020 or the Paro principle right uh
only 20% of the concepts that you will read in a business book are the ideas are actually useful the only a very small percentage of the things that you can know about business carry most of the weight and so I as I was reading all of these books I started seeing these patterns and these themes and so the next evolution of the personal MBA became uh less about books which books should you read if you want to educate yourself about business and more about what are the ideas what are the concepts that govern how every
business works from the smallest microventure to the the largest corporations in the world what are the patterns what are the themes and the idea is if you learn those essential Concepts and call these uh these ideas mental models if you learn these essential mental models first you're as well prepared as you can possibly be for real world business uh situations because you understand how the whole thing works you understand the structure you understand the questions to ask and at least if if you're in a situation where you uh have no idea what's going on at
least it gives you a place to start even if you have no experience and so this the central idea of the personal MBA is not to answer any of the millions and millions of um of things that you absolutely need to know to do exactly what you need to do that's impossible there are millions of answers and they're all different it all it all depends on who you are what you're doing who you're working with but the questions are the same and so the goal of the personal MBA is to help you learn enough about
how businesses actually work to help you ask good questions and by asking the right questions you can gather more information make informed decisions and ultimately do better than you otherwise would and so the whole idea is once you understand more about business I think um if you come from a creative or a technical background it's very easy to find the entire subject of business in intimidating it's complex it's weird it's strange things don't work exactly the way that you may have learned in in your particular discipline but once you really understand these mental models this
very small core set of things that provide most of the value and most of the difference the whole world of business kind of opens up I mean it just look around us right now everything that we see from the projector to the screen to the carpet to the chairs to my uh computer and my iPod Touch I mean all of these things were created by a business and once you really understand how that works you start seeing the same things everywhere and having a systematic way to learn those things first is very useful I uh
got an email this morning from a reader who had just read the book and said I felt like this approach defragged the business part of my brain uh you know we we are taking in all of these patterns and all of these ideas ad hoc all the time and taking a just a little while to examine them and to consolidate them and to remove the overlaps and see how they all interact that's an enormously useful uh uh enormously valuable use of time and when you take a moment to do that the whole world of business
becomes much easier to understand it becomes much less intimidating and as a result you feel much more free to take risks at your job to start something new or to do something that hasn't been done before so what we'll do right now is talk a little bit about uh the the high level of how businesses actually work how they're structured and then we'll talk about two related subjects um that are related to business in a very important way which is people and systems so if you take if you take a step back and you think
about what is a business really when we're doing business what are we doing um it's a very simple question and and unfortunately it's one that's not asked nearly often enough and there's a simple answer to that simple question the first is every single business creates something of valuable something of value for other people if you're not creating something of value you have nothing to trade and therefore you don't have a business once you create something of value you have to get people's attention and make them interested in that value in or in order for any
transactions to take place right so that's marketing you're just getting people's attention and doing that in a way that makes them interested in learning more about who you are and what you have to offer now once you have their attention you have to uh convince them that what you have is valuable enough in order to pull out their wallet or their checkbook or their credit card and say yes I'll take one and pay you money that's sales that's all you're doing you're trying to encourage people to trust your ability to Del deliver value and pay
you money in return now once somebody pays you you actually have to give them what you promised right otherwise you're a scam and that's value delivery you're you're providing the value that you promised in a way that makes the customer happy and satisfied that they've done business with you and throughout this entire process you're spending money and you're collecting money and finance is simply figuring out how much money am I spending how much money am I making am I making more than I'm spending and is it enough to make it worth it to keep going
that's really it parts of every business value creation Marketing sales value delivery finance and that very simple structure it's not complicated it's mostly common sense but if you're starting a new business uh and you're interested in creating a business plan those are the five places to start put them as Hatters fill in the blanks because that's what a business is and that's what a business does and if you understand that that's how every single business works you can use that structure to actually examine a business and see how to make it better to see what
you're doing well or not doing yet and to start there because the things that will improve a business most are related in some way shape or form to those five core things and so I think it's very easy when you're just getting started and learning about business to over focus on the money part and and money is important and if you go to business school you'll spend a lot of time uh doing very complex calculations and spreadsheets and quantitative analysis and all of these things things that are focused on the dollars and cents part and
that's all well and good but it's very important to understand that unless you're doing the value creation the marketing the sales and the value delivery you have no finances to analyze and so start with those first now there's another problem when when you get started in business and this is a problem that is uh very pervasive it it affects small businesses just as well as larger ones which is let's say you have an idea to create something how do you know whether or not people actually value it enough to pay for it's not created yet
it's very uncertain and this is an idea called the iron law of the market and it was phrased best by Mark andreon who was the founder of Netscape and he said businesses that don't exist or markets that don't exist don't care how smart you are and a really good example of that is you remember a couple years ago when the segue personal transporter came out the two- wheed scooter thing do you remember the hype uh just before that came out you know this was going to be an invention that changed society and it was very
secretive and it was uh to the investors and the people who were running the business it was such an exciting opportunity that they sunk hundreds of millions of dollars into its development and production and when they unveiled this world changing Innovation to the market very few people bought it now the company's records are are private we don't know exactly how bad the situation was but compared to their public statements of how much they intended to sell over five years they sold about 10% of that and so you know and that was a very large business
startup company um small businesses have this all the time if you're starting something new how do you know whether or not it's going to work and fortunately there are an enormous number of things that you can do to collect information as you go so you don't syn years of your life and lots of money developing something that nobody wants and this idea is related to experimentation and prototyping and iteration developing something very small the smallest possible thing that you can create that will actually sell to a real life customer it's called a minimum economically viable
offer you're developing some the the smallest thing that somebody actually will pull out their wallet and pay for and then you improve that thing over time and by investing just a little bit first in what you need to create to to find out whether or not uh what you're developing will actually sell to someone you can reduce the risks um that that you carry in developing something new and this is not just a small company problem as as we talked about it it applies to the segue but uh in my job at PNG there was
a great example of this uh one of the my very first projects uh when I worked at PNG I was I was working on Mr Clean in home cleaning products which is an exciting category to work in and uh there was a really great Innovation that came out of the R&D lab about a product that if you used it would make your bathroom less dirty over time so you could clean less often than you were cleaning right now which sounds great right I mean who wants to clean their bath bathroom more often than they are
right now no one so it sounds really good and it was very exciting and the science says that it worked and it's a really good thing that PNG did not decide to take this idea and do a full-blown commercialization because what they did was they decided to test it they had a group of about 100 people and they actually gave this uh a prototype of this uh of this product to them and said use it for a period of about six weeks and we're going to ask you a lot of questions and and we'll see
how you like it almost to the person people came back and said this doesn't work this is a piece of crap or I got a dud can you send me another one because this is not working and there's a uh a psychological tendency that every person has which is called absence blindness uh we are tuned to see things in in the world around us we are not tuned to see things that aren't there or aren't happening and so when you use a a cleaning product you know you spray it on the wall and you use
your sponge to wipe things off you see the grime disappearing as you do that it makes sense when you are seeing something that is not happening nothing registers and therefore it doesn't work and so we tested this product and uniformly horri horrible horrible horrible reviews and so by testing the product first with a very small group of people we decided to cancel that project and it was a very good thing we did because it would have lost money hand over fist and so things that you can do to experiment to test to iterate to develop
something small and to build on it those things reduce the risk that you're going to develop something that nobody's going to want now does anybody ski or uh skateboard or snowboard or or do tricks here what was the first uh trick that you tried yeah how how did how did it go fell on fell on your face okay uh did you expect to fall on your face um I Wasing okay gotcha much better to fall in your ass than fall in your face um and that's the thing about trying something new you have to be
willing to uh fall in your face or fall in your ass or you're not going to be willing to extend enough to try it and so a lot of the uh creation and delivery parts of business are all about figuring out how can I try something new that has a very real risk of failure I mean none of us can can see what the future holds for us we can't predict the future we don't know what's going to work and we can't know what's going to work and so what can you do to actually create
something in a way that has a very real risk of failure but those failures won't kill you and they won't end your company or your business and the reality is we are all going to make mistakes when we knit a hat for the first time it is going to look something like this and that's okay because if you plan your business in a uh in such a way as to minimize the risk of a a catastrophic failure you can experiment very quickly to find something that works and when you find something that works you build
on it does that make sense okay every business really works that way now the second area which isn't necessarily directly uh related directly to business to the to the five parts but is part and parcel of what business is really about is people right businesses are created by human beings like you and me our customers are human beings like you and me our employees the people that we're managing are all human beings and so the more you understand about how people work how they gather information how they make decisions how they uh they interact with
each other in groups the more you understand about human psychology the more you can work uh effectively with yourself and the more effectively you can work with the people around you either you're employees or your customers and there's there have been enormous advances in the realm of human Psy psychology over the past 20 years and things like cognitive Neuroscience are telling us a lot more about how we really do gather information how we make decisions and how those Mis those decisions can often malfunction there's an entire entire subfield of psychology called cognitive bias which is
basically figuring out ways or figuring out how the human brain systematically does things wrong and knowing those things in advance uh can be enormously beneficial so think of something like absence blindness that's a cognitive bias our brain malfunctions in in treating things that aren't there as less important than things there are when really the things that are absent may be more important than the things that are there the more you know things like that in advance the more you can plan for it the more you can build that into into how you deal with the
people around you and the better decisions you can ultimately make now one of the things that's very useful to understand about how the uh the brain works uh has to do with the field of of productivity so all of us you know it's it's very rare now for anyone um anywhere around the world to work solely with their hands anymore in some way shape or form we're working with our minds and we're working with our bodies and so if you do any sort of creative work at all you really are the tool that you are
using to get things done and the more you understand how your brain and your body actually work the more you can structure your environment structure your team structure your projects to actually work with the way that you naturally work instead of work against it so instead of chugging eight gallons of coffee every morning in order to feel motivated you can actually change the environment around you to make it easier for you to get the things done that you need to get done now communication and psychology or psychology also has lot to do with communication how
we interact with each other how we form teams how we work in groups and how to establish teams that actually are effective instead of uh teams or committees in which nothing gets done I'm sure has has anybody uh ever been in a meeting where the sole purpose of that meeting was to prepare for another meeting everybody me too there's a reason for that and it's an idea called communication overhead so basically every single person that you add to a team you're theoretically adding to the capability of that team right more hands more work more brains
more work right after a certain point adding an additional team member becomes a net drag on the performance of that team instead of a benefit and the reason is when you have a group of of uh well if you have one person there's no communication that needs to happen right everything's happening up here and so that person can be very efficient they decide to do something they do it done add two people what happens is not only do they have to do the work they have to spend some time and energy communicating with each other
in order to make sure they're both working on the same thing right add another person the communication that those people have to do goes up dramatically right they're not just communicating with one person they're commun with two and they have to spend much more time and energy on making sure they're all on the same page now expand that team to a thousand and let's assume every all of those people have to be on the same page in order to get something done there as the number of people on the team uh goes up the percentage
of time and energy those people are spending in communication versus actually moving the project forward goes up towards 100% And so understanding how people people work in groups understanding that there is a drag in performance when it comes to communication has a massive influence on on how you choose to structure your teams in the first place there is a reason that Elite Medical Teams SWAT teams all of the highper Performing teams that you can think of have more than three but less than 12 participants it's because that tends to be The Sweet Spot depending on
the function where each additional team member is adding more in capacity than they're taking taking away in communication overhead so knowing some of these very basic things about how people interact uh makes it much easier to actually uh create a team of people that can actually be effective at getting whatever it is they're supposed to be doing done the last part is whenever you have a group of people you have conflict you have people with competing goals you have people with competing priorities and knowing how people choose their goals how they decide to do what
they want to do what types of situations tend to provoke conflict and how to actually go through a process of understanding what somebody really wants and restructuring the situation to make that conflict disappear is enormously important and so understanding how people work how they communicate how they work in groups how to notice and avoid and resolve conflict the more you understand about those topics the more effective you will be as a business person no matter who you are or what you do now the third major subject that is not directly a part of the five
parts of every business but is related to to all steps in some way shape or form is the study of systems if you think about it every business is just a system right the five parts of every business the things you are doing in that order it's a repeatable process you're creating a process that you that produces a result which is a happy customer and more money in your bank account and you want to do that over and over and over and over again as much as possible as quickly as possible and as effectively as
possible and so a lot of people when it gets to the study of systems um some people's eyes tend to glaze over like this is the boring complicated part that I don't understand and this is actually the part where technical folks have a massive Advantage um versus uh people in let's say more uh more directly creative disciplines like art because systems are a part of how you do your job and if you look at your business as a system and you understand how all of the parts of that system and you can deconstruct and see
how everything is uh is working together you can take that knowledge to make improvements that benefit the entire system as a whole and a good example are two related Concepts called uh amplification and accumulation so accumulation is when you make a change once to your system and the results add over time right so let's say uh you you move to a new apartment and your rent decreases by $100 a month that is accumulation a 100 you save $100 every month that goes by and those savings add up amplification is when you make a similar change
to a scalable system A system that can multiply so there's there's a really great example of you remember about uh have you ever seen an old um soda can the ones that were made of of of Steel that were really heavy kind of ccal like if you if you throw a an empty can at somebody uh it would hurt uh cans don't look like that anymore and there's a reason uh the the old cans were actually made out of stainless steel and they were they were about 2 mm thick on all sides required a lot
of material and they were cylindrical because that's the only way that they could figure out how to produce it but can design has changed so so now the can is necked at the top it kind of goes in a little bit and that makes it easier to drink from which is a benefit for for the the end user but it also uh because of how the the physics work it makes it much the it makes the can able to withstand much more pressure using much less material so whereas an old can the size may be
2 mm thick now it's about 90 micrometers thick that's a huge savings in terms of raw material costs right and if you're even if you're only saving fractions of on a single can think of how many beverage cans are produced worldwide every year billions trillions and the savings of making that one change in the can design are multiplied across all of the cans that are now produced and ever will be produced and so if you're able to make a change to a scalable system something that multiplies that the effectiveness of that change is Multiplied across
the entire system and the more you understand about the parts of your system that actually multiply the more you can hone in on making some of these very small changes that have huge results now the other thing about systems to understand is that happens things go wrong things break it's not a question of if it's a question of when and if you understand how the system works enough to understand what could potentially break what could potentially go wrong how things might turn out uh not turn out as expected you can plan for those in advance
there's a very powerful capability of our brain that's called scenario planning we're able to use our imaginations assume the future is going to look a certain way and then say what would happen if that really does become true using that uh that capability along with understanding how the system you're working in Works allows you to avoid some of these these incidents that could threaten your business and the more you can prepare in advance for those things that could go wrong the better off you'll be there's a very underrated concept when it comes to the business
world and the idea is called resilience which is your ability to withstand things that go wrong and a lot of the uh the the talk that's happening in terms of of management uh and business now is all about optimization right how can we uh eek out the very last bit of performance and how can we eek out the very last quarter Cent In Our earnings per share numbers this month that is a very dangerous mentality when it comes to systems because things go wrong so all of us pay car insurance right how many people raise
your hands really hope to collect a claim on their car insurance within this month nobody right if you don't collect a claim you are throwing hundreds of of of dollars away every month right you're spending money on something you're not using that's not performance maximization right you could put that that you start a a business with that money you could invest it and you could have more money left when you're done but we don't do that because we understand that if something happens if our car gets totaled we want that insurance it protects us against
something bad happening that insurance makes us resilient against something that's very important and you can apply the same idea to your business or to your work so anybody ever had a hard have a hard drive crash how did it feel yeah horrible horrible when you so uh one of the things when when I was writing my book that that I was slightly paranoid about was backing it up because I spent a lot of time and if my hard drive crashes I would lose everything and have to do it all over again and that sucks and
so planning for resilience is very important because if you don't plan for it you you can't just go back and let's say your hard drive crashes you can't raise your hand at that point and say I would like to install a backup system now doesn't work that way you have to invest in the resilience before things happen and when you do when the bad thing happens you're covered and so planning to make your system resilient is extremely important because you can't do it after the fact and the more backup systems the more fail safes you
have the more resilient your business system is and the better off you'll do in the long run and so what I want to leave you with before we open it up for Q&A is business is really a creative exercise it's an exploration exercise you're taking what you learn about how the world actually works and what people actually want and you're using that to create something that people find valuable it really is a very creative very exploratory thing to do and if you're setting off on on some type of Journey you would be foolish not not
to be as prepared as you can possibly be in advance to learn the root to learn the things that will help you and if you do just a little bit of learning first that creativity and that exploration uh is much easier it goes much better you get better results and and frankly you have more fun because instead of freaking out about all the things that you don't know you can spend more time and energy actually doing things that matter that make a difference and so I really encourage you if you're interested in exploring uh the
topic of business there's really only a small set of things that you need to know and it doesn't take much time and it doesn't take much energy to learn those things first and once you learn them you'll use them for the rest of your career and the rest of your life so that's the end of my formal presentation I hope you found it useful and I'm happy to uh take any questions uh it could be related to this it could be related to um education or credentialing in general that happy yeah absolutely a lot of
yeah and I know a lot you think guess sure sure sure yeah the the the big thing is oh yeah so so it's um how to disrupt the disrupt the the MBA or or credentialing in general through technology I think over the past several decades in most people people's minds education and credentialing were considered the same thing right you go to school and that's where you're both learning and you're getting the stamp of approval or getting your ticket punched in order to go on to something new um as the credentialing process becomes more and more
expensive and people have to give up more and more in order to have their ticket punch for lack of a better term um what technology is able to do is separate those a little bit and so the education and the learning you're right you can do it on your own you can do it through books you can do it uh by Googling you can go to YouTube and and watch all sorts of educational content and that's very good and very valuable I think the next big step is going to be when a lot of these
organizations um who rely on the credentialing process as a screen as a way of separating out who I want to interview from who I don't want to bring in when there is some very straight forward credentialing process um that does not have to go to school and that could be a test uh that could be a project that could be an apprenticeship or an internship when the credentialing process is separated from the education process um that's when the big shift is going to occur and I think it's happening right now but we're not anywhere close
to them being fully separate yet what about like inss har stf running Char person inter that at all all process yeah absolutely I've talked to a lot of business school professors and and a lot of business school Deans and uh reviews are mixed as as you uh you might anticipate there are a lot of uh business professors and actually graduates from uh from business school programs including top programs who don't see the personal MBA as a competitor at all um because even if you get an MBA you really do need the continuing education and to
learn all of the stuff that you might or might not have picked up in business school anyway so they're really complimentary in the learning sense I'm just you know we're trying to learn things that are useful doesn't matter if you've gone to business school or not um business school Deans don't like me which is okay because I'm I'm saying that their product is way too expensive for the value it provides um and their response is well you know people are still paying to attend our program and so there must be some value in it in
order for for them to do that and that's okay too um I I think Business Schools over the next couple years are going to be under an enormous amount of pressure um because of tuition and uh they're experimenting with different approaches we really haven't seen uh anything they have no incentive to take their costs down and frankly for most universities MBA programs are the cash cow that's where a lot of the tuition dollars flow into the university and that program then subsidizes all of the programs yeah phds uh research Humanity things like that and so
Business Schools frankly don't really have an incentive to change this stuff so it's more about the institions that rely on the exactly so I I actually think that um a lot of the institutions in the future that are going to do really really well are going to be the ones that identify the promising candidates um early uh high school or pre high school and have some for form I mean it's it's almost the return of an apprenticeship model you find the promising people early you teach them exactly what they need to know as quickly as
possible and you give them real world experience with real problems I think that's exactly yeah back to here what do you think the actual value of the education is how signal to employer to person get through this education experience yeah so so yeah to repeat the question just what's the difference between the uh the education and the credentialing part of going to a university versus doing yourself versus doing an apprenticeship that's why I really try to be very careful about separating the credentialing part from the education part they really are two very different things so
you know if we think of Education as learning things that you will find useful in the doing of whatever it is that you do um you can learn a lot in business school you can learn a lot in an apprenticeship and you can learn a lot studying this stuff on your own the things that will be useful it's all the same stuff it's just delivery mechanisms the the the central Concepts that provide most of the value those are Universal however you learn it is fantastic I think the credentialing part is very different and I'm I
I think we're going to see over the next couple years a lot of variability in how that happens and a lot of experimentation frankly in different ways of doing it because for uh the way that it's being done right now it's incredibly expensive and very inefficient so you know we'll see does it help okay so Focus onal you already have brand that is are there any plans for you to try and come up with those that's actually a very good question and is something that I I have thought about for a very long time I
think um if I go that route what I'm really focused on is uh I would like to provide some type of credential that actually helps the people in an educational way as they are actively pursuing it and so one of the things uh particularly when it comes to business uh when you talk to uh people in high school or just out of high school and or and are going to college there's still this tremendous perceived amount of risk of actually going out and starting a business right out of school you know it's like the the
default you know that a what a young successful or what a young ambitious person wants to do if they want to become successful is automatically go to college straight out and I think there's there's probably an opportunity to develop something that a a credential that would give them real world experience and uh alleviate some of that perceived risk of you know what if I start this business and it and it doesn't work out and I want to go work for an employer elsewhere so yeah it's it's an open question but I I do think there's
an opportunity thereo yes I think the problem starts post high school but yeah this this is a problem that extends you know well into your 40s in most cases and so yeah the same approach would do the same thing I question sure oh yes oh yes there is yeah if you go to personal mba.com and you go to the uh reading list section I have a a list it's called the personal MBA uh recommended reading list it's a list of 99 books that I have found most valuable in my education that covers everything that we've
talked about uh business people and systems [Music] yep uh not necessarily it would depend on how it was done um I think the the credentialing body or the a credential in terms of employers actually using it they use it as a risk mitigation strategy right it's a way of filtering out all of the the people who are coming to their door um so they don't have to interview everybody they can just interview some sub Subs segment so most employers look at credentials as a way of um assuring at least a a minimum uh amount of
of competence and credibility before they ever get to the interview process and traditionally accreditation was a way that um these employers could understand that a college was meeting certain credentials and they they weren't just handing out degrees in in Le of payment or in for a payment and so I think um particularly with technology and the internet um the oversight part of accreditation has become much less important because let's say um hypothetical credential student has a massive portfolio on their website uh in terms of talking about the projects that they've worked on um showing their
work essentially if there was a centralized way to do that that an employer could take a look and say yes this person has met you know some certain amount of requirements they're a good person to interview that's the real purpose of the credential and so I'm just trying to disaggregate them uh as much as possible Right so old and not really to current environment I that one thing that i' like to know yeah I think one thing from a curriculum standpoint that MBA programs don't do incredibly well is focus on the core principles first so
if you go to business school either at The Graduate or the undergraduate level it's kind of assumed that you already know what a business is how it works how it functions all this stuff and we're going to jump right into the quantitative analysis part so we can do a capm calculation and I think a lot of the things you know as as you pointed out with the credit crisis I think that's a symptom of not understanding enough about some of the core ideas that we've talked about so when you understand things uh like um like
resilience of second order effects of you know understanding how this model interacts and how it could possibly break if you understand all that stuff first then you can learn something like um the the capital asset pricing model and use it for what it's intended to do with all of the limitations that it has and so what I would really like to see you know from a business school standpoint I think every Business program that's out there would do much better to actually take a step back focus on learning the core stuff first and then layer
on finance and layer on the the quantitative analysis on top of that because people will get a much better education that way it's all the same stuff that helpes um was that framework did you did you come across it your reading or did you just is that kind of patter recognition found after just instilling so these different books and at the end of the day is that really the is that the pattern from a bunch of these different books and kind of that's what they focus on fundamental principles or is it on that you priori
better than others yeah so uh I really wish that the five parts of every business I really wish I would have read that in a book because it would mean that it had been out there for a long time um it's not it's something that I had to develop from reading all of this stuff and and trying to synthesize it for my own understanding and so a lot of these ideas exist in little pieces Parts out there in the world and you know sometimes you'll read a book that is the the whole book is focused
on some very little sliver and so you know over the past six years reading thousands of books what I've been really trying to do is to synthesize that and put them all together in the smallest clearest most complete form that I possibly could so yeah pretty pretty much everything that I talk about about um is not directly from other folks it's it's all bringing it together in a way that you can understand it as a whole so thank you thank you so much for the invitation to showing up I appreciate it
