Greg Tirico

April 25, 2021

Episode #337: Interview with Jonathan Stark, Author — Hourly Billing Is Nuts

Greg Tirico

April 25, 2021

First, a bit about Jonathan Stark

Jonathan Stark is a former software developer who is on a mission to rid the world of hourly billing. He is the author of Hourly Billing Is Nuts, the host of Ditching Hourly, and writes a daily newsletter on pricing for independent professionals.

Ed’s Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I'm Ed Kless with my friend and co-host, Ron Baker, and folks on today's show, we are pleased to have with us our interview with Jonathan Stark. Hey, Ron.

Ron

Hey, Ed. How's it going?

Good. Good week here in Texas beautiful, we still have cool weather, which you know I love.

Ron

That's awesome, it’s beautiful here, too. Hey, listen, I'm really excited about this because this is way overdue. I think I've been on Jonathan's podcast two or three times maybe? And so I’m just thrilled to finally get him on our show and turn the tables on him.

Absolutely. I've only been on once, but my claim to fame is—it was episode five—and I believe, if I'm correct, I was the first ever guest. So let's get the particulars over with. Jonathan Stark is a former software developer who is on a mission to rid the world of hourly billing. He is the author of Hourly Billing Is Nuts. The host of Ditching Hourly and the Business of Authority podcasts. He writes a daily newsletter on pricing for independent professionals. Welcome, long overdue, to The Soul of Enterprise, Jonathan Stark.

Jonathan, I gotta tell you that your sample questions that are on your website basically suck for us, because I'm not gonna say what is so bad about hourly billing. I'm not gonna ask you that question, we're not gonna go there. We're gonna go right into the love fest portion of our program. Since we're all on the same side of this. I will give you a chance to talk a little bit about your background, but the first thing I want to ask you is, tell me about Fred, the story on your website?

So did you have resistance with some of those early customers who were like, “No, no, just give me your hourly rate?”

The statistics on that are unbelievable. I remember reading some of the Standish Group stuff on it. Alright, so at this point you would say that you're offering a fixed price. What led you then to value pricing?

We talked on your podcast about the Backward Bicycle and the absolute rethinking that you have to go through in your mind to shift. What I wanted to get to, though, is this. So you you've made this transition, you've now studied you're Alan Weiss, you're doing value-based pricing for your software consulting. Then what led you to the transition to say, you know what I want to do though, is I want to coach other people and help VeraSage, who I didn't know about at the time, bury the billable hour. Where was that transition?

All right, outstanding. Well, that brings us right to our break.

Ron’s Questions: Segment Two

Welcome back, everybody. We're here with the host of the Ditching Hourly podcast, Jonathan Stark. And Jonathan, I'm curious, you've been at this for a while, as you were talking about with Ed. And you're probably very familiar with the Crossing the Chasm diffusion curve, the early adapters and all that. Where do you think your sector is, the software developers and all the different sectors within that space that you work with? Where do you think they are on that curve in terms of getting rid of the billable hour?

That's awesome. We try and keep track of that for the different professional sectors. I think in accounting, we're actually approaching the early majority.

Law a little bit slower, advertising agencies are really adopting it at a good rate. So it's just interesting, like you were talking with Ed, the unlearning that has to take place is massive.

The other question I want to ask you about, because I think this is the real cancer, and that is the timesheet. I mean, we are what we measure, right? And if you're measuring yourself, like you were saying in the first segment, in six minute increments, and that's what you think you sell, how do you help or coach your folks to get rid of that timesheet, that measurement? And because there's all those defenses? Well, we needed to figure out if we're efficient, we need it for project management, we need it to do this or that.

Accountants have the same problem with the “I've got to know the time” because they want to check it after the fact. They've got this fetish about “We projected so many hours, now we want to compare it to actual.” It's crazy. I'm going to go off of the billable hour now, Jonathan, and ask you about this. You had Blair Enns on your show on February 9, 2021 [What Is Strategy?]. It was a terrific discussion about strategy, all the cliches about the definitions of strategy. It's one of those terms that when you ask people, and they have to really think about it, they don't really know what they mean by strategy. You know the typical answers, “It's knowing what not to do.” “It means having a plan, having a smart plan,” and all these things. And Blair's favorite definition—and he's got a weird hobby, too, by the way, he collects definitions of strategy. We've had Blair on the show [Episode #188], I love Blair. He's great. He's really brilliant. But his favorite definition of strategy is, “The idea that describes a journey to a position of advantage.” And I thought that was pretty interesting. But you have a very interesting, favorite definition. What's yours?

I love that definition. I especially like the surprise, and Blair even alluded to this in the conversation with you. It comes from George Gilder’s book, Knowledge and Power [Episode #60], it's his information theory of capitalism, which is information equals surprise. Creativity, and innovation always takes us by surprise. And that's why that definition is so great. And we've had on Rory Sutherland [Episode #267], and in his book, Alchemy, he talks about if your strategy doesn't have an element of surprise it's kind of worthless. He compares it to the military, you've got to have an element of surprise, otherwise, the enemy knows what you're up to?

It's really hard, because of all these definitions, like you say, many of them are not helpful. And then when you start parsing even the ones you like, you run into these walls. I'll give you mine favorite definition of strategy, and it comes from Jules Goddard [Episode #27 and Episode #315]. He wrote a book called Uncommon Sense, Common Nonsense. He’s a management Professor out of the UK, and I love this because it speaks to me; let me get your take on it: “Strategy is the rare and precious skill of staying one step ahead of the need to be efficient.”

What I love about it is it bakes in innovation. But like you said, if that's not the goal, if your goal is to maybe be the low-cost leader. But you know, I think this strive to be efficient is an innovation destroyer, innovation and creativity is the antithesis of efficiency.

Yes, that book [Good Strategy, Bad Strategy, by Richard Rumelt] is a bit dense, but it was a thought- provoking book.

We've only got about a minute, but I have to ask you about this, too. Pricers have a pretty interesting saying, “Innovate for growth, price for profit.” How do you think and advise your customers around innovation? And I'm not just talking about the new iPhone, I'm talking about innovation broadly. How do you think about it?

That's been my experience, too. We always talk about how you can innovate your language, you can innovate your sales approach, the questions you ask, your why conversation, can all be part of massive innovation. So, Jonathan, this is great, it’s flying by.

Ed’s Questions: Segment Three

And we are inspiring people today by talking to Jonathan Stark, who is the host of the Ditching Hourly and the Business of Authority podcasts. Jonathan, I want to throw you a change-up here. Ron said he threw you a curveball during the break. I want to throw a change-up. I'm a big baseball guy. What are your thoughts on subscription pricing?

The reason why I wanted to ask you about that is because of the nature of the customers that you have, which is software development. And oftentimes this is what I hear—I’m in an adjacent space, software implementation. But then we do have partners at Sage who also do custom development work as well. But the thing that I hear from them is, “This is a one-off thing, it’s just a one-off thing. They aren’t going to subscribe to me to do just this one-off project.” What's your reaction to that?

That's why I wanted to talk to you about what you are advising the people that you work with now to try to adopt a subscription model, where possible, and if so, what has been the reaction from the people you're working with?

Thanks for that. Just to give you a quick introduction, Ron and I are just relaunching our Patreon site with additional subscription offerings. So that was a great tie in, and I wanted to ask you this. I was poking around your website preparing. Are you going to move some of the stuff that you have right now as one-offs, which includes your book, you have three levels of buying your book, and there's some content. Are you going to move yourself to a subscription model on the content you offer now?

If you haven't read Tien Tzuo’s book, Subscribed, we highly recommend it. He's been a guest on our show as well [Episode #230]. What you're describing is what he calls “swallowing the fish,” because it's this graph that happens when your expenses go up, and your revenue potentially goes down at the same time. And then they cross somewhere in the future, but you want that future to be as quickly as possible.

You’re figuring out how to swallow the fish. Well, that's great stuff. We're up against our last break.

Ron’s Questions: Segment Four

Welcome back, everybody. We're here with Jonathan Stark of the Ditching Hourly podcast, which I highly recommend. You put out great content on that show, Jonathan, every week, it's really good. Even your short, little three minute ones are incredibly thought provoking, so I congratulate you, it's just a great job. The late Andy Grove, founder of Intel, said, “Disruptive threats come inherently not from new technology, but from new business models.” How do you deal with business model innovation in your coaching? I know we think, for example, I work with a lot of accountants, [and we think they] only have one business model. But that's not necessarily true, we have a range that we can pick from. How do you deal with business models?

You've probably heard about the firm Pilot, which is an accounting firm that Jeff Bezos’ family office recently invested $300 million in, along with some other venture capitalists. That puts the valuation of that accounting firm, with about 1000 customers, at $1.2 billion, with a B dollars. That makes them the eighth largest accounting firm in the country, as most accounting firms are valued at one times revenue. I know you had John Warrillow on your show talking about his book Built to Sell, and we had him on to talk about his book, The Automatic Customer, which is his subscription book [Episode #327], which we also recommend highly. What [Pilot] tells me, Jonathan, even if you don't want to sell your business, the market is screaming at businesses, “Hey, we value businesses that have annual recurring revenue at much higher multiples than even value pricing.”

Oh, you can swallow the fish. We're finding the fish to be more like a minnow in a lot of firms, rather than a big Marlin. We've only got about four minutes left. You have a concierge doctor, it’s one of the reasons I came on your show, because I think that is the model for accountants and lawyers going forward. Tell me about that experience. And I want the psychological reasons that you see incredible value, because those are the hardest to get on a spreadsheet.

Well, that's awesome. Jonathan, unfortunately, we're at the end. And we really want to thank you for coming on. It's been an honor to have you on here. Keep up the great work over at Ditching Hourly. Ed, what's on store for next week?

Ron, we have John Tamny, author of They're Both Wrong.

Ron

Yes, and author of When Politicians Panicked. Looking forward to that, I'll see you in 167 hours.

Ed’s and Ron’s Appearances on the Ditching Hourly podcast:

Burying the Billable Hour with Ed Kless, October 17, 2016

The 8 Steps to Value Pricing with Ron Baker, December 8, 2016

The Ethics of Hourly Billing with Ron Baker, May 22, 2017

Ron Baker on The Subscription Economy, December 17, 2019

Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.

This week is bonus episode 337 - New Tiers and the USPS

Here are some links discussed in the bonus episode:

Click the “FANATIC” image to learn more about pricing and member benefits.

Greg Tirico

April 18, 2021

Episode 336: Interview with Leah Power, Institute of Communication Agencies (ICA)

Greg Tirico

April 18, 2021

First, a bit about Leah Power

A proven results-oriented finance and operations executive, Leah has 20 years of experience supporting agency leaders develop and achieve strategic plans that lead to consistent growth and award-winning client work. She has advised C-level execs at the operational, regional and global levels on issues of financial leadership, agency acquisitions, operating system implementation, information technology integration, agency transitions, management of Capital projects, as well as fee, scope and contract negotiations. Her agency experience includes time most recently at Grey Canada as Chief Operating Officer plus financial leadership roles at Grey SF, DDB Canada, Downtown Partners, Echo Advertising, and Rapp Collins Worldwide.

Ron’s Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I’m Ron Baker, along with my good friend and VeraSage Institute colleague, Ed Kless. On today's show, folks, we're talking with Leah Power from the Institute of Communication Agencies. Hey, Ed, how's it going?

It's good Ron. It's cool in Texas and it's mid-April, so I will take every cool day I can continue to get.

Ron

It's nice here, too. So I'm excited about today's guest. I know we both read the report that she edited. And let me read her Bio so we can get her in here. A proven results-oriented finance and operations executive, Leah Power has 20 years of experience supporting agency leaders develop and achieve strategic plans that lead to consistent growth in award winning client work. She's advised C-level executives at the operational, regional and global levels on issues of financial leadership, agency acquisitions, operating system implementation, and a whole bunch of other things. Her agency experience includes time most recently at Grey Canada as Chief Operating Officer plus financial leadership roles at Grey SF, DDB Canada, Downtown Partners, Echo Advertising, and Rap Collins Worldwide. Leah Power, welcome to The Soul of Enterprise.

I got to meet you when you brought me up to do a talk to the ICA, and that's where I met Blair Enns [Episode #188] for the very first time in my life, as we had corresponded a lot but I never got to meet him. So I credit you for that meeting. And also, I met David Meikle, who we’ve also had on the show [Episode #206].

It was fascinating to meet David because, as you know, he spent time working in Russia with Ogilvy, wasn't it?

He told me just so many stories about what it was like to work in Russia. It was just great. But Leah, how have you been doing this year? It's been a crazy year.

How have agencies been doing up in Canada? We hear from Tim Williams a kind of lay of the land when we talk to him. But how are they, in your field of vision, doing this past year?

It seems like a lot of the professions are doing okay. I think this whole thing has brought us closer to the customers and probably deepened the relationship a little bit. We certainly see that in accounting, where all of the loans and bailouts ran through the accounting. So the accountants were in great demand for the past year. You published the QBS Agency Search Guide back in 2019 and it was authored by Cal Harrison, and you edited it. Why is it time to change the agency selection process, which is what this report is about?

That's a great point. You do a wonderful job in the report of tearing down the price-based Request for Proposal [RFP] process. And you've probably heard us talk about the author of Let's Get Real or Let's Not Play. His name is Mahan Khalsa. He's got a line in the book, he thinks dysfunctional buying processes resulted from dysfunctional selling processes. And I can't think of anything more dysfunctional than the billable hour. And that is something that we as professionals foisted onto the customer; the customer didn't ask for it. And Tim Williams has a great saying, “If you want to avoid procurement, stop selling things that can be procured.” What do you think about that?

And you landed on this Qualifications-Based Selection [QBS] process, which was developed decades ago in engineering and architecture, is that right?

There's a derivative of Murphy's Law that I like. When a pilot gets into the fighter jet. [“Never forget that your weapon is made by the lowest bidder.” ––Law Number 20 of Murphy’s Laws of Combat]. You want the person or the firm that can build it the best, like you say. What I found fascinating about QBS is it doesn't initially evaluate price. But I'm sure Ed's going to take you further into this conversation but unfortunately we're up against our first break.

Ed’s Questions: Segment Two

We are with Leah Power, the editor of the QBS Agency Search Guide. And Leah, Ron set me up perfectly for what I wanted to talk to you about. I'm just going to quote a little from the report. We'll talk about each of these. In the report it says, “While it appears to be a reasonable and balanced procurement process, the typical price-based RFP has many issues, many of which are not immediately obvious, but real and costly nonetheless.” And then you talk about some of them and illustrate some examples. I'd like you to give me a chance to talk about each of them. But the first one I think is probably the most insightful for me as an outsider to the agency space, is that price often becomes the deciding factor, even when it is weighted only as little as five or 10%.

That brought up a question in my mind as I was reading through this. As you know, one of the things that Ron and I advocate for is giving the customer choices. And what have you seen, if any, the reaction of procurement when you provide in your response three choices, rather than one particular price? What happens?

That's the axiom of the presenting problem, right? The presenting problem isn't necessarily the real problem that the customer has, or even thinks they have. But is there a positive or negative reaction, or neutral reaction, among procurement people when an agency provides choices when they're not asked for them? I'm just really curious about that?

The second one in the list has got to hit people like a ton of bricks. And that is, “Suppliers are incented to focus on providing the least [viable], instead of the most valuable solution.”

I'm skipping a little bit ahead here, but I think it's an appropriate point to bring up. There's a story in here, where the author was speaking at a conference and told them that they needed to disclose a budget for procurement. Someone said, “But if I disclose my budget, that's all we're going to get is the bids in line with the budget.” And he said, “Well, that's a huge difference, because that way, they're all working toward the same thing. And that way, you'll get to find out who's going to be the most innovative within that constraint of the budget.”

Yes, it's critical. I'm skipping to the third because you dealt with it, which is about the time-consuming process. I'm going to the fourth in this section, which is “The most qualified firms are the least likely to respond to a price-based RFP.” Yeah, that's what I want. Give me the crappiest people, please. That's what I'm looking for.

And the last one—we’ve only got about a minute left—is that “RFP projects begin agency relationships as adversarial while the QBS is far more collaborative.” And by the way, this is absolutely true in just about every professional space that I've worked in, especially with regards to say ERP systems, which is my background. Why are we starting our relationship off on an adversarial basis? So talk briefly about that.

Outstanding. Well, we're up against our next break.

Ron’s Questions: Segment Three

Welcome back, everybody. We're here with Leah Power from the Institute of Communication Agencies. Leah, I wanted to ask you about in QBS, there's no spec creative. And this must be an objection you hear all the time from the client side, “Well, how can I evaluate them without seeing their creative work?” But creative work done, as you say, without client direction really has no value?

Ed mentioned in your report you talked about the best agencies might not even get involved in a price-based RFP. Can you imagine the day, because this is my dream world, where agencies would charge for an RFP, because competition is useful and valuable to the buyer. Why shouldn't they charge for it?

When you talk about how QBS lowers costs, fosters communication and collaboration, and it's a true relationship, one of the greatest pieces of empirical evidence to back that up, is you cited a 2009 American Public Works Association and American Council of Engineering Companies study that said, most projects have about a 10% change order cost of the total project. Whereas in QBS, it's 3%. I know, Ed, you run around with some statistic that's mind blowing about scope creep, and cost overruns. But this seems to be really good at controlling that. Do you think, Leah, that's because there's better communication and better diagnosis being done up front?

By the way, one of the things I thought of, looking at the list of all the different advantages of QBS: It lowers cost, fosters communication, all these different things that it does. And I was thinking, because QBS is in 47 States here in the USA, what happened with the Obamacare website? I wonder if that went through some QBS process because that was a disaster from start to finish, but that's an unfair question, it’s just commentary on my part. So this report has been out there for a couple of years. Obviously buyers and agencies have to have to buy into it. But I would think there's more onus on the buyer’s side, the client side, than the agency side, since they control this whole RFP and agency search process. Have you seen success in getting some clients, some advertisers, to adopt this model?

It's a great point. Another idea that's been around for a long time, maybe not as long as QBS, is value pricing. In the last couple of minutes that I have you here, I wanted to ask you, how has that been going with agencies? Do you see more agencies adopting what Tim Williams and Blair Enns and what I've been talking about, what we've talked about on the show all this time?

Great point, the billable hour does commoditize the relationship, that's one of the things that's most pernicious about it. It just turns everything into commodities, like you said. But Leah, unfortunately, I'm up against my last break with you, and Ed's going to take you home, but I just want to say thank you so much for appearing on The Soul of Enterprise, it's been a great discussion. And we're going to link to where folks can get a copy of this report (ica.ca/qbs). And if you're at all involved in RFPs, procurement, you need to take a look at this. There's some really fantastic ideas that, by the way, apply to all professions, not just agencies. I can see accounting firms and law firms learning some useful things out of this. So thank you for all of that.

Ed’s Questions: Segment Four

We're talking with Leah Power. And Leah, as you and Ron were talking toward the end of the last segment, this thought came to my mind: We could take this report and cut and paste it and use it to buy accounting software. And it's almost worse, because in the mid-market space that many Sage partners work in, they're not dealing with procurement. It's worse. They're dealing with finance, directly. I did want to ask you this. There's a whole section you have on creating your QBS document, which is great. We don't have time to go through each of them. One I wanted to ask you to explain is you say that price compliance is mandatory but not evaluated. Talk a little bit about that.

And number seven in this list is never request free consulting in a proposal. You talked a little bit about that with Ron, but when I read that section I was immediately reminded of the great scene that Ron and I have played at many presentations with Don Draper and Conrad Hilton, from Mad Men. [Connie’s] basically asking for one for free? And Don Draper has that great line, which I've encouraged others to use, “Connie, it's my profession. What do you expect me to do?” And I really love that, and I really wish that far more professionals would have the self-esteem to be able to say that and stick to their guns about it. They think they have to give away something for free in order to prove their worth. And I think if you withhold it, that is what is actually proving your worth, which is what the great Don Draper does.

We've got about four minutes left. And you and Ron were talking during the break about the possibility of bringing a subscription-based pricing into the mix here. And you said that you were a big fan. I want to hear more about that. Do you think that would be another potential either solution to this problem, or tool in the in the belt of agencies, to be able to use subscription pricing for some of this stuff?

It's similar in a way to the space that I'm in with ERP software, and what most buyers think they're buying is a transaction, they're buying the implementation of the new system, or they're buying some creative work from an agency. But the good ones know that, long term, it's more you're buying a relationship, not just the initial thing that the RFP was sent out for to begin with.

Well, outstanding. Leah Power is the editor of the QBS Agency Search Guide. We're so happy to have had you on The Soul of Enterprise, Leah, we hope you come back another time.

And Ron, what do we have coming up next week,

Ron

Next week. And we have [Jonathan Stark, host of the Ditching Hourly podcast], which is just fantastic.

Bonus Content is Available As Well

This week is bonus episode 336 - More QBS and why car companies blew it on subscription

Here are some links discussed in the bonus episode:

Click the “FANATIC” image to learn more about pricing and member benefits.

Greg Tirico

April 11, 2021

Episode 335 - Interview with Alex Nowrasteh

Greg Tirico

April 11, 2021

First, a bit about Alex Nowrasteh

Alex Nowrasteh is the director of immigration and trade at the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies. His popular publications have appeared in the Wall Street Journal, USA Today, the Washington Post, and most other major publications in the United States. His peer-reviewed academic publications have appeared in The World Bank Economic Review, the Journal of Economic Behavior and Organization, Public Choice, and others. Alex regularly appears on Fox News, MSNBC, Bloomberg, NPR, and numerous television and radio stations across the United States. He is the co-author (with Benjamin Powell) of the book Wretched Refuse? The Political Economy of Immigration and Institutions (Cambridge University Press, 2020), which is the first book on how economic institutions in receiving countries adjust to immigration. He is also the co-author (with Mark S. Krikorian) of the booklet Open Immigration: Yea and Nay (Encounter Broadsides, 2014) and has contributed numerous book chapters about immigration to various edited volumes.

Ed’s Questions: Segment one

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I’m Ed Kless with my great friend and co-host Ron Baker, and folks, on today's show we are honored to have with us from the Cato Institute. Alex Nowrasteh.

Ron, how you doing?

Ron

I'm great. I always love having Cato guys on. They're wickedly smart.

Absolutely, looking forward to having Alex on. And a quick shout out to my friend Kathleen Stokes, who is the one who connected us with Alex. She worked on the Joe Jorgensen campaign and ran across paths with Alex, I think in Michigan if I've got that correct, but maybe not. I'll have a talk about that with Alex. Let me get the bio out of the way and get right to the interview. Alex Nowrasteh is the director of immigration and trade at the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies. His popular publications have appeared in The Wall Street Journal, USA Today, The Washington Post and other major papers and publications in the US. He is the co-author with Benjamin Powell of the 2020 book, Wretched Refuse: The Political Economy of Immigration and Institutions, which is the first book on how economic institutions in receiving countries adjust to immigration. Welcome to The Soul of Enterprise, Alex Nowrasteh.

Well, first off, Alex, congratulations. I understand you're a new dad.

Well, congratulations again. That's awesome. Since you bring up children, I'm going to go right to one of the first things that I posted of yours back on Facebook, and through the magic of logging my Facebook posts and doing a name search on it, I came up with something that you posted back in July of 2014. It was a podcast that you did with Cato Daily. The podcast, which title was “Unaccompanied children in limbo.” I don't know if this is ringing a bell for you, Alex, this topic seems to still be a problem. Has it changed? Or could you just replay that 2014 podcast, and we would be good to go on it.

And obviously, in you calling for different policies resolutions back then I assume that some of them are still in order? And the question is, why haven't we dealt with this, if this is a constant crisis? My perception—and I don't want to be too cynical—is that this is a great fundraising opportunity for both sides. So that's why we don't fix immigration.

Well, thank you for that. I wanted to address that first. It's obviously currently in the news, and we're dealing with it, but I'm going to take you a little bit back now, we've got five minutes left in this first segment, roughly. I've run for office before as a Libertarian, I'm in Texas, so this does tend to come up. And one of the things that I've come across is that immigration is actually not mentioned in the Constitution, at all. The word naturalization is used, and naturalization—my understanding, and correct me if I'm wrong—is the process of becoming a citizen. Whereas immigration is the entry into the country. In my view, especially if you're a strict Constitutionalist, shouldn't that mean that immigration is really an issue for individual States to discern how to handle, and what would be wrong with going back to that and then let the federal government decide who is and who is not a citizen.

And correct me again if I'm wrong, and I'm sure I heard this from you on the various podcasts that I listen to, but Canada does do immigration by Province, correct? Or there is at least some authority over immigration by Province, and it seems to work fairly well for them.

I just think it would make a much better system. From my perspective, like I said, it gets local control back to where it’s needed. If you need more agricultural workers, you let in more agricultural workers, it just makes so much more sense. I think there are two things from Canada I think we should import, maybe more, but at least two. One is their immigration policy, and two is the privatization of air traffic control. Both things that I think they do better than us. But we are up against our first break.

Ron’s Questions: Segment Two

Welcome back, everybody. We're here with Alex Nowrasteh, the Director of Immigration and Trade at Cato Institute. Alex, I grew up on The Ultimate Resource, and The Economic Consequences of Immigration by Julian Simon, which had a profound influence on me, and George Gilder who said Castro set out to build the world's greatest city, and he did so, in Miami, Florida. These were all pro- immigration. I mean, without immigration, we wouldn't have been able to build the bomb and then the war, we wouldn't have got Hollywood. According to what I've read, half the companies in Silicon Valley had been founded by immigrants. Is there an Einstein Effect? You hear this argument, or at least I used to hear this argument from the right, that, hey, if we get one Einstein in, one incredible founder, a Google Sergey Brin, someone like that. And it pays for a lot of costs that immigration may bring with it. Is that still talked about?

And not that college is the only way to become an entrepreneur. In fact, I think most great entrepreneurs probably didn't go to college. But that said, the people that are here in college and graduate, shouldn't we make it easier for them to stay here? It seems like we make it really difficult.

And then when you get into the whole illegal crossing, and the argument, “Oh, they're taking our jobs at the low end. And they're driving down wages for the unskilled worker.” I look at this stuff, and yeah, I might say there's some affect there. But isn't there a grand fallacy here, the Lump of Labor Fallacy, that there's only so many jobs (a fixed number of jobs in the economy).

Alex, one of the things that I've learned from Thomas Sowell is in economics, there are no solutions, there's only trade-offs. And Thomas Sowell is not an open immigration economist. I'm sure you're familiar with some of his work. He takes it to task, and he said, “You can't talk about immigration in general, because there's no such thing.” And he kind of takes you around the world and proves this. And basically says there are no solutions to this. There's only tradeoffs, the best economists can do is ask politicians the questions that they're going to need to answer. What's your take on Sowell’s work?

Well, I think he would say—and I don't want to try and speak for him, we did have him on the show. And I did ask him this question about immigration. But one thing he writes about, and basically it's in his book, Applied Economics, if you want to see where he really goes into this topic. Then he's got a scholarly Trilogy as well, that gets into immigration, migration, and culture [Migrations and Cultures, Race and Culture, and Conquests and Cultures]. But he said this, in equating human immigration with trade. He said, when you buy a Toyota and the Toyota crosses the border, it doesn't have little Toyotas. And it doesn't bring a culture, and it doesn't demand the new country accept its language. And it comes with its own culture, which affects behavior. It's not simply a movement of people. And I think he's also worried about the cultural impact, the crime is part of it, but just the culture, kind of the same point that Samuel P. Huntington makes, and I wanted to ask you about his work as well, because he's brought up some of these cultural and spiritual issues that don't really relate to the GDP and some of the economic impacts that we normally talk about around this issue.

And like you say, our culture is so ubiquitous and overwhelming in this country how can you not adapt to it.

I like that. Well, Alex, this is great. Unfortunately, we're up against our break.

Ed’s Questions: Segment Three

And we're back on The Soul of Enterprise with Alex Nowrasteh. Alex, great segment with Ron. I was waiting for him to spring the Sowell on you. When we were prepping for the show earlier he said he was going to do that. So I was really interested in your answer. But I'd like to take you through some of the cliches that are still out there. The first one: illegal immigrants are, by definition, criminals.

You anticipated my next question. So I can go on to the third question, which is—and I love this, it is my all-time favorite, and Ron alluded to it earlier—"Illegal immigrants simultaneously take away jobs and have come here just to collect welfare.

So wait, there's not a box with my name in it that has all my money that I've been sending in? This is great stuff. And what I have heard, and this is kind of interesting to me, the argument, “Well, they come and they use our schools.” And I'm like, isn't educating them a good thing? Because then they go on and like you said, produce more stuff here. I never quite understood that, and what percentage of the school system is illegal immigrants? It's not that tremendous, I can't imagine it is, anyway.

We have about one minute to the break. One of the things when I was running for office that we often talked about—to allude to Texas again—is we don't have a state income tax, but we do have a sales tax, which people who are legal or illegal pay into that system, whereas Arizona does not, they have an income tax, and that's where they fund it. And so there's clearly, I think, more of an immigration problem in Arizona because of the state tax law. Would you agree with that as well?

Great stuff, Alex, and we're up against our last break.

Ron’s Questions: Segment Four

Welcome back, everybody. We're here with Alex Nowrasteh talking about immigration. And Alex, Samuel P. Huntington makes this point, which I find interesting. He says, you hear the partial truth, as he calls it, that “we're a nation of immigrants.” But he draws a distinction between settlers who form new societies, and then immigrants who come later who were attracted to those societies. How do you see that? Or how do you think about that?

Yes, [Milton] Friedman's question, “So what?” I know you're a Southern California boy, and I’m Northern California, born and raised here as well. And one of the things that frustrates me about this whole topic is the caricatures and the cliches thrown around, like we're a nation of immigrants. How do you specifically answer this, I'm sure you've heard this a million times: “If you want to see the effects of illegal immigration, look at California, a red state up through 1998 and now look at it, it’s a complete economic basket case in a lot of respects.” What's your response to that?

Alex, if you were in charge of immigration, how would it work? What would you do? I know you'd refuse that job, but if you were in charge?

Excellent. Well, Alex, thank you so much. This has been an honor to be able to talk with you. Thank you so much for appearing on The Soul of Enterprise. Ed, what do we have coming up next week?

Next week, Ron, we have Leah Power from the Institute of Canadian Advertisers to talk to us about her work.

Ron

I think it's the Institute of Communication Agencies, actually. Well, I’m looking forward to it. I'll see you in 167 hours.

Bonus Content is Available As Well

This week’s is bonus episode 335 - More on immigration and Guest Garrett Wagner

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Greg Tirico

April 4, 2021

Episode 334 - Interview with Dre Baldwin

Greg Tirico

April 4, 2021

Dre Baldwin’s Biography

Dre Baldwin is a graduate of Penn State University and had a nine-year career as a professional basketball player. He’s a noted expert in discipline, confidence, mental toughness and personal initiative. He authored 27 book and holds a YouTube Silver Play Button (100,000+ downloads). Today, he makes it easy for entrepreneurs to have consistent mental toughness and confidence to deliver their best, mentally and physically, even when they least feel like it. Learn more at www.workonyourgame.com and www.dreallday.com.

Ron’s Questions: Segment One

Welcome to The Soul of Enterprise: Business in the Knowledge Economy, sponsored by Sage, transforming the way people think and work so their organizations can thrive. I’m Ron Baker, along with my good friend and VeraSage Institute colleague, Ed Kless. On today's show, folks, we've got the pleasure of interviewing Dre Baldwin. Hey, Ed, how's it going?

Ed Kless

Ron, it's going great, baseball season is back upon us. That makes me happy, of course. Unfortunately, my New York Mets have been COVID’d out because the Nationals ended up with the Rona again. So I have to wait until Monday. But other than that everything is great.

Ron Baker

I’m looking forward to today we this. Dre Baldwin is a graduate of Penn State University and had a nine year career as a professional basketball player. He's a noted expert in discipline, confidence, mental toughness and personal initiative. He's authored 27 books, I feel like a piker Ed, and holds the YouTube silver play button, which means he's got over 100,000 downloads. Today, he makes it easy for entrepreneurs to have consistent mental toughness and confidence to deliver their best mentally and physically, even when they least feel like it. You can learn more about Dre at www.workonyour game.com Dre Baldwin, or Dre all day, welcome to The Soul of Enterprise.

You shot a three minute video to both me and Ed, as a way to get on the show. I have to tell you, it was one of the most innovative ways we've ever been asked to have a guest come on the show. So we had to have you on. So it's an honor that you're here.

I've been dying to talk about your story, there's so much to talk about. But one of the things I gleaned from browsing your website this morning is you've always been athletic. You finally make the high school varsity team, basketball team, as a senior but you sat on the bench all year. You didn't make the NCAA team, but then you succeeded at the professional level. Dre, how did you not get discouraged?

That's why you should feel right at home here because we're contrarians as well.

So you had a nine-year professional basketball career, you played in eight countries. Which league was that?

You name some of the countries, Lithuania and Germany, Mexico, did you have a country that you liked best or saw things that you wanted to go back to?

Dre, what were the fans like, compared, to say, the USA?

Even before you started to play pro, you started building your personal brand, blogging and going on YouTube, and now you're involved with marketing campaigns with Nike and Wendy's and a whole bunch of others. You did this all with no advertising. What was your motivation to share so much knowledge, because you have a ton of great content on your website—that’s free?

That's phenomenal, because as I was going through all of your content, you share the same philosophy that Ed and I have, which is we give away our knowledge. And the philosophy is if you give it away, then you have to replenish it. So you're always at the contrarian edge, or the cutting edge. You seem to share that philosophy.

You're an accomplished speaker, I give you credit because you stand and when you present, you command the audience, and I'm really interested in what you have to say. In 2009, you formed the Work On Your Game, Inc. You've got over 400 products. Again, you've written 27 books. Tell us about that journey. I know we've only got a couple minutes, so it's a little bit unfair, but tell us about the journey, of starting this enterprise.

That's awesome. Well, Dre, this is flying by. We're already at our first break.

Ed’s Questions: Segment Two

And we are back on The Soul of Enterprise with Dre Baldwin, #workonyourgame. Dre, I wanted to ask you about mental toughness. You said earlier that you were a little bit of a late bloomer with regard to basketball. When did you become aware of your mental toughness, and how were you able to use it better than other people to your advantage?

That’s one of the things that continues to amaze me about professional athletes at any level, but especially those that get to play professionally. We see the games, right? We see the games that are starting at eight o'clock at night or whatever. But what we don't see is the sweat out there on the practice court for hours and hours every single day. Is that where the mental toughness really comes in? I mean, you’ve got to be mentally tough in the game. The mental toughness to just continue to work at the, in football they call it the block and tackle stuff, the very basics over and over and over again. Talk a little bit about that.

Did you see the ESPN documentary on Michael Jordan, Last Dance? Have you had a chance to see that? The basketball story is obviously well known and the mental toughness that Michael Jordan had but the thing that I really got from that was—it wasn't a surprise to me—how focused he was when he played baseball. Like how intense he was, he was just as intense trying to play baseball as he was playing basketball. And that just blew me away, the incredible tenacity that it takes to do that.

And we saw that with Tim Tebow, too, with my Mets for the last couple of seasons that he was able to just even make his way through the minor leagues to where he got was amazing. Let's bring it to business now, what are the things that you take away from the mental toughness that you brought to your basketball playing career, and how do you apply them in the business setting now?

How about the application to teamwork? I mean, there is a great video, I have to see if I can dig it up. It was Peter Drucker and, I think, Magic Johnson, going back and forth about basketball versus teams in business. And they're talking about the same thing. What did you learn from the application of playing a team sport to the business world, because I know you have a team because we've interacted with a couple of folks on your team who have been sending us emails and stuff. So talk about that aspect of the team part of business.

That's a great point. One of my favorite stories and this was, I think, about seven or eight years ago, there was a major league baseball game. One of the guys on the bench, who’d been riding the bench most of the year, noticed that a runner missed second base. And he was the only one other than him and the umpire who noticed it. They actually called an appeal play, and they got the guy out at second, but only because the guy on the bench was paying attention to what was going on on the field. I just see that as such an important role, being part of the team even on the bench. I coach my son's team. And one of the things that I would tell the kids because I was a bench coach was, “I'm going to teach you how to be on the bench.” We would go through that process.

That's great. I think my coaching days are done. My son is now in his freshman year in high school, and he's beyond me from a skill standpoint, which I'm pretty happy about. This is, as Ron said, flying by. We're up against our second break.

Ron’s Questions: Segment Three

Welcome back, everybody. We're talking with Dre Baldwin from WorkOnYourGame.com. Dre, I was listening to some of your talks this morning, and you said something I thought was incredibly profound that I want you to explain. You said, “To be the Best You, it's the permission you give yourself to not conform to who you've already been up to this point.” Explain that.

And along those same lines, it might have been the same talk or a different one, but you asked the audience, “How many times have you been too confident, too arrogant, too cocky? And compare that to how many times you didn't go far enough, you stopped short.” It's like we place our own limitations. And then you say, “If you're going to make a mistake, which one do you want to make?”

Then you said, “The difference between the amateur and the professional is changing the word If to Until. I thought that was brilliant, too.

Do you think, Dre, we learn more from success or failure?

One of your podcast episodes I listened to this morning was “mental errors are unacceptable.” We love to quote Yogi Berra’s, “We made the wrong mistakes.” Why are physical errors okay, but mental errors are unacceptable?

You've got a new product coming soon, called Raise Your Value. And Ed and I are pricing consultants, so we spend a lot of time on value pricing. You say it's time to up your worth and time to start demanding and getting it from the marketplace. Can you share anything about that product? Or at least your philosophy behind it?

That's so true. And it's part of your contrarian philosophy too, because the last thing we want is our dumbest competitors setting our price.

Dre, I have to ask you this, should NCAA players be paid?

Excellent. That's one of the best explanations I've heard, thank you for that. Unfortunately, we're up against our next break.

Ed’s Questions: Segment Four

We are back with Dre Baldwin. The website is www.dreallday.com where you can look at an unbelievable amount of free content. Plus, take a look at some of his Master Classes and what he's got coming up with for you in the next couple of months. We look forward to looking at that as well. Dre, I wanted to just jump back quickly, since Ron stole my question about the NCAA. I wanted to jump back quickly and ask you about the whole confidence thing, and contrast confidence with arrogance. Because, like you, I think there's a missing element of confidence for a lot of people. And I think it's because people are afraid to be perceived as arrogant. That's what they're worried about. Arrogance is a whole other level. And it's not confidence. And I try to explain that those two things are not the same. But unfortunately, they're perceived as the same by a lot of people.

I believe it was Pete Rose, who's not the best role model admittedly, but he said something like, “It ain't bragging if it's true.”

Well, I always say he bet on his own team. It wasn't like he was betting against his team, he bet on his team to win. That’s confidence.

You're talking a lot here about what I see is a lot of folks are envious of others. We hear a lot talked about inequality in the world today. And there certainly is. But Ron and I are big believers what we absolutely need is equality of opportunity. It doesn't guarantee equality of outcome. And if you're looking for equality of outcome, that's not really a world that I want to live in. What are your thoughts on that?

Yeah, I've heard it put this way: At the Olympics, the bronze medalist hates the silver medalist and the gold medalists. The silver medalist hates the gold medalist, but the person who finishes 15th is just happy to be there.

I absolutely love the phrase “Ethical, unfair advantage.” I think that is a great phrase because you're making a connection here of something you said earlier when you were talking about the hedgehog principle, right? The Venn diagram, it's almost the same question, isn't it? That's what you're looking for in the intersection of that Venn diagram.

All right. Well, we've got only got about a minute left. I know you can't talk about it officially. But what what's coming up for Dre?

All right, @Dreaallday and #workonyourgame on Twitter, Dreallday.com is the website, any place else somebody should go to try to find your, Dre?

Outstanding. Dre Baldwin this has been such a pleasure. Really happy to have you on the show today. Ron, what do we have coming up next week.

Ron Baker

Next week, we're going to be talking to Alex Nowrasteh from the Cato Institute about immigration.

Ed Kless

I look forward to that. He's a really brilliant mind. Well, I'll see you in 167 hours.

Bonus Content is Available As Well

This week’s is bonus episode 334 - Warren Newsom Buckley and Rothbard

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Click the “FANATIC” image to learn more about pricing and member benefits.

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