How To Make a Legit Business in Education Ep 523

Summary Notes


In this episode, the host and guest explore the nuances of building a legitimate and successful education business, contrasting scam-like quick-money schemes with the long-term value of institutions like Harvard. The speaker, a Vanderbilt University graduate with experience in both internet marketing and management consulting, shares four pillars of legitimacy: selective customer acceptance, setting proper expectations based on data, giving away valuable content for free while selling the implementation, and not graduating everyone to maintain brand reputation. These strategies are exemplified through, a portfolio company focused on buying businesses, which emphasizes the importance of transparency, customer success tracking, and providing substantial value to foster brand credibility and growth. The discussion encapsulates the journey from scam to legitimacy in the education sector, emphasizing the importance of building a brand that delivers on its promises and creates a positive, self-sustaining reputation over time.

Summary Notes

Harvard's Value Proposition

  • Harvard's highlights include experience, network, relationships, character development, rather than income.
  • Selling based on these values is more challenging and takes longer.
  • Focusing on quality admissions enhances the institution's reputation and outcomes.

"The highlights that they have at Harvard are not the income, but the experience and the network and the relationships and the character development, etc."

This quote emphasizes that Harvard's appeal lies not in the promise of income but in the holistic development it offers its students, which includes experiences, networking opportunities, relationships, and character building.

Building Legitimate Businesses

  • The speaker is sharing insights on building a billion-dollar business and documenting the journey.
  • The speaker expresses a desire for transparency in business growth, akin to the openness they wish entrepreneurs like Bezos, Musk, and Buffett had shown.

"I'm trying to build a billion dollar thing with I always wish Bezos, Musk, and Buffett had documented their journey. So I'm doing it for the rest of us."

The speaker is discussing their ambition to build a significant business with and the importance of documenting the process for others to learn from, something they felt was missing from other famous entrepreneurs' stories.

Education Business Legitimacy

  • The speaker contrasts scammy internet business promises with Harvard's modest promise of a possible graduation.
  • Four elements are mentioned that distinguish legitimate educational businesses from scams.
  • The speaker shares their credentials and experience in both traditional education and internet marketing, establishing credibility.

"You've probably seen these make $10,000 month in 30 day scam businesses, marketing all over the Internet. And on the same degree, you've probably seen Harvard Market and say, you might maybe graduate from Harvard, and that's the only promise they make, and you can pay us $250,000 a year."

This quote contrasts scammy online business promises with Harvard's conservative approach to marketing its education, highlighting the difference in how each sets expectations.

Criteria for Educational Legitimacy

  • Legitimate education businesses have a selective admission process.
  • They avoid giving income expectations and focus on brand endorsement.
  • Testimonials focus on experiences rather than income.
  • Tracking and publishing customer success metrics is crucial.

"Number one, Harvard turns people down. If every single person who applies to work with you, you immediately try and take their money. And the only requirements to become a customer of yours is a credit card and a pulse. Ding, ding, ding. You might have red flag number one."

This quote explains that a legitimate educational institution like Harvard does not accept everyone; it has a selective process that ensures a fit between the institution's offerings and the applicant's potential.

Importance of Customer Success Metrics

  • Tracking customer success over time is vital for a business's legitimacy.
  • Success metrics should be measured at multiple intervals post-purchase.
  • These metrics increase a business's credibility and can attract serious investors.

"If you do not track your customer success metrics, meaning when someone buys, what percent of them succeed at 30, 60, 90, 12 months, 24 months, what are the averages for whatever the thing that you educate them on now, mind you, this naturally predisposes itself to b two b"

This quote underscores the importance of tracking how customers fare after purchasing an educational product or service, suggesting that consistent success metrics are a sign of a business's legitimacy and value.

Indirect vs. Direct Income Earning Skills

  • Indirect income earning skills are those that enhance a person's ability to generate income, but are not businesses themselves.
  • Direct income earning skills are described as "businesses in a box," implying a more immediate pathway to generating income.

"But if you teach people how to use Adobe and you have a course on that, awesome. If you teach people how to take pictures for homes as real estate agents, awesome, right? Those are what I would consider indirect income earning skills versus direct income earning skills, which are usually businesses in a box of some sort."

The quote distinguishes between skills that indirectly support income generation, such as using Adobe or photography for real estate, and those that are direct income sources, akin to packaged businesses.

Importance of Data in Setting Expectations

  • Transparency with data is crucial for setting accurate expectations without sensationalism.
  • Harvard is cited as an example of an institution that publishes graduate outcomes and industries without creating false expectations.

"If you track the data, then you don't add any sensationalism to what you are reporting. Harvard publishes what the top 20%, what the average, what the median person gets, and what industries their graduates go into, because that's data."

This quote emphasizes the value of using unembellished data to inform others of outcomes, as demonstrated by Harvard's practice of reporting graduate statistics.

Financial Fund Analogy and Future Performance

  • The financial industry's practice of clarifying that past performance is not indicative of future results is paralleled with how educational outcomes should be presented.

"The important thing is that just like what makes financial funds legit is they say past performance isn't a prediction of future performance."

The quote draws a parallel between the responsible disclosure practices in the financial sector and the ethical way to present educational outcomes.

Emphasizing Experience Over Income in Education

  • The focus of educational institutions like Harvard is on the experience, network, relationships, and character development, not solely on income.

"And the highlights that they have at Harvard are not the income, but the experience and the network and the relationships and the character development, et cetera."

This quote points out that the value proposition of an institution like Harvard extends beyond income potential to include personal and professional growth.

Pillars of Legitimate Educational Business

  • Pillar 1: Sell to better customers and have filters.
  • Pillar 2: Set proper expectations based on data and provide testimonials about experiences rather than income.
  • Pillar 3: Monetize education by giving away content and selling implementation.
  • Pillar 4: Not everyone graduates; maintain brand reputation through quality control and honest reporting of student outcomes.

"Pillar number one is that you sell better customers than you have filters. Pillar number two is that you set proper expectations only based on data. And the testimonials you provide are about experience rather than income or outcome."

This quote outlines the first two pillars of running a legitimate educational business, emphasizing the importance of selecting the right customers and setting realistic expectations based on data.

Free Content and Implementation as a Business Model

  • Giving away content for free and charging for implementation is a strategy to establish thought leadership and monetize education.

"The third one is that you can monetize the education itself. You can sell education. But I think the smart move, and if you've consumed any of my stuff, is that you give away the secrets. You sell the implementation."

The quote suggests that providing free educational content can attract customers who will then pay for assistance in applying that knowledge.

Maintaining Brand and Reputation Through Selectivity and Endorsement

  • Being selective about admissions and providing honest assessments of students' abilities help maintain a brand's reputation.

"And so rather than accept everyone and say, we're going to make everyone Harvard smart, which you can't, they got smart and realized it's much easier to pick smart people and then do a standard education than it is to take dumb people and try and make them smart."

This quote highlights the strategy of maintaining high standards by admitting those with the greatest potential for success rather than attempting to educate everyone to the same level.

Market Control Through Supply and Demand

  • Controlling both supply and demand allows a business to maintain high prices and quality control.

"So when you have that supply demand curve in your favor and you have all these people want in this tiny little amount of supply, you control the market."

The quote explains how creating a balance where demand exceeds supply gives a business leverage in the market, allowing it to dictate prices and standards.

Steps to Creating the Best Salespeople

  • Selecting individuals with natural sales ability, setting appropriate expectations, and providing high-quality, free content are key steps to developing top sales professionals.

"How could we get 100% of people who graduate from my thing to be the best salespeople. First thing is, we pick people who are naturally good at sales. Second thing is, we automatically cut out the people who are not."

This quote outlines the initial steps in a process designed to ensure that graduates from a sales program are of the highest caliber.

Networking and Connection Building

  • Encouraging listeners to connect and engage with the podcast hosts for networking.
  • Suggesting tagging relevant individuals in posts to foster community interaction.
  • Emphasizing the value of personal notes to establish a connection.

So send me a connection request, a note letting me know that you listen to the show, and I will accept it.

This quote emphasizes the speaker's openness to networking with listeners who reach out and express their interest in the show.

There's anyone you think that we should be connected with, tag them in one of my or Layla's posts, and I will give you all the love in the world.

The speaker is encouraging listeners to help expand their professional network by tagging potential connections, promising positive reinforcement for such actions.

Building a High-Quality Education Program

  • Discusses the time and effort required to build a substantial and successful educational program.
  • Highlights the importance of maintaining high standards and the positive impact of graduates on the industry.
  • Focuses on the value of exclusivity and quality in education, leading to higher earning potential for graduates.

Yeah, it takes time to build big shit.

This quote acknowledges the significant time investment necessary to create something of substantial value and impact.

So if you build it for a year, and let's say you only got 25 people to graduate, okay. But they're all killers, savages.

The speaker is emphasizing the importance of quality over quantity in an educational program, where even a small number of highly skilled graduates can make a significant impact.

What do you think is going to happen to the friends of those people who start making twice what the industry averages for sales guys because they're that much better.

This quote suggests that the success of graduates will inspire others to pursue the same education, recognizing the potential for increased earnings and professional growth.

Leveraging Brand Reputation and Thought Leadership

  • Analogy with Harvard's branding and educational model to illustrate how to build a reputable education business.
  • Discusses how companies like McKinsey and Morgan use data and thought leadership to build trust and do business.
  • Emphasizes the creation of high-quality, authoritative content that becomes a go-to resource in the industry.

Harvard's over 100 years old. That's how you build a brand.

The speaker uses Harvard as an example of long-term brand building, implying that a strong reputation takes time to develop and is highly valuable.

Look at what Harvard does and model that thought process.

This quote suggests that emulating Harvard's approach to education and branding can lead to a legitimate and successful business.

The Harvard Business review, they put out books. They have a massive email list.

The speaker is highlighting the various methods Harvard uses to maintain its position as a thought leader and authoritative source in the business world.

It has to be so good that it becomes the textbook, it becomes the canon, it becomes the go to resource.

The quote emphasizes the need for creating content of such high quality that it becomes the standard reference in its field, much like academic textbooks.

Transparency and Content Creation

  • Advocates for transparency in business practices to build long-term trust.
  • Compares the creation of business content to academic research, emphasizing the importance of originality and citation.
  • Discusses the role of search engines like Google in recognizing and rewarding high-quality, authoritative content.

Transparency always wins long term, because it's like the Eminem thing. No one can hold against you what you put out publicly, right?

This quote promotes the idea that being open about both successes and failures builds trust and credibility with an audience.

Their main job is content creation. Think about that. Their job is to create net new content that no one's ever made before.

The speaker is drawing a parallel between academics who create new knowledge through research and businesses that generate original content, both of which can enhance a brand's authority.

That's also how Google figures out what content is good or not.

This quote explains how search engines evaluate the quality of content based on the number of shares and links it receives, which can be a measure of its value and authority.

Marketing and Compliance

  • Discusses the importance of avoiding unsubstantiated claims in marketing to remain compliant with laws and regulations.

That's fundamentally what almost all marketing laws and FTC compliance, all of t

The quote is incomplete, but it suggests that the speaker was discussing the legal aspects of marketing and the importance of making claims that can be substantiated to avoid issues with regulatory bodies like the Federal Trade Commission (FTC).

Importance of Data in Making Claims

  • Emphasizing the necessity of having data to substantiate claims.
  • Data allows for setting realistic expectations based on historical performance.
  • Acknowledges that past performance is not a guaranteed predictor of future results.
  • Data helps in avoiding the pitfall of claiming to be "the best" without objective evidence.

"So the best thing to do is collect data so that you can make substantiated claims. That's the key here."

This quote highlights the central idea that gathering data is crucial to support any claims made by a business or individual, ensuring they are grounded in reality.

"Past performance isn't a predictor of future performance. This is what happened with our last graduating class."

The speaker is cautioning that while data is useful, it should not be seen as a definite forecast of future outcomes, maintaining the importance of informed decision-making.

Differentiation and Return on Investment (ROI)

  • The concept of differentiation in the market without claiming to be "the best."
  • Demonstrating high ROI as a more effective strategy than competing on subjective terms.
  • ROI allows prospects to make informed decisions based on clear expectations.
  • Informed decisions made by customers tend to be more sustainable in the long term.

"You don't need to be the best, you just need to show and you just need to demonstrate high return on investment."

This quote suggests that businesses should focus on demonstrating the value they provide through ROI rather than engaging in subjective comparisons.

"But what you can say is these are the expectations you can have given the data that I have to support this claim."

The speaker advises businesses to present factual expectations based on data, which helps prospects make informed choices.

The Pitfalls of Overpromising and Underdelivering

  • Discusses the limitations businesses face when they overpromise and underdeliver.
  • Companies that fail to meet expectations may need to constantly reinvent themselves.
  • A lack of compounding growth due to constant reinvention prevents substantial long-term success.

"Because there's a reason that most of these businesses cap like they can't get beyond a certain size, whereas legitimate businesses can."

The speaker is indicating that businesses that consistently exceed expectations are more likely to grow beyond certain size limitations.

"Which means you constantly have to start back at ground zero every 24 months with your new big idea because you've over promised and under delivered to everyone in one marketplace."

This quote discusses the consequences of not delivering on promises, leading to a cycle of rebranding and repositioning in the market.

Building Legitimacy and Long-Term Wealth

  • The value of adding legitimacy to a business for significant wealth accumulation.
  • Legitimate businesses are contrasted with those perceived as scams, with a focus on long-term success.
  • The speaker emphasizes the importance of a longer time horizon for achieving true wealth.

"You can make yourself $30 million wealthier by adding these elements of legitimacy."

The quote suggests that by incorporating legitimacy into their operations, businesses can significantly increase their value.

"Do I want to be really wealthy, or do I just want to flex on Instagram?"

The speaker challenges the listener to consider their long-term goals versus short-term appearances, highlighting the importance of legitimate business practices for substantial wealth.

The Economics of Customer Acquisition and Growth

  • Discusses the increasing costs of customer acquisition in expanding markets.
  • The significance of customer referrals and goodwill in scaling a business.
  • Outlines the challenges of scaling with rising advertising costs and the need for positive word of mouth.

"If you have three forces working against you. You have to have the people who come into your business send you other people."

This quote underscores the necessity of leveraging customer referrals to counteract the rising costs and challenges of reaching new audiences.

"And that's how you can continue to market and expand over time."

The speaker is explaining that positive customer experiences leading to referrals are key to sustainable market expansion and business growth.

The Importance of Compounding in Business Growth

  • Explains the concept of compounding in business as a means to achieve significant growth.
  • Stresses the need for a long-term strategy to build a valuable and helpful education business.
  • Compounding is presented as a long-term play essential for creating substantial value.

"The only things that get really big are things that grow unto themselves. They compound."

The quote emphasizes that for a business to achieve significant scale, it must have the ability to grow organically through compounding.

"And compounding takes time."

This simple statement reinforces the idea that substantial business growth through compounding is not immediate but requires a long-term perspective and patience.

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