Is an MBA worth it? – Exclusive interview with Josh Kaufman from PersonalMBA.com

Is an MBA on your agenda? Don’t commit before you’ve listened to this interview with Josh Kaufman, founder of the PersonalMBA.com.

MBA Programs come in a wide variety of flavours, and it’s often difficult to assess whether or not it’s worth pursuing them (especially due to the potentially large financial investment required to do so). Do they pay off? Where should you go? Is it worth the money?

Stay with me for the next 60 minutes and you will learn:

  • How to obtain a similar level of theoretical education for a fraction of the cost.
  • Josh’s story – The mindset, the process and the philosophy behind the PersonalMBA
  • What they don’t teach in traditional MBA programs, yet it’s essential for business success
  • The importance of research when considering enrolment for a MBA program – especially if you’ll be doing so on a student loan in the United States
  • The 5 stages a business goes through to be successful

Josh was faced with these questions as he approached his second year at Proctor and Gamble (P&G) in their graduate program. His peers were experienced and possessed MBAs from the top 15 programs in the country, whilst he himself had entered the organisation through a cooperative education program half-way through University. He felt that he needed to obtain the same knowledge they appeared to have – did he need an MBA to be successful? He did extensive research and his findings disagreed. When considering the cost (and earning potential afterwards) it simply did not make good financial sense to pursue the program. There was no return on investment in his particular situation.

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His parents were heavily involved in academic fields – his dad being a science teacher and his mom a librarian. It thus makes sense that Josh has a passion for reading, immersing himself in books on a variety of topics from a young age.

So he started reading.

Estimates are that there are roughly 11’000 business books published every year. That’s ~30 per day. If each book is 150 pages, that’s 4500 pages of business content published per day (a stack of paper as high as your knee).

It seems like an impossible task to sift through that much content and extract meaning from it, but for the last 6 years Josh has made it his commitment to try and identify the essential sources of business knowledge that yield the highest return on the time you invest. He founded the PersonalMBA.com to share his journey with the world.

The idea is simple – apply Pareto’s law (80/20 Rule) and identify the resources out there that provide you the maximum return on invested time and teach you almost everything you need to know to be proficient in a variety of business subjects.

In short, the PersonalMBA aims to:

  • Isolate the essential principles that every working business person should know about what businesses are, and how they work
  • Distill the thousands of resources out there into a manageable library of content that focuses on the essential principles (with resources that are EFFECTIVE at teaching).

It is essentially a carefully-prepared reading list (with a social network attached) that contains the essential business books that actually deliver on their promise. Read these books, apply your learning by doing real work somewhere (either as an employee or by running your own business) and you should be able to obtain the vast majority of knowledge taught in an MBA program (but at a significantly reduced cost to you).

At the time the interview was recorded I was on the hunt for a good MBA program. Lucky then I was introduced to Josh, and lucky for you – you get to hear the conversation as it happened.

I believe traditional MBA programs have some advantages over personal study. There are social aspects to consider – being in a class with other like-minded people and face-to-face interaction – These are elements  that are difficult to replicate online. However, it is certainly possible to create value without it (this website is produced and managed by people in 4 countries, without me ever meeting anyone face-to-face).

It’s also very possible that paying tuition and attending class in-person may not ever provide you with a return on your investment (which could be a very large sum of money – equivalent to a mortgage in some cases).

No-one should make a life-changing decision like that without doing their research first. For this reason I believe you will not be doing your due diligence if you don’t at least consider looking at Josh’s material.

I agree with Josh that perhaps the answer is to read the books, get real working experience and learn like that. In my personal situation, what I did was finish University and then joined a consulting firm. Greatest amount of experience in wide variety of industries, in the shortest amount of time – it’s all 80/20.

Unless you are going to apply for a job where the MBA is a prerequisite to entry, you should seriously think about the cost and your earning potential before- and after the MBA. A book costs $20 and if you read attentively and try to apply the concepts, you can’t really lose anything. Incurring $50k-$250k student debt for a $10k payrise is an entirely different story. Everyone’s situation is different though, so it means is that you have to arm yourself with knowledge and consider whether or not it is the right thing for you.

I thoroughly enjoyed chatting to Josh, he has a very engaging personality and it is clear that he loves teaching and sharing ideas. He is passionate about business, and his knowledge is diverse.

If you would like to know more about Josh and the Personal MBA program, please head over to the PersonalMBA website and get involved.

Josh’s links:

Other links on the topic you may find interesting:

I would love to hear what you guys think of the interview and Josh’s ideas. If you have specific questions you’d like me to ask Josh, send them through to me via email and I will do my best to follow up with him at a future date.

Thanks for listening,

Jurgen

FULL TRANSCRIPT

JURGEN: Good day, everyone! Thanks again for tuning in to another installment of the Niche Interview.

I’m very, very pleased to bring you a guy named Josh Kaufman, founder of the www.PersonalMBA.com. He’s also got a book coming out: ‘The Personal MBA: Master the Art of Business’.

And today we are going to be talking to him about, I guess, the state of education at the moment and whether or not it’s a financially feasible solution for you to consider pursuing an MBA at some big school, and whether or not that it makes sense for you in terms of where you want to go in your career, and so on.

Now, Josh has got a colourful history. He spent 3 years working for Procter & Gamble as an Assistant Manager there, and throughout his studies, I guess, he’s always tried to consider “Should I go do an MBA or not?” After weighing up the cost, well he decided that it was probably not financially viable for him to do it and that the return on investment probably wasn’t there. And we’ll go into this interview talking a little bit about that.

But what he’s done is basically gone, and looked through the business books that he’s read and all sorts of other associated, I guess, titles, and put together a list online that you can go, and you can read this, and you’re almost – if you distill the knowledge in these books, you’re going to be fairly sure that you’ll have the same level of knowledge, I suppose, as someone that went through a full MBA program.

Now often __[01:17] contrary to that is there’s no social connection or there’s no network opportunity in that case. And we’ll talk a little bit about Josh, and how he’s got around to that, and bringing that into this concept.

I’m very excited to talk to him.

Josh, are you there?

JOSH: Yes. Happy to be here. Thanks for having me.

JURGEN: No worries. It’s a pleasure to have you onboard, mate.

Josh, I guess for the listeners out there, perhaps giving a little bit of your history; just who you are just so we can see who we’re talking to.

JOSH: Let’s see, where to begin?

I actually grew up in a small town called New London which is in Northern Ohio, midwest US – farming community. Not a whole lot there aside from a lot of family farms, and some very light manufacturing, and the educational system.

My father actually was a Science teacher turned elementary school principal and my mom actually worked as a children’s librarian at the local library. So from a very early age, books were a major part of my life.

It was very natural for me to go and – whenever I was curious about something, there was always a way to learn or some book to take a look at to learn what I wanted to know.

I graduated from high school, went to the University of Cincinnati which is down in the southern part of the state, started as a computer engineer actually, did about a year of that until I realized that I cared more about what people did with computers than how processors worked. I transferred over to the Business school.

One of the reasons that I went to the University of Cincinnati was something that was called a Cooperative Education Program where starting in your second year of school, you go and work full time for a local company. The University of Cincinnati had one of the oldest coop programs that existed. As a result of that, I began working at Procter & Gamble when I was a sophomore in my second year of college.

It was interesting because I was working for this Fortune 50 company, and I entered it in a very non-traditional way, and so I got a lot of experience. By the time I graduated with my undergraduate degree, I had been working for P&G full time for a year and a half, and I had a job offer to be an Assistant Brand Manager which is their management track position right as I graduated.

A lot of how the Personal MBA started was me trying to figure out “I’m going into this job with a whole lot of people who are graduating from Top 15 MBA programs.” and that kind of freaked me out, frankly, because at that point I thought that they knew something that I didn’t or they had this knowledge or this experience or this world view or mindset that would help them be successful in that position, and that I didn’t have that. That’s how I started reading.

After graduating, instead of going on vacation as so many graduating college students do, I just spent most of time in the library, in the bookstore, and I just started reading, and researching, and trying to learn as much as I could before walking into what I thought at that point was a really great job.

JURGEN: This Cooperative Education Program that you did through University of Cincinnati, that’s really good concept. I really like the fact that the university is kind of getting out there and cooperating with organisations to help the students actually get some good work experience. Maybe we got some of the programs in Australia, but it’s more driven by the employers themselves than so from the university side.

Is that a common thing?

JOSH: It’s becoming more common. I think it started at the University of Cincinnati and then spread to a lot of schools in the area. But it’s becoming more popular because you do graduate with something tangible. Employers will look at that work experience and consider it as real full time work experience.

At least in my opinion, in my experience, if you’re going to go the undergraduate college education route – and most people choose to – looking for a mandatory coop or a mandatory full time internship type of thing is probably the best decision you can make because you’ll graduate with a real asset.

JURGEN: I would agree, yeah, 100% because you’re not going to be making coffee and pushing paper. I mean, they’re going to give you real work. They want to make you learn anyway. It’s a great resource for them to find young talents and so on. So it‘s just win-win for everyone.

JOSH: Yeah, it’s great for both sides.

Because a lot of businesses, if they’re recruiting college students, they aren’t necessarily looking for you to know everything about what it is you’re supposed to do the moment you walk in the front door. They treat it as a new hire training type of thing. And so you are doing very real projects with very real consequences, and you get the experiences that you would get as a regular full time employee anyway.

I’m a big fan of Cooperative Education Program. I think that’s, in a lot of ways, it’s college education done right, and I would like to see more of it.

JURGEN: I agree because that’s a really, really beneficial thing for parties involved.

JOSH: Sure

JURGEN: Sorry, I interrupted you there. You were talking about how you went to P&G in an Assistant Brand Manager role. What was that about?

JOSH: It’s funny because P&G – being in brand management is kind of being at the hub of a wheel. You’re kind of in the centre of everything. The role is described as marketing, so you’re bringing new products to market, and then you’re doing some of the advertising, and the promotion that actually gets into the large source that P&G sells to. But it’s a fascinating place to be in the centre of such a large company because you get to see pretty much everything.

In my first 2 years at Procter & Gamble, I was responsible for new product development primarily. I worked for a brand here in the US called Mr. Clean. At the time, I just shaved my head so it was very ironic.

JURGEN: It’s living the product.

JOSH: Yeah, it was great. It was fantastic because going in – and P&G has some really massive research & development facilities, and budgets, and people. So I was working on Mr. Clean, and to a lesser extent, on a brand called Swiffer working with the research scientists on ideas that we had that could potentially become products, and then figuring out which products were worth commercialising, and which ones we should hold off on for a while.

Just coming out of college, being able to work with the guy who invented Swiffer on things that you do with the technology, yeah, that was great. I really, really love new product development.

After that, I actually moved into the more customer side of the business.

So P&G kind of has 2 customers. Part of it is the consumers who actually use the products that P&G creates, but our real customer, the people who pays P&G’s bills are large retailers like Walmart, and Target, and Sam Club, then Costco, and TESCO, and all of these massive monolithic retailers.

And so I was working kind of on the later side of new product development which is actually selling new products in the customers, getting support, getting display space. Negotiating with folks like Walmart and Target is a fascinating, eye-opening experience in of itself.

After that, I decided that I wanted to go back – I entered the company working on projects that were kind of P&G’s first large forays into online digital marketing. There is a website called www.HomeMadeSimple.com. The way to think about it is P&G has 5 home care brands: Mr. Clean, Swiffer, Dawn, Febreze, and Cascade. And instead of each of them developing their own website, and trying to attract attention to it, they actually did something very, very smart, and they pooled all of their resources together to build one big thing.

I was involved in the launch and development of Home Made Simple, and that’s how I actually got into marketing because there were a lot of things that started it being very technologically-focused but it really was a marketing campaign, and so that’s how I got some of my early marketing experience.

After my customer development experience, I decided to go back into the digital marketing space, and was responsible for leading the charge in helping P&G figure out – it had been, see, about 6 years later, and P&G was doing a lot – like many companies – doing a lot of experiments online, and there really wasn’t a good way to understand which of these experiments were working, and which ones aren’t.

So spending, collectively, tens to hundreds of millions of dollars every year (depending on the category), and not having a real good idea whether or not that money was actually returning something.

JURGEN: What year was this in?

JOSH: This was 2008, I believe.

JURGEN: So it’s fairly recent.

JOSH: Yeah, I left the company about 2 years ago, give or take, and I took that job right at the end of 2006.

JURGEN: I was actually having a conversation today with someone about how I – because I like marketing as well. One of my side hobbies just studying up like tons of books, and always trying to find people that know a little bit about it to discuss things – and we were talking about how direct mail or the essence, I guess, of dealing directly with someone, being able to track every marketing dollar is one of their concepts that I absolutely love. And it’s actually the only part of marketing that I would come close to, and the reason for it is exactly I won’t go and waste ten to a hundred million dollars on just a whim and trying to figure things out.

It’s just quite interesting that you can help them go towards that route as well of trying to kind of track and measure things.

JOSH: And it’s really, really important because if you don’t know – a lot of these experiments were being done as experiments, but there wasn’t a whole lot, at least at that point, there wasn’t a whole lot of rigor about what exactly is the goal here? What are we trying to do? And what measures do we know actually lead to a business result? Which is either somebody purchasing a product for the first time, or the second time, or whatever that looks like.

What I really helped P&G do over the 2 years I was in that role was figure out, okay, for all of the thousands of things that P&G is doing online, what are we actually trying to accomplish here, and then what are the key performance indicators that let us know, for any particular campaign, whether or not we’re doing it or accomplishing that or not.

It’s a fascinating, fascinating role.

JURGEN: Yeah, it’s groundbreaking as well. I mean, it’s on the full front of their foray into the digital world. You came through uni directly into it.

JOSH: Yeah, if you’re going to have the large company experience, I’m pretty glad I did it the way I did it.

Because as thankful as I am for the experience of working in such a large – fantastic company in a lot of ways – working for a big company long term as a career was not for me. And I’m glad I had the experience of doing it and learning from it, but I’m also glad that I had those experiences without, for example, going through a Top 15 MBA program which is how most people get into it because if I had done that, what I really wanted to do was start my own business, and do my own thing, but if I had potentially hundreds of thousands of dollars in debt, I couldn’t leave.

And so there’s the whole ‘Debt is slavery. Lack of debt is freedom.’ that I feel very personally because I wanted to leave at some point, and I’m very fortunate in that I didn’t have that, and so I was able to do that.

JURGEN: Yeah, I guess a lot of people out they aren’t so lucky.

JOSH: Yeah

JURGEN: And that’s what we’re talking about today.

So you did this coop education, and you learned a lot through the work experience, and eventually started working on the digital side of, I guess, Procter & Gamble, after learning all about how the customers work, and negotiation with the retailers, and all that kind of stuff.

It’s all very valuable experience, which leads me to kind of ask what are you passionate about? What kind of drives Josh Kaufman in these things? Because you’ve done a whole lot of different things, but you said that you wanted to start your own business. What’s the driving force behind the way you think and who you are?

JOSH: I’m just a very, very curious person. And when I decide I’m interested in something, I can’t help but learn more about it in pretty much any way that I possibly can.

If you would look at my bookshelf, you would see a lot of business books because that’s primarily what I’m doing right now, but I have books on hundreds of different topics. And it’s just when I decided I’m curious about something whether it’s reading online or reading books or talking with people, curiosity is a big thing that drives me. I just love learning as much as I possibly can about pretty much everything.

JURGEN: That’s a niche interview for you right there. That’s exactly why we have decided. I’m very similar. I feel we have a connection here, Josh.

It’s definitely a very useful driving force to have is the curiosity; that hunger for learning. We’re just wanting to know and figure something out is a very exciting thing to do.

That led you to obviously then looking at some of your peers or the guys that you were working for, and then you wanted to be the same or you wanted to learn the same things that they had, but didn’t initially want to go business school so you started reading, and then The Personal MBA was born?

JOSH: Yeah, and I think it was partially trying to learn what I thought everybody else around me already knew, which was accurate in some cases, and not accurate in others. But the other interesting thing about business particularly is that it’s everywhere.

If you look around you right now, your apartment or your house was created by a business. The clothes you’re wearing were created by a business. Everything around you, in some way, shape or form, came from a business.

And so I think just the larger topic for most people is learning how businesses work, and what makes a good one, and what makes a bad one, and what to do, and what not to do is a tremendously important skill for pretty much everyone.

My personal journey through this stuff started with me trying to figure out “Okay, how do I do all of the stuff to do my job very well?” But over the years – and I’ve been running The Personal MBA for over 6 years now – and what really keeps me going is for most people, these skills are very, very important. And pretty much everyone is going to be better off if they learn them or learn at least the subsegment of those skills that really, really makes a difference if they want to do well in their job, if they want to start a business, if they want to do well financially, people really need to know this stuff, and it’s everywhere so you might as well learn it.

JURGEN: Exactly

So The Personal MBA is basically a place where people can start to uncover the basics, I suppose, or even going into some of the detail but just a general overview of the philosophy behind business then or what makes business tick? Is that how you would describe it?

JOSH: It’s very much a business essentials type of program.

Do you know the 80/20 principle?

JURGEN: Yes. Pareto?

JOSH: Yeah, Pareto’s Law. So for the listeners who don’t know it, basically, it’s the vast majority of the outcomes or the results come from a minority of the inputs in any given system. Getting 80% for 20% is how it’s typically said.

The essential insight behind the reading program is that applies to education as well. If you’re trying to learn a new topic, you don’t have to learn everything there is to know about it because there’s way more information out there than you can ever absorb.

There’s something like 11,000 business books that are published every single year.

JURGEN: Oh my goodness! Every year?

JOSH: You can’t even make a dent in that. And a lot of people, I think, when they’re curious about learning a topic like this, get really, really overwhelmed because they have no idea where to start.

And so the purpose of The Personal MBA is twofolds: first and primary is to isolate those essential principles that every working business person really should know about how businesses – what they are and how they work.

Tangentially to that or in service of that primary goal, what I’ve been doing for the past 6 years is looking at the thousands of resources that are out there, and trying to isolate just the really, really good ones that actually teach you those things.

And so The Personal MBA started as a reading list has fluctuated widely over the years. When I started, it was really big. I think it was 126 books, and then I pared it down, and then it’s now sitting at a very stable 99 which is just big enough to cover everything you need to know, but small enough to actually be manageable.

JURGEN: It’s certainly a lot less than 11,000 a year. So in terms of making it attainable to the audience, I suppose, that’s very good. If you can distill everything into 99 books, a lot of effort must have gone into that.

JOSH: I’ve kind of distilled my reading list down into here are the books that really – as far educating yourself about these very important things, the books that I recommend really do provide the biggest bang for the buck in terms of both money and time invested.

What I’ve done for the past 2 years – and my first book ‘The Personal MBA: Master the Art of Business” comes out December 30, and that’s kind of taking the distillation process further.

Here’s the small set of books that’ll teach you what you really need to know. Those books are primarily vehicles for essential ideas, the concepts that you really need to understand.

And so in the book, I talk about – I think it ended up being 226 very simple, straightforward ideas about business that you really need to know in order to understand what they are and how to make one.

JURGEN: And they range across all the different topics like some boring stuff like accounting, but also the fun stuff then as to kind of try to define a market, and those kind of things as a full suite of – the plethora of, I guess, concepts that you need to understand?

JOSH: Yeah, so there’s kind of 3 major divisions or parts of the book. The first is really digging into businesses: what they are and how they work. And so we talk about every single business, no matter what it is, what it provides, how it works – whatever – always has 5 parts. And if you understand those 5 parts, you really understand how the business works.

And the 5 parts are value creation. So every business creates something of value to other people. Every business markets, so marketing: getting the attention of people who may be interested in that valuable thing. The third is sales. In order for the business to continue to exist, it actually has to have a transaction with the customer. Somebody has to pull out their wallet and say “Yes, I’ll take one.” And then once somebody purchases, you actually have to deliver what you promise which is what I call value delivery. And the fifth part is finance.

Typically in value creation, and marketing, and value delivery, you’re spending money. Sales is the only part of the business where money actually comes in. And so finance is basically the act of looking throughout the entire business system and saying “Here’s where money’s coming in. Here’s where money’s coming out.” And then you’re making 2 very critical distinctions. Number one is more money flowing in than is flowing out because it’s not… And then the second, which is a little bit fussier question but just as important is “Is it enough?” which is a concept called sufficiency. Is it enough to keep you going? Is it enough to compensate you for the time and effort that you’re putting into it? And as long as you reach that point of sufficiency, you’re a successful business. Doesn’t matter how much money you make. You could be bringing $10,000 a year. You could be bringing in $10 billion a year. But as long as it’s enough to compensate you for your time and effort, you’re doing well.

JURGEN: And if you say sufficiency enough, how do you define enough? It depends by person by person, I guess, owner by owner whatever they deem is sufficient for them?

JOSH: Yes. It’s a very personal subjective decision.

If you’re running your own business, you get to decide what enough is. And at a certain point – and a lot of business owners do this once they realize they actually have a choice – is you don’t always have to optimise a business on revenue or income. You can optimise for other things as well.

JURGEN: Like time?

JOSH: Yeah, like time. So ‘The 4-hour Work Week’ by Tim Ferris is an example of after a certain point, he didn’t optimise on income anymore. He optimised on time.

JURGEN: He also applied that 80/20 to do that.

JOSH: Yeah, exactly. And you can see a lot of these ideas in most of the books on the list in some way, shape or form.

But it’s really eye-opening for people when they finally realise that the point of business is not necessarily to maximise the bottomline from a financial standpoint. There are other things that you can focus on as well.

When you get into things like businesses that operate on the financial markets, sometimes that choice is made for them in that they have no choice to focus on anything else.

What happens in a lot of those cases is if something has to give, if there’s a trade off that needs to be made, and the trade off is always made in terms of profit, that’s not necessarily the best working environment for the people who actually work there and who make the business operate.

So that’s why you tend to see some fairly major attrition in terms of employees deciding to leave for other options for large companies that are bottom line driven because they’re sacrificing something in the pursuit of those profits, and that typically happens on part of the employee.

JURGEN: Yeah, it’s really bad. I suppose if you have shareholders, the entire loan, the entire model is set up so that they are inherently suppose to be greedy so that the company performs better, and gives them a better return on their investment so that they don’t have to go somewhere else. The model itself kind of lends itself to be profit-driven and focused on bottom line.

Yeah, what you’re saying is true. If you sacrifice the staff or the employees kind of culture and those kinds of things then it’s very bad long term profit decision especially for the shareholder as well. So the short term gains are there, but then over the long term, you start losing some of your key talents and then it’s all coming downhill from then if you can do something to stop it. And then CEO gets fired, you get a new CEO, he does some cuts or something, and then cycle is going to continue, and continues, and continues.

JOSH: Sure. Or acquisitions where you’re bringing in a whole bunch…and then immediately cutting it.

It is fairly heartening to see there are some businesses like Google and Whole Foods who are explicitly stating that they’re looking out for the interest of their employees before the interest of their shareholders because they believe that by taking care of their employees, their shareholders are going to be better off in the long run. And if you don’t like it, sell your shares. I think that’s a fantastic approach. It’s relatively new so we’ll see how that works over the long run. But if your business is driven off of quarterly earnings, and work needs to be done in order for those earnings to come in, that’s not always the best situation for the people who are actually doing the work.

JURGEN: Yeah, definitely.

So all this makes me think of getting back to The Personal MBA, and the kind of skills that you can learn through these books, and the knowledge, and so on.

The kind of philosophies and the critical elements, I suppose, that compose the leverage of all components of the MBA. So compared to someone going to university and studying an MBA there, do you think there’s some form of – I want to use the word ‘indoctrination’, but it’s probably a bit too strong – but you know what I mean? Like where a certain culture gets created in that environment where people may be focused on this older way of thinking before not putting the employee first, but almost like an industrial age kind of mentality that’s created out of those courses, I suppose.

Do you find any of that in your research that you’ve done that it’s the case?

JOSH: Yeah, and actually I think it kind of goes back to a more fundamental issue of business schools would be a lot more effective if they actually taught the fundamentals of business first.

And what I’ve seen in a lot of my research is that is almost never the case. What tends to be emphasised, or in my opinion, over-emphasised are 3 things: the first being leadership and management as the valuable part of business education. It is A) important part. It is not the most important part because you can very easily lead a group of people to the very wrong goal. And those types of skills are actually not taught very well in the classroom. But there seems to be a little over-emphasis on the importance of leadership and management to the growth of the business or to the success of a business, and they don’t even teach that particularly well which is unfortunate, but that’s not the type of thing that translates very well into the classroom. It’s a very experiential type of thing.

The other 2 things that are emphasised are finance and quantitative analysis, which don’t get me wrong, they’re very useful skills if they’re applied appropriately in the right situations to accomplish the right goals. The problem is over-emphasis.

I think a lot of folks who go to business school – and I see this across both graduate MBA programs, and actually undergraduate business programs which are pretty much the same thing. There’s not a whole lot of difference between undergraduate level of study of business and graduate level of study of business.

But the emphasis on being able to program a spreadsheet to do proforma or know what CAPEM analysis is, or use the Black-Sholes Option Pricing Formula, that’s not as important as actually understanding how the fundamental business works. It’s really not.

But what most business students in colleges and universities around the world are focused on is how to make my spreadsheet show the numbers that it’s supposed to. And I think that’s an incredibly destructive way to approach the entire topic of business.

Yes, they’re very useful tools. Yes, there are analyses that you can run to give you an idea whether something is out of whack or not. Yes, it’s important to know how financial statements work, and be able to highlight parts of the business that may be in trouble. That’s incredibly important. But if you don’t know how the business part starts or how it operates, those skills aren’t very useful, and in some cases, are destructive.

There was an article about a year ago in Wired Magazine. I think the title was something like “The Formula That Ended Wall Street” and it was about the CAPEM Model, which having some way to figure out “We’re investing hundreds of millions of dollars, this is going to be worth it.” is a very useful thing. But when you only know the formula, and you’re only able to plug it into a spreadsheet, and run the numbers, and see how that comes out, and you don’t understand how the actual business is functioning, you’re just asking for trouble.

JURGEN: Yeah, it’s almost like you’ve got blinkers on.

JOSH: Yeah, exactly.

The other destructive part, if you don’t know a whole lot about how psychology works – which I think is another topic that business schools really, really undervalue and under-teach – and it’s easy to teach yourself this stuff – but things like cognitive bias show how easy it is if you’re relying primarily on a spreadsheet model to do your job, and your life is going to be better off the spreadsheet model comes out one way versus coming out another, it’s very easy to make poor decisions if you don’t know what to look for in advance.

JURGEN: Definitely, and that’s a key thing.

When I went through my business school, we didn’t do any form of psychology at all in the entire degree that I studied. I was naturally interested in it myself, I suppose, and that’s why I kind of read up on it. But that was a key part in just understanding, not only the world around you, but I mean, the basic fundamental things like you mentioned: businesses fundamentally broke up into 5 parts: value creation, marketing, sales and transactions, delivery or distribution, and then finance. And the only thing that’s bringing in money for you there is the sales and the transaction one, but you can’t do that unless you understand the psyche of the buyer, or your customer or your clients. There’s absolutely no way you can interact and deliver something of value unless you’re able to almost put yourself in their shoes, and understand why people buy in.

So yeah, I agree 100% with you. It’s extremely important and it’s definitely not taught.

JOSH: And even when you get into the management and leadership parts – I mean, business is really fundamentally created by human beings for other human beings. You can’t get the people part. You can’t divorce business from people. And so it just kind of blows my mind that these topics which are very well known, which are highly researched – the whole second part of my book – the book is split up into 3 parts: business, people is the whole second part, and then systems: how to understand how systems work, and how you can change them without blowing things up.

It blows my mind that there have been thousands of very useful business-related psychological studies that have been conducted over the past 80 years, and almost none of them are taught in business schools. And when people are doing the work and receiving the benefits of business, that should probably be one of the first things that’s taught.

JURGEN: Yeah, that’s right. And that’s extremely important.

JOSH: And that is the benefit of learning a topic like business on your own is instead of having this received longstanding curriculum that has been developed by folks who, for the most part, don’t run businesses, if you approach the subject on your own, you can afford to take a step back and think “What am I really trying to do here? What’s the point of what we’re trying to accomplish? And what are some of the things that are probably going to help us more than others?”

For me, as I was going through this process for myself, psychology very quickly leapt out as this is something that pretty much everybody needs to know if they want to do well in this.

JURGEN: Okay, yeah definitely. 100% agree with that.

Brings me to the next part of the interview that I wanted to talk to you about. It actually ties in nicely with it. Basically, you could go and study MBA through university. And we’ve talked a little bit about the different kind of topics and how your book is going to be structured, which I can’t wait to get my hand a copy of this by the way. So I’m going to make sure I give them the pre-order list there.

JOSH: I appreciate that.

JURGEN: For anyone listening out there as well, head over to www.ThePersonalMBA.com. Follow the links, but I’ll also put a link on the website here so that you can make sure you get a hand on Josh’s book that’s coming out. It’s certainly aiming to be a very, very good addition to your collection.

But what I wanted to ask was reconsidering going for an MBA which is supposed to teach you all these basic things, having done business school studies myself – my undergraduate degree is a business commerce kind of degree, I feel that I kind of know a lot of the things, a lot of the concepts that they would teach in an MBA already because I’ve gone through the undergrad. And you mentioned briefly that it is very similar anyway. I also spent a lot of my time working, getting the experience which I think is probably the most valuable part of it all is actually just getting out there and doing something.

But one particular thing to me that draws me towards going and attending a course like this with other people that are thinking the same thing is exactly that. It goes back to the psychology, but it’s the people around you that you’ll meet, and that you’ll get to kind of talk, and share ideas with, and that kind of thing. And that’s something that I don’t seem to kind of, in one way, understand how you can get the same kind of experience, I guess, out of the whole thing by just reading a book by yourself.

Are you doing anything to kind of combat that at least or to make sure that there is some kind of social aspect to following, I guess, your reading list or the advice that you give?

JOSH: Sure. There’s a couple of things that I’m trying to do to make it easier for people.

The reality is it does take effort. It does take work. When you go to a business school, you kind of have a self-selective group of people who are all at least semi-interested in this particular topic all together at once. And that is a benefit. Whether or not that benefit is worth the asking price is a separate question. But there is a lot of benefit in having a group of people to study this with, and ask questions, and throw ideas around, and things like that.

There are actually 3 things: 2 of which exists and one of which is in the process of existing. In the early part of the life of The Personal MBA, I started what’s called The Personal MBA Community which you can get to by going to www.Community.PersonalMBA.com. That is very similar to business school: a group of self…people from all over the world. I think we have something like 30 countries represented, last I looked, who all signed up and are interested in talking about business. And so if you have an idea, if you have a question, there is a group of people – it’s completely free – sign up and ask the question. There’s a lot of value in seeking out people who are doing what you’re doing, and you’re doing something that you’re interested in.

In the grand scope of human history, there’s never been a time where it’s easier to find and get in touch with people who are doing what you want to do.

Even just doing something like searching for blogs or websites of people who are experts in what you want to learn about, and asking them questions, it’s never been easier to do that. And so there are a lot of opportunities if you’re self-directed anyway. It’s surprisingly easy to get in touch with authors, to get in touch with experts, to go to a community like The Personal MBA, and start asking questions, and start meeting people.

The other 2 things that I’m personally trying to do to help people form a community, to help them learn these things, one is I have a crash course. Just go to www.CrashCourse.PersonalMBA.com and that is more of a direct teaching model where I’m teaching some of these most important concepts in business that we’ve been talking about. But the other unexpected benefit of that is you start to see a lot of the discussions that you would have if you go to business school.

For example, I had one of my participants ask a question about “How would you go about manufacturing the physical product if you want to do it some place like in China or Taiwan?” And another participant jumped in and said “Well, my father actually owns a manufacturing business in China. Here’s how you…”

JURGEN: Awesome! That’s great. You wouldn’t get that in a classroom.

JOSH: No! And it’s amazing because of the internet, the course that I offer is a very, very small fraction of what you’d spend on business school. But because it’s so accessible, and because people can participate from anywhere, you’re getting a lot of the same benefits.

The third thing that’s in the works, probably for early 2011, is I’m starting to teach these things in person, in a classroom or seminar-type of format. And so I’m really looking forward to seeing how that works. Getting a whole bunch of people in a physical room, and having…this stuff, I think it’ll be very beneficial as well.

JURGEN: Let me know how that goes. That sounds awesome. You’re kind of branching out. You’re getting bigger and bigger. That’s awesome.

JOSH: It’s funny that I started trying to get an MBA, but not going to business school. And now I’m basically trying to be a business teacher without having a PhD. It’s great!

JURGEN: You mentioned there briefly the fraction of the cost when you talked about your crash course. What’s the cost of your crash course and just give us a little maybe 2-minute overview of how that..

JOSH: Right now it’s $997.00 and it’s a 12-week program which covers all of the essential concepts that you need to know about how businesses work. It’s completely self-paced so you can do it on your own time. It’s in video format, full transcripts, comments. Yeah, it’s a fantastic program.

JURGEN: That’s awesome. And would that actually teach you some of the technical things or is it more based around the philosophy of business? Like to be talking earlier about the fundamental points, I guess, of doing a business is to provide things that people want by people for people.

JOSH: Right

JURGEN: We didn’t get too much into the technical things like how do you balance a T account in accounting or how do you use the Black-Sholes Option Pricing Model and so on?

Do you actually go through some of those technical things or is it more the philosophy of it and just the general “This is how the different functions within a business work together. This is why it’s important that business silos…” and those kind of things?

JOSH: It’s probably about 70% fundamentals and 30% technical.

Once you actually have an accurate model of how the essentials work, you can start getting into “Here’s a tactic that you can use to do X.”

For example in sales, one of the things that we talk about or one of the central issues is trust. If you can’t get a person to trust you, they will never give you their money. Ever. So that trust is a major barrier. One of the tactical things that you can do to help people trust your ability to deliver what you’re promising them is a technique called ‘risk reversal’.

In every single transaction, the purchaser’s assuming some risk because there’s always the risk that they’re spending money, and it’s not going to be as good as they think it is. And as long as they’re feeling that, they’re going to be hesitant to give you their money, or to go through the transaction.

So risk reversal is an actual tactic that you can use to look at all of the risks that they may be feeling, and systematically either eliminate them or take them upon yourself as the seller.

For example, things like money-back guarantees. I’m sure you’ve probably seen the betting industry is notorious for this: 365 day, 120% money-back guarantee, you can sleep on this thing for a year, and if you don’t like it, we will give you back your money plus $200.00.

JURGEN: They know you’re never going to take it back.

JOSH: Exactly! Because it’s cloaked with this kind of called the ‘take the puppy home’ strategy. Once the puppy’s home, it’s never coming back.

JURGEN: Are you familiar with Jay Abraham?

JOSH: Yes, actually.

JURGEN: I think he was the first guy to really kind of publicly push this risk reversal kind of thing. I’ve…tons of books for that guy. He’s amazing.

JOSH: Actually, one of his books: ‘Getting Everything You Can Out of All You’ve Got’…

JURGEN: I love that book! It’s so good. It’s one of my favourite books of all time.

JOSH: And it’s a brilliant mix of both the essentials like ‘Here’s what you really need to know.’ along with the tactics of ‘Now that you know this, here’s what you actually do about it.’

Yeah, I would say it’s probably a 70%/30% mix.

There are some things, like for example, the Black-Sholes Option Pricing Formula, we don’t cover because 99.99% of working business professionals will never ever use the Black-Sholes Option Pricing Formula. It’s typically taught in business schools because finance professors really like teaching it, not because you actually need to know it.

JURGEN: Do you know what I found is the more, and more, and more, I guess, further my career I get, the less important it is for us to actually know specifics about like that Option Pricing Model or whatever it is technical that you need.

We’re so connected nowadays that just logging onto Wikipedia, and giving yourself like a quick overview of the formulas or whatever is more than enough to just refresh your memory from what you may have learned in undergrad or anything like that. Not only that, but if you’re in an organisation such as the one that I’m in, it’s very easy, and very open forum, I suppose. You can just call someone up that has knowledge, or that knows how to do that particular thing, and they’ll help you get through that particular problem that you have. It’s certainly much more important to have the right mindset and the kind of attitude towards the whole thing as opposed to actually knowing the technical detail which is why I like this 70%/30% split. You’re kind of focusing on the right things to make someone into, I guess, a leader or someone that’s responsible, in some ways, setting the direction of a business which is what the MBA’s all about really. It’s becoming a manager position… That’s really cool.

JOSH: I’m a big collector of quotes. And probably my favourite of all time was one that came from Ralph Waldo Emerson, which paraphrased, says “If you know the principles, you can select your own methods. But if you focus on methods or tactics, and you ignore the principles, you’ll almost inevitably get into trouble because you’re almost guaranteed to not focus on the right things.”

That seems to me to be a very good philosophy of learning pretty much anything in general. Focus on the essentials first. Learn those things that you really need to understand first. And then you’re absolutely right, if you need to know something specific, A) you already understand what you’re trying to do, and B) there are all sorts of places where you can learn those techniques or tactics as long as you know what you’re looking for.

JURGEN: Yes. Maybe then what you’re doing is creating that hunger or you’re instilling that sense of – you’re making them aware that it’s out there, and then at least you know about it, so you can go learn about it when you do need it, and you’re not wasting your time studying it up now, and never using it.

JOSH: Right, exactly.

JURGEN: Which is great.

So we were talking about how this is kind of a 70%/30% split and so on, I wanted to talk about more of the financial kind of burdens, I suppose, that you can get in higher education.

So a bit more serious topic. And half the reason why I wanted to talk to you today, currently, the economic environment in the world is not the greatest it’s ever been. A lot of things are better than the last time this happened such as we have the internet now, and everything is kind of more connected, and it’s a lot easier for you, I guess, to get the knowledge or reach out to people out there that can possibly help you.

Going to a traditional business school, I saw some numbers when I was doing some research for this interview, up to $350,000.00 for an MBA at Harvard if you take the tuition, and your living expenses, and everything like that. Is it really worth spending that amount of money to learn things that you can learn from this book?

Why would I go to an institution such as that apart from, I guess, the one thing would be the prestige and so on that’s associated with it, and there’s no denying that that’s very powerful thing. But is it really worth all that money?

JOSH: Right. And that is the key question. It’s not even are you going to have a positive experience if you choose to go? It’s is it worth the cost?

I think this varies in different parts of the world and depending on what school you go to. It almost universally costs a lot of money.

And particularly in the US, we have a particular feature of our legal system which is student loan debts are very easy to get, but impossible to discharge unless you pay them off.

JURGEN: Right. And so by discharge, you mean, you can’t file for bankruptcy or something like that when you can’t pay them.

JOSH: If you file for bankruptcy, your credit cards will go away, your mortgage will go away, your utility bills that are past due will go away, your student loan debt will always be there. And there’s only one other type of debt that has that particular characteristic, and that’s debts that you incur in the perpetration of a felony.

JURGEN: So that’s actually comparing a felony with a student loan like it’s almost they’re viewed as the same thing.

JOSH: Yes. You cannot…

JURGEN: So it’s almost criminal going to university?

JOSH: It’s criminal not to pay off your debts.

I think that’s the thing: college now costs something like – depending on the school – over the past 20 years, the costs have quadrupled to quintupled in 2 decades even versus back when I was in school, top MBA programs at that point were charging around $20,000.00 a year. Now it’s $40,000.00-$45,000.00 a year.

It’s a lot of money and it adds up, as you said, with this statistic about how much it costs to go to Harvard Business School now. A really useful way of thinking about that is by the time you’re done, you’re carrying a mortgage because you’re going to pay 6.5%-7%, sometimes up to 10%, in interest if you take on private loans. That debt is non-dischargeable, and it’s essentially like carrying a mortgage on a very large house, only you don’t have a nice place to live, and if things don’t work out for you, you can’t get rid of it.

JURGEN: You’re screwed for life, basically, if you don’t end up getting the half percent or the 1%.

I mean, absolutely no disrespect, I love everything that comes out of Harvard. Like I read the HP and all that kind of things. I don’t want anyone listening to this to think that we’re dissing the Ivy League schools or anything like that because I’d really do enjoy a lot of the knowledge, the IP, and stuff that comes out of there.

But surely, not everyone that graduates – I mean, how many MBAs do they pump through in a year in one of these schools? Well just pick like any of them.

JOSH: It depends on the school. Some are very small. Some are very large. I think Harvard has about 2,000 last I looked.

JURGEN: Is there 2,000 senior exec positions or there’s kind of positions where you could realise a return for those kind of things?

JOSH: Right, I think latest research was there was something around 200,000 MBAs that are graduating every year. And in terms of the jobs that you really need an MBA to get and that will compensate you for having it, there’s only something like 5,000 a year.

So a lot of people actually have the experience of going to business school, and either returning to the job that they had before business school because there’s nothing else available or actually finding a job that pays them less than what they were making when they got in.

JURGEN: Plus they got to pay off $200,000-$300,000 worth of debt?

JOSH: Yeah. Oh, and the other thing – at least in the US – is student loan debts are not tax deductible like a mortgage payment would be.

So you’re paying anywhere between $1,000-$2,000 a month in debt service on a student loan that’s non-deductible before you pay for your living expenses, before you pay for transportation or food or any of the other debts that you may have incurred.

I would be a really, really big fan of business school because I think business is a really important topic to learn. I would be a big fan of business schools if they actually taught things that were useful, and if you didn’t have to mortgage your life to go to them. And the debt issue, interestingly enough, is not just constrained to business schools. This is a system-wide issue.

A lot of undergraduate programs are now creeping into the 100,000+ range. Law school is going through a very similar issue where there are hundreds of thousands of lawyers that are graduating from law school every year and there aren’t enough jobs for them.

JURGEN: I was reading an article recently about that. Open letter to the dean of a school or something that one of the students wrote, and he’s basically saying “Look, I’m almost finishing my degree. If I stop now and don’t graduate, can you please give me my money back because I don’t think I’m going to get a job doing law and being able to service this debt that I have.”

And you go through some of the comments that some of the people are commenting on – I mean, this was only a few days ago. Maybe 3-4 days ago that someone put this up online, and some of the comments are pretty scary where people are saying “There’s no market for us.” Some people are working at Starbucks after graduating from law school simply because they can’t find a decent job as a lawyer somewhere. And then having that job at Starbucks is counted, at least to the university, as one of their students are employed. So it didn’t say where they’re employed, but they say “He’s employed.” So their stats look good. They’re collecting this non-serviceable – you can’t get rid of this debt even if you can’t pay it, and the only person left holding the buck is the actual student that went in with all good intentions, and tried to go there because they wanted a better life.

It seems like pretty messed up.

JOSH: Yeah, and whenever there’s an incentive system like college rankings, you introduce…cost bias. Schools will do what they need to do in order to appear higher on the rankings – almost universally.

What very often happens is people will go into business school, or law school, or there’s a similar problem with PhD programs right now. It’s almost impossible to find a paying career, tenure track position as a PhD candidate particularly if you’re in the humanities, and engineering, science, and business are not much better. Way over supply, not enough positions.

People go into it, I think in a lot of instances, half blind to what the odds really are. Even if they understand the odds, it’s kind of like – it’s called excessive self-regard tendency or optimism bias where “Doesn’t matter what the odds are. I’m going to be the one who gets that position.”

JURGEN: Yup, and statistically, you’re not.

JOSH: Statistically, you’re not.

Those decisions carry a large amount of inherent risk because you’re borrowing a lot of money. And if you were capable of mitigating that risk in some way, it may be a decent option for most people. But because you can’t mitigate that risk at all, it ends up being a very, very poor option for most people.

At least, from my perspective, if you can get pretty much the same benefits without this massive risk that can’t be mitigated, that seems like a pretty good decision or at least a pretty good option.

JURGEN: At least for consideration, you should at least think about it.

JOSH: Right, or maybe do the thing that you can do easily by yourself without a whole lot of risk first. And if you still really need this thing to do what you want to do then great. Go.

I was actually reading on a law issue. There was a gentleman in New York who actually read – I think it was the Law Bar – their regulations on who can and cannot practice law, and most people assumed that you have to graduate from law school in order to practice law. And as it turned out, that’s not the case. You had to study law, and a viable way of studying law – at least in the State of New York at this time – was to effectively – it looked like interning for a law firm, and studying the law on your own, and passing the bar. And if you can do that, you can practice law.

JURGEN: So you can go, and if you’re really switched on – this reminds me of Goodwill Hunting. Have you ever seen that movie?

JOSH: Yeah, exactly.

JURGEN: It’s that kind of thing?

JOSH: Yeah, love the movie.

JURGEN: Pass the bar and then…

JOSH: Exactly

JURGEN: That’s interesting. It’s almost like a false screen that’s been erected in front of our eyes and this perception that’s out there.

JOSH: At least personally, I’m not against people going to school if they decide that that’s the best option for them. What I am very much against is people who make life-changing irrevocable decisions without looking at their options or without going into it with eyes wide open.

And so as long as someone does the research, and they know the risks, they know the rewards, and they make a conscious decision then great. Knock yourself out. But do the research first and really try to figure out are there other ways that you can get what you want that may be better, that may be faster, that may be cheaper than what the default option that most people take is?

JURGEN: Yeah, don’t just go blindly into it. Make sure you understand what’s out there and what your options are because I don’t think a lot of people would be aware of these kind of numbers and things that you’re throwing around here. I mean, it’s the first time I’ve heard this kind of scary numbers about the situation.

Business school, to me, was like one of the best things I could’ve done in terms of – I mean, I moved to a different country halfway through my university degree, and it’s kind of really good just to get to know people, and build up a network in a new place, and stuff.

I mean, it all just kind of worked out and it was really good. It was a good opportunity to, I guess, at least on paper it gives you a little bit of credibility in the market if people don’t know you. That was definitely necessary for me to end up where I am now…awesome position, but I do love what I do. I feel very grateful that I went through that process of doing it.

But certainly, research is very important in the front even if you’re just deciding where to go, and what you want out of life, and you know what you reasonably can expect to get out of it, and so on. Maybe going to Harvard can land you that CEO position one day that you need because your name is so good, and there’s all this prestige that goes with it, and you’re very well-qualified, and so on. But maybe going 3 levels down costs maybe 10% less or something, but it’s not going to give you nearly that return, and being aware of that should be an important factor.

JOSH: In terms of effectiveness, there’s only been one systematic study, particularly on the business school front, of does going to business school – particularly a Top 1- help you? It was done by Dr. Jeffrey Pfeiffer of the Stanford University Business School and Christina Fong [53:17] of the University of Washington.

Schools, they collect reams of outcomes data: Who’s working where? How much are they making? How high do they rise in the organisation? Every school has this. They don’t release the information.

JURGEN: I wonder why.

JOSH: If it was good, I mean, that’s perfect marketing material. Almost no schools use it. And so it’s pretty safe to say that it doesn’t look good, but what Drs. Pfeiffer and Fong were able to do is analyse some of that data to answer the question “Is getting an MBA worth it? And if so, is there a benefit of going to some of the higher, more selective programs?” The short answer to this whole study is available online. I’ll send you a link so people can see themselves. They said “No, it does nothing. Absolutely nothing.”

And in pretty much every variation of this type of research that’s ever been done on college, at least that I’m aware of, whether it’s business, whether it’s law, whether it is an undergraduate program – whatever – where the person goes to school almost never makes a difference.

The success or failure of any particular individual, as you might expect, is very, very dependent upon that individual.

A person who is curious, and driven, and it really likes a particular area, and wants to do well in it, will do just as well if they go to Harvard or if they go to a random state school.

JURGEN: I agree. I’ve seen that.

JOSH: There are certainly opportunities that you can take advantage of, and then it becomes a very personal cost benefit type of situation.

But at least from what the data in the statistics say, if you are a driven, motivated, ambitious individual who wants to do something with their life, you’re going to do well regardless of where you go.

JURGEN: That’s true. Exactly. You nailed it.

Makes me think of another – you mentioned the research that they’ve done. There’s another article that I read recently about – it was in Bloomberg Business Week, and it’s something about the CEOs with MBAs not really stacking up to their reputation, I suppose.

JOSH: Right

JURGEN: Well, they looked at 1,500 companies for a number of years mainly throughout the 90s and the 2000s, and through a variety of metrics and things – I don’t know exactly. I’ll see if I can find the link somewhere and post that on the website as well – they basically said that there seems to be no tangible long term difference between a CEO that attended Ivy League school and got an MBA from it or one that didn’t. And they said the only thing where it really does make a difference is the point of getting hired.

It’s almost like all this money buys you your foot in the door, and then the rest is up to you like it is anyway, like we just discussed.

JOSH: Exactly. That was actually the outcome of the Pfeiffer and Fong study as well. There’s a very limited benefit, and they said this wears out largely within 3-5 years after graduation of there are some businesses: prestige consulting firms, investment banks, the Top 5 general accountancy firms – things like that, where the HR Departments use having an MBA or not as their first pass screen in terms of who to interview.

If the HR Department has hard-coded has an MBA into their screen, and you know absolutely that that’s what you want to do for the rest of your life, and you’re not going to be happy doing anything else, then yeah, get your MBA. It’s going to be worth it because that’s what you need to do in order to do what you want to do. For pretty much anything else – and even after those 5 years have gone by – every single employer – doesn’t matter who they are or what they do – they care more about what you’ve done in the meantime since college than where you went to college.

If you need an MBA to pass the screen, by all means, do it. You’re probably better off doing it with as little a debt as you possibly can. But for pretty much everybody else, it doesn’t matter.

JURGEN: That seems to be a unanimous conclusion. So definitely financially, it doesn’t seem to stack up.

JOSH: And it’s incredibly fortunate for us that this is not the only way that you can learn these things.

JURGEN: Yes

JOSH: You can learn all of this stuff better on your own. And if you learn it, you can do all sorts of incredibly useful things. It’s a very good use of time and money.

JURGEN: Definitely. As far as learning it yourself, let’s get back to the MBA program to just like tie this all.

JOSH: Sure

JURGEN: Do you have any examples of interesting things your students have achieved or people that are on this community or in the crash course or so on? Some remarkable things that you’ve kind of heard stories from them whereas they decided not to go for the full fledged MBA, attend school route but they still made whatever you term as a success in that regard?

JOSH: I have a ton of good stories.

JURGEN: Go for it.

JOSH: I have been with the course, and I also – for a number of years – have been working with people individually. Personally, I work primarily with entrepreneurs or people who are interested in being entrepreneurs. A lot of times they have some type of skill that is valuable. They just don’t know how to go about this whole business thing.

Probably the most dramatic example is there’s a gentleman who is a programmer, and actually now works for a defence contractor, but he was interested in starting his own programming business selling software, and very, very skilled but just didn’t know how to organise the business side of things. From the time we started working together to the time he had his own business set up selling his first product at a profit was 4 weeks.

JURGEN: Wow!

JOSH: What he said is “This is a lot easier than I though it was.”

JURGEN: Yeah, because it’s not hard. That’s the whole thing. It’s not hard.

JOSH: Yeah, and the fascinating thing for me is that once you know the essentials – I mean, none of this is rocket science. It really isn’t. It’s just thinking about these things in a very specific way.

His feedback was he always had this image in his mind about what it took to start a business that made money. And in his mind, that was much, much bigger and more complicated, and scarier than it actually was.

That’s kind of the first primary benefit that I see for a lot of people as they learn this is like once they grasp the essentials, they’re like “I could do that. That’s so much easier than I thought it would be.”

JURGEN: That’s a great story.

JOSH: Yeah, there are 2 other folks both actually run professional service firms. One of them – actually the very first conversation we had – we were on the phone for an hour – he was in the midst of putting together a proposal for his largest client on a renewal. We just talked about some very basic things of how he position his products and services, and as a result of that one conversation, he revised his proposal, and brought in an extra $120,000.00.

JURGEN: Pretty good

JOSH: Yeah, the other client who actually does similar services, we worked together for a couple of months, and he increased his income by 8 times/800%.

There’s a lot of like once you really understand what’s important, you can create more valuable things and you can also sell them for more money because they’re worth more.

…actually comes from someone who is taking my program, but is not in the business world. He’s in academia. He’s actually a very well-known, prestigious medical university. He was graduating with his PhD in chemical engineering and was on – as we talked about – on a very competitive search for a tenure track teaching position for professors. But it was also his insight was the professors who tends to do well from what he was able to see knew a lot about how business worked. And so he was getting ahead of the game by trying to figure this stuff out before he got his professorship.

And as a result of our working together, we actually worked a lot on his communication and presentation skills. He ended up landing a very competitive post…professorship at a world class university using this stuff.

JURGEN: That’s awesome!

JOSH: And I love stories like that because once you wrap your mind around how the world really works in a lot of fundamental ways, you can use it to do pretty much anything you want.

JURGEN: That is awesome. Definitely. And it’s all about just the concepts.

I think you said the third part of your book relates around systems, and system thinking, and the magic of this stuff is once you’ve done it once, and once you’ve kind of – it’s almost like this between the lines. Once you get it, and you have that ability to kind of put it into some form of process, and replicate it, then you just start getting snowball because one thing leads to…

JOSH: The magic of standard operating procedures.

JURGEN: Yeah, exactly. If you want to save yourself some time, you put it down onto a process, and you give it to someone else to do, and there you go.

JOSH: Yeah, I mean, even something as simple as a checklist. I have a lot of clients who kind of thought that that was the boring part of business. And then they actually start experimenting with it, and all of a sudden, they’re making more money, and their life is easier. It’s like the closest thing to magic. It’s great. And it’s not complicated. You just need to know a few things about how they actually work.

JURGEN: And you learn a lot just by writing those things down. You learn so much of your own thing. That’s just great.

Well, that’s awesome, man. Thanks for sharing those examples with us. It’s really good to hear that you’re getting some tangible results, very positive ones from the work that you’re doing.

What’s next for The Personal MBA? So you’ve now been running it for 5 or 6 years. You said that you’re going to be starting maybe some classroom and seminar based training, I guess. So where do you want to take this in the next 5 years? What’s the ambition and the goals?

JOSH: Well, my goal is – this is a set of skills that pretty much everyone needs to know in some way, shape or form. And the first 5-6 years of The Personal MBA were really, for me, doing a lot of research, and honing in on what’s actually important, and then helping people take the same path in terms of the reading, and research, and doing things on their own.

What I’m really shifting into is this is a set of skills that is very important to learn, but also very important to teach because no one else is teaching this right now.

And so I said earlier that what I do now basically looks like I’m a business professor, but I don’t have a PhD. I’m really shifting into teaching mode on a lot of these things because as we’ve talked about in terms of results, people can really, really improve their lives pretty dramatically very quickly after learning this stuff.

And so what I’m really focused on for the foreseeable future is teaching these very important things, helping people learn them, helping them apply them to whatever it is that they’re trying to do, and hopefully making the world a better place in the meantime both in terms of saving them from unnecessary debt, and then helping them build something that will help even more people.

I think the fascinating part of business on a larger scale, for me, is it’s one of the only areas of life I can think of where you can simultaneously improve your own lot in life by helping a lot of other people do something that they want to do. It’s a very virtuous cycle in a lot of ways if you approach it correctly.

And so that’s what really, really excites me. Teaching these very important concepts, and principles, and tactics to someone who’s going to be able to take it, and then build something really great that helps a lot of people, and makes them very successful in the meantime, like, there’s nothing better than that.

JURGEN: That’s awesome, man.

Yeah, great. I wish you the best of luck with that. I’m certainly going to be following your progress. I’ll check out this crash course as well. It’ll be interesting to see what that’s all about, and how that works, and definitely look forward to seeing your book when it comes out, Josh. You said in December?

JOSH: Yeah, December 30 is the official launch date in the US. And it’s coming out on the shelves in the UK, I believe, February 2 is the official date for that.

JURGEN: So we’ll probably get in Australia around that time. Cool! I can’t wait.

It was a big process to write it? Did you spend a lot of time kind of…book writing?

JOSH: Well the research was like 6 years, but the actual writing took me about a year of pretty much full time effort. So it’s all of the good things that I know are in the book. I didn’t really hold anything back there.

JURGEN: Great! Thanks very much for chatting to me today. It was a pleasure speaking to you, Josh. Very interesting stuff that we talked about; the 5 parts of a business: system thinking, leadership, management, just learning about how you started this community, and how you’re giving way for 30 countries where the people can now log on, and kind of learn some of these fundamental business things for free.

It’s no wonder that you’ve been, I mean over time, quoted – when I did some research for this interview, I just Fast Company, Life Hacker, Business Week, KK.org, CNN Money, Harvard Business Review – all these people are paying attention to you, and from this interview I can see why.

So I’ll certainly be following your progress over time, and I really wanted to thank you for the interview.

JOSH: Thank you so much. It was really fun.

Categories: Interviews
Tags: Interviews

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Josh Kaufman

Author of the Personal MBA and The First 20 Hours: How to Learn Anything . . . Fast!

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