Ep572: Ron Baker – Have Your Skin in the Game

Andrew Stotz 00:02
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning. In our community. We know that to win in investing, you must take risk but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives to reduce risk in your life. Go to my worst investment ever.com today and take the risk reduction assessment I've created from the lessons I've learned from more than 500 guests. Fellow risk takers, this is your worst podcast host Andrew Stotz and I'm here with featured guest, Ron Baker. Ron, are you ready to join the mission?

Ron Baker 00:41
I am Andrew, this is great.

Andrew Stotz 00:44
I'm excited to have you on and I was just joking about my radio voice. But we've got a real radio man on the line. RON BAKER started his CPA career in 1984 with KPMG's privates private business advisory services in San Francisco. Today, he is the founder of various age Institute, the leading Think Tank dedicated to educating professionals, internationally, a radio talk show host on voice America. And his show is the soul of enterprise business. In the knowledge economy. Ron has authored seven best selling books, including the firm of the future, pricing on purpose, measure what matters to customers and implementing value pricing. His forthcoming book, time's up, the subscription business model for professional firms is going to be published in November of 2022. This year, Ron, take a minute and tell us about the value that you bring to this wonderful world.

Ron Baker 01:45
Wow. I don't know about that. But I'll try. I started my career as an accountant. So I'm a recovering CPA, as I like to say and then I went out started my own firm. And we started doing value pricing, because we thought it was a better customer experience. And that's how all of this started. And then I wrote a book that was published in 98. That book kind of took off worldwide, sold 40,000 copies. It was kind of interesting, because it was $150 book, I had no idea that it would do as well as it did. And then I stopped practicing, I sold my interest to my partner who still carries it on. And I've been consulting Writing, Speaking ever since.

Andrew Stotz 02:29
Why do you think that book did so? Well.

Ron Baker 02:32
Because the timing was right, it was 1998. Nobody was really out there talking about value pricing, you're moving away from hourly billing like most professionals charge for. And I had done it in my firm, I proved the concept. We've got we even got rid of timesheets. So if you're not pricing by the hour, there's no more reason to track it. And it just resonated with people as a better way and a saner way to do business and a better customer experience and to create more value for the customer. And I think that was the big point it was. The second big point is I hooked up with a couple guys from Australia, who ran what was known as the results, accountants book, boot camp. And they were waving the book around stages, literally around the world. And that really helped the book take off.

Andrew Stotz 03:26
And if I, you know, for the listeners out there, we think about pricing, a lot of people think hourly based pricing, or maybe cost based pricing, you could also call that whether that's the cost of your hour, or the cost of the materials or whatever it takes to produce it. So maybe you could just explain because I know some of my listeners are struggling because they can't scale. They can't get the value out of what they're delivering, because they're stuck in this, you know, old pricing model, but they also feel I would say nervous that they're not gonna be able to get that price. You know, they don't. They're scared. They're scared to move away from the model and I'm asking for a friend.

Ron Baker 04:18
Well, you're absolutely right, Andrew, there's a lot of inertia. This model has been around since 1999. I traced it back to the guy who started it. Guy named Reginald Heber Smith, who introduced the first time she can build by the hour in his law firm in Boston, Massachusetts. And of course, he was educated at Harvard. He was a product of the zeitgeist of his time, and he was heavily influenced by Frederick Winslow Taylor, of the scientific management. Turns out Taylor was a huge fraud. None of his studies have been able to be replicated the other 40% fudge factor me scholars have torn him down completely. I surprised he has any reputation at all. But it did however it didn't, it didn't take off in the legal world for another 40 or 50 years, it took him even to implement hourly billing another 40 years. And then of course, by the 70s 60s 70s, when the computer hit the desk basically, is when CPAs started to build by the hour before that we were charging by the day or something like that. And, but then, of course, when they hit the desktop, the computer, it made it really easy to spit out a bill made it almost mine turned it into an administrative task. And as we know, marketing is not an administrative task. Its pricing is a marketing issue. It's one of the four P's product promotion, place price, and you can't you can't turn it into an admin thing to make it efficient. You have to think about value to the customer. And the value to the customer always exists outside of the organization's or walls. So value pricing forces you to align the price to the value and make sure there's a healthy customer profit built in. And then that's how you profit is when your customer profits.

Andrew Stotz 06:07
All right. That's a fascinating point. And for the listeners out there, let's just go with that for a moment. What you're basically implying is when you're basing your pricing on your costs, really you're internally focused. Absolutely. When you're basing your price on your value, you're focusing on your customer. So okay, that kind of makes sense to the average person. But tell us how does someone move from that internal focus to the client focus? Tell us a little bit about the steps there.

Ron Baker 06:44
Yeah, it's a big mind shift change. There's a lot of unlearning. That has to happen. And I think one of the things I've learned this probably been most valuable to me over my professional career is you've got to unlearn things. Because if you want to learn new things, you got to give up old things. And to move forward, you have to give some things up. And the unlearning process is very, very difficult. It's not that the knowledge, the new knowledge is difficult. It's not that it's rocket surgery or anything complicated. It's just that it doesn't conform to our priors. You know, we're path dependent creatures. If I build by the hour in the past, most likely I'm going to build by the hour in the future. And to break that cycle really requires you to step out take, you know, take some risks. I mean, the turtle only makes progress when he sticks his head out. So I would say unlearning, is the big obstacle, it's a mind shift change more than anything?

Andrew Stotz 07:39
Yeah, it is. For those people that are watching, they'll see me constantly looking down because I'm taking notes. And I'm thinking about this idea of unlearning is such a valuable thing. And I haven't really thought about it the way you're raising it. But you know, the new knowledge out there is not that complicated. You know, it's not like it's, as you say, it's not rocket science, or whatever. But the point is, is that we have to make room for it. Yep, unlearning aspect, so that's great. So the first thing I think for the listeners out there is to think about the idea of cost based pricing doesn't really work. It doesn't bring the best value to the client. And so we have to kind of unlearn that cost based pricing. Everybody wants to see our timesheets, and they want to be able to track that that doesn't bring value to the client.

Ron Baker 08:28
It doesn't that's exactly right. And as a finance person, Andrew, I know you'll understand this. If cost plus pricing explained how the world worked. In other words, how you and I spend money when you buy things and Internet transactions, then if you think about it deeply, no business would ever go bankrupt. Because again, it doesn't take a rocket surgeon to put a price above a cost. And had businesses go bankrupt or don't earn a profit all the time. And that's because they don't produce anything of value. So it's the value that actually drives price, not your costs. Your price justifies the costs that you can profitably invest in to produce the product or service that the customer is willing to buy.

Andrew Stotz 09:14
I was recently thinking that, you know, I really want a water fountain on my balcony here in that beautiful Bangkok, Thailand, I thought that would be a great way to wake up and just turn on this water fountain. And so I visualize it, I went out and I looked at the parts and you know, the people that are buying from they didn't realize I was making a water fountain but I got a water pump. I got a PVC pipe, I got a little showerhead. Very simple. And once I got everything set up, I decided I want to have these I want it in stereo and so I put them on both sides of my balcony. And they're simple little, you know, water fountains, but the value that they're bringing me is amazing because it's like it's like it's a trigger. So it's a sound trigger in the morning. I know like for instance to do yoga. When that goes off. I'm No, this is my yoga time. I know I feel more peaceful. Now, they didn't sell it as that because they were selling a different parts. But it's clearly the value I'm deriving it is way above what I paid for the independent parts that it took to make it. So that's maybe my description of kind of the way to think of value in my recent, you know, history.

Ron Baker 10:25
Yeah, no, that's a great description. In fact, I always talk about and this, this, I think is really tough for us finance people, we like spreadsheets, we like certainty, we like objectivity. We like to quantify things, I'm big quantify, or I'm an accountant, it's really hard to get that out of my DNA. But when it comes to value, all value is subjective. And that that is a very weird thing to try and wrap your head around. Because value is more of a feeling than a number. You know, if you think about the brands that we buy, that there are indulgent brands, like maybe you have an apple in front of you, or maybe you have a certain type of car, clothing brand, their watch brand jewelry brand, whatever it is, there's more going on there than just the the financial ROI that you're getting from your car. There's an emotional attachment. There's other things happening, that can't that are difficult, if not impossible to quantify. So always try and think about value in terms of it. Sure there's material value, you can put, you can quantify certain things, savings, efficiencies, profit, whatever. But there's also a spiritual value, meaning it can't be measured. When I say spiritual, I don't mean religious per se. I mean, it can't be measured . I can take a violin into a lab and I can measure it, and I can weigh it. And I can do all those things and quantify it as best I can maybe even carbon dated and find out it's a Stradivarius. But when a master violinist picks it up and plays it, and I weep, or I cry, or I march off to war. How do you quantify that value?

Andrew Stotz 12:06
You made me think of the kind of I wrote down value based management, like thinking about how departments within a company work together? Are they bringing value to each other? And how are we making sure that we're focused on the value, not the cost? It's a fascinating discussion. And I want to just go back in time for a moment, because you mentioned about Taylor. And for the listeners out there, some of you know that Taylor was kind of known as the father of scientific management, with the idea being that you could measure everything and all that. And there was a man who was born in 1900, who came into collusion with Taylor, and ended up bringing a whole different way of thinking from Taylor. In fact, you have to understand what the world was going through from the effects of Taylor, in the early 1900s, let's say from 1900 1920, or whatever to World War Two. It was all about measuring and all of that and the man was I got his book on my shelf here.

Ron Baker 13:18
Deming are Drucker. Deming, Deming.

Andrew Stotz 13:21
So Dr. W. Edwards Deming basically saw what Taylor was doing and said, this is, you know, this doesn't make sense. And he spent his life railing against that and trying to get people to think now I was 24 year old guy working at Pepsi. And my boss told me, Hey, you should attend this seminar. And I went and attended a seminar and there was Dr. W. Edwards Deming standing in front of me. Wow. And I was blown away. And I learned so much that I had another chance that he was coming to LA in this case, that time I flew to Washington, DC, but he was coming to LA. So I attended that second one. And then later I wrote a book called transform your business with Dr. Demings, 14 points. And for listeners out there, I'm also now the host of the Deming Institute podcast where we talk about his teachings and the people that have been affected. So if you think about the impact of scientific management, where there's plenty of people right now listening that are like KPIs, that's how we're going to get the best result. We're going to measure everything that people do. That's like tailor thinking. And when you start to think about value that you're bringing to the customer, that is Deming, like making, what do you think that Ron?

Ron Baker 14:40
Absolutely right? Wow, I'm envious that you got to meet Deming, Deming and Peter Drucker probably my two heroes. What I find fascinating it doesn't Deming say in that very book that you held up, I believe he says in that book that we can measure 3% of what matters in the business. It's the night 97% That's not measurable, that's critical. And what I really appreciated about Deming and Drucker is they were systems, thinker. Thinkers, they understood that a business is an interdependent system. And the goal is not to optimize each section of that business and think that you'll get a more optimized whole, it's to know that certain parts of this business have to be inefficient, in order for the whole to be effective, just like the human body. I mean, if I cut off my hand here, my wrist and lay it on the table, I can no longer write with that hand, it needs my entire body. So sometimes a surgeon has to cut off a digit or a limb to make you healthier. And business people don't think that they're all about, oh, if we can make everything efficient, we can optimize everything, and then we'll have more doesn't work that way with a system.

Andrew Stotz 15:48
And the best way that he illustrated that was through the idea of a symphony or an orchestra, where you have many, many musicians. But if they all stood up at the same time being all at the top of their game, I mean, there's some of the best in the world. And they all stood up and gave their best efforts. It would sound terrible, terrible. So sub optimizing in the case of an orchestra, is when, let's say the percussion is quiet, while the strings are doing their thing. And that's how you optimize the output of the system, you must somehow optimize parts of the system. The second part that you mentioned was really, what he talked a lot about was systems thinking. And the idea that the output of a system is a function is just a measurement of the system. So for instance, if you have a kid that's getting low grades, it's the output is the low grade, but all of the other inputs, is he staying up late at night? Is he getting good role models, is he you know, all the different things is he got teachers that aren't exciting him, all those different things come together, and they form the system. And so it's very difficult when you're in a really, let's say, tough environment to produce an amazing result. In fact, you're going to produce a result that is measured, you know, you could measure it from a statistics perspective to say most of the results coming out of this is going to be in this range. And then what happens is that people start focusing on those little results, why did you get a C minus? Why did you get an O, tell us about your amazing with your B plus. But really, if you go back and you work on the system, about 90 plus percent, let's just say, of the output of the system is going to be a function of the system itself, not the efforts that are going on within it, the little bit of a complicated way of explaining it, but I know if you go to my one of my businesses is a coffee factory and, and I say I want more precision in the you know, the weight of the coffee that's going into this bag, every time we ship out a 500 gram bag with 501, we lose them one, and they're like, Boss, this machine is not that accurate. If you want that level of accuracy. There's nothing we can do. We've optimized everything for our work, but you've got to work on the system, getting a better machine reducing vibration, those types of things, change the outcome. So just a little quick summary there.

Ron Baker 18:12
Yeah, no, that's a great point. I love it. I love the fact that you wrote a book on Deming, and yeah, that's awesome. I totally agree. And the other thing about systems is it makes you think about, like you said, the result. You know, it's like when a friend or a loved one has a baby, nobody wants to hear about the labor pains. You want to see the baby. But businesses are so internally focused, especially as they grow and get bigger, that they turn inward, and they start looking and trying to optimize the labor pains, rather than delivering the baby.

Andrew Stotz 18:43
Yeah. For the listeners out there. This is, you know, a fascinating subject. And I think I'm gonna wrap up this discussion by saying that the most valuable things out there are things that you can't quantify. And if you as a business, are delivering transformation, if you're delivering, helping people move to a next level, if you're helping people recover their businesses, if you're helping them recover their relationships, if you're helping them transform themselves, then you are bringing serious value to them. And you should charge based upon that transformation that you're bringing. Wow, well, that

Ron Baker 19:28
was beautiful, Andrew, I couldn't agree more. I mean, transformation, I think is a revolutionary idea. Because that's the top of the value curve. If we actually provide transformations, we move a customer from where they are to where they want to be some desired future state. Then the customers the product, and just like Harada said, you know, you can't step in the same river twice, because not only does the river change, you've changed and boy, when you transform somebody, that's the pinnacle that's as good as it gets here. We're on the mortal coil. And that's we talk about solving problems in business. And this drives me crazy, because if all we're doing is solving problems for our customers, or even just internally, but let's just stick with the customer, all we're doing is solving the problem. We're just reverting them back to the status quo, we're not advancing or progressing them.

Andrew Stotz 20:21
Ladies and gentlemen, stop solving problems and start building solution. Well, now it's time to share your worst investment ever. And since no one goes into their worst investment, thinking it will be tell us a bit about the circumstances leading up to then tell us your story.

Ron Baker 20:38
I have a feeling that my story is not going to be all that sexy compared to other ones that you've talked about. I haven't, I look, this could be luck, it could be self delusion. I haven't had many bad investments. Because most of my investments have been into my human capital, and my intellectual capital, which is my social capital, my human capital, and my structural capital. And I find that those always pay off. But I did do an investment with a group of guys, a couple guys. And we started a software company, we were going to write a software program that would help firms value price. And we went out and we hired a software engineer and spent a lot of money. You know, I mean, not not not a ton of money, by any, you know, big standard. But back in the day, in the 90s, it was in, I probably lost about 60,000, or 75,000, in this venture, a lot of money. It's a lot of money, and it didn't feel good. We were delusioned, we thought that we were sitting on top of something that was radical and innovative, we didn't have any idea what it was what it would take to build a software company, I think it'd be a little easier to do it today, given how many software engineers are out there and other track records you could learn from, but I always look at all investments, even portfolios, stock market, my my retirement accounts, I see two things going on, I see a financial return or loss. And then I also see an epistemic gain or loss. I mean, I gained knowledge. You know, Walt Disney, I think, said everybody in their 20s should have a serious, hard bankruptcy in their 20s. Because they're young enough to kind of get over it. He filed bankruptcy. And I think he was 26 or something before he moved out to Hollywood. And to his, there's a museum here in San Francisco, a wall of Walt Disney. It's not a corporate Museum, it's his life. It was built by his daughter. It's phenomenal museum. And you can see the bankruptcy filing. And all of his debts listed. I mean, somewhere, it's like $2, you know, and, and he talks about that as being a incredibly valuable lesson to him what he learned from the school of hard knocks, and that that's my take on the epistemic knowledge that we get, even when we fail.

Andrew Stotz 22:58
So how would you summarize the lessons that you've learned from this experience? And you know, as you continue to look back on, you know, challenges and losses, what would you say is kind of the the main lessons,

Ron Baker 23:11
my main lesson Andrew has been, and this is something Peter Drucker wrote about in his book, in his autobiography, adventures of a bystander. And when I read it, I need jerk instantly rejected this, because it's so counterintuitive. And it just, it goes against everything that everybody tells you about how we learn more from failure. His point was, I learned more from people who succeed and fail. So I study success. Success leaves clues, as others have written. And he said, I have to study what people have done, right? Because there are so many ways to do something wrong. You could get lost in a rabbit hole studying failure. But I want to study success. And that's stuck with me, it took me a while to grapple with that and wrestle with that. But that's been my mantra kind of ever since that. I seek out people who are successful and try and learn from them.

Andrew Stotz 24:08
Interesting, I think I may have to change my podcast name. But on another note,

Ron Baker 24:13
I didn't want to challenge your podcast name. But that's been my personal philosophy. And again, I and I've said this at conferences, and people come up to me and they do nothing but argue. And I say, Listen, I didn't say that. You can't learn from failure. Of course we can. When we're little kids, and we get up and we walk and we fall over. We're learning from failure. No doubt, that's always going to be part of the human condition. But there's something about success and people. I I don't know about your experience with this, but I think people want to chalk up success to luck or timing, or meeting the right person and all that's true. That's certainly part of it. But I think there's more to success than just randomness.

Andrew Stotz 24:59
Maybe I'll just share a couple of thoughts on that. The first thing I wrote down was I wrote down software. And then I wrote down easier today. And I thought to myself, if I look at all the struggles that my friends who are setting up software and apps and stuff, like, I have to say, I wonder if it's really easier today we software.

Ron Baker 25:19
True, true. And I thought the same thing after that came out of my mouth, but I outfits like Y Combinator, and being able to talk to other entrepreneurs, I think it is a system is really ecosystems more supportive, very powerful.

Andrew Stotz 25:33
I also wrote down lose money gain knowledge. So you know, okay, if you lose money, it's going to happen. But if, if you didn't gain knowledge along the way, then you're really failing. So I think that that tells me that, you know, we, we want to learn from our losses. And then I think, from my perspective, when I look at kind of studying success versus failure, it's interesting, because I would say that almost all the books I read are about success. I mean, who writes, you know, I read the book about the guy named Warren Buffett that one in the stock market, 50 years in a row, but I can't find that book of that guy who lost in the stock market, 50 years in a row. Right. Now, there's people that exist that have lost lost loss. And of course, then turn it around and became president of America or something like that. Try and the point is that we don't write books on those people. You know, it's a very small number. And so it's what we call survivorship bias. And we look at that in academic research to make sure that we adjust for that. In fact, going back to Deming, Deming talked about the outcome of a system is a let's just say there's randomness, with the outcome of the system. And you could also say that there's persistence in outcomes. So you could if you had an audience of people, and you ask them to flip a coin, and you said, you're looking for the people that flipped heads consecutively, entails consecutively, you would find after many flips, that there are people that consistently flipped heads or tails. And then you end up with Warren Buffett, and you have to ask the question, could Warren Buffett have succeeded? Only because of luck? And the answer to that, statistically, is yes, that is a possibility. Now, we'll never attribute it to that, because now we're explaining it, we're interviewing him. He's describing it all. And it makes so much sense that he won because of skill. But I also think that, you know, we, I think what I learned from Dr. Deming is never never overlooked the, the randomness and that type of thing. That's, that's out there. And so I just kind of think about that. And I tried to think about success and failure. The last thing I would say about it is that I, as I get older, and I get involved with different businesses, I find that a lot of my value is helping a young person, avoid failure. And they're focused on growth and success. And they're reading those success books. They're, they're being inspired by all those successes. But my job a lot of times, and I describe it as the difference between the CEO and the chairman, or CEO should be focused on growth, a Sherman should be focused on risk. And so what I tried to do is focus on risk reduction. And that's really what I take away anything else that you would add to that?

Ron Baker 28:46
No, I think that's a great point. It kind of reminds me what Steven Jobs he's thinking, the commencement address he gave to Stanford, he said, it's very easy to connect the dots after the fact. It's very difficult to connect the dots as you're going through it and time. And you know, we all develop narratives. I know Phil Rosen squad wrote a great book called The halo effect, talking about the survivorship bias. And I know Talib has written about that, and Black Swan, and Fooled By Randomness and all of that. And there's certainly some truth to it. But I think on a more philosophical scale, having on and I think this is one of the differences between an economist and accountant. Economists don't really talk about keeping a business around forever. They're not even interested in the survival of a business. They want to see a healthy marketplace, a lot of dynamism and a lot of failure, because after all, capitalism is a profit and loss system. And, you know, capitalism without loss, it's like church without hell. I mean, it doesn't work. And I just think that when you have all these experiments going on, there's something just besides randomness that's causing people like Jeff Bezos to rise up or Steve Jobs or others but it's a philosophical point probably Me,

Andrew Stotz 30:01
capitalism without loss is like church without hell. Or religion without religion without hell. Yeah, in fact, that's a fascinating, you know, topic where I think what's happening is people are expecting governments to, to protect them from loss. And they don't see that the long term impact of that is disastrous, so huge moral hazard. Exactly. And we're living through it right now. And we'll see the outcome. I mean, we're actually performing a really interesting tests and the long term impacts of that. And that's not just business, it's exposing yourself, to viruses to bacterias, all the different things that young people, for instance, are exposed to, that if they can survive it, they have a stronger immune system in the future. And we can see we're doing some interesting tests right now that will see whether people are getting healthier or less healthy in the future.

Ron Baker 31:03
Yeah, it's the anti fragile idea. Right? So yeah,

Andrew Stotz 31:07
anti fragile is, is fantastic, you know, original, great, you know, book, I love it. So based on what you learned from this story, and what you continue to learn, what action, would you recommend our listeners take to avoid suffering the same fate?

Ron Baker 31:23
Not be delusional, not not good and not go in and just confirm your biases and be full of yourself, like, oh, we can solve these problems. Business is a heck of a lot more complicated than I think most people think. And, boy, that's and make sure that you have partners who have skin in the game. One of the problems with what we did was we all had other sources of income. So this was like a part time gig. And man, I think you got to be like Cortes, you got to burn the ships, and tell your crew, hey, you're gonna fight and you're either gonna leave this island, or you're gonna die on it. Total skin in the game.

Andrew Stotz 32:03
That's fascinating. Because I know a lot of people out there thinking, I'll just do this on the side and make a side gig and then make that. So that's something to think about. Okay, so what's the resource of yours? You know, you've got a lot of different stuff going on, you've got books, and you've got the podcasts and radio, you know, all this different stuff going on, what would be one resource that you would say would be valuable of yours for the listeners to go to first?

Ron Baker 32:30
Wow, I guess it would depend on what they wanted to try and learn. But if it was pricing, it would be my latest book implementing value pricing, if they wanted to learn about subscription. And then I wrote that book, because I'm seeing this tsunami of subscription businesses, I really do think that, you know, teens, Oh, who's the founder of Zorro, which is a software company that runs the subscription business model. It's a platform. And he says, In five years time, we won't own anything will subscribe to everything. Now, I'm not going to go that far. I don't think that's correct. I think ownership is always going to be there. But what I do believe is in five years time, we'll have the option to subscribe to everything. And every business is going to have to deal with this. Because when you subscribe to something, you don't have that albatross of ownership, you don't have the search costs, and the transaction costs of finding the product and disposing of the product and having it fixed and repaired and the downtime, and all that hassle. If I subscribe to my refrigerator, and it breaks, they just come out and swap it. And it's convenience, it surfaces simplicity. It's a direct one to one relationship with the business. And I think that's why the subscription companies are doing so well. Because they know a lot more about their customers than the average business that is just more transactional.

Andrew Stotz 33:51
It fascinating because I just decided with my team that we were going to offer, we have a website called become a better investor.net. And we've been posting there for years, and we post a lot of our research and stuff. And then we have professional clients that we service where we provide research for investing in stocks and the markets and all of that stuff. And we decided what if we made a subscription out of this. And so we went out and we created a subscription to say you get access to us and our materials. And basically, we got 100 people signing up right off the bat that we call founding members. And now we're serving those founding members. And that's become a better investor community. And we're getting feedback from them. And we're trying to iterate through and try to figure out, but I can see that we have value to add through the subscription and that we can improve that value over time as we start to release the bigger priced ones and all that so is there any little tip that you would give me or anybody that wants to start a subscription based upon your expertise in that area?

Ron Baker 34:56
Yeah, you just basically you said one of the biggest things About the subscription business model, I think is really different is innovation has to be baked in. You know, Amazon Prime is constantly giving us new features, new things that we have access to whether it's music or magazines, or whatever. And notice that your price doesn't change. They're just constantly adding more value. Walt Disney called it plussing. They're constantly plussing the offer. And if there's anything I've learned about having exceptional pricing power, because his prices, were I'm not interested in penetration pricing, where you try and go into the market and grab market share. I'm interested in the apples of the world who you know, might have 20% of the iPhone market, or 30%, but captured 90 or 100% of its profits, I'd rather have that. And the only way to get uncommon pricing is to go to the market with an uncommon offering. So we got to up our game, we got to we got to make the relationship with the customer easy, we got to provide convenience, we've got to stop wasting their time. I think the biggest sin in today's world is to waste your customers time, make every interaction easy, make it simple to to access you whether it's digitally online, whatever it is. And we're starting to see a lot of businesses do this specially here in the States, we have these concierge doctors and direct primary care doctors who have completely redone how healthcare is delivered, you subscribe to them, and they're your general physician. And they do telemedicine they do texting, they'll email you, they'll come to your home your office, because they have fewer patients. Because that your patients, they always have enough capacity to handle anything that might come up. And that gives me peace of mind. It gives me a feeling of insurance that I'm going to be covered no matter what happens. And they're not nickel and diming. Me It's not a fee for service model as subscription model. And I'd rather be in a relational model than the transactional model.

Andrew Stotz 36:53
Man, you are firing me up. But we're at the end of the episode. So we have to consider what we talk about next time. But last question for you. What is your number one goal for the next 12 months?

Ron Baker 37:06
Wow. You know, I read? Are you familiar with Scott Adams, he's the author of Dilbert. Yeah, he wrote a fantastic book, I forget the name, I apologize. But he said, I gave up goals a long time ago. And I did too, even long before I gave Read Scott. But he said I don't have goals, I have portfolios of things that I do that. And I kind of love that idea. Because I'm pretty focused. I'm niched, I obviously serve the professional community. But my big, upcoming project, of course, is this book that's going to launch in November, and going out there and speaking about it and evangelizing about it, just like I did for value pricing. And that's going to be a tough sell. Because I've spent 20 something years teaching people value pricing. And now I'm saying this kind of blows that up. And this is a better model, and you should consider this. And so that's my next My next project.

Andrew Stotz 38:05
Well, that's exciting. I mean, I have a lot in my head related to that. But I want to, you know, advise for the listeners and the viewers out there to go to value pricing, first of all, and learn more about implementing value pricing from Ron's work. And just thinking about a friend of mine in particular that is struggling with his tax business, and how do I turn that either into a subscription model into value pricing, and I know he's going to benefit from that. So that's going to be a little gift I'm gonna send him. So fantastic. Fantastic. Well, listeners, there you have it another story of loss to keep you winning. If you haven't yet taken the risk reduction assessment, I challenge you to go to my worst investment ever.com Right now, and start building wealth the easy way by reducing risk. As we conclude, Ron, I want to thank you again for joining our mission. And on behalf of a Stotz Academy, I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Ron Baker 39:08
Now just thank you very much, Andrew. This has been a fun conversation. I've really enjoyed it.

Andrew Stotz 39:13
And likewise, and that's a wrap on another great story to help us create, grow and protect our well fellow risk takers. Let's celebrate that. Today. We added one more person to our mission to help 1 million people reduce risk in their lives. This is your worst podcast host Andrew Stotz saying I'll see you on the outside.