5 Things You Can Do Right Now to Create Residual Results in Your Business with Greg McKeown: An EOFire Classic from 2021

0:01Light that spark fire nation, JLD here and welcome to Entrepreneurs on fire, the only daily show interviewing the world's top entrepreneurs seven days a week. Today, we're pulling a classic episode from the archives, and we'll be breaking down five things you can do right now to create residual results in your business. To drop these value bombs, I brought Greg McCowan into EO Fire Studios. Greg is a speaker, best-selling author, and host of the popular podcast, What's Essential? He's been covered by the New York Times, Fast Company, Fortune, Politico, and Inc. and has been interviewed on NPR, NBC, Fox, The Steve Harvey Show, and Entrepreneurs on Fire.

0:35And today we'll talk about shift where you put your efforts, build something that produces results rather than simply trying to produce results directly yourself. And the due diligence alone, the process of confirming what you've been told about business is accurate would take monumental effort and oh so much more. And a big thank you for sponsoring today's episode goes to Greg and our sponsors. Is this your year to grow a successful business? Attend the world's highest rated business growth workshop taught personally by Clay Clark and now featuring football star Tim Tebow and President Trump's son Eric Trump at Thrivetimeshow.com slash EOfire.

1:11Again, request life-changing tickets today at Thrivetimeshow.com slash EOfire. Fire Nation, you have a book inside you and it's time to share your message with the world. That's why I created Author 100, a 100-day program where I will personally guide you one-on-one to create, write, publish, and market your book. If you want daily guidance and mentorship from me, JLD, then head over to author100.com to sign up for a free call with me to chat about the details. Greg, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with? Well, I think the most important thing one needs to know about success is that success can become a catalyst for failure.

2:03And so what gets us here is not what will get us there. And so we have to, in a sense, distrust success or at least learn how to become successful at success. or it will tend to produce behaviors that undermine the very things that led to success in the future. Become successful at having success. I mean, that's something that so few people give any thought to. They just spend so much time in the grind, in the dirt, nose to the grindstone. Then they look up and maybe months, years, decades later, they've achieved whatever level of success they're looking for. And then they're kind of like, well, now what?

2:45How do I actually become successful at this success that I have? And there's one phrase that I actually love, which is how do you go from success to significance? So like once you've achieved success, how do you go to significance in your life? And I want to dive into two types of results, linear and residual. Can you give an example of each of these specific results and then share the difference between the two? Linear results and residual results are so different in kind. It's like night and day. A linear result is one that has a one-to-one ratio. The amount of effort you put in equals the results you receive.

3:37If an employee who works an hour gets paid for that hour, they have a linear income. A student who crams for a test, regurgitates the facts, and gets a grade is acquiring linear knowledge. An entrepreneur who makes money only when she is actively working to make it happen has a linear business model and so on. So linear results are limited. They can never exceed the amount of effort exerted. And there are many entrepreneurs who really don't realize in practice at least that there is a far better alternative. Residual results are so completely different. I mean this is where you establish a system.

4:27It may take a little more effort up front but then the results flow to you. So in my field as an author, you write a book once, but you can be paid royalties for years and years to come. That's residual income. A student who learns first principles can apply that understanding in a variety of ways over time. They're acquiring residual knowledge. An entrepreneur who sets up her business to work even when she's on vacation for six months has a residual business. and so on. I mean, it may sound like I'm exaggerating, but I'm not. The thought of getting perpetual results might seem improbable for someone who's used to taking one action and getting one result, but really the residual results are like compound interest.

5:21And as we all know, Benjamin Franklin talked about compounding interest. He said, it's money that makes money and the money that money makes makes money. And so it is with compounding residual results. One thing that I've been pretty passionate about over the past few years is angel investing. I mean, now that I've been running my business for a decade and acquired a little bit of a financial war chest, I really do kind of look to that residual side of things. And for me, I love entrepreneurship, obviously. I believe that small businesses are the backbone of the growth in America and in this world in general.

6:01So I love taking money that I've earned and putting it into businesses that now I'm kind of sometimes sitting there during the day. I'm like, you know, I haven't actually done that much today, quote unquote, work wise. But, you know, I've invested in 13 companies right now. And I'd like to at least think that those CEOs and the employees of that company are working hard, are hopefully doing some things that could increase my investment within them. Does that fit under your definition of residual? Yes, it does. And there's so many layers to this once somebody escapes the idea of a linear result.

6:38For example, Jessica Jackley, a friend of mine, was doing voluntary service in East Africa. she meets a local fishmonger, Catherine, and there's loads of demand for the fish that Catherine brings in each day. But the problem is she has a middleman that means that she gets hardly any profit in the system. So she has to sit there selling that produce every day for her to eat, for her to survive. It's like almost the epitome of linear results. And so Jessica steps in and says, well, I want to do something to help her. And she finds that$500 is all she needs to give to Catherine to be able to help her build a business that at least is semi-residual.

7:27At least there'll be some profit each day. So that means she can work on her business, not just in her business. And so she's about to give that$500. And then inspired by Muhammad Yunus and all the Grameen Bank, especially Fuhrer at the time, instead she says, well, well, what if we could do it as a loan? Because then it could be passed on multiple times. So that's a bit more residual. And then she thinks, well, hold on, what if I could create a platform that allows people all over the place, like-minded people who have a small amount to be able to give microloans? And so this is the birth of Kiva.org.

8:07Crowdsourcing platform allows anyone to loan any amount of money to entrepreneurs in developing countries. Well, now, as you look back at this, that what could have been$500 to help one person has turned into$1.3 billion with a B in loans with a 97 % of those loans being repaid. The contrast isn't just 10x difference or 100x difference. I mean, that's, you know, well beyond a thousand X impact difference by shifting where you put your effort, building something that produces results rather than simply trying to produce the results directly yourself. I love that example. And in your book, Effortless, you actually break down five levers that we can all use to turn modest efforts into great results.

9:02We're talking learn, teach, trust, automate, prevent. Let's start going through these levers with learn. There's different ways to think about learning. And let me think of one example that I especially like is I'm thinking of Elon Musk, the entrepreneur's entrepreneur, founder, of course, of Tesla and SpaceX and many others. He was once asked an unusual question. And it's a bit of a leading question too, but the interviewer said, I know you've read a lot of books and you hire a lot of smart people and soak up what they know, but you have to acknowledge, they said, you seem to have found a way to pack more knowledge into your head than nearly anyone else alive.

9:47How are you so good at it? Okay. So it's a leading question. It's a presumptuous question. But still, he tried to give an answer because what a lot of people don't know about Musk is that he didn't have a background in rocket science before starting SpaceX or in electrical engineering or machine engineering before starting Tesla. So there's a perception that he had expertise in those areas and then started these businesses. That's not how he did it. So how did he learn so fast? Because we're not talking about getting basic levels of competence. We're talking about learning so fast that you're pushing the boundaries of what has ever been done before in your field and faster than any of the other competition that you're facing.

10:35So that is a different kind of level. And as his answer was so, I think, brilliant, he said, it's important to view knowledge as a sort of semantic tree. Make sure, he said, you understand the fundamental principles, i.e. the trunk and big branches before you get into the leaves or details or there is nothing for them to hang on to. There it is. A lot of people have been taught a way of learning that is almost opposite of what Musk is teaching. Most of our formal learning was teaching us to memorize some sets of facts to get through certain tests to get through hoops. You're designed to forget the information and you're absolutely, the design of it, not that it really people have to think so much about this, but the design of it is such that it's confusing.

11:36You don't really know how the knowledge fits together. Now, there's reasons for that way beyond this conversation as to why the modern school system is designed that way. It's somewhat appalling that it is. But what we can do, whatever age someone is listening to this, is that we can now take advantage of a much faster way of learning. So that is whatever subject you want to get up to speed at. You want to discover the core, the foundational, the essential, most important principles, and to understand those really well. And you create, he's calling it a semantic tree, but another name for it is an architectonic way of learning so that you have hooks to add on other information as you have it.

12:23And if someone will do that, you can learn 10 times faster than somebody else in your same field. And so you're looking for the foundational key principles first, first principles, we might call them. And as you gain mastery of those, you suddenly have something you can use again and again in innovative ways and faster than other people because you're not having to copy the applications of your customers. You can just keep innovating from the deep understanding that you have. Fire Nation, if you think level one was good, wait till we hit two through five when we get back from thanking our sponsors.

13:05Is this your year to grow a successful business? Are you looking to learn the proven processes and success systems that have been used to create thousands of millionaire success stories? See thousands of success stories and testimonials from real people just like you who Clay Clark has mentored and coached into prosperity at thrivetimeshow.com slash EO fire. Clay's proven business coaching program is month to month and it costs less money than hiring a minimum wage employee. Yes, it's month to month and it costs less money than hiring a minimum wage employee. Schedule your free personal 13-point assessment with Clay Clark himself today at thrivetimeshow.com slash eofire because Clay only takes on 160 clients and only allows 300 attendees to each business conference.

13:48You will interact with Clay directly. See thousands of real success stories and learn about attending the Thrive Time Show two-day in-person workshop featuring football star Tim Tebow and President Trump's son, Eric Trump, today at thrivetimeshow.com slash EO Fire. Become the next success story. Schedule a free consultation and request tickets to join football star Tim Tebow and President Trump's son, Eric Trump, at Clay Clark's next business conference today at thrivetimeshow.com slash EO Fire. Fire Nation, you have a book inside you right now. But it's not always about our desire to write a book.

14:23Sometimes it's about knowing which steps to take and when to take them to make it happen. If you know you have a book inside of you but aren't sure where to start, then I have an exciting opportunity for you. It's called Author 100. Author 100 is a program I personally crafted to help you one-on-one every step of the way from drafting to writing to publishing and even marketing your book. When you join the Author 100 program, you'll have access to me, JLD, for 100 days. We'll have weekly one-on-one calls, Plus, you'll get daily guidance from me whenever you have questions or hit a roadblock. Over the past 12 years, I've self-published five books, including one of the top five publishing campaigns of all time on Kickstarter, the Freedom Journal.

15:08I've also traditionally published with HarperCollins, so I know a lot about the book publishing world and where most authors go wrong. I created Author 100 to share my experience and the lessons I've learned along the way, and I can't wait to share it with you. If you're interested in learning more, head over to author100.com and sign up for a free call with me. That's author100.com. Greg, we're back. As I kind of teased before the break, we're going to talk about Lever 2, which is teach. Break that down for us. Well, there's an amazing story that happened through the pandemic that illustrates the lift that is possible once you tap into entrepreneur as teacher.

15:54This is – there was a shortage. Maybe people remember this. A shortage of clinical face masks for healthcare workers at the very beginning of the pandemic. And there was a project. It was called Project Protect. It was a collaboration among various community groups in Utah. And their goal was to create five million masks in five weeks. How would you go about doing that? I mean, of course, you could do it in a linear way. You could say, well, I'm going to try and do it myself. I mean, that sounds absurd. I know it's absurd. But still, that's the sort of linear entrepreneur way of thinking. Well, I'm strong and I'll make it happen.

16:34Well, of course, they're not going to get there in that method. But they also they did it through teaching. So they created a five minute video, very, very clear, simple video of how to be able to turn basic raw materials into a medically acceptable mask. mask and and so they just the word went out and people would teach other people how to do it and send them to the website and they would pick up supplies and so on within the first week they did one million masks within five weeks they did five million and and to me there's something i mean of course there's something really delightful about that from a community perspective but it also illustrates the far-reaching impact that teaching others to teach can have.

17:30It is itself a high leverage strategy for entrepreneurs and beyond. Trust is something incredibly difficult to attain when you're meeting other people, you're engaging other people, you're wanting them to know, like, and trust you. This is your third lever. Break it down. One of my favorite illustrations of this was when Warren Buffett, of course, we know is one of the most successful investors in the world, chairman and CEO of Berkshire Hathaway, he was interested in buying McLean Distribution for$23 billion. It's a provider of supply chain solutions that was owned by Walmart. Okay, so how might you imagine someone would go about such an extraordinarily complex undertaking?

18:26I mean, just the due diligence alone, the process of confirming that what he had been told about the business was accurate would take monumental effort. dozens of attorneys reading every contract, equipment lease, real estate purchase, union agreement, take a small army of accountants going over every line item of the company's annual quarterly, monthly financial statements through every asset, lien, every debt, a team of compliance officers looking at the legacy technology, the stated risk, every capital expenditure. I mean, All of this, this is months and months of work and millions and millions of dollars.

19:08Why it's so extraordinary, so breathtaking, what actually happened. Buffett closed the McLean deal over a single two-hour meeting and a handshake. And it was just 29 days later that the purchase was complete. Buffett said, we did no due diligence. On the basis of his prior experience, he concluded that he knew everything would be exactly as Walmart said it would be, and it was. I mean, a two-hour meeting and a handshake with no due diligence, that's absurd. It's extraordinary. But that's the thing precisely. That's the power of trust. That's why it's such a powerful leverage. Now, of course, it's not accurate to say that if you just trust everyone the way that Buffett trusted the Walmart managers he was working with.

20:03No, that's not the right lesson to take away. But he gives at least one really great rule of thumb for who you can trust. He uses, well, I call it now the three eyes rule. He's looking for three characteristics with the people he partners with, works with, or hires or invests in. One, integrity. Two, intelligence. Three, initiative. The three I's. He was – what he's looking for is high I's. In my own work now, I'm looking for people who are 9 or 10 out of 10 on all three. incidentally Buffett points out that if they don't have integrity the other two can hurt you so that's really the foundational one if you work with high trust people then you can trust them completely and that in fact is the other part of the story is that it's not just that they could make this decision on a two-hour handshake but that after the purchase Buffett's not in there micromanaging anyone.

21:14He's investing in the best managers in the world. And he's on record as explaining this. We work with people we completely trust, and then we trust them completely. That is an almost perfect illustration of the power of residual results. Fire Nation, level four, automate. That's how one can use automation to achieve disproportionate results in business. Lever five, prevent. You know, we're talking about getting residual results in your business. And it's a little different when we're talking about prevent. But these two are going to be little spoilers for you once you get into effortless and actually read, consume, and hopefully implement these things that Greg's talking about here today.

22:08I mean, I love what he was talking about when it came to trust. Integrity, intelligence, initiative, the three I's. I mean, that is such an amazing way to go about looking for individuals to join you, to join your team, or to work with in general. So I've already kind of teased what they're going to get with Lever 4 and Lever 5 when it comes to reading your book, Effortless. What I want to do now, Greg, as we close down here is hand you the mic and have you do one of two things. Either share the biggest takeaway that you want to make sure our listeners get from everything we talked about here today, or the biggest takeaway that you hope people get from your book.

22:49I'll give you that choice and then give us a way we can connect with you and then we'll say goodbye. The most important thing is that for people who are in what my brother Justin calls the hit squad, that is the hardworking, intelligent, talented group of people who are listening to this, what got them here won't get them there. There are great contributions that lie ahead of them. In fact, I personally believe that our greatest contribution always lies ahead of us, not behind us. And one of the great obstacles to getting there is that we think that what got us here is the only path. That path of hustle, of 24-7, of pushing till we break, of teetering right on the edge of exhaustion is the only path.

23:40and I learned in a very personal experience relating to my daughter that I write about at the very end of the book that there are two parts and they really matter. Essentialism, the book I wrote before Effortless, is all about doing the right things. This new book, Effortless, is about doing them in the right way and how we do them matters because if we do it the wrong way, we can end up burning out well before our contribution is made, our project is complete, our business is successful, or our mission in life has been fulfilled. And so in order to fulfill our great potential, our extraordinary potential, we need to find the right way of doing so that we can be along successful at success.

24:34Fire Nation, the hook has been baited. Greg has been reeling you in. Greg, where do we go to consume all this great content that we've been talking about here today in Effortless? I would encourage people to check out essentialism.com. There's a new academy there that is like a masterclass series of many classes and we're adding to it all the time. And then also as a free resource, you can check out the One Minute Wednesday newsletter. And there's the new podcast, the What's Essential podcast, where we take these conversations in depth. Well, I love that. And Fire Nation, our podcast listeners.

25:18So that sounds like a fantastic resource because everybody here knows they're the average of the five people they spend the most time with. And today, Fire Nation, you've been hanging out with GM and myself today. So keep up the heat. Head over to eofire.com. If you type Greg in the search bar, the show notes page will pop up with everything that we've been talking about here today. and Greg, thank you brother for sharing your truth, your time, your energy, your levers with Fire Nation today. For that, we salute you and we'll catch you on the flip side. Thank you. Hey, Fire Nation. Today's value bomb content was brought to you by Greg and over the last decade, I've interviewed more than 3 ,000 of the world's most successful entrepreneurs and created a revolutionary 17-step roadmap to your financial freedom and your fulfillment.

26:05I put it all into my first traditionally published book, The Common Path to Uncommon Success, personally endorsed by Seth Godin and Gary Vaynerchuk. The Common Path to Uncommon Success. It's a step-by-step guidance for you to achieve the lifestyle of your dreams. Visit UncommonSuccessBook.com, UncommonSuccessBook.com to order your copy, and I'll catch you there or on the flip side. Is this your year to grow a successful business? Attend the world's highest rated business growth workshop taught personally by Clay Clark and now featuring football star Tim Tebow and President Trump's son, Eric Trump at thrivetimeshow.com slash EO fire.

26:49Again, request life changing tickets today at thrivetimeshow.com slash EO fire. Fire Nation, you have a book inside you and it's time to share your message with the world. That's why I created Author 100, a 100-day program where I will personally guide you one-on-one to create, write, publish, and market your book. If you want daily guidance and mentorship from me, JLD, then head over to author100.com to sign up for a free call with me to chat about the details.