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Eight Hundred Million Dollars Discussed on Journey to $100 Million
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We Are Funnel Hackers And These Are Our Stories - Part 3 of 3
On this episode you will hear the final part of Russell’s first presentation at last year’s Funnel Hacking Live. Here are some of the amazing things to listen for in this episode: Find out what the creativity switch is and how it can help you grow your company. Why the backend of your Value Ladder should never change. And how you can avoid getting stressed out and overwhelmed by the surplus of information you are receiving in this presentation. So listen here to hear the final part of this amazing presentation at Funnel Hacking Live 2018, and get excited for this year’s event coming up soon! ---Transcript--- Hey everyone, this is Russell again. Welcome back to the Marketing Secrets podcast. This is day three of three from this presentation. So this was the very first presentation I gave at last year’s Funnel Hacking Live event. I hope you’ve been enjoying it. There’s so many cool things that we cover in here and I just thought, you know what, if I want to get people excited about Funnel Hacking Live, those who are coming this year for the first time, I want to share this. And for those of you guys who don’t have your tickets yet, hopefully it will push you over the edge to realize, “Man, that was just one presentation. Can you imagine what would happen if I was there for four days?” So if you don’t have your tickets yet, go to funnelhackinglive.com and get them. And with that said, let’s queue up the intro music and let’s jump back into the last part of my presentation. Thanks so much you guys and I will see you soon in Nashville. Now again, the problem us entrepreneurs, if we can figure out the what and the how and make a million bucks, and then we’ll be like, “I’m bored. I need to do something.” You’re freaking out and you’re trying to create the next thing. So what I want to talk about now is the creativity switch. This is what took us to the next level, when I learned this about myself. The thing that makes entrepreneurs great is also the thing that holds the rest of the company back at a certain level. I was the one that was able to get it to the spot, but I was the one who was hurting it. And I knew that, and I was like, “What do I do?” I wanted to create all these other things, and that’s when I figured out this next step, which is the creativity switch. I had to shift my creativity from figuring out the what and the how to get this thing into orbit, now it’s in orbit, I have to shift my creativity or else I’m going to go insane. I shift my creativity as an entrepreneur to the next thing, which is going from 7 to 8 figures. Now, I’ll write this down really quick. Jay Abraham, one of my mentors, he told me there are only three ways to grow a company. And at first I was like, “Nope, you are wrong. There’s tons of ways. There’s Facebook ads, there’s Twitter ads, there’s YouTube ads.” And he’s like, “No, no, no. There’s only three ways to grow a company.” And at first I didn’t understand. And then he mapped it out and said there’s three ways. Who here knows what the three ways are? What’s number one? More customers. Okay, what’s number two, let me write this real quick, “One is more customers. Number two, getting them to spend more.” I know what it is, I just need to show you on the slide, to spend more. “Spend more money.” And then number three, who knows what number three is? “More often”. Okay, so that’s the three things. Get more customers coming in the door, get those customers to spend more money with you, and to get them to buy more. So I always translate things into funnels. So I’m like, “Well, how do funnels do that? How does this whole thing word?” and I was like, “Wait a minute, I know how this works. More customers are acquisition funnels. Funnels that get people into the front door.” That’s it. And I’m like, “Getting people to spend more are what we call ascension funnels, gets somebody to ascend up with our side of our business. And number three, getting people to buy more often are just monetization funnels.” I’m walking through all those things, but as soon as I saw that I was like, “Oh my gosh. I know exactly what to do. I know how to shift my creativity now to grow this company.” If you come back here to Clickfunnels, this is, again, our value ladder, if you look at it. When we launched the company, the core funnel was in the middle, that’s where I figured out the what and the how, and we launched this thing and it was going awesome. And now it’s like, now I gotta figure out other ways to grow the company. So I started looking at this, started to say, “Okay, the webinar is working good, everything is coming in. How do I get more customers?” And I was still doing the webinar, but I was like, “What else can I do to get more customers?” and I was like, “Wait a minute, what if I build front end acquisition funnels?” So I started building acquisition funnels. So how many of you guys, shortly after we launched Clickfunnels remember me launching this book? That guy is awesome. So the reason why we launched this book was not because I wanted to write a book. Writing a book is horrible. Who’s ever written a book before? I’ve never given birth but I’m pretty sure it’s like comparable in pain. It’s really, really hard. So we got this first book done, and the goal of this book, like I love selling books and stuff, but the only reason I want any of you guys, I wanted anyone on earth to buy this book, I wanted them to buy this book and then read it, and to then know that they needed to get Clickfunnels, my core offer. The whole goal of this was to acquire new customers, indoctrinate them into my way of believing and thoughts, and then ascend them up to the actual thing I’m selling. And then a little while later Russell got all panicky and stressed out again, and I was like, “I need a new funnel.” So I wrote another book, I gave birth again. It was painful, but it was awesome. So we launched this book to acquire new customers in. So I started creating front end funnels to acquire people in, but not at first, not until after we were at a million dollars. A book funnel is probably one of the harder funnels to get to work. Most people are like, “I’m going to write a book.” And spend the next 8 years of your life trying to write a book, trying to figure out a funnel. It’s like, you should just make money now and sell something in the middle of the value ladder. Start there, and when it starts getting ad, and some people start seeing it, it starts getting more expensive to buy ads to your webinar, that’s when you come back and start creating new funnels to bring people in as customers. Does that make sense? I didn’t write the books until my webinars were fatiguing and I needed something new to get people to raise their hand and say, “I do think I’m an expert.” I would love to figure out how to share my message with more people.” I’m like, “Cool, here’s the book to teach you how to do it, but then there’s this tool that actually you need to do it.” And they’re like, “Oh my gosh, I need Clickfunnels.” And I’m like, “yeah, you do.” And they naturally will ascend up. So acquisition funnels. If you guys look at our business, we create new acquisition funnels all the time. I actually want to go back a step to this. One thing I want to talk about before I go too deep into this, because this has been a common mistake I’ve seen most of our people make over the last year. They create a value ladder and they start creating more and more and more things, they’re always creating more backends and more…for most of your businesses you should create one core offer (I’ve got one, clickfunnels), one backend offer, you know what that is, and then you never create anything else in the value ladder again after that. Ever. It’s done. All you should be focusing your creativity on afterwards is like, what are cool front end offers I can get to get a different set of people to raise their hand and come to me? Last, uh, two months ago, three months ago, these are some front end offers. Again, Dotcom Secrets book, Expert Secrets book, and then a couple of months ago I was like, looking at different marketing segments that we don’t have yet and I was like, “you know what, there’s not very many network marketers using Clickfunnels. How do I get more network marketers? How do I get that segment of the world to come in and start using funnels.” They just don’t understand how it works, right. It’s the same concept I had before Expert Secrets. How do I get all these people who are thought leaders to come and start using Clickfunnels? So I message Julie Stoian, who you guys are going to meet in two days up here. Wow, her reputation precedes her. I messaged Julie, “Hey um, I want to write a book teaching network marketers how to do this thing.” And then we sat down and I created like a six hour course, she watched the whole course, and then like two days later she gave me the book. And I was like, “That was really, really fast.” So we put together this book and in about a week or two we’re rolling this out to the network industry, getting network marketers to understand what funnels are and they come into our world. We create new front end offers to bring people in different segments. You’ll see we also have an ecomm funnel, a book coming out, we’ve got other ones. What are different segments I want to go into and I create front end offers to get those customers and bring them in and I can go up. So your business, again when you have your value ladder, after you create the backend of your value ladder, you should never touch it again ever. That should give you guys some freedom of, “Ah sweet. I can quit creating stuff.” If you go to a Tony Robbins event, you’ll notice from the past 20+ years his backend hasn’t changed. You read a book, you go to UPW, you go to Day with Destiny, that’s his value ladder, 20+ years. And 20 years later he’s like, “I’m going to write a new book.” So he wrote the money book, Money Master of the Game, which brought in a whole new audience for him. And then guess what he did when they came in? Send them to UPW and send them to Day with Destiny. That’s it. So don’t keep trying to create other things. Do it once and then it’s done and you can be like, “Oh sweet. I can relax and I don’t have to stress about this anymore.” The backend is done and now this where we shift our creativity to like, “what cool front ends can I create?” You start having fun with that. That’s where we focus our entrepreneurial creativity. So again, we moved down a step in the value ladder and started creating really fun frontends to bring people in. So that’s number one, more customers. Number two now is how do we get these customers to spend more? These are called ascension funnels, to get somebody to ascend up. I learned this concept initially from Bill Glazer. Bill is, he was like my marketing dad or grandpa. When I got in this business I went to his mastermind group for six years and he was like, telling me how to do all sorts of stuff. And one of the coolest things I learned at GKIC back when Bill was in charge of it was this concept of ascension. How many of you guys are GKIC members, or were back in the day when Bill was running it? Alright. A lot of you guys don’t know about it. So I’m going to walk you through their business model because it’s brilliant. They had different continuity programs. They had a GKIC gold member, which I think was $49 a month, then there was a silver member, which was like $199 a month, then there was another one like $250 a month, and there was peak performers at like $6800 a year, then there was platinum at $15k and titanium at $25k. So that was their business. So all they focused on was customer acquisition to this $49 thing. So they would drive ads for everyone to buy this thing. As soon as you bought this thing, it was crazy. All they would do is focus on getting you to ascend from here to here. That was it. So if you were on this, if you signed up for this program, you were shifted to a different list, and they focus on ascending you from this to this. Every campaign, everything they did was getting you to move from this to this. They do big huge events, like “Come to the event.” And they’d sell something at the event and say, “Hey, if you’re a gold member it cost $10,000. But if you’re a silver member it’s only $5. Click this button and we’ll upgrade you right now.” And they’re like, upgrade. And they got everyone to move up here. Every product they put out the only goal was to get people to ascend. And then as soon as you ascended to silver, all the marketing shifted for you and the whole thing was about getting you to ascend to here. That was it. So the marketing would focus on ascending and then all the sudden, boom, they ascended there. And then you shift and all the marketing is focused there. And I saw him do it for years and I watched him grow this company, all focusing on ascension. And I don’t know anybody in our world that really does that. So last year at Funnel Hacking Live, who was here last year at Funnel Hacking Live? So at Funnel Hacking Live last year was the first time I was like, how do we ascend people in Clickfunnels and so we did a presentation that some of you guys were part of called Follow up Funnels. How many of you guys saw this presentation? Nobody saw it? You saw it if you had a Confusion Soft t-shirt at the end of it. How many of you guys remember that one? My entire goal of this presentation, of this one was to ascend people from Clickfunnels to Actionetics. That was the ascension path, right. And we moved them up right there. Right now about 20% of all Clickfunnels members have ascended up to that. Anyone need help to do the math on that? We make more from our Actionetics level than we do from Clickfunnels right now. It’s insane. I didn’t have to resell those people anything. All I did was told them, “hey, this is awesome. This is even cooler.” And I get people to step over and ascend up. How many of you guys think I’m going to try to ascend you to some things this weekend maybe. I’d be doing you a disservice if I didn’t right. Because my goal inside of this, when someone comes in my core offer of CLickfunnels, they’re in Clickfunnels, and then as soon as they’re in Clickfunnels how do we get them using our entire platform? How do we ascend them up to Actionetics? And then people come to Clickfunnels and how else can I ascend them? I ascend them up to my backend things as well, to my higher end coaching programs, so I can serve them at a higher level. It’s all about ascension. When somebody comes in, you get a customer coming in it’s all about how do I ascend them? How do I serve them more at a higher level? What can I do? What can I create? What can of marketing? What kind of funnels can I use to ascend people up? So we started creating ascension funnels to get people to spend more money with us, so we could serve them at a higher level. That was number two. So for me, as the entrepreneur, this is where I get to use my creativity. How can I get people to ascend up? And now I’m not focused on some new business I want to create, I’m focusing on this problem. How do I solve this? That’s the magic. We start focusing our entrepreneurial efforts on these kinds of problems and we’re not focusing on creating new businesses, this how we started growing and scaling our company. So ascension funnels. And the third type of funnel are Monetization funnels. How do we get people to buy more often. Okay, now the very first thing you were selling someone, your what and your how, if you read the Expert Secrets book, initially you’re always offering them an opportunity to switch. You’re switching them from some opportunity to your new opportunity. If you don’t know what I’m talking about go back and read Expert Secrets, and we’ll actually talk more about this in two days, but that’s the first thing. Monetization funnels are what we’re doing in an opportunity switch. These are where we’re offering our audience other, different products to help them as well. So some examples, we have our software secrets product, which is a monetization funnel. We have funnel scripts, which is a monetization funnel. Funnel university, these are other things we sell our audience to help them on their journey with us. And those are monetization funnels. So for us as entrepreneurs, when we’re going from a million to ten, this is where our focus needs to be at. It’s not creating a new offer, new business, new company. It’s how do I create front end funnels to acquire more customers? How do I create ascension funnels to get these people to ascend from this level to this level to level? And then what else does my audience need to be more successful? What else can I create to give them? How many of you guys has Funnel Scripts made your job so much easier when you build your own funnels? Yeah, it’s insane huh. That was something we created to help people more in their journey with us. All these things are. So that’s the monetization funnels. So if you look at the order of this. When we launched, when you’re going from zero to seven figures, you figure out your core offer first, then from there we open up our backend offer, after we build up pressure. A whole bunch of people, customers coming in, we open up the backend offer. Then we come down and start focusing on our ascension funnel, that’s where we start bringing people in. Alright, like I said, the back of the value ladder never changes. You just create, your focus should be creating new creatives on the front end to bring more people in. Okay, I’m going to walk you guys through some businesses of some people here in the room that you may know. The first one is Brandon and Kaelin, give them a huge round of applause. They’re over here somewhere. Kaelin’s going to be speaking with you guys here in a few minutes and I’m excited because man, their journey has been so much fun to watch, as they went from zero to a million, a million to ten, and now they’re on their journey from ten to a hundred. And it’s just, it’s awesome. But if you look at this, if you look at their journey, if you reverse engineer this, and I’m obsessed with reverse engineering what people are doing, they followed this process to a t. When they first came out, the very first thing they launched was this program. It was a webinar they launched, I think $150 lifetime access or $30 a month. That was their first thing. Their what and their how. And they grew this to over a million dollars before they came out with the next new thing. They built up all this pressure. The people they were serving, they were changing lives, all this was things happening. After they had this audience of people who loved and then they were like, “how else can we serve these people?” Now they open up the next thing, and they brought people in with their supplements. Boom, they launched their supplements day one and it just blew up. One of the biggest supplement companies online overnight because they built up so much pressure on their first thing. If they had launched a supplement company first guess what would have happened? Nothing. There’s an order, there’s a sequence. They figured out their what and their how and they focused, they focused, they focused. I’ve been telling people for two years now that you need to do a live webinar every single week until you make at least a million dollars. Most people don’t. How many of you guys do that right now? So Kaelin and Brandon said, “We’re going to do what Russell says.” They created the hashtag, dowhatrussellsays, and she started doing a webinar every single week, every single week, every single week. I think she did thirty or forty webinars live before she ever tried to automate it. You figure out the what and the how. The reason why I tell people that, do it live, is because that’s going to help you figure out the what and the how. Your audience will tell you. You’ll feel it, they’ll give you feedback and you’ll make the tweaks and the changes you need to do. So they did that, launched their supplement and afterwards they launched their coaching. So if you look at their value ladder, the front end, figure out the what and the how, they sold that. After someone buys that they ascend up to supplements, then from there they ascend them up to coaching. Alex and Layla, where you guys at? You guys will have a chance to hear from them tomorrow, I don’t remember when, in a day or two. So I’ll tell you more of their story later. But Alex and Layla literally launched their new company in April and you may have noticed they stood up when we did the Two Comma Club X awards. From zero to ten million dollars since April, insane. I still don’t know how they did that, that’s gotta be a record. But if you look at their funnel, same thing. They figured out their what and the how, people bought this. They built up pressure and they released the next thing. And that’s the whole game. Figure out the what and the how, build up pressure, release the next thing. And they haven’t even gone to the point where they had to build new front end funnels. They’ve just been killing it with this so much right now. Look at their value ladder, they aren’t even on step number three yet. They got the what, the core offer, the what and the how figured out, built up pressure, launched the next thing, monetized it, and someday I’m going to get Alex to build a frontend or a webinar or something and it’s going to be amazing. He said, “No.’ Anyway, like I said, there’s 17+ other stories just like these that I want you to understand, sitting here in this room with you. The path and the process is the same. Understand that. Again, we’re going to come back to the creativity switch. Step number one going from zero to a million is figuring out the what and the how. You transition your creativity as an entrepreneur to figure out ascension, acquisition, and monetization funnels. If you’re not in that spot yet, don’t stress about this at all. Like, “I know Russell did something really fancy there, but I’m not ready for that. I’m focusing on the what and the how.” For those of you guys who are there, it’s like, “Okay, that’s my focus. That’s where I need to be focusing all my creative energy.” And after you go from there, then the third phase of going from ten million to a hundred million, this is where I’m focusing all my effort at right now, is this piece right now. And it’s focusing on getting mass traffic. Now, I’m not going to spend a ton of time during this presentation right now, going through the traffic part of this. But my creativity right now is focused on what kind of ads can I make that are insane that are going to get more people to raise their hand on all sorts of platforms? Here’s a couple of them that you guys may have seen. This is one we did on Instagram the other day, “Hey, this is Russell Brunson. My new book Expert Secrets is literally on fire. Get your free copy by swiping up right now. Swipe up to get your copy of the Expert Secrets book. Quick, it’s on fire, you get a free copy. Just cover shipping and handling and we’ll mail one out to you.” So if anyone ever lights a book on fire, this is what we learned, first off, you can’t just light a book on fire, it doesn’t burn. Second off, you have to douse it with gasoline, but if you douse it with gasoline while you’re holding it and then you light it on fire, the flames will come down to your arm. I learned that, that night. That’s why I’m like, “Ahh, ahh, ahh.” And we did videos like this for Facebook, YouTube, all these videos of books burning. It was horrible. Number three, when you burn books on ads, people complain in the comments, so you shouldn’t burn books on ads. So we learned a lot of fun things. But here I’m like, this is what I do with my creative energy. Like, how can we sell more books? Let’s light one on fire. Or the other day I was walking past our, in our office we have potato guns because that’s kind of the whole beginning story. So I found a potato gun and we had this big mud pit behind our office and Dave was like, “Let’s go take the jeep out.” So we spin the jeep in the mud, I got a potato gun and then we found the prospector, we had this big cardboard cutout of the prospector. I was like, “Oh my gosh, I got an idea for an ad.” Five seconds later we’re set up and this is the ad that came from that one. “Hey, my name is Russell Brunson and I’m a potato gun expert. (Thud) and I just finished my new book called Expert Secrets. Expert Secrets tells you how you can become an expert in anything. I’ve done it with potato guns, I’ve done it with other things as well. Inside the Expert Secrets book I tell a story about how I started my entire business as a potato gun expert. I was making DVDs teaching people how to make potato guns, how to shoot them, it was a ton of fun. And I turned that little idea, that hobby into a career. And you can do the same thing with the things that you’re good at. “What are you good at? What are you passionate about? What do you have opinions on? What do you have a lot of advice about? What is something that you love, that you’re an expert at, that you can share with the world? Just like I made money selling potato gun DVDs, now I make money teaching people how to market their businesses, you can make money with your passion, your idea, and the way to do that is all included here inside the Expert Secrets book. “Now I have pre-bought a whole bunch of copies of this, if you want you can go to Amazon.com, go order it from there, you’ll see tons and tons of five star reviews, or if you want, you can get a free copy. All you gotta do is go to expertsecrets.com, I already bought the book, if you cover a tiny shipping and handling fee, I will ship you out your very own copy, then you can read this book and find out how to find your message, how to build your tribe, and how to make a whole bunch of money teaching people whatever it is that you’re amazing at. “Now, this book has literally helped hundreds and hundreds of people around the world to take their passion, their talents, their ideas, their hobbies, their advice and turn it into a full time business. And you can do the same thing as well. All you gotta do is go to expertsecrets.com, get your free copy there and you’ll also see all the other bonuses and other cool stuff I’m going to give you as well, when you go and get your free copy. So now is the time, wherever you’re at watfching this, on Facebook or YouTube, wherever you’re watching this, stop what you’re doing and go to expertsecrets.com and get your free copy. I will ship this out and this will teach you how to take your ideas and turn it into a business. “Thanks so much, again my name is Russell Brunson and I cannot wait for you to get your first copy of the Expert Secrets book.” You’d think as you go from zero to a million, a million to ten, and ten to a hundred you’d get more mature, but I think it’s the opposite. Because now it’s like, literally we’re thinking, anyway, the weirdest things possible. But that’s the focus, as an entrepreneur, when you get to that point you don’t need more offers. There’s a point where you have enough offers, your value ladder is in place. Now it’s like, what can I do to promote this more? All my creative energy has been focusing on new ads, new ad types, new platforms, new things like that, and the last phase in here. Going from ten to a hundred million is that. I’m going to be doing another presentation here in a little over an hour, it’s called Conversation Domination. I’m going to go deeper into some traffic stuff. I’m not going to touch it too much right now. But this is the fun part, I’m just focusing….You’ll be able to tell when I do these presentations, this is where most of my focus is at right now, and it’s a lot of fun. So I wanted to come back to this. This is the vision I want you guys to understand over the next three days. Because I know that with so much stuff happening, some of you guys are going to feel overwhelmed. But if you understand, this is the vision of where you’re going, you don’t have to stress about the overwhelm. Okay, you look at this and say, “Okay look, zero to a million. This is the category I’m in, all I’m going to focus on is the what and the how, the what and the how. For every presentation I here, I’m going to listen for how does this company figure out what it is I’m selling and how I’m selling it.” And I want you to stress about, think about that. In that process, if you look at in that first circle that little triangle, that’s from the Expert secrets book, in fact, my next two presenters who are going to be speaking are going to be talking about this part. Because going from zero to a million, a lot of it is figuring out the what and the how, but a lot of it is figuring out yourself too. If you’re the one selling the product, how do you build your following? How do, yourself as an expert, how do you position yourself, how do you put yourself out there in a way that’s a lot of times not very comfortable, but in a way that’s going to attract people to you? So the next two presentations are going to be going deep into that. But every presentation for you guys, if that’s the phase you’re in, just think about that, the what and the how, the what and the how. That’s the key for you guys going from where you are today to Two Comma Club. That’s it. Now for those of you guys who are in the Two Comma Club and you’re like, “Sweet, I want more.” You should be focusing on all the different funnel types, like, “Okay, there’s this one and this one, what should I do to acquire more customers and those kind of things?” And those who are growing beyond that, you’re focusing on all the traffic presentations, how to scale your traffic and get more and more people in. But that’s what I want to explain, because I know that so many of us, especially as our community as a whole has been growing. It’s been fun watching, if you look at four years ago, the first Funnel Hacking Live event, if I would have said, “How many people here are making over a million dollars?” It was like one or two people. Now we’re at like almost 300. If you look at 17 at ten and it just keeps growing and scaling, it’s so much fun. And I think as a community, as a whole, we’re all growing together. But I want everyone to understand, this is the vision, this is where you should be focusing, this is what you should be doing, because I don’t want you guys focusing on eight and nine figure creativity problems if you don’t have your what and your how figured out. And visa versa. You focus on where you’re at, built that piece out, figure it out, and then you can switch and again, the market will tell you when you’re ready to make the switches and the transitions. Okay, to end this presentation I want to come back and I want to show you the video I showed you at the very beginning, one more time because, two reasons. Number one, after I watched it, I watched it like 30 times more, and it’s really fun so I’m going to show it again. And number two I want you guys, as you’re listening to it, to understand that this video is talking about you. We’re not normal, you guys know that, right? Most people don’t wake up in the morning, figuring out how can I change the world? How can I sell more products, how can I serve more people? That’s not a normal thing. Most people wake up in the morning, they’re depressed, they’re tired, they go to work, they’re miserable, they come home again, they’re miserable. Most people don’t spend all their extra time, energy, and money flying to here to hear people talking about selling stuff through funnels, for crying out loud. You guys are different and that’s good. So I want to show you guys the video one more time, and let’s watch it. “Here’s to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes, the ones who see things differently, they’re not fond of rules, and they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them, about the only thing you can’t do is ignore them, because they change things. They push the human race forward. And while some might see them as the crazy ones, we see genius, because the people who are crazy enough to think that they can change the world, are the ones who do.”
Aired Last week 42:13
Q&A With The Kids
Behind the scenes conversation with a bunch of young entrepreneurs. ---Transcript--- What’s up everybody? This is Russell Brunson, welcome back to Marketing Secrets podcast. I’ve got a really fun special episode for you today. Recently I had someone in our community contact us and say “Hey, we run a school with kids from (I don’t even know how young), from first grade up to sixth grade.” I think the oldest kids were about 12 years old. Anyway, they said, “We’d love to have these kids come over and ask you questions about your company, about being an entrepreneur and all that kind of stuff.” So I thought it’d be really, really fun, so we had them come over this last week. And they’d been studying entrepreneurship and business and they were doing a bunch of things, and they had to make a pitch deck to pitch to investors, they were going that night to actually go sell stuff. So this little cute entrepreneurial classroom of kids came here to the Clickfunnels offices, and I thought, you know I’m going to record this just in case anything cool comes out of it. And it turned out to be really, really fun. This is an episode that if you have kids, you should probably pull your kids in and listen with them. I think you’ll hear some new stories and get some ideas whether or not you have kids or not. But this is definitely a presentation geared towards children and getting them excited about entrepreneurship and kind of telling them some stories about how I built my company. It was funny, we had this little microphone box you can throw to them, and they were all fighting over it, they wanted to hear their voice. So you’ll hear a little bit of that. I had my brother try to edit out any of the long pauses, or the awkward things. So hopefully it’s listenable to listen to everything. And it’s kind of fun, I think 8 or 9 kids asked the exact same question, so I had to re-answer it different ways every single time. So hopefully you guys catch that in there. One of the girls talked about entrepreneurship, I asked who wants to be an entrepreneur, and she’s like, “No.” and I’m like, “Why not?” and she’s like, “It’s kind of like a teeter totter, where you’re off a cliff where either you fall of a cliff and you die, or you don’t.” or something like that. And I was, “That is the best explanation of entrepreneurship I’ve ever heard.” Anyway, this is just a fun episode I wanted to post here for you guys. I hope you enjoy it. Again, if you have kids, maybe have them listen in as well. And with that said, I will queue up the theme song and I hope you guys enjoy this Q&A session from the kids group that came into our office the other day. What’s up guys? How are you guys doing? Kids: Good. Russell: Welcome to Clickfunnels. We’re excited to have you guys here. Why do what? Kid: Why do you sound like you have a microphone? Russell: Because I have a microphone. Check this out, I have a microphone here. This is called the catch box, you hold it like this and you talk into it. I wanted to this so that way when we ask questions we can make sure we hear everything. Because it’s kind of fun, and sometimes this room gets loud because we have all these super heroes everywhere that sometimes mess things up. So we’re going to practice this to make sure you guys can make this work. So who wants to tell me their name? Kid: My name’s Garrett. Kid2: My name is Paxton. Kid3: My name’s Brynn. Kid4: My name’s Jack. Kid5: My name’s Liam. Russell: Alright, so my first question for you guys is do you guys know what my name is? Kids: No. Russell: What’s my name? Do you want to catch it? Kid: Jack! It’s Clickfunnels. Kid2: Russell. Russell: You’re right, good job. Okay, thank you. Russell. I am one of the founders of Clickfunnels, which is where you guys are at today. So I heard you guys have been learning about entrepreneurship, is that true? Kids: Yes. Russell: How many of you guys want to be entrepreneurs when you grow up. Kid: No thanks. Russell: No thanks. How come, I want to know why you don’t want to. Kid: The reason I don’t want to be an entrepreneur is well, first of all, I’m afraid of messing up and I don’t like the risk that I’m taking. Russell: Who has a cool thing about being an entrepreneur? Kid: One cool thing is that you can be almost anything that isn’t already a corporation. You could be like a UT bridge kind of entrepreneur. Like Clickfunnels is made by entrepreneurs and it’s made for entrepreneurs as well. Stuff like that. Russell: Okay, so I’m going to tell you guys my story real quick about how I became an entrepreneur, and then I’ll let you guys ask questions because I heard you guys had some good questions. So I didn’t know I was going to be an entrepreneur my whole life, but when I was…how old are you guys? Kid: 6 Kid2: 9 Kids: crosstalk Russell: Who’s the oldest? Kid: 6 to 12 Russell: How old are you? Kid: 12 Russell: 12 okay. So I was about your age, I was about 12 or 13 years old and I didn’t know what I was going to be when I grew up. I had no idea. I remember I was watching TV one night, and late at night there’s these things called infomercials. Any of you guys ever seen an infomercial before? Where they try to sell stuff? And there was this guy on the infomercial, he was selling this book about how to make money in the newspapers, and I was like, that is the coolest thing in the world. And he was selling, you had to pay $40 to buy this kit, and I did not have $40, so I begged my dad for money and he said, “No.” He said, “If you want to have that money, you have to earn it.” So I went out and mowed lawns for a whole month to earn $40 and then I took that and bought this kit on TV that taught me how to make money with newspapers, which was kind of cool. So that’s when I first started learning, I was about your age when I started learning about it, so you guys are in a good spot. So then fast forward to when I was in college. I was going to school and I didn’t know what I wanted to be. I liked to wrestle, do we have any wrestlers in here? What? We got a couple of wrestlers. So I’m a wrestler, so I was wrestling in high school and I loved it and then I started wrestling in college. I came to Boise State to wrestle, and then I met my beautiful wife and I fell in love with her and I wanted to marry her. But guess what you have when you get married? Do you know what this means? Kids: Money. Russell: Money. And I didn’t have any money, I was completely broke. I didn’t even have a job. And I was like, I gotta do something or else I’m going to be in big trouble and my wife’s not going to have a house to live under if I’m going to marry her. So I tried to figure out how to make money, but I couldn’t get a job because I was wrestling. So I gotta figure out a different way to do this. So I thought, you know I could do, I could quit wrestling, but I love wrestling. I was like maybe I could become an entrepreneur and try to sell something of my own. And I didn’t know what to do. So I started trying to learn how to do, how to make money. I was trying to think what my first big idea was going to be. And I tried a whole bunch of things, and guess what, none of them worked. I tried thing after thing to make money and none of them worked, and then one day, one of my friends said, “Russell, do you want to make a potato gun?” and I was like, “What’s a potato gun?” How many people here know what a potato gun is? Kids (inaudible) Russell: So this is a potato gun, and I didn’t even know what it was. I was like, “What’s a potato gun?” and he said, “What a potato gun is, you make it out of sprinkler pipes and you get a potato and put it here and you jam it, so a potato would be right here, and you get a broom and push it down so it pushes it all the way down to right here. And then over here there’s a big hole. So you spray hairspray in here, and you put a cap over the top of it, and then guess what happens?” Kid: It goes boom. Russell: Inside of here there’s a whole bunch of fuel and there’s a potato stuck right here. So in the cap, and I couldn’t find the cap this morning because I think somebody stole it, or somebody just misplaced it, there’s a little igniter, and if you click the button on the igniter it makes a little spark inside of this hole right here, and that spark lights the hairspray on fire. And the hairspray is like, ‘Ugh” and it wants to explode, but it can’t. But guess what it does? It takes the potato right here and goes, pfft, shoots it out and it goes like a hundred yards. How many of you guys know how far a hundred yards is? Have you ever been to a football game before? A hundred yards is the whole football field. It shoots it all the way across a whole football field. Is that crazy? So he told me that, my friend told me that. And I was like, “That sounds like so much fun. Let’s do that.” So we went and we didn’t know how to make it though. So we went on Google and typed in “how to make a potato gun, and then people had different instructions, “This is how you cut the pipe” and “This is how you glue it together” and “You gotta buy pipes this size and this size and this and this.” And we read all the instructions about how to make it, and then we went home that night and we started making it. And we had so much fun. It took us three or four days to build our first potato gun, and when it was done we went out by the airport and we started shooting potatoes, and it was so much fun. But then, guess what happened? We were shooting potatoes and all the sudden this big huge jeep, that had camouflage on it, started coming toward us. And I was like, “What’s going on?” and they drove all the way up and out came this big, huge army guy, with a big old mustache. And he walks over, “What are you guys doing?” I’m like, “We’re shooting potatoes.” And he’s like, because we were behind the airport, he said, “You’re on government land. You cannot be shooting things back here.” And I thought I was going to go to jail. I was so scared. I was like, “Ah, okay. Okay.” And he’s like, “How does that thing work?” So I kind of told him, and he’s like, “It doesn’t go that far.” I’m like, “No, it really does.” And he’s like, “Prove it.” I’m like, “Really?” so he said, “Yeah.” So he started shooting guns with me, this big police man who was going to arrest me. And he shot like 5 or 6 potatoes with me, and then he’s like, “Okay, you can’t shoot back here or I’ll have to put you in jail. So go shoot them out in the forest or something.” And he let us go and I was like, “Oh good, I thought I was going to go to jail.” So luckily I didn’t. So then, we had so much fun making these, they were so much. The next day I went back to school…yeah? Kid: Why didn’t he arrest you for having an illegal and dangerous weapon? Russell: That’s a good question. He said, “How come he didn’t arrest you for having an illegal and dangerous weapon?” I think it’s because he thought it was kind of cool. It could have been worse. Anyway, luckily he didn’t. I don’t know why, but I’m super grateful he didn’t arrest me. So anyway, I went back to school on the next Monday and I was sitting there thinking, “What should my business be? What should my business be?” and all the sudden, boom, the light bulb went off in my head. Have you guys ever had that before? You have an idea? I was like, “What if there’s more people besides me that want to make a potato gun? What if I’m not the only person.” And I thought, I’m going to see if there’s more people besides me. So on the internet, what’s cool is it will show you how many people are typing in different searches in Google. And guess how many people were looking for potato gun plans that month? Kid: 200,000 Russell: Ooh, I wish. Kids: crosstalk Russell: 500, 100. Kids: Crosstalk Russell: So if you look at the entire world, around the whole world, there were 18,000 people searching for how to make potato guns and nobody was selling a product on how to make potato guns. I was like, “What if I made a product on how to make potato guns? I could make some money. This would be the coolest thing in the world, and I could get arrested.” So I had the idea. So then I called my friend up, his name is Nate. I said, “Nate, we’re going to make a product teaching people how to make potato guns.” And he said, “How do you do that?” and I said, “I don’t know. I’ve never done it before, but let’s figure it out.” So we borrowed a video camera from somebody and then we drove down to Home Depot, maybe it was Lowes, I can’t remember. Home Depot or Lowes, and we walked to the sprinkler isle, and I had all the sprinkler pipes and I recorded a video and said, “When you buy the sprinklers, there’s a secret, you have to make sure that the PSI is right. So if you look on here it talks about the Pounds per Square this thing can handle.” Anyway I summarized how much that is, how much these are, and what sizes. So we made a video of us buying all the pieces of the gun. Then we drove to my wife’s work, where they had a little workshop, and we made a video us, recording gluing the thing together and making the actual potato gun. Then we drove and filmed us at school writing out all the different formulas and how, you know, all the different plans on how to make potato guns. And we took all those different things and we put it on these videos and then we made a dvd. And this was my very first dvd, it’s called HowToMakeAPotatoGun.com. And this dvd taught people how to make a potato gun, just like that. So this was my very first product ever made, and there’s the dvd inside. Do you guys even know what dvd’s are? You’ve seen those before. Kids: Yeah. Russell: I know, it’s a pain. It gets scratched, they have to rebuy a new one, which is good for me. Kid: Just put a bandaid on it. Russell: I don’t think you can put a bandaid on a dvd, but that is a good idea. Alright, so this was my very first dvd, and I was so excited, I’m like, “Now what do I do? How do I sell it?” and I didn’t know how to sell it. So I went and got this website, howtomakeapotatogun.com and then I put up a webpage to sell it. And it had a little picture of the dvd. I said, “Here’s a dvd teaching people how to make potato guns, just like the one that I just made. And I started buying ads. So when somebody would go to google and type in “How to make a potato gun.” They would see my ad and see, “Do you want to learn how to make a potato gun? Click here.” And they’d click on my ad, come to my webpage, and a lot of them started buying this dvd for like $27, they’d buy the dvd. And that’s how I got started as an entrepreneur, I started selling this dvd. I sold a whole bunch of them for a while, and that was my very first product. Any questions about that at all? Kid: What was the hardest part about making it? Russell: Ooh, good question. The hardest part about making it is I didn’t know how to edit videos. So we recorded them on this camera, and then I didn’t know what to do. So I had to read books about how you get them from the video camera onto the computer. So then we got them on the computer. And it’s like, how do you turn it into a dvd? I didn’t know how to do that. So then we had to edit the thing, then we had to glue it together, put it together, then we had to burn it on dvd. So learning how to actually make the dvd was the hardest thing for me. Kid: What was the most difficult thing about making your whole business? Russell: The most difficult thing about making my whole business was probably believing it was going to work. A lot of times… Kid: It seems so fun. Russell: A lot of times we have an idea but we’re like, is that really gonna work? We have to do all this work, should I do it or not? So the hardest part is just believing it will actually work the very first time. Kid: And how did you make it? Russell: Alright, who else has got a question? Kid: What was the easiest part about making your business? Russell: The easiest part, man, there’s not a lot of easy parts. There’s a lot of hard parts. The easiest part was probably after it started working. Because there’s a lot of hard work to get it started, then when it started working, then guess what? The webpage was there, my ads were there, and I’d go to school every day, I’d go to wrestling practice, and while I was goofing off and having fun, people were going to Google, type it in, click on the ad and they would buy. So even when I was sleeping at night, people started paying me money. So I was making money in the morning, at night, when I was on vacation, the money kept coming in. So that was the best part. After all the hard work was done, then it just started making money whether I was there or not. Kid: What, how much money did you make every day? Russell: Good question. So this product, this was my very first one, so it never made me tons of money. But it was making probably between 25 and 50 dollars a day. But for me, how many of you guys think that $50 a day would be amazing. So it was tons. When I was going to college I was like, $50 a day is a lot of money for me. It was really, really cool. Good question. Kid: My name is Paxton. Russell: Thanks Paxton, you’re awesome. Kid: What inspired you to make the potato gun? Russell: Ooh, good question. So when I was trying to figure out what to make, I was looking around and I saw a lot of other people selling things. So I was looking at what’s everyone doing? And I had a friend, one friend who was making a product teaching people how to do baby sign language. So I was like, that’s kind of cool. Because she was really good at teaching babies sign language. I had another friend that was teaching people how to do hair bows. They’d make hair bows, any girls have hair bows? They’d make these really cool hair bows, and they had a dvd teaching that. So I saw three or four things, I saw all these people who were really good at something, they made a dvd teaching it, and I was like, “I’m not good at anything. What could I do?” and then when I made that potato gun I was like, “What if that’s my thing? What if I make potato guns?” So that was my very first, that’s how I got the inspiration. Kid: What was your biggest regret? Russell: My biggest regret…hm. Probably my biggest regret is I didn’t start sooner. I waited for like 2 years before I made my first product. I was thinking about it, talking about it, I was scared. So I didn’t do it. I wish I would have started faster, because I would have started having success faster. Kid: How much money did you make every year? Russell: Every year? Well the first year I didn’t make very much money. I made maybe $10,000. And then it started getting bigger and then one year I made a million dollars in a year, which was so cool. And then it got bigger, and then Clickfunnels, this company now, I’ll tell you what we do in a minute, but Clickfunnels did over a hundred million dollars last year. What would you guys buy with that? Just kidding. Kid: I’d buy the company. Russell: You’d buy the company. Kid: What was your favorite part? Russell: My favorite part? I love when somebody buys your product and then they use it, and they have success, that’s the best. So someone who’d buy it, they’d make a potato gun and they’d send me a picture, “Look at my potato gun that I made?” Yes, that’s awesome. I helped them do it. Kid: How many did you sell in the first week or month of you releasing it. Russell: Good question. First week, I don’t think I sold any. First month, I probably sold 5 or 6. And then it got to the point where I was selling about one a day. So probably 30 a month. One or two a day was kind of average. Kid: Do you have any advice for people who want to be an entrepreneur or want to get what they’re doing out there. Like if you’re streaming and stuff. Russell: Yes, great question. Can I tell you a story about that? I have a friend, his name is Jacob Hiller and when he was born he wanted to be able to dunk a basketball. How many of you guys here can dunk a basketball? Kid: In a baby. Russell: How many guys dunk on a ten foot hoop? It’s hard right. I still can’t do it either. I’m not good enough. But he wanted to be able to dunk that. He loved basketball, but he couldn’t quite dunk it. He said his arms were a little bit shorter, so he couldn’t ever dunk. So he said, “I want to figure out..” He set a goal, he said, “My goal, I want to become someone who can dunk a basketball. How do I do that? I can’t dunk right now. I have to learn some exercises.” So he stared reading books and started studying, how can I increase my vertical. That’s what they call it, you’re vertical, how high you can jump. So he started learning, started watching videos, and reading books, and then that’s how he started. Then he started learning some stuff and it started helping him. And he thought, “I’m going to start a YouTube channel teaching people what I’m learning.” So he started this YouTube channel, and in the YouTube channel he would learn something. So he would learn, if you do a certain exercise it will make you jump higher. So he’d show people how to do the exercise and posted a video on that. Then he’d post another video learning other ways to increase your vertical. And he had a whole bunch of videos and started posting them on YouTube because he was loving it. He was learning it and then he would share it as he was learning what he was learning. And then one day he ended up having about 10,000 people who were following him on YouTube, and he’s like, “This is so cool. I have all these followers that are following me and I don’t know what to do with it.” So he asked those guys, “What do you guys want me to, what can I do?” and someone said, “I wish you’d put together a book that would teach me all the different ways you learned how to jump.” And he’s like, “Okay, that’s kind of cool. I could do that.” So he wrote an ebook. Do you guys know what an ebook is? Kid: Yeah, it’s like a book that’s online and it’s really cool. Russell: Yeah. So he wrote his first ebook and all it was, was a whole bunch of different ways that he used to jump higher. So he’d show, “Here I tried this exercise and how I did it.” And then “This exercise” and he showed like a hundred different ways to jump higher and he put it together and he called the book The Jump Manual, teaching people how to jump higher. So he got that all done, he started being excited about something, then he started talking about it every single day until he got a lot of people following him, then he came out with his very first product, which was an ebook. I think he sells the ebook for $37, and he makes 3 or 4 thousand dollars a day, every single day, selling that book. But what’s crazy, he did that while he was in college, then he met his wife and they fell in love and got married, and they said, “Where should we move to?” and he said, “Our business is on the internet, we don’t have to live anywhere.” And they said, “What if we just picked somewhere really cool.” So his wife a globe out, a big globe. You guys know the big globes? Kid: Yeah, yeah, yeah. Russell: And they spun it like this, and said, “Ready go.” And they stopped it and it was like, “Kenya.” And they’re like, “Let’s move to Kenya.” So they got in a plane, packed up all their suitcases, they didn’t have a house yet, and they flew to Kenya, and then in Kenya they found out there’s warriors called the Maasai warriors. Have you ever heard of them before? Kid: No. Russell: Well, guess what they’re famous for? Jumping. They’re famous for jumping. They go out in these plains, in the desert and they jump. So they got to Kenya and he’s like, “There’s these guys that are great at jumping.” So he got his video camera out and said, “Teach me how to jump better.” And these warriors in the middle of the desert in Africa taught him how jump higher and he filmed it all and posted those videos online like, “I learned how to, these cool jumping tricks from these guys.” And he said, “If you like these you should go buy my book.” And more people bought his book. So he lived there in Kenya for 3 years, excuse me, 3 months and the whole time they were there people were buying his book on the internet, so he didn’t have a job, he was just living and having fun. And 3 months later they said, “Let’s move. Where should we move to? I don’t know.” So he got the globe out again, they spun it, “Here.” And it was like the Great Wall of China. They’re like, “We’re moving to China.” So they flew to China and they got to China and they’re like, “What should we do in China.” And they said, “Well what kind of exercises can we do on the great wall of china? We can sit against the wall, I can do jumps on the wall.” So they made videos of him doing all sorts of exercises on the great wall of china, and put those on YouTube and then more people bought his book. And then 3 months later they spun the globe again and picked a new spot. And they’ve been doing that now for like 8 years. They have not had a house for 8 years. Every three months they pick a new place around the world and they fly there and live there, and their internet business, people keep buying his ebook while he’s traveling the world having a good time. Is that cool? Kid: And another question, is buying ads for your video even worth it, in your opinion? Russell: Definitely. We spend about $750,000 a month buying ads. So we spend a lot of money because it’s the fastest way to get to people. There’s free ways you can do it, but it takes a lot longer. If you can buy ads, it speeds up the process a lot. Kid: But for smaller YouTubers who are trying to get out there. Russell: Yeah, so it’s good to buy ads when you have a product to sell. Because if you’re just buying ads to grow your channel, it’s hard because you’re not making any money and you’re just spending money. But if you have a YouTube channel and you’re selling something on the channel, then it makes sense to buy as long as you make more money than you’re spending. That’s all we’re looking at. I want to make sure that if I spend $1 I want to make $2. And you just kind of watch that really close. Good questions. Kid: What was the best part after you made your business? Russell: The best part is, let’s see, there’s been a lot of really, really cool parts. But I think my best part is there’s this group, have you ever heard of Operation Underground Railroad? Have you heard of it? You think so. Do you guys know what the Underground Railroad is? Did you learn about that yet in school? What’s the underground Railroad? Kid: It’s how slaves get away from their owners. Russell: Yes, the Underground Railroad, how they freed slaves back in the day. So, Operation Underground Railroad is an organization, it's called a charity, and they help save people who are enslaved. Did you know there are still people in slavery? There are little kids that get kidnapped that are put in slavery, and they think there's over 2 million kids right now that are in slavery all around the world. It's really sad. So, there's this group and they go in and they try and save these little kids. So, the most exciting thing so far is the last two years a in a row we helped raise money for Operation Underground Railroad. We raised over $2 million for them which is enough money to save almost 1,000 kids from slavery. So, of everything we've done, that's the thing that's the coolest for me. Kid: How did you get the idea of ClickFunnels? Russell: Ooh, good question. That's a great question. Ken, so after I made my potato gun… So, I made my potato gun and we were selling this, right, and then what happened is I wanted to figure out how do you make more money. I was just selling DVD, but I wanted to make more money. So, I had a friend and he said, what you need to do is you need to add an upsell. Do you guys know what an upsell is? Kid: No. Russell: Who's ever been to McDonald's before? So, you go to McDonald's and if your mom or dad says, hey, I want to order a Big Mac. Then what does the guy say at the drive-through, do you know? Goes, a Big Mac, do you want a fries and drink with that? You heard him say that before? Kids: Yes. No. Russell: That's called an upsell. Kid: I don't go to McDonald's. Russell: Good, it's bad for you. That food kills you. Anyway, but if you go, that's called an upsell. So, my friend said you should have upsells for this. I said, what does that even mean? He said, well, when someone buys potato gun DVD, what's the next thing they need? I said, well, they have to go to Home Depot and they have to buy all the pipes and all the stuff and the glue. He said, what if you put those together in a kit and then just sold the kit, and you send the kit out to people? I said, that's a cool idea. So, I found somebody to make these kits and they make a potato gun kit. Had all the pipes and everything, all the glue, everything. So, what we did was somebody would buy the DVD from me and they'd say, I want the DVD. Then the next page would say, cool, you bought the DVD, we're going to send it to you. Do you want us to put one of these kits in the mail that way you don't have to buy the pipes, you can just glue them together? Out of every single person who bought the DVD, for every three people got the DVD, one person would buy the kit right there. So, that's what we call a funnel. A funnel is where you take people through a sales process. Someone buys a DVD, and then someone buys the kit. So, that's kind of what a funnel is. I know it's kind of confusing, but that is what a funnel was. So, we did it for my own business. I did it for a lot of other people's businesses, and then one day I met this guy named Todd. He's my business partner in ClickFunnels. He lives in Atlanta, Georgia, though. You guys know where Atlanta is? Couple of you guys. So, he lives in Atlanta, way over there, and he said, what if we build software that makes it super easy for people to make websites and funnels the way that you do. So, he built the software and we decided to call it ClickFunnels. So, what we do is we help entrepreneurs and we teach them about stuff like this. Teach them how to start their own businesses and then they use ClickFunnels to build-out their web pages and their funnels. So, that's how we got the idea for ClickFunnels. And you guys know what a Funnel Hacker is on your shirt? Kid: No. Russell: A Funnel Hacker is someone who uses ClickFunnels. So, you guys are all Funnel Hackers now. So, that means you are a part of our tribe. So, all of our people they say, I'm a Funnel Hacker. Kid: What was your most exciting part of starting your business? Russell: Most exciting? So, there's this guy, he's 6'7". You know how tall that is? It's like this tall. His head's like this big, and he's super-famous. His names is Tony Robbins. Any of you guys ever heard of Tony Robbins before? Kid: Yeah. Russell: You guys have? Kids: crosstalk Russell: He could be. Anyway, Tony Robbins is cool. He was someone I saw him in movies, on TV, and he was super-famous. I always thought he was awesome. So, about 10 years ago, I got to meet him, and then he had me fly out to Fiji. You guys know where Fiji is? You do? Fiji's awesome. He owns a resort in Fiji, so I flew to Fiji and I got to speak at his seminar. Then he spoke at my seminar which was super cool, and then recently we became business partners. So, I got to be friends with somebody who was my hero for a long time, and I even became friends and business partners with him. So, that's probably the most exciting to be able to hang out with a giant, he's literally a giant. He is so cool. Kid: What was the most expensive part of your business? Russell: So, for ClickFunnels there's over 300 people that work here. Not all of them in this office, but it costs us a few million dollars a month to pay everybody who works here. So, that's by far the most expensive is all of the people. Okay. But they are amazing people, so we love it. Kid: What was the most fun part? Russell: Ooh, the most fun part? Let's see. I think the very first time I made my very first sale, that was so fun because I tried to sell something, nobody bought it. Then very first time somebody gave me money, I made $20. Someone bought something on the internet from me, I made $20. I was so excited that I called my wife up, I said, we made $20. She said, that's not very much money. I said, I know, but it's the very first time I made money on the internet. So, we went out to dinner and spent that $20 on dinner and a movie. And then guess what? Kid: What? Russell: The next day, the person who paid the $20, he asked for a refund and I had to give it back. But it was the very first one, so it was still exciting. Kid: Can we watch your potato gun video? Russell: Oh, I can give one to your teachers, if they want to make a whole class on potato guns, I don't think… But that's up to them, not to me. Kids: crosstalk Russell: That would be a cool class in school, but I think Potato Gun 101. Yes? Kid: Like, on the commercials it cost a lot of money. Have you ever been in debt from the commercials? Russell: Mm-hmm, yeah, a couple of times we tried to... A couple of times we did commercials and they didn't make any money, and we got in some debt. But we were able to pay it off. What happens a lot of times, a lot of times you'll do a lot of different commercials or ads, and sometimes some of them work and some don't work, but hopefully you get more that work than don't work. And the other thing is if you put a commercial on TV, it costs a lot of money, but if you put a commercial on Facebook, it doesn't cost very much money. Kid: What made you come up with the name ClickFunnels? What's the inspiration for that? Russell: Great question. So, we had this other company that we tried to start back in the day called ClickFusion. I was thinking that's a cool name. I don't know why we thought it was kind of cool, but guess what? That business failed three times. It kept failing, and so when we started the idea for ClickFunnels, Todd, who is my business partner, I said we should call it ClickFusion. He's like, ClickFusion always fails. It's bad luck. We should call it something different. Like what should we call it? Like Click Waffles, Waffle Funnels, Funnel Ice Cream, Funnel Cake, Funnel, and then all of a sudden he said, ClickFunnels. I was like, ooh, that sounds cool. Let's see if we could buy it, and nobody owned it. So, we're like, yes, so we bought ClickFunnels. Kid: What do you sell besides weapons of death by potato? Russell: So, besides weapon of death by potatoes? So, I've written some books. Want to see? So, I've written these books. I wrote this book right here called Expert Secrets. I wrote a book called DotComSecrets. So, I sell these books. We also do seminars where we have entrepreneurs from all around the world. They fly actually here to Boise sometimes. We actually, last week we had people here from all around the whole world and they pay us to teach them how to build funnels, and then we also sell ClickFunnels as software. So, most of our money comes from ClickFunnels from the software. We use these as coaching people on how to build businesses or it's the ClickFunnels software. That's where most of the money comes from now. Kid: Where were you originally from? Russell: I grew up in Utah. Kid: What? Russell: Yep, I grew up in Utah and then I actually, I told you I was a wrestler, remember? So, I wrestled, then I wrestled at BYU, and then BYU dropped the wrestling program, so I was like where should I got to wrestle? And Boise State had a program, so I moved to Boise, and I've been here ever since. Kid: Is it hard or easy to own your company? Russell: Ooh, good question. Some days it's really easy because I wake in the morning and I'm like, I can do whatever I want. I don't have to wake up. But some days it's really, really hard. Some days you wake up and it's like, for me I have 300 people to work for me, so if we don't make money, then where are they going to get paid from? And somebody and they have all their kids. Sometimes it's kind of a stressful thing to manage a lot of people who rely on us. So, some days it's really nice. I go on vacation for a week and not worry about it, or a couple of weeks, but some days it's really stressful. So, that's with entrepreneurship there's really good things and really scary things at the same time. Kid: Why is your logo like a tablet with gears? Russell: Oh, good question. So, when we started ClickFunnels, we needed a logo design, so we hired this guy, his name is Mantis, kind of like praying mantis, but he's Mantis. He lives over in Europe somewhere. I don't even know. And so I said I want a really cool logo, but I don't know what it looks like. So, he designed 20 different logos and a whole bunch of different ones, and that was one of the ones he designed. I was like, ooh, it's kind of cool. That was my favorite one. I like the gears because we can do gears like, on my jeep we could have gears on it. We could put gears on our T-shirts and things like that. So, that was just the favorite one I liked of all the different ones that he designed. Kid: Did you ever get like, when you wrestled, did you ever get really hurt really bad? Russell: Nothing too bad. I got hurt a little bit, but I never broke a bone or anything super bad. Kid: What was your favorite part about starting your business? Russell: I think my favorite part is my boys now are wrestling. My kids, they do a lot of sporting things, and it's cool because I can leave any time I want in the middle of the day, and go and see them. Go see them at wrestling practice, or I can do things like that. I kind of set my own schedule. So, those are my favorite things. I can set my own schedule and be able to to whatever I want. Kid: Were you nervous at all? Russell: Oh yes, all the time I get nervous. Especially sometimes I get to standup... So, this is kind of a little stage, and there's about, I think about 50 people can fit in here. But this year in February I spoke at a baseball stadium with 35,000 people in it. So, I walked on this huge stage and there's 35,000 people, and that was really scary, but it was pretty cool too. Kid: If you don't have this restrictive access, what's the next product you plan on selling if you are going to? Russell: Oh, that's a good question. I love software. The software business is fun because you create it once, and people pay you every single month for it. So, I think if I ever sold ClickFunnels or if I ever got unrestricted access to whatever, I'd probably call my business partner, Todd, up I'd say, okay, let's build some more software. This will really be fun because it's really nice. Some businesses are hard because it's like you have to ship products from China, or the supplements, you have to get all the materials and mix them all. This ones just nice because it's like we have a bunch of programmers who make the software better every single day. But people are just buying the software, they keep paying every single month. They keep using it. Kid: Also, I'm wondering where did you get your, you know, you said you had that extra pack with all the tubes and stuff, where did you get those things? Do you ship them in? Russell: Oh, the sell the kits? Kid: Yeah. Russell: There was a guy in Northern Idaho who I met who was selling potato guns online. He wasn't selling very many of them. So, I bought a kit from him and I'm like, these are really cool. So, I called him and I said, hey, you're selling these kits, I'm selling DVD, if I sell your kit and I pay you for it, will you ship it out to people? And he said, yeah. So, I think, I can't remember exactly. I think I'd pay like $50 to buy the kit from him, and I'd sell it for $200. So, basically, somebody would give me $200 and then I would send him $50, and he'd send the kit to them. It was really cool. Kid: Would ClickFunnels be something that smaller YouTubers would may be beneficial to them or would it be like- Russell: You want to be a YouTuber? No, for sure. In fact, we have a... Did you see the bathroom hallway yet or the kitchen? So, we have a really cool thing that we created, it's called the Two Comma Club. When somebody makes a million dollars inside of a funnel, we give them this huge gold record and there's two commas in it. Do you know why it's called Two Comma Club? Okay, this is why. If you draw a million dollars, this is what a million dollars looks like. That's a million dollars. How many commas are in a million dollars? Kids: Two. Russell: Oh, so we call it the Two Comma Club. So, anytime somebody makes over a million dollars, we send them a trophy like this and there's two commas it says, you're in the Two Comma Club. So, when you guys see we send them a big one like this big, and then we put a small one in our office. So, when you guys do a tour, you'll see all these all over the place. And then there's a silver one that means they made $10 million in side of funnel. So, anyway, I was going to tell you this because we have some kids right now, there's one kid who's I think... What's Caleb, Caleb's 17 or did he just turn 18? Well, anyway, one kid was like 17 or 18, he won a Two Comma Club award. We've got a couple of other kids that are teenagers that are like 15, 16 year old, that have almost won a Two Comma Club award. So, there are kids that are not that much older than you that are doing this. We had one girl who was here last week, when she was 13 years old, her mom taught her about how this whole business works, and she started selling scarves. And at 13 years old, she made over $100,000 on the internet selling scarves. Is that crazy? And then when she turned 16, she didn't want to get a driver's license because she had too much money, so she just had Ubers drive her around everywhere. So, she never got a driver's license. That's how much money she had. That be crazy? Take an Uber to school every day. Kid: If you're just selling merchandise on your channel, like you know how YouTubers sell merchandise? Russell: Yep. If you were to make some merchandise, would it be worth it to advertise it through your ClickFunnels or no? Russell: Yeah, for sure. Kid: Okay. Russell: Yep, for sure. Kid: What was the part that you found most interesting? Russell: Ooh, the most interesting? Definitely is all the different people we've had a chance to meet. So, people that started using ClickFunnels. First we didn’t know who was going to use it, and then we started meeting these amazing people. Like there's one guy, his name's Chris, and Chris had cancer. He almost died of cancer, and he figured out how to fight cancer, and he ended up not dying. So, he wrote a book called Chris Beat Cancer, and he was trying to sell it. He started selling it on ClickFunnels, and he's helped tens of thousands of people to overcome, to be able to fight cancer now from his book which is really, really cool. That was just one person, and there's so many interesting people like people selling all sorts of things. So, definitely my favorite part is just seeing all the cool people that we're helping and letting them sell more of their products to help more people. Kid: What other awarenesses do you help with? Russell: So, the main ones that we do, we do Operation Underground Railroad to help children from slavery. We go to Kenya every year. We build schools in Kenya for kids out there. And then we, a lot of the people that work with us do stuff like, one of these guys, he helps gym owners to build up their gyms, and last month... You guys know who Arnold Schwarzenegger is? Kids: Yeah. Russell: Arnold Schwarzenegger is like Mr. Olympia like 20 years, like the strongest man ever for a while, he gave $100,000 to Arnold Schwarzenegger to The Boys and Girls Program or, yeah Boys and Girls. So, we got to meet Arnold Schwarzenegger to give him $100,000 to help all these kids. So, a lot of people that we help, help tons of different organizations and charities too. It's really cool. Kid: What was the hardest part of your job? Russell: For a long time the hardest part was how to fire somebody. Oh, that was the worst. Someone works for you and they're not doing a very good job, you'd be like, I have to fire you. In fact, the first time I fired someone, guess what happened afterwards? Kids: What? Russell: I cried for like 10 minutes. It was really bad. I don't fire people anymore which is really nice. The hardest thing now is sometimes when ClickFunnels has a problems, we have 89,000 people that use our software, so like one time we were flying to London and when I was in the air, ClickFunnels went down, and everybody's websites, and everybody's Funnels went down. When I landed, people were super mad, and I got thousands of messages on my phone, everyone who was mad that all of their websites were down, and that was not very much fun. So, those are the hard parts sometimes when stuff like that happens. Kid: What's the hardest part that happened to you before, like in the start of your business? Russell: The start of my business? Twice I almost went bankrupt. Twice when I started making a little bit of money, and then I lost it all. That was the first time I had like probably six or seven employees, and then I couldn't afford it all, and we almost lost it all. The second time I built it to 100 employees, I was like, this is amazing. And then everything fell apart and I had to fire 80 people in one day. Oh, that was really hard too, so there's a lot of ups and downs. Someone earlier, oh you back here earlier said you didn't want to be an entrepreneur because of the risks. So, the nice thing to being an entrepreneur, there's two things, right. There's a lot of risks. Like a lot of times you can fail, and if you fail, you don't get paid anything. Like when I show up at work, I don't guarantee to get money. When you're an employee, if you get a job, you always get paycheck every two weeks. For me, I didn't get a guarantee. But the upsides is that you can make unlimited money. So, you have unlimited... There's no ceiling on it, so you kind of have the both. You can lose everything or you can make everything, but that's the scary part of it. But I still think it's worth it. Kid: It's sort of like a teeter-totter, like hanging off a cliff. You either fall or you live, so. Risk or no risk? You go on it, you risk your life. You don't, you stay alive. Russell: There you go. The entrepreneur teeter-totter, you either live or you die. The last question. Make sure it's the best one ever. Kid: What's your favorite part about your job? Russell: All of the people that work here at ClickFunnels are my best friends, so my favorite thing to come in everyday and I get to see all of my best friends. We all get to hangout and talk about business, and have ideas and brainstorm, and it's just fun to hangout with all of my friends everyday. Man: I'll give you one more final maybe tough question. Russell: All right. Man: As you've built this, obviously, you've had to venture out into different things whether that's speaking, or hiring people and firing people, all these different things. What would you say has been the greatest fear that you've had to face? Russell: It's tough because there's a lot of fears that go into starting a business because the path never, there's never a path. It's always you're just kind of like, so when you hire your first employee, you're like do I hire somebody, do I have enough money to hire? Like what's the rule, what's the laws? I don't even know, but I know I need help. It's just like you hire them, and then you're like waiting for everything to collapse. Then you're like, okay, nothing bad happened. Okay, cool, then you hire another person. My first time I hired eight employees before I knew I had to pay taxes. I didn't even know that was a thing. I had no idea, and I found out later. It's like, oh, you have to pay taxes and payroll tax, and like I didn't know that. So, like you have to go fix all the problems that you made, but I think a lot of times for me the scary part is I just didn't know anything. I was just kind of just stepping out. I was passionate about stuff so I was trying to create things, and as I was creating things, that's when to be able to support the art of what we were trying to do, like you had to figure out all of the other stuff along the way. But we were so passionate with what we were doing, it made it worth it. But just the fear of like at every step of it, because there's a million books but you don't know which book to read for this problem or this situation. A lot of times you read a book later, you're like, oh, that would have been awesome to know way back here. So, a lot of it is just being willing to risk it all and just hope for the best and hope you figure it out as you go. I heard someone say one time it's like you're jumping out of an airplane and you're building the parachute as you're falling. You know, like I hope I get this thing figured out before I hit the ground. That's what it feels like most days, especially the early days. Less nowadays. We've got pretty good structure in place now, but initially it was a lot of that kind of stuff. That's why I think a lot of people don't do the entrepreneurship because that first step is really scary. It's not like I know this is the path, get a degree, go to college, get a job. There's no path like that. It's like okay, go create something and the market will tell you if you're worth it or not. That's kind of scary to put yourself out there a lot of times.
Aired Last week 35:17
Pay Day at the Trump Doral
In mid-March, the payday lending industry held its annual convention at the Trump National Doral hotel outside Miami. Payday lenders offer loans on the order of a few hundred dollars, typically to low-income borrowers, who have to pay them back in a matter of weeks. The industry has been long been reviled by critics for charging stratospheric interest rates — typically 400% on an annual basis — that leave customers trapped in cycles of debt. The industry had felt under siege during the Obama administration, as the federal government moved to clamp down. A government study found that a majority of payday loans are made to people who pay more in interest and fees than they initially borrow. Google and Facebook refuse to take the industry’s ads. On the edge of the Doral’s grounds, as the payday convention began, a group of ministers held a protest “pray-in,” denouncing the lenders for having a “feast” while their borrowers “suffer and starve.” But inside the hotel, in a wood-paneled bar under golden chandeliers, the mood was celebratory. Payday lenders, many dressed in golf shirts and khakis, enjoyed an open bar and mingled over bites of steak and coconut shrimp. They had plenty to be elated about. A month earlier, Kathleen Kraninger, who had just finished her second month as director of the federal Consumer Financial Protection Bureau, had delivered what the lenders consider an epochal victory: Kraninger announced a proposal to gut a crucial rule that had been passed under her Obama-era predecessor. Payday lenders viewed that rule as a potential death sentence for many in their industry. It would require payday lenders and others to make sure borrowers could afford to pay back their loans while also covering basic living expenses. Banks and mortgage lenders view such a step as a basic prerequisite. But the notion struck terror in the payday lenders. Their business model relies on customers — 12 million Americans take out payday loans every year, according to Pew Charitable Trusts — getting stuck in a long-term cycle of debt, experts say. A CFPB study found that three out of four payday loans go to borrowers who take out 10 or more loans a year. Now, the industry was taking credit for the CFPB’s retreat. As salespeople, executives and vendors picked up lanyards and programs at the registration desk by the Doral’s lobby, they saw a message on the first page of the program from Dennis Shaul, CEO of the industry’s trade group, the Community Financial Services Association of America, which was hosting the convention. “We should not forget that we have had some good fortune through recent regulatory and legal developments,” Shaul wrote. “These events did not occur by accident, but rather are due in large part to the unity and participation of CFSA members and a commitment to fight back against regulatory overreach by the CFPB.” This year was the second in a row that the CFSA held its convention at the Doral. In the eight years before 2018 (the extent for which records could be found), the organization never held an event at a Trump property. Asked whether the choice of venue had anything to do with the fact that its owner is president of the United States and the man who appointed Kraninger as his organization’s chief regulator, Shaul assured ProPublica and WNYC that the answer was no. “We returned because the venue is popular with our members and meets our needs,” he said in a written statement. The statement noted that the CFSA held its first annual convention at the Doral hotel more than 16 years ago. Trump didn’t own the property at the time. The CFSA and its members have poured a total of about $1 million into the Trump Organization’s coffers through the two annual conferences, according to detailed estimates prepared by a corporate event planner in Miami and an executive at a competing hotel that books similar events. Those estimates are consistent with the CFSA’s most recent available tax filing, which reveals that it spent $644,656 on its annual conference the year before the first gathering at the Trump property. (The Doral and the CFSA declined to comment.) “It’s a way of keeping themselves on the list, reminding the president and the people close to him that they are among those who are generous to him with the profits that they earn from a business that’s in severe danger of regulation unless the Trump administration acts,” said Lisa Donner, executive director of consumer group Americans for Financial Reform. The money the CFSA spent at the Doral is only part of the ante to lobby during the Trump administration. The payday lenders also did a bevy of things that interest groups have always done: They contributed to the president’s inauguration and earned face time with the president after donating to a Trump ally. But it’s the payment to the president’s business that is a stark reminder that the Trump administration is like none before it. If the industry had written a $1 million check directly to the president's campaign, both the CFSA and campaign could have faced fines or even criminal charges — and Trump couldn’t have used the money to enrich himself. But paying $1 million directly to the president’s business? That’s perfectly legal. *** The inauguration of Donald Trump was a watershed for the payday lending industry. It had been feeling beleaguered since the launch of the CFPB in 2011. For the first time, the industry had come under federal supervision. Payday lending companies were suddenly subject to exams conducted by the bureau’s supervision division, which could, and sometimes did, lead to enforcement cases. Before the bureau was created, payday lenders had been overseen mostly by state authorities. That left a patchwork: 15 states in which payday loans were banned outright, a handful of states with strong enforcement — and large swaths of the country in which payday lending was mostly unregulated. Then, almost as suddenly as an aggressive CFPB emerged, the Trump administration arrived with an agenda of undoing regulations. “There was a resurgence of hope in the industry, which seems to be justified, at this point,” said Jeremy Rosenblum, a partner at law firm Ballard Spahr, who represents payday lenders. Rosenblum spoke to ProPublica and WNYC in a conference room at the Doral — filled with notepads, pens and little bowls of candy marked with the Trump name and family crest — where he had just led a session on compliance with federal and state laws. “There was a profound sense of relief, or hope, for the first time.” (Ballard Spahr occasionally represents ProPublica in legal matters.) In Mick Mulvaney, who Trump appointed as interim chief of the CFPB in 2017, the industry got exactly the kind of person it had hoped for. As a congressman, Mulvaney had famously derided the agency as a “sad, sick” joke. If anything, that phrase undersold Mulvaney’s attempts to hamstring the agency as its chief. He froze new investigations, dropped enforcement actions en masse, requested a budget of $0 and seemed to mock the agency by attempting to officially re-order the words in the organization’s name. But Mulvaney’s rhetoric sometimes exceeded his impact. His budget request was ignored, for example; the CFPB’s name change was only fleeting. And besides, Mulvaney was always a part-timer, fitting in a few days a week at the CFPB while also heading the Office of Management and Budget, and then moving to the White House as acting chief of staff. It’s Mulvaney’s successor, Kraninger, whom the financial industry is now counting on — and the early signs suggest she’ll deliver. In addition to easing rules on payday lenders, she has continued Mulvaney’s policy of ending supervisory exams on outfits that specialize in lending to the members of the military, claiming that the CFPB can do so only if Congress passes a new law granting those powers (which isn’t likely to happen anytime soon). She has also proposed a new regulation that will allow debt collectors to text and email debtors an unlimited number of times as long as there’s an option to unsubscribe. Enforcement activity at the bureau has plunged under Trump. The amount of monetary relief going to consumers has fallen from $43 million per week under Richard Cordray, the director appointed by Barack Obama, to $6.4 million per week under Mulvaney and is now $464,039, according to an updated analysis conducted by the Consumer Federation of America’s Christopher Peterson, a former special adviser to the bureau. Kraninger’s disposition seems almost the inverse of Mulvaney’s. If he’s the self-styled “right wing nutjob” willing to blow up the institution and everything near it, Kraninger offers positive rhetoric — she says she wants to “empower” consumers — and comes across as an amiable technocrat. At 44, she’s a former political science major — with degrees from Marquette University and Georgetown Law School — and has spent her career in the federal bureaucracy, with a series of jobs in the Transportation and Homeland Security departments and finally in OMB, where she worked under Mulvaney. (In an interview with her college alumni association, she hailed her Jesuit education and cited Pope Francis as her “dream dinner guest.”) In her previous jobs, Kraninger had extensive budgeting experience, but none in consumer finance. The CFPB declined multiple requests to make Kraninger available for an interview and directed ProPublica and WNYC to her public comments and speeches. Kraninger is new to public testimony, but she already seems to have developed the politician’s skill of refusing to answer difficult questions. At a hearing in March just weeks before the Doral conference, Democratic Rep. Katie Porter repeatedly asked Kraninger to calculate the annual percentage rate on a hypothetical $200 two-week payday loan that costs $10 per $100 borrowed plus a $20 fee. The exchange went viral on Twitter. In a bit of congressional theater, Porter even had an aide deliver a calculator to Kraninger’s side to help her. But Kraninger would not engage. She emphasized that she wanted to conduct a policy discussion rather than a “math exercise.” The answer, by the way: That’s a 521% APR. A while later, the session recessed and Kraninger and a handful of her aides repaired to the women’s room. A ProPublica reporter was there, too. The group lingered, seeming to relish what they considered a triumph in the hearing room. “I stole that calculator, Kathy,” one of the aides said. “It’s ours! It’s ours now!” Kraninger and her team laughed. *** Triple-digit interest rates are no laughing matter for those who take out payday loans. A sum as little as $100, combined with such rates, can lead a borrower into long-term financial dependency. That’s what happened to Maria Dichter. Now 73, retired from the insurance industry and living in Palm Beach County, Florida, Dichter first took out a payday loan in 2011. Both she and her husband had gotten knee replacements, and he was about to get a pacemaker. She needed $100 to cover the co-pay on their medication. As is required, Dichter brought identification and her Social Security number and gave the lender a postdated check to pay what she owed. (All of this is standard for payday loans; borrowers either postdate a check or grant the lender access to their bank account.) What nobody asked her to do was show that she had the means to repay the loan. Dichter got the $100 the same day. The relief was only temporary. Dichter soon needed to pay for more doctors’ appointments and prescriptions. She went back and got a new loan for $300 to cover the first one and provide some more cash. A few months later, she paid that off with a new $500 loan. Dichter collects a Social Security check each month, but she has never been able to catch up. For almost eight years now, she has renewed her $500 loan every month. Each time she is charged $54 in fees and interest. That means Dichter has paid about $5,000 in interest and fees since 2011 on what is effectively one loan for $500. Today, Dichter said, she is “trapped.” She and her husband subsist on eggs and Special K cereal. “Now I’m worried,” Dichter said, “because if that pacemaker goes and he can’t replace the battery, he’s dead.” Payday loans are marketed as a quick fix for people who are facing a financial emergency like a broken-down car or an unexpected medical bill. But studies show that most borrowers use the loans to cover everyday expenses. “We have a lot of clients who come regularly,” said Marco (he asked us to use only his first name), a clerk at one of Advance America’s 1,900 stores, this one in a suburban strip mall not far from the Doral hotel. “We have customers that come two times every month. We’ve had them consecutively for three years.” These types of lenders rely on repeat borrowers. “The average store only has 500 unique customers a year, but they have the overhead of a conventional retail store,” said Alex Horowitz, a senior research officer at Pew Charitable Trusts, who has spent years studying payday lending. “If people just used one or two loans, then lenders wouldn’t be profitable.” It was years of stories like Dichter’s that led the CFPB to draft a rule that would require that lenders ascertain the borrower’s ability to repay their loans. “We determined that these loans were very problematic for a large number of consumers who got stuck in what was supposed to be a short-term loan,” said Cordray, the first director of the CFPB, in an interview with ProPublica and WNYC. Finishing the ability-to-pay rule was one of the reasons he stayed on even after the Trump administration began. (Cordray left in November 2017 for what became an unsuccessful run for governor of Ohio.) The ability-to-pay rule was announced in October 2017. The industry erupted in outrage. Here’s how CFSA’s chief, Shaul, described it in his statement to us: “The CFPB’s original rule, as written by unelected Washington bureaucrats, was motivated by a deeply paternalistic view that small-dollar loan customers cannot be trusted with the freedom to make their own financial decisions. The original rule stood to remove access to legal, licensed small-dollar loans for millions of Americans.” The statement cited an analysis that “found that the rule would push a staggering 82 percent of small storefront lenders to close.” The CFPB estimated that payday and auto title lenders — the latter allow people to borrow for short periods at ultra-high annual rates using their cars as collateral — would lose around $7.5 billion as a result of the rule. *** The industry fought back. The charge was led by Advance America, the biggest brick-and-mortar payday lender in the United States. Its CEO until December, Patrick O’Shaughnessy, was the chairman of the CFSA’s board of directors and head of its federal affairs committee. The company had already been wooing the administration, starting with a $250,000 donation to the Trump inaugural committee. (Advance America contributes to both Democratic and Republican candidates, according to spokesperson Jamie Fulmer. He points out that, at the time of the $250,000 donation, the CFPB was still headed by Cordray, the Obama appointee.) Payday and auto title lenders collectively donated $1.3 million to the inauguration. Rod and Leslie Aycox from Select Management Resources, a Georgia-based title lending company, attended the Chairman’s Global Dinner, an exclusive inauguration week event organized by Tom Barrack, the inaugural chairman, according to documents obtained by “Trump, Inc.” President-elect Trump spoke at the dinner. In October 2017, Rod Aycox and O’Shaughnessy met with Trump when he traveled to Greenville, South Carolina, to speak at a fundraiser for the state’s governor, Henry McMaster. They were among 30 people who were invited to discuss economic development after donating to the campaign, according to the The Post and Courier. (“This event was only about 20 minutes long,” said the spokesperson for O’Shaughnessy’s company, and the group was large. “Any interaction with the President would have been brief.” The Aycoxes did not respond to requests for comment.) In 2017, the CFSA spent $4.3 million advocating for its agenda at the federal and state level, according to its IRS filing. That included developing “strategies and policies,” providing a “link between the industry and regulatory decision makers” and efforts to “educate various state policy makers” and “support legislative efforts which are beneficial to the industry and the public.” The ability-to-pay rule technically went into effect in January 2018, but the more meaningful date was August 2019. That’s when payday lenders could be penalized if they hadn’t implemented key parts of the rule Payday lenders looked to Mulvaney for help. He had historically been sympathetic to the industry and open to lobbyists who contribute money. (Jaws dropped in Washington, not about Mulvaney’s practices in this regard, but about his candor. “We had a hierarchy in my office in Congress,” he told bankers in 2018. “If you were a lobbyist who never gave us money, I didn’t talk to you. If you’re a lobbyist who gave us money, I might talk to you.”) But Mulvaney couldn’t overturn the ability-to-pay rule. Since it had been finalized, he didn’t have the legal authority to reverse it on his own. Mulvaney announced that the bureau would begin reconsidering the rule, a complicated and potentially lengthy process. The CFPB, under Cordray, had spent five years researching and preparing it. Meanwhile, the payday lenders turned to Congress. Under the Congressional Review Act, lawmakers can nix federal rules during their first 60 days in effect. In the House, a bipartisan group of representatives filed a joint resolution to abolish the ability-to-pay rule. Lindsey Graham, R-S.C., led the charge in the Senate. But supporters couldn’t muster a decisive vote in time, in part because opposition to payday lenders crosses party lines. By April 2018, the CFSA members were growing impatient. But the Trump administration was willing to listen. The CFSA’s Shaul was granted access to a top Mulvaney lieutenant, according to “Mick Mulvaney’s Master Class in Destroying a Bureaucracy From Within” in The New York Times Magazine, which offers a detailed description of the behind-the scenes maneuvering. Shaul told the lieutenant that the CFSA had been preparing to sue the CFPB to stop the ability-to-pay rule “but now believed that it would be better to work with the bureau to write a new one.” Cautious about appearing to coordinate with industry, according to the article, the CFPB was non-committal. Days later, the CFSA sued the bureau. The organization’s lawyers argued in court filings that the bureau’s rules “defied common sense and basic economic analysis.” The suit claimed the bureau was unconstitutional and lacked the authority to impose rules. A month later, Mulvaney took a rare step, at least, for most administrations: He sided with the plaintiffs suing his agency. Mulvaney filed a joint motion asking the judge to delay the ability-to-pay rule until the lawsuit is resolved. By February of this year, Kraninger had taken charge of the CFPB and proposed to rescind the ability-to-pay rule. Her official announcement asserted that there was “insufficient evidence and legal support” for the rule and expressed concern that it “would reduce access to credit and competition.” Kraninger’s announcement sparked euphoria in the industry. One industry blog proclaimed, “It’s party time, baby!” with a GIF of President Trump bobbing his head. Kraninger’s decision made the lawsuit largely moot. But the suit, which has been stayed, has still served a purpose: This spring, a federal judge agreed to freeze another provision of the regulation, one that limits the number of times a lender can debit a borrower’s bank account, until the fate of the overall rule is determined. As the wrangling over the federal regulation plays out, payday lenders have continued to lobby statehouses across the country. For example, a company called Amscot pushed for a new state law in Florida last year. Amscot courted African American pastors and leaders located in the districts of dozens of Democratic lawmakers and chartered private jets to fly them to Florida’s capital to testify, according to the Tampa Bay Times. The lawmakers subsequently passed legislation creating a new type of payday loan, one that can be paid in installments, that lets consumers borrow a maximum $1,000 loan versus the $500 maximum for regular payday loans. Amscot CEO Ian MacKechnie asserts that the new loans reduce fees (consumer advocates disagree). He added, in an email to ProPublica and WNYC: “We have always worked with leaders in the communities that we serve: both to understand the experiences of their constituents with regard to financial products; and to be a resource to make sure everyone understands the law and consumer protections. Educated consumers are in everyone’s interest.” For their part, the leaders denied that Amscot’s contributions affected their opinions. As one of them told the Tampa Bay Times, the company is a “great community partner.” *** Kraninger spent her first three months in office embarking on a “listening tour.” She traveled the country and met with more than 400 consumer groups, government officials and financial institutions. Finally, in mid-April, she gave her first public speech at the Bipartisan Policy Center in Washington, D.C. The CFPB billed it as the moment she would lay out her vision for the agency. Kraninger said she hoped to use the CFPB’s enforcement powers “less often.” She alluded to a report by the Federal Reserve that 40% of Americans would not be able to cover an emergency expense of $400. Her suggestion for addressing that: educational videos and a booklet. “To promote effective approaches to savings and particularly emergency savings,” Kraninger explained, “the Bureau recently launched our Start Small, Save Up initiative. It offers tips, tools and information to help consumers build a basic savings cushion and develop a savings habit. Later this year, we will be launching a savings ‘boot camp,’ a series of videos, and a very readable, informative booklet that serves as a roadmap to a savings plan.” Having laid out what sounded like a plan to hand out self-help brochures at an agency invented to pursue predatory financial institutions, she then said, “Let me be clear, however, the ultimate goal for the bureau is not to produce booklets and great content on our website. The ultimate goal is to move the needle on the number of Americans in this country who can cover a financial shock, like a $400 emergency.” Back at the Doral the month before her speech, $400 might not have seemed like much of an emergency to the payday lenders. Some attendees seemed most upset by a torrential downpour on the second day that caused the cancellation of the conference’s golf tournament. Inside the Donald J. Trump Ballroom, the conference buzzed with activity. The Bush-era political adviser Karl Rove was the celebrity speaker after the breakfast buffet. And the practical sessions continued apace. One was called “The Power of the Pen.” It was aimed at helping attendees submit comments on the ability-to-pay rule to the government. It was clearly a matter of importance to the CFSA. In his statement to ProPublica and WNYC, Shaul noted that “more than one million customers submitted comments opposing the CFPB’s original small-dollar loan rule — hundreds of thousands of whom sent handwritten letters telling personal stories of how small-dollar loans helped them and their families.” A couple of months after the Doral conference, Allied Progress, a consumer advocacy group, analyzed the new round of comments that were submitted to the CFPB in response to Kraninger’s plans. In one sample of 26,000 comments, the group discovered that 27% of the statements submitted by purportedly independent individuals contained duplicative passages, all of which supported the industry’s position. For example, Allied Progress reported that 221 of the comments stated that “I have a long commute to work and it’s better for me financially to borrow from Cash Connection so that I can still make it to work than to not take care of my car and lose my job because of absences.” There were 201 asserting that “I now take care of my parents and my children” and I “want to be able to enjoy life and not feel burdened by the additional expenses that are piling up.” Allied Progress said it doesn’t know “if these are fake people, fake stories, or form letters intentionally designed to read as personal anecdotes.” (Cash Connection couldn’t be reached for comment.) Taking account of public comments is the final task before Kraninger officially determines whether to put the ability-to-pay rule to death. Whatever she decides, it’s a likely bet that decision will be challenged in court, the CFSA will weigh in and the payday lenders will still be talking about it at next year’s annual conference. A spokesperson for the CFSA declined to say whether the event will be held at a Trump hotel.