Noah Kagan's Insights on Entrepreneurship, Negotiation, and Building a Successful Business

Added: Jan 24, 2024

Starting a Business with Limited Resources

Kagan talks about his experience of starting AppSumo from a basement with just $48. He emphasizes the importance of starting low-cost, low-risk businesses and shares his playbook for creating a million-dollar business in a weekend. He encourages people to ask for discounts and practice negotiating, even for small things like a cup of coffee, to build confidence and develop the skills needed for entrepreneurship.

Negotiating Prices and Deals

Kagan provides tips for negotiating prices and deals, emphasizing the importance of understanding the other party's needs and finding a win-win solution. He suggests being positive, having a good experience, and being clear about the value you are negotiating for. Kagan also shares a personal example of negotiating a discount on a sauna by using the power of silence and persistence.

Building Tolerance to Discomfort

Kagan encourages people to take on small challenges to build their tolerance to discomfort. He suggests asking a friend to invest a dollar in their business as a way to practice and build confidence. He also recommends knocking on doors and engaging in conversations with strangers as a way to practice persuasion and sales skills.

The Importance of Asking

Kagan emphasizes the importance of asking for what you want, whether it's a discount, investment, or support. He shares examples of how asking for small things can lead to bigger opportunities and success in business. Kagan also highlights the concept of "life punishes the vague wish and rewards the specific ask," emphasizing the importance of being clear and specific in one's requests.

Lessons from Personal Experiences

Kagan shares personal experiences of practicing what he preaches, such as asking for discounts and negotiating deals. He highlights the value of learning from these experiences and building confidence in asking for what you want. Kagan also emphasizes the importance of making business fun and enjoyable, even when taking on challenges and practicing negotiation skills.

Setting a Singular Goal and Tracking KPIs

Kagan emphasizes the importance of having a singular goal for the company, such as achieving a specific revenue target. He mentions that at appsumo.com, their singular goal is to achieve $45 million in net revenue for the year. To track progress towards this goal, they use a daily pulse system that provides key metrics related to traffic, conversion rate, and average order value. This allows them to focus on the core numbers that impact their main outputs.

Feedback and Top Three Bottom Three

Kagan discusses the value of feedback and the practice of asking for top three things done well and bottom three things to improve on a regular basis. He mentions that he and his team use this practice to gather feedback and make improvements. He also emphasizes the importance of being clear about what success looks like and using scorecards to track progress towards goals.

Weekly Review

Kagan shares his weekly review process, which involves asking three questions at the end of each week. The questions include rating the week on a scale of one to five, evaluating consistency, and identifying the top three priorities for the following week. He uses this process to reflect on his performance and set clear priorities for the upcoming week.

Unambitious Goals and Long-Term Vision

Kagan discusses the concept of setting unambitious goals, which allows for more sustainable growth and the freedom to take 10x experiments. He shares that appsumo.com aims for a 5-10% growth range each year, which allows them to focus on sustainable growth and experimentation. He also emphasizes the importance of having a clear long-term vision for the company and aligning the team around that vision.

Lessons from Conversations with Millionaires and Billionaires

Kagan reflects on his conversations with successful entrepreneurs, including John Paul DeJoria, the founder of Patron tequila and Paul Mitchell Hair Care, and other successful business leaders. He shares that none of them became billionaires within 20 years and that they all got rich through a single venture. He also notes that they were all entrepreneurs and emphasizes the importance of being good at sales. Additionally, he mentions that while many of them could be happier, they all had a good balance in their lives.

Sales and Kindness

Kagan highlights the importance of being good at sales and shares a story about John Paul DeJoria, who demonstrated the power of kindness in sales. He emphasizes that there are many different ways to be good at sales and that being kind and considerate can also be effective in business.

Tim shares his approach to sales, highlighting the importance of persistence and understanding the needs of potential clients. He emphasizes the value of effort and the need to focus that effort on underserved areas. Tim discusses his experience in sales, including the strategies he used to reach decision-makers and close deals. He also emphasizes the importance of understanding the technical aspects of the products he was selling, which allowed him to have meaningful conversations with potential clients.

Immigrants' Success

The conversation shifts to the success of immigrants, with Kagan pointing out their strong work ethic and positive attitude. Tim agrees, highlighting the importance of effort and the ability to control one's attitude. He reflects on his own experiences and the relentless effort he put into his early ventures, acknowledging the impact of hard work and determination.

Effort and Enjoyment

Kagan observes that Tim seems happier when recounting his early entrepreneurial experiences, and Tim acknowledges the excitement and fulfillment he felt during those formative moments. He reflects on the contrast between the early stages of building a business and the later stages of maintaining and optimizing it. Tim emphasizes the importance of enjoying the journey and finding fulfillment in the process, rather than solely focusing on the end goal.

Transitioning and Evaluating Opportunities

Tim discusses his current approach to evaluating opportunities, emphasizing the need to consider his unique strengths and the underserved areas in the market. He reflects on the challenges of differentiating oneself in a crowded landscape, particularly in content creation. Tim also explores the concept of the "halflife of fame" and the implications of algorithm-driven content consumption, which has led him to reevaluate his approach to growth and visibility.

Finding Underserved Areas

Tim shares his approach to identifying underserved areas, emphasizing the importance of experimentation and looking for neglected opportunities. He discusses the value of revisiting old concepts and finding ways to meet unmet needs in the market. Tim also highlights the significance of endurance and personal alignment with the chosen pursuits, rather than solely focusing on profit or external validation.

Revisiting "The 4-Hour Workweek"

Tim mentions that he recently revisited "The 4-Hour Workweek" to explore the principles and tactics related to virtual assistants. He emphasizes the value of revisiting past successes and principles, especially when experimenting with new approaches. Tim's books serve as references for him, providing valuable insights and strategies that continue to be relevant in his current endeavors.

Testing Business Ideas

Kagan provides an example of a man named Jake who has a day job and dreams of starting a business. Kagan challenges Jake to come up with a business idea and test it in a weekend. Jake's idea is to organize high-end golf trips, and Kagan guides him through the process of validating the idea. They use simple methods such as Google Trends and Facebook ads to gauge the market demand for golf trips. They also create a one-minute business model to estimate potential revenue and costs. Through this process, Jake gains clarity on the viability of his business idea and is able to take concrete steps towards making it a reality.

Overcoming Fear and Taking Action

Kagan emphasizes the need to overcome the fear of starting and to take immediate action. He encourages listeners to identify tasks on their to-do list that they have been avoiding and to tackle them head-on. He also suggests starting a podcast as a way to improve communication skills and gain valuable insights. Kagan believes that entrepreneurship can provide individuals with the option to change their lives and create opportunities for themselves, even if they don't aspire to be lifelong entrepreneurs.

Simplifying Business Models

Kagan stresses the importance of simplifying business models and understanding the revenue dials of a business. He shares his experience of modifying the business model for AppSumo, a company he co-founded, to increase profitability. By adjusting the average order value and finding ways to increase sales, he was able to make the business more viable and profitable. Kagan encourages entrepreneurs to focus on finding simple and effective business models that can lead to success.

Validation and Pre-Selling

In the case of Jake's golf trip business, Kagan suggests the method of pre-selling as a way to validate the idea. Jake creates a Google doc with details of the golf trips, including pictures and pricing, and starts reaching out to potential customers. This approach allows Jake to gauge real interest and demand for his business idea before fully launching it. Kagan emphasizes the importance of taking small, actionable steps to test and validate business ideas, rather than getting caught up in overthinking and planning.

Reflection and Persistence

Kagan highlights the value of reflection and persistence in the entrepreneurial journey. He encourages individuals to take a step back, go for a walk, and give themselves a break when feeling frustrated or overwhelmed. He emphasizes the need to look back on past achievements and progress to gain perspective and motivation. Kagan also shares his personal experience of being fired from his first job and how it motivated him to never be dependent on someone else for his livelihood.

Experimentation and Persistence

Kagan emphasizes the importance of experimentation and persistence in entrepreneurship. He shares his own experience of starting a business in a weekend by cold emailing a college student to partner in selling software deals. He also highlights the value of persistence in pursuing opportunities, citing examples of rejection and how it led to better outcomes in the long run. Kagan encourages entrepreneurs to view rejection as an opportunity to learn and improve, rather than a setback.

Light Touch and Informed Optimism

Kagan discusses the importance of a light touch in business interactions, citing examples of how he approached potential partners and customers with a non-intrusive and respectful attitude. He emphasizes the value of informed optimism, where entrepreneurs approach opportunities with a sense of abundance and a willingness to learn from rejection. Kagan shares his approach to rejection, viewing it as feedback and an opportunity to reassess and pivot if necessary. He also emphasizes the importance of being open to new opportunities and not getting fixated on a single idea or outcome.

Creating a Category of One

Kagan discusses the concept of creating a category of one in business, citing examples from books such as "Blue Ocean Strategy" and "The 22 Immutable Laws of Marketing." He emphasizes the value of identifying unmet needs and positioning oneself as the only solution in a particular category. Kagan encourages entrepreneurs to look for opportunities where they can create a unique offering that stands out in the market. He also shares his approach to assessing playing fields and choosing opportunities that align with his strengths and preferences.

Validation of Business Ideas

Noah Kagan shares his experiences with validating business ideas, emphasizing the importance of testing ideas quickly and inexpensively. He mentions the use of pre-selling as a method of validation, citing examples of how he has used this approach in his own business ventures. He also discusses the use of marketplaces such as Etsy, Craigslist, and Amazon to test product ideas and gauge customer interest.

Simplicity and Frugality in Business

The conversation also touches on the importance of simplicity and frugality in business. Noah Kagan emphasizes the value of starting with the easy and simple things first, rather than getting caught up in complex and expensive strategies. He shares examples of how he has implemented this approach in his own business, such as prepaying for all podcast ads to avoid accounts payable and receivable complexities.

Best Purchases Under $50 and $100

Noah Kagan surprises Tim Ferriss with a bag of Hanukkah gifts, including a travel backpack, a board game called "Schotten Totten," a sample of Element electrolyte drink, travel clippers, and a memoir book titled "A Million Miles in a Thousand Years" by Donald Miller. He explains the practicality and usefulness of each item, highlighting their affordability and value for under $50.

The travel backpack is a compact and versatile option for day trips, while the board game "Schotten Totten" offers a fun and engaging two-player game experience. The Element electrolyte drink is praised for its health benefits and refreshing flavors, and the travel clippers are recommended for their compact size and sharpness. Lastly, the memoir book "A Million Miles in a Thousand Years" is described as an inspiring read that encourages living a more interesting and fulfilling life.

Coaching and Inputs

Kagan discusses his experiences with various coaches, including CEO coaches, business coaches, marketing coaches, and board members. He emphasizes the importance of seeking coaching in specific areas of weakness and the value of accountability and outside perspectives. Kagan also highlights the significance of recording coaching sessions and revisiting them to identify areas of resistance and opportunities for growth.

The 48-Hour Challenge

Kagan introduces the concept of the 48-hour challenge, encouraging listeners to take action and make significant changes in their lives within a 48-hour timeframe. He invites individuals to share their results in the comments section of the podcast episode, with the opportunity to win a trip to Barcelona, Spain to spend a day with him. The challenge aims to inspire people to take decisive action and achieve meaningful results in a short period.

Lessons from Cindy

Kagan shares the story of Cindy, who participated in a mentoring program with Tim Ferriss and himself. Cindy's experience demonstrates the power of simplicity, focus, and leveraging the most important actions to achieve significant results. Her journey from a postal worker to a successful entrepreneur highlights the impact of taking decisive action and seeking guidance from mentors.

Kindness and Self-Compassion

Kagan emphasizes the importance of self-compassion and kindness, encouraging listeners to be more forgiving and understanding of themselves. He acknowledges the value of preserving mental and emotional energy by practicing self-kindness, especially during challenging or off days. Kagan's message resonates with the idea of nurturing a positive and supportive mindset for personal well-being.

The Million-Dollar Weekend

Kagan introduces his book, "Million Dollar Weekend," which outlines a simple approach to launching a seven-figure business in 48 hours. The book provides practical strategies and insights for aspiring entrepreneurs, focusing on the concept of simplicity, leverage, and results-driven actions. Kagan's book aims to empower individuals to take bold steps and achieve significant business outcomes within a short timeframe.