¶ Introduction to Perry Marshall
Welcome to the Multiply your Success podcast , where , each week , we help growth-minded entrepreneurs and franchise leaders take the next step in their expansion journey . I'm your host , Tom Dufour , CEO of Big Sky Franchise Team , and , as we open today , I'm wondering if you have ever heard of the 80-20 rule .
Well , if you're like most of us , you've probably heard of it , but how familiar are you with it ? Have you applied it to your business ? Well , our guest today is Perry Marshall , and he has become an expert at applying the 80-20 principle to your business and your life Now .
Perry is a renowned business strategist , bestselling author and expert in digital advertising . He's known for the Ultimate Guide to Google Ads and 80-20 Sales and Marketing . Perry has consulted across over 300 industries , shaping the $400 billion digital ad space .
He's the founder of the $10 million Evolution 2.0 Prize and co-founder of the Cancer and Evolution Working Group . Perry's insights bridge the worlds of marketing , science and entrepreneurship , making him a must-listen for anyone seeking growth and innovation . You're going to love this interview , so let's go ahead and jump right into it .
Perry Marshall . I'm the founder of Perry S Marshall Associates , author of 80-20 Sales and Marketing , and really glad to be with you today . We're going to have a good time , Absolutely Well .
Thank you , Perry . Really appreciate you being here and spending some time together . I really wanted to at least get the conversation started , talking about your book 80-20 Sales and Marketing and talking about this 80-20 principle , and let's start there . Let's talk about why write a book about this .
I thought I understood 80-20 a long time ago when I read some business book . It said 80% of your business comes from 20% of your customers and the other 20% comes from 80% of the customers . And I thought is that right ?
I printed out a QuickBooks report , I pulled a calculator out of my desk , I went down , sure enough , from top to bottom , 20% of the way down , yep , that was 80% of the revenue . And I go oh , that's interesting . And I thought I understood it and that's what most people understand . Most people have heard this before . I did not understand it .
I didn't really understand it at all . So at the time I had this customer named Dimitri and his company only ordered a few thousand dollars of stuff every year . It was a very small customer but he would always beat me up about well , you guys don't have this software feature and you don't have that .
And I was at a software company and I would always try to like make him happy and he would threaten to leave . And what I didn't realize at the time was this guy's a minnow and you shouldn't get tangled up in that and 80% of your business comes from a few customers and he's not one of them . But I just didn't quite connect it .
And a few years later I was reading a different book and it said
¶ Discovering the True 80-20 Principle
80-20 has a lot to do with chaos theory . And suddenly my head exploded because that is something that I've studied . That is the science that deals with things like tornadoes and earthquakes and glaciers and cracks in windshields and black swan events . And I go wait a minute . And I jumped up .
I was in a coffee shop , I jumped up , I ran home and an hour later I'm laying on the living room floor with papers everywhere , I'm doing calculations and my wife walks in and she goes what happened to you ? I'm like I just had a huge realization . My brain melted . So I want to explain . Why did my brain melt ?
Well , in chaos theory they show you that a crack in your windshield and a crack in the San Andreas fault are the same . You know it could be really tiny , it could be really huge . It's the same process that makes them both .
A tree has tiny , tiny little branching patterns in the leaves under a microscope and has a huge branching pattern when you back out and that's called fractal . And what I suddenly realized was 80-20 is fractal . There's an 80-20 inside every 80-20 inside another one and another one .
So not only do 20% of your customers produce 80% of your business , 20% of the 20% produce 80% of the 80% , and that goes again and again until you're down to only one customer . So this goes all the way to Jeff Bezos . It guarantees you that somebody in the world is going to have that much money .
And what it says is that the inequality where the 80 and the 20 and the 20 and the 80 is baked in . It's a law of physics and when I suddenly saw it I couldn't unsee it . It is absolutely everywhere . Most people have never noticed this . In fact , I have a friend who texted me a week ago . He goes .
My daughter is about to graduate from major university with a degree in statistics and he goes . I was talking to her last night . She's never heard of the 80-20 principle Degree in statistics , never heard of it . It is the most pervasive thing that nobody ever told you about . It's in your Facebook account . It's in shoplifting .
If 80% of the stuff is stolen by 20% of the shoplifters , you'll never eliminate all the shoplifting , but you can eliminate 80% of it by finding two people . It's true of employees and it's true of ad campaigns . It is a total mind shift . It's like putting on a set of x-ray glasses that allow you to see things that you never saw before .
It is the most important thing you can learn in business .
It is a tremendous principle and one I've been familiar with , like you described , but then taking it and essentially duplicating that within itself right these , with like you described , but then taking it and essentially duplicating that within itself , right these branches , as you described , the branches you shared with the leaf , and then the branches and so on , yes ,
and it applies to almost everything .
Let me tell you a story . I have a friend who , at age 17 , he dropped out of Catholic school in Denver , hitchhiked to Las Vegas and became a professional gambler . This was his fantasy as a teenager to be a pro gambler .
So he got a fake ID and he's going around the casino and he's playing poker and about a month into this he's like this is a lot harder than I thought it was going to be .
So he goes to a gambling bookstore and he's looking at the books and he starts talking to this guy who's there and he finds out the guy runs a professional gambling ring and his name is Rob . And Rob , do you think you could teach me to do what you guys do ? And he says for a percentage of your winnings , I can teach you to do what we do .
And so they shake on it Jump in the Jeep , john , we're going for a ride . Gets in the Jeep , they're driving down the highway and John says so , rob , how do I win more poker games ? And Rob says you need to play people who are going to lose . You don't go after other professional gamblers .
You want the 18-year-old from Wichita whose grandma just gave him some money and he's going to go to lost wages and get rich . And he goes well , where do I find that kid ? And he goes here , I'll show you . And they pull into the parking lot of a strip club . They go in there . There's women , there's music , there's
¶ Racking the Shotgun Concept
lots of distractions , loud rock and roll playing . Rob sits John down at a table and he pulls a sawed-off shotgun out of his jacket . He holds it under the table and he slams it shut . So it goes . And in the middle of this loud club there's a few people that hear that noise and they're like , what ? Like ?
There's biker dudes over there who made that noise . And the owner comes over the table . What's going on here ? It's okay , just teaching the lad a lesson . John , did you see those dudes who turned around when they heard that noise ? Yeah , don't play poker with them . They're not marks .
Play poker with everybody else , and that is what we call racking the shotgun , and that is what we call racking the shotgun , and that separates the 80 from the 20 . Everything you do in sales , everything you do in marketing , everything you do in entrepreneurship is racking the shotgun .
So , with customers , every salesperson in the world is obsessed with all the people that didn't answer the phone , didn't buy , didn't click on the people that didn't answer the phone , didn't buy , didn't click on the link , didn't , didn't , didn't .
What's so easy to forget is that the dids are 16x , the didn'ts Like if you look at 80-20 , the top 20 are 16x , the bottom 80 . And then there's a top 20 of those , that's 4x , and then another top 20 , that's another 4x . So I call it the espresso machine principle .
For every 1,000 people who buy a $5 latte at Starbucks , one of them will spend $2,700 on a gleaming stainless steel espresso machine . It's a law of physics that if you've got a lot of buyers who buy , you know , for a dollar , there's a few buyers that'll spend $10,000 . It's a law of physics . 80-20 guarantees that it's true .
A law of physics 80-20 guarantees that it's true . And a lot of people don't realize this and they don't understand that the coffee just keeps the lights on and it keeps the customers coming in the door , but all the money is in the espresso machine and a lot of businesses are not what you think they are .
80% of the money in Vegas comes from these people that they call whales , that spend $100,000 on a hand of poker and there's special wings and rooms and suites for those people that the rest of the world doesn't even know exists . And most people don't know that McDonald's isn't really selling hamburgers .
They're growing the value of real estate and most smart businesses . There's something behind it . That's not what you see on the front door and that's all . Espresso machine principle .
As I'm listening to you
¶ Practical 80-20 Business Applications
describe and talk about this , I guess my question that comes to mind is this is great , but if I'm listening into this , how do I apply this to my business ? These stories are great , but maybe what's something practical or a nugget from your book that I might be able to apply ?
So if you're advertising on Google or Facebook , 80% of the money is in 20% of the ad campaigns , 20% of the ads , 20% of the keywords . There are huge parts of those that are generating huge amounts of waste . I guarantee it . If you hire 10 salespeople , two of them will outperform the other eight put together . I guarantee you that is going to happen .
80-20 guarantees you it's going to happen . Most people try to fix the runts , and not only do they try to fix the runts that can't be fixed , they also annoy the performers . Like you got Charlie and he's an amazing closer and Susie is assaulting him because his expense reports aren't in on time .
Well , why don't you get your hire him an assistant to follow him around with a shoebox and pick up his receipts or whatever you've got to do ? But don't annoy the guy with that crap and let him perform . There are areas of waste in business 10% of your product line , 10% of your clients , 10% of your employees .
You are taping dollar bills to every box that goes out the door and you don't know it . You would make more money if you discontinued that product or if you doubled its price . You're afraid to double the price because you'll offend somebody . Well , you're losing money . It's everywhere and there's never just one cockroach .
You mentioned raising prices on that product . That's 10 or 20% driving revenue . Are there other practical things you've seen or suggestions you might have for someone that says , okay , I like this . What can I do to analyze this and start making some adjustments ?
There's a principle called the 21-20 rule and it says that 20% of your business makes 120% of your profit . That's the best 20% of your business and the worst 20% of your business loses money . And brings your 120 , you would have made down to the 100 that you did make . You have employees who are losing you money .
I have a good friend named Nancy Schlesinger , longtime client . She's a recruiter , been in that business for 30 years . She told me a bad employee costs five to 14 times their salary . I thought , oh well , that's got to be an exaggeration . It's probably one or two X and Nancy's just exaggerating .
Well then , a year or two later , I had to fire a bookkeeper and then , when I had a better bookkeeper , I started finding out what all the mistakes were . There were $50,000 invoices that never got sent out two years ago . Well , how does a customer feel about getting a $50,000 invoice two years later ? Does that go over ?
Very well , that bookkeeper costs you way more . Like that's just one mistake and that's not all the other mistakes . It is absolutely true that bad employees cost you way more . A players attract A players , b players drive away A players and attract C players . That's 80-20 .
Have you applied this just to other areas of your life , just in general ? Not just you know running your own business , but where else have you applied this ? Just to other areas of your life , just in general ? Not just you know running your own business , but where else have you applied this ?
It is true in personal relationships , it's true in science , so it's 80-20 is true of the traffic on the streets . In your town , 80% of the traffic runs on 20% of the streets and 50% of the traffic runs on 1% of the streets . It's true of craters on the moon . It's also true of personal relationships .
The top 20% of your personal relationships create 120% of your happiness and the bottom 20% of your relationships create negative 20% happiness . Okay , you have toxic people in your life that you need to get rid of and you haven't gotten rid of them . Because you're not , because you didn't rack the shotgun and decide to do something about it . It's everywhere .
That's just amazing to think about . Well , real quick , while we're in the midst of this , how can someone get a copy of your book , learn a little bit more about what you're doing , maybe follow what you're up to ?
If you go to perrymarshallcom slash podcast , you can get 80 , 20 sales and marketing for seven bucks including shipping . It's about 20 bucks on Amazon . It's got 1300 reviews , 4.7 stars . It will completely change your life and that's at perrymarshallcom slash podcast . And it comes with a couple extra
¶ Personal Victories and 80-20 Wisdom
videos that you wouldn't get if you bought it on Amazon . So go pick that up and sign up for my Perry Marshall Minute , which is a daily email that comes out , and it will get you thinking 80-20 . I have a whole bunch of 80-20 fanatics that follow me and learn and it just goes deeper . It's like martial arts .
You can get a first degree black belt , but you could also get a second or a third or a ninth . How deep do you want to go ?
Fantastic . I love it . Well , Perry , this is a great time in the show . I always like to ask every guest the same four questions before we go , and the first question is have you had a miss or two on your journey and something you learned from it ?
Yeah , about nine years ago I was talking on the phone and I looked through my French doors and my brother was in the next room and he's the president of my company and I live in Chicago and he lives in Nebraska . So I wait a minute . My brother's here unannounced . This doesn't look good .
So I finished my phone call , Brian , what are you doing here , Perry ? We need to talk . And he goes . We have too much overhead , we have too much employees , Our expenses are too high , we need to cut back . And we spent that was like two in the afternoon . We spent until 11 o'clock that night arguing and debating .
Well , Brian , we're going to do this and we're going to do that , and I think we're going to be fine , and you don't know how awesome this next thing is going to be .
Well , about two or three months later , it was obvious he had been right and I had been wrong , and I was now three months further behind on my over-optimism and now I really needed a cut .
Now , anybody who really owns a business and has done it for a while and has had to make cuts , knows that when you cut , the improvements do not immediately come , Because you have things like severance packages and stuff like that , and we were laying employees off severance packages and stuff like that and we were laying employees off .
And that was really the first time that I learned the subtraction side of 80-20 . 80-20, . Go back to the rack , the shotgun story . It's more about who you don't talk to and what you don't do and what product you don't ship out and which employee you don't hire , as much as it is about what you do .
You can apply it to set boundaries right .
Yes , and most entrepreneurs that I know are , yes , people . We're optimists and we love life and we love adventure and we're interested in people and we're interested in ideas . And well , you know what ? You can't fund all the ideas and you can't hire all the people and you can't invest in all the things that cross your path .
You have to be very , very selective .
Let's talk about a make . Let's look on the other side .
I had a huge victory a little over 20 years ago , and so now that I'm 55 , I guess it's an early victory , but I want to tell it to you because it pertains to right now . So in 2001 , in the summer , a company approached the company I worked for and said we want to buy you out . And that was exactly according to plan . We were developing a chip .
We had been working on this for three years . The intention was we want to make ourselves attractive . This is what we want . So that was all great . So they started doing the negotiations and when it was almost about done , 9-11 happened . And all of a sudden the orders stopped coming in . We're selling capital equipment . Everybody just froze . Sales plummeted .
The company's just about to get sold . They're offering me a job . The company's just about to get sold . They're offering me a job . And , especially given how scary the world was , it seemed extremely attractive to take the job , even though the job offer wasn't really that great . And my wife says take the money and run .
No , and go start the company that you've always been talking about starting . And I'm like she goes , no , I'm serious . And I asked around and this one lady said to me Perry , the time of maximum uncertainty is maximum opportunity . Now is the time to make a jump . And again , remember , 9-11 has just happened .
People are driving around with flags on their cars and the planes aren't flying and conferences are canceled . And I decided she was right and all the other employees thought I was crazy and I jumped out and I started a consulting business . A year later , the founder of the company I worked for he had become a vice president at the company that took us over .
He hated his job . He didn't get along with anybody Very common , by the way , when buyouts happen he ended up leaving and kind of having a little fight about it and the new company was a train wreck and I escaped all that .
Meanwhile , the world was just starting to shift from employee world to freelancer 1099 world and I had made that jump at the exact right time in a year . Well , it wasn't even a year later that I was happy about it . It's actually three months later . I made the most money that I ever made in a year .
Well , it wasn't even a year later that I was happy about it . It's actually three months later . I made the most money that I ever made in a month , which at that time was $12,000 . I'm like , dude , like this is like six figure territory and I'm what ?
And like , no matter what happens , I still think back on that of what , how good it was that I took that advice . And I bring that up now because right now feels like 9-11 to me in the world , but it's a different 9-11 . It's not a this one thing happened , it's a .
There's 1,700 things happening and everybody's arguing about them and debating them and a lot of people are frozen and they're scared and they're hiding under rocks and they're just not really doing anything . That is the wrong thing to be doing right now . Right now is major opportunity . It doesn't look like it , it is .
Let's talk about a multiplier that you've used to multiply yourself , your organization , any business you've run , the best multiplier is know thyself is know thyself , know thy strengths and weaknesses , and I have my own
¶ Success and Future Opportunities
version of this . In the 80-20 book there is a link to take what we call the marketing DNA test , and it is a test that measures how do you sell and persuade as compared to anybody else in the room . And the reason I made this test was , first of all , early in my sales career . I bombed badly .
Two years of bologna sandwiches , ramen soup , baked potatoes and salsa is really cheap , by the way Really cheap and I didn't know it at the time . But I was trying to be somebody . I was not People . I would admire them and they were on stage or they were on tapes or books or videos .
I was trying to be like them and I didn't understand no , how do you sell ? And then , later on , I got more successful and I started consulting . I've worked with thousands of entrepreneurs and sales and marketing people and over and over I've seen people try to shove a square peg in a round hole .
Maybe they're a really good negotiator and they're killing themselves trying to make a YouTube channel . Or maybe they're a really good copywriter and they're trying to be a social media diva or whatever , if you can figure out what your strengths are . Those are huge multipliers .
If you're a really good writer , the best investment you can make is to go to a writing class the right one and get even better . It's not . Oh , I'm going to go to . I'm going to learn how to run video cameras . Now , because YouTube is popular is now , because YouTube is popular , people get on these bandwagons and they don't value what they bring .
That is a huge multiplier , I think .
for sure , most of us go through that , or some of us get stuck in that and find different versions of that as we go through life . So I think that's a great , great multiplier there . Well , the final question we ask every guest , perry , is what does success mean to you ?
I think success means if you got a terminal diagnosis , you wouldn't change very much of anything that you're already doing . You know , we've all heard the stories of you know , my life flashed before my eyes . What am I doing ? What am I up to ? Totally changed my priorities .
I think success is you don't need to change your priorities because you already got them figured out .
That's powerful , very , very powerful . Well , as we bring this to a close , perry , is there anything else you were hoping to share or get across that you haven't had a chance to yet ?
I think that if you think things are choppy now , just wait a little while . 2025 is going to be a choppy year , and that means it's going to be increasingly tough for people who are hanging on to whatever the way things were , because I think normal just went out the window . I think there is no normal . You need to let go of your notion of normal .
There is big opportunity in embracing the new and the strange . In hindsight , there is no question that 9-11 had a lot of opportunity in it .
There's no question that COVID had a lot of opportunity in it and we could go over that in detail that would be a whole other conversation but we can all agree that those opportunities existed and that most people didn't seize them . And so how are you going to do this different than most people did the last couple of scary times in life ?
That's what I want to leave you with , because the future belongs to the bold .
Perry , thank you so much for a fantastic interview , and let's go ahead and jump into today's three key
¶ Key Takeaways and Win-Win
takeaways . So takeaway number one is just about the 80-20 rule in general and how Perry talked about . He didn't really truly understand it until he had this connection point with the chaos theory and how he saw it can be applied to every industry and every area of life . Takeaway number two is how he's talked about applying it to your own business .
For example , looking at your Google ad spend and Facebook advertising and looking at probably 80% of your keywords and spend is not producing the kind of results you're looking for , that it's the 20% that's driving most of your results and keywords , et cetera , and he gave another example of how it may be applied to your salespeople or to your profit in your
business . Takeaway number three was just applying it to your life in general or personal life , and he said , for example , 80% of the traffic likely runs on 20% of the streets and , thinking about your own personal relationships , that you're probably your top 20% . The top 20% of your relationships generate 80% of your happiness .
I thought that was a really unique way to think of it , and now it's time for today's win-win . So today's win-win comes from the tail end of the conversation . I thought this was a great little nugget that Perry shared with us .
He said with the changing environment that we're in , he said , think about the new opportunities that are in front of us and it got me thinking okay , well , how can we apply this 80-20 principle he was talking about to new opportunities for your business or for your personal life in this changing business climate that we're living through ?
So that's the episode today . Folks , please make sure you subscribe to the podcast and give us a review , and remember if you or anyone you know might be ready to franchise our business or take their franchise company to the next level . Please connect with us at BigSkyFranchiseTeamcom . Thanks for tuning in and we look forward to having you back next week .