By Elton John

My favorite album at the moment is by a New Zealand three-piece called Breaks Co-Op. ‘Sound Inside’ is a chill-out disc that sounds a little like Crosby, Stills and Nash. It’s brilliant, wonderful. Since I bought it in the store, I’ve played it for so many people. I played it for the head of my record company today. I’m on Universal and Breaks Co-Op is on EMI, but he said it was probably one of the best records he’s heard all year. It just kills me that these albums come out and they don’t sell or don’t get the right promotion. Everyone I’ve given it to – from the Killers to the Scissor Sisters – have all freaked out.”

Spotify link: http://spoti.fi/ylVhAd

YouTube: http://bit.ly/sKf8u

by ANDRE CALILHANNA

It’s fun and easy to blame the woes of the world on major labels. After all, they’ve brought us The Pussycat Dolls, Milli Vanilli, and global warming. Oh yeah, there’s also the 360 record deal.  It’s worth mentioning that 360 deals (AKA Multiple Rights Deals) are common across all types of music labels (majors, indies, etc.), and music publishers are also in on the action with versions of their own. Not to be left out, concert promotion giant Live Nation also bangs the drum, having signed so-called 360 deals with the likes of Madonna and Jay-Z.

Read more: The 360 Deal – the music industry’s scary monster | Echoes – Insight for Independent Artists http://blog.discmakers.com/2012/01/the-360-deal/#ixzz1kS6FdJUM

According to Analysys International (in Chinese), a leading Chinese market research provider, China’s wireless music market  will grow at a 11.8% CAGR through 2013 and exceed RMB 40 billion (US$6.16 billion). At the same time the wireless music population will grow at a 16.2% CAGR through 2013 to reach 995.3 million users (over 70% of China’s total population).

As defined by Analysys the wireless music business represents data from the wireless carriers and includes wireless music access services such as ring tones, wireless music subscriptions,wireless music search, and mobile client music software.

The report goes on to cite two primary conclusions about the stabilization of the future development of the wireless music market:

1. Innovation in wireless music service providers and content providers will have limited impact on the revenue growth for the market. The key drivers of the market will continue to be low cost access to free music that bypasses the ability for carriers to monetize it more effectively. Although new apps may improve the user experience it will not do much to capture the real value of music content being accessed by users.
2. The average revenue per user (ARPU) will experience downward pressure from bundled wireless music packages from carriers trying to monetize the largest number of users but at a lower cost. The wide availability of free access to online music contributes to the operators’ decisions to keep costs low to capture users who could choose to avoid paying altogether.

Soul saxophonist and singer Jimmy Castor, one of the most sampled artists in music history, has died aged 71.

The musician, who is credited with influencing many hip hop artists, died in a Las Vegas hospital, family members confirmed.

His hits Just Begun and Troglodyte were sampled by many artists including Ice Cube and Usher.

Kanye West used Castor’s I Just Wanna Stop on his track We Don’t Care, which featured on his debut album.

What I plan to do in the next 45 minutes is radically alter the way all of you think about the concept of investing.

You are all highly accomplished engineers, managers, executives, and professionals in Silicon Valley, the heart of innovation in America. You work for a legendary company in the history of capitalism. So for me to stand up here and say that in 45 minutes, I might alter the way you think about a concept as fundamental as investing, is a tall order.

But that’s what I’m going to aim for today.

I’m not here talk about stocks, bonds, real estate, 401Ks—you’ve all heard those kinds of lectures before. You all know the rap about that kind of investing.

The type of investing I want to talk about is one you’ve probably heard about less, because it’s discussed a lot less. But I think it’s very, very important: investing in your own human capital.

The title of the talk today is “Get Rich Investing in Your Own Human Capital.” If you haven’t guessed already, it’s a slightly tongue and cheek title. I wanted to poke a bit of fun at all those books about the other kind of investing: “Get Rich Investing in Real Estate” and so forth.

But in all seriousness, I do believe that investing in your human capital can potentially be much more lucrative than all those other kinds of more traditional investments. It’s possibly much more safe—which is something that we’re all interested in now given the craziness of the markets in the last several years. It also can be possibly more rewarding, and fit in more with the fabric of your career and your sense of meaning.

I’m going to start with a pretty uncontroversial statement. We’ll get to a bit of controversy later, but let’s start with uncontroversial. Most economists and career development professionals will agree that spending your time and your money investing in human capital is a really good investment. You’re not going to find many people who disagree with that statement.

But almost all the discussion around that concept focuses on investments informal credentials and formal higher education. Those can be very powerful investments. I know that Google, as a corporate culture, highly values educational attainment in its employees, and its recruits. You’ve all probably made a lot of those investments. Those can be very powerful, very worthwhile investments.

But almost all the discussion centers around those kinds of formal investments. Yet, there’s a whole world of investments I’ve been exploring the last several years. I’ve been talking to very successful people who didn’t go that path, who instead bootstrapped their human development, and their human capital.

Formal education might be thought of as a “venture capital” model of investing in your human capital. There’s often a lot of financing involved. A lot of effort and money is spent up front. Sixteen years to get through elementary school, high school, undergraduate. More years for graduate education. And then, after all this investment and all this financing and debt—then you get some financial benefit afterwards.

What I want to talk about today instead is investing in yourself in ways that can just be put into action right now, without a lot of expenditure of money. You don’t have to leave this wonderful campus where there’s all this free food available—which I’ve already been enjoying today. You don’t have to take time off from your career. You don’t have to go into student debt. It’s available to you right now.

So this might be thought of as more of a “bootstrapping” model of human capital development. Or “lean.” Or “guerilla” style investing. So that’s what we’re going to be talking about for the next 40 minutes or so.

Next: The Google-Earth View of the Issue

I want to start by give you a Google Earth view of the issue. And then we’ll zoom in to more specific take-aways towards the end of the talk.

In my write-up for this talk, I compared two different types of people. Take a billionaire executive—you probably know of a few here in this company—or just someone who is at the top of their game in the corporate world. In contrast, take someone who is earning minimum wage which is around $7.50/hour these days.

These two people don’t have much in common professionally. They pretty much couldn’t be more opposite, professionally.

Except they have one really, really important thing in common. Can anyone guess what that one thing in common is?

They both have 24 hours in the day. I don’t care how much money you have.  Even if you owned every share of Google stock on IPO day and cashed it out that day, all that money could not buy you a 25th hour of the day. We’re all working with 24 hours.

So then the interesting question becomes, what distinguishes these two kinds of workers who have same amount of time to work with. Why is one earning so much more than the other?

It’s quite dramatic. The average executive compensation for the CEO of a major corporation is around $10 million dollars in salary, stock options, and benefits. I know that Larry and Sergey were at one point taking $1, so they’re not the best example here—but the average is around $10 million. Now, they don’t get paid hourly. But, if you break that down say over 50 weeks a year, 80 hours a week, you’re looking at around $3,000 an hour. That’s how the market is valuing their time. Versus someone working at minimum wage, whose time is valued at $7.50. Yet, they’re both putting in roughly the same amount of time each day. What is the difference between them?

Economists, when they look at who’s earning what and why people are earning more, use a concept called productivity—the productivity of someone’s labor. How much output is created for each hour of time. And one of the main ways to increase the productivity of someone’s labor, is to increase the capital they use with that labor. You take the same amount of labor, mix it with more capital, and you get more productivity—which leads to more compensation.

Think of someone who is earning minimum wage.  Their capital may be a mop, and very minimal training to learn to clean what they are cleaning.  This low amount of capital is mixing with their time, and they receive low results financially.

Whereas, very highly compensated executive is putting in roughly the same hours, but they are mixing those hours with an enormous amount of capital. They have, of course, a human capital. They have their formal education,  informal training, all their experience on the job. They have a rolodex—which is a form of human capital, or what might be called “social capital.” Then they have all the capital of the company. They have executive teams who can execute their vision. They have all the financial resources of the company. So each minute is being mixed with a lot of capital, and that’s why each minute gets rewarded more highly.

You all have a lot of human capital already, in your expertise, your education, and your experience.

What I want to do today is give some kind of guerilla-style bootstrap ways you can start adding even more to your human capital. So that each minute of your time, each hour you spend here, is mixed with more capital.  Therefore your time is more valuable, causing your career, your compensation, and your earnings to develop that much faster.

I’m going to talk about 4 main types of bootstrapped human capital that we can all gain.

Next: Bootstrapper’s Human Capital #1: Learning the Arts of Sales  and Persuasion

The first one I’m going to talk about today is sales. That might sound a little bit crazy. A lot of you in the audience are engineers.  You may never be in a position of formally selling something in the context of a business during your career. Maybe some of you do, but my guess is that probably most of you don’t.

So why would I be standing up here telling you that learning about sales is a valuable way to add to your human capital?

Well, even if you are not selling a product for money, all of us, all of you, are working in a knowledge economy. We’d like to think we are getting paid for our creativity and our ideas. We would like to think that the best ideas win. But we know that in office politics, just by the way things work, that isn’t always the case.

The ideas that win are the best ideas multiplied by the best persuasion—the best sales, if you will—of those ideas. Formal education teaches us about how to come up with great ideas. It’s a pure idea environment, where there’s a very high premium on coming up with brilliant ideas. But, the thing that you don’t tend to learn in a formal environment is how to pitch and sell and persuade others of those ideas to teams in the real world.

Someone I interviewed for the book, Victor Cheng, actually went through the entire course catalog of Harvard, Stanford, and Wharton Business Schools looking for courses in sales.  There was not a single course in sales in the entire MBA catalogs of those 3 prestigious programs. There was one course in sales course management—which is very different from sales.

Now, if you talk to the people I interviewed in my book—these self-made millionaires and billionaires, and successful entrepreneurs—about what was behind their success, almost all of them are passionate about the concept of sales. They are passionate about both traditional sales—in the sense of selling things for money. But just as much, they are passionate about sales as the art of persuasion—in the sense of getting people excited about your ideas.

You all are very idealistic. You want to make a big impact on this company. You want to make a big impact in Silicon Valley. What I’m putting forth to you, is that your impact relies on your persuasiveness when pitching your ideas.

Now, one resistance that a lot of people have—and I used to have—around learning sales or persuasion, is that it sounds manipulative. The word “sales” has a bad ring to it. The word “persuasion” has a manipulative ring to it.

The truth is that there is a lot of manipulative, cheesy, low-grade sales out there. That’s why we have this impression.  That type of sales exists, and has that connotation of an encyclopedia salesman or a used car salesman.

I’m not here to tell you to learn that kind of sales. I promise that’s not what I’m talking about.

(Wikipedia has pretty much put encyclopedia salesmen out of business. Who knows, maybe the Google car project will put used car salesmen out of business. You can just order your car off the Internet. If you guys do a good job on the algorithms, and end car crashes through automatic driving, maybe you will put auto insurance salesmen out of business.)

The kind of sales I’m talking about is high integrity sales, and it does exist. If you are somehow resisting the concept of how to become more persuasive because you think it’s cheesy or manipulative, that excuse is holding you back from furthering your career.  There are ways to earn this stuff that are high integrity, that are befitting of your careers, and of the Google brand.

A very specific recommendation I want to make is a book called Spin Sellingby Neil Rackham. This is—in my opinion—the best book on sales ever written. As far as I know, the only book that is based on actual observation of in-field sales sessions.

They had a budget of a million dollars and dozens of researchers.  They went all around the country observing in-field sales sessions of high-ticket priced items that we’re considered major purchases by the buyer.

What they found, fortunately for all of us, is that slickster manipulation doesn’t actually work. That’s not what is ultimately persuasive in pitching your ideas to your teams—the people who are going to buy your ideas.

What works are two things: asking the right questions, and listening very closely to the answers. So, actually the more the person you are trying to persuade talks, the more likely you are to persuade them of your vision. So sales becomes not a cheesy pitch, but a human conversation where you are listening to your team.

You are listening to what they want, and you are finding ways to demonstrate that you really understand what these people care about.  You are tailoring what you are pitching, what you are “selling,” to their needs. When people get that feeling—that you are tailoring to their needs and desires and agenda in that way—they listen, they are persuaded, and your ideas start diffusing through your team and through the company.

So, there is one example of a very highly-leveraged way to invest in your human capital. I just mentioned one book. I think it’s probably 30 bucks at most. You can read it in a few evenings.  You don’t have to leave Google.  You don’t have go into a masters or graduate program and take on student debt to start making these kinds of investments in your career. You can do them in this bootstrapped, on-the-fly way.

Next: Bootstrapper’s Human Capital #2: Learning to Harness Your Attention

The second type of human capital or investment I want to talk about today is attention. Investing in the quality of your attention.

There’s a huge issue in the knowledge economy. All of us who work at a computer know that Facebook, Twitter, and now Google+ are each just one more thing to keep us distracted during the day. With email, IM, text messages coming through the day—everyone is struggling with this. I don’t know anyone who is not struggling with issues of attention during their workday.

Take two people who have roughly the same educational credentials, roughly the same training, technical knowledge, and same background.

One of them has fantastic attention and just gets down to work.  They have a clear mind, they’re focused, they can get right to work and not be distracted.  They go through the day with a great level of energy and focus and attention.

Compare that to your typical corporate worker, who is drinking 3 or 4 cups of coffee just to wake up in the morning and get started. They are distracted by all of these social media things, and don’t really know where they are going in their work day.  Maybe they have to have another huge jolt of caffeine in the afternoon just to get through the day.

You compare those two people, and the first person I mention is going to win in their career ten times out of ten.

Again, this is another type of investing in your human capital that’s easily leveraged and doesn’t take a lot of money. This is stuff you can learn about. You can focus your time and money on improving your attention. We can all change ourselves this way, and it has a huge impact on our careers.

Think again about productivity as being a product of labor mixed with capital. You all have a certain amount of labor that you are bringing to the table—eight, ten, twelve hours a day. I don’t know quite how much all of you are spending each day, but it’s a fixed amount.

So, in this whole lecture, we’re talking about changing things in ourselves that make each of the minutes we bring to the table more productive.  That change results in much, much higher career results.

There are a lot of ways to focus on attention. I just saw a wonderful sign on that wall over there about an employee meditation group.  So there are techniques out there you can learn.

But there’s a specific kind of investing in your attention span and the quality of your attention I want to talk about. It’s very near and dear to my heart.

I had a very serious problem with this issue in my twenties. I’m thirty-four now. Four years ago, on the eve of my 30th birthday, I was suicidal. I had struggled throughout my twenties with bipolar II, which is a serious mental illness that involves strong mood swings.

My attention was one of two ways. It was either super jacked up, where I could barely contain myself. It was surprisingly hard to be productive, because my mind was so jacked up. Or I was in bed and could barely pull the covers off of me. Neither of those is conducive to good work.

If you think this stuff about attention is kind of airy-fairy and New Age, it really isn’t. It has a very direct correlation with your earnings. In the darkest moments of that period, I was working as a freelancer and in my lowest year earned $8,000. I wasn’t able to bring quality attention to my hours in the day, and it showed in my pocketbook.

I got out of this through better nutritional and eating habits. It was a long story, I wrote an article about it on Forbes. If you Google my name and bipolar II, I have a very detailed article about it. I went through a whole gauntlet of doctors and psychiatrists. I was on all kinds of drugs.

Eventually, I came across a doctor who knew that there were nutritional components to attention and mood. He told me specifically that with these mood swings, blood sugar was a really big issue.  He told me to get off caffeine, alcohol, and refined sugar. All of which I was consuming in high quantities.

I resisted this advice for quite a while. I basically told him to F-off.  I didn’t want to live without those things.

It got really bad. As I mentioned, I was literally on the verge of suicide. But I realized, “I need to make a change.” I implemented what this doctor told me, and within two weeks my life had radically transformed.

Now, you don’t need to be on the brinks of that level of darkness to have this be effective.

Google is at the forefront—literally on the forefront, I’m not saying this to flatter you, it’s actually true—of paying attention to employees’ nutrition as a component of their value in the company and the attention they’re bringing. Google deservedly has received a ton of great press about the healthy food that’s available to you in the cafe.

But, we can always do better. We can always learn more. Nutrition is a very high leverage way to increase the value of each minute you’re bringing to your day. Get this part of your life—your nutrition and health—really handled.

Probably all of us could tick off a list of the basic things you need to do to be healthy. We all know, it’s basically: eat more fresh fruits and vegetables, cut down on refined sugars, cut down on alcohol and caffeine consumption, get more exercise, and get better sleep. All of us know these things. But really, the difference is whether or not we implement them.

One of the pitfalls of formal education is that focuses on what you know. Do you know things intellectually? Can you tick them off on a test.

But, what you know is only part of the issue. It’s really about what you put into practice. That is the more challenging part.

You have to train in these things. There’s an analogy to training an athlete. You actually have to train your taste buds, your senses, to respond to healthier eating. It is a training process.

I have another specific recommendation. It’s a book that was very helpful to me in this process of transforming my own life. It’s called The Ultra-Mind Solution by Dr. Mark Hyman.

It’s a very straightforward, scientifically-based book on the nutritional aspects of mental performance and mental health. A lot of books on alternative nutrition are filled with woo-woo, New Age concepts. This is a very straight-ahead book written by an MD. I highly recommend it. Maybe that book is 15, 20 bucks. You can read it. You don’t have to leave your job to bring this kind of education into your life.

What I’ve been talking about in my own book is that institutes of higher learning have inappropriately monopolized the word “education.” They all undoubtedly provided very good education, important and invaluable education. But, that’s all we think of when we think of word “education:” going to school, taking classes, getting a degree, getting advanced degrees.

We don’t think about all the other ways that we can educate ourselves. Often times. in ways that are much less expensive and much more relevant to what you are doing right now in your careers. There are all these ways available to us.

That’s what I really interviewed these people about: the street-smart ways they went about educating themselves. This group that I talked with over the last few years probably has the most success with the least formal credentialsfor that success, in the world. So, all of their success came in these street-smart, practical intelligence ways.

So we’ve talked about sales persuasion. We’ve talked about your attention.

Next: Bootstrapper’s Human Capital #3: Overcoming Emotional Liabilities

The third form of street-smart human capital I want to talk about might ruffle some feathers, but I think is really important. It’s what I call “overcoming emotional liabilities.”

I have a very technical definition of “emotional liabilities.” You might want to take notes on this technical definition. I define an emotional liability as: any emotional issue you haven’t dealt with, that could come back and bite you in the ass.

We all have these. All of us. I definitely have these. All of us in this room have emotional liabilities. Usually we’re not aware of them.

Another way you might think of them is “blind spots.” Everyone else is aware of them in you. I assure you, your team is aware of your emotional liabilities. [Laughter.] You’re the only one who isn’t.

There are several kinds I’ll talk about that are very common in the work world. One that I personally struggle with a lot is defensiveness. Which is essentially, being un-open to feedback around your improvement.

My wife, who is in the front row here, is laughing. She is the mirror to my blind spots. She’ll say something very reasonable. Some very normal wifely criticism of a husband. And I’ll get extremely defensive and I’ll deny it and I’ll start criticizing her right back.

She’s very patient. I’m very lucky to have such a patient wife who will patiently, compassionately say, “Honey, you’re doing that defensiveness thing again.”

She’s actually got to point this out to me, because when you are in the grips of it, you’re not aware of it. You are possessed by this, but you don’t see it. Everyone else sees it, but not you. So, that’s defensiveness.

Another emotional liability that is extremely common in the work world is what I call a “victim mentality.”

If you are in a victim mentality, everyone else is the cause of your bad results. If your team doesn’t do well on a project: “Oh well, it’s my team members. They didn’t get that piece of programming, that piece of code in on time.” All those kinds of excuses that we always hear.

If you walk around with a victim mindset, in your view, you’re not the cause of the bad things in your life. But that throws the baby out with the bathwater. If you’re not the cause of the bad things in your life, you’re not the cause of the good things either. You’re not the cause of anything. You’re a passive object, just being blown around by whatever winds, positive or negative, are around you.

The people I interviewed for my book have a very different mindset around this. The one thing they all seemed to have in common is a complete absence of the victim mentality. And a lot of them grew up in very, very difficult circumstances, harder than probably a lot of us in this room could even imagine. And yet, the managed to maintain a sense throughout their lives that they are creating the results around them. They are the cause of the results.

I think it stems from them being entrepreneurs.  If you are an entrepreneur and one of your employees screws up, maybe some entrepreneurs say, “Oh well, the employee is terrible, it’s their fault. That’s why our company messed up.” But those kind of entrepreneurs don’t last very long.

The ones that are successful say, “Okay, this is my fault. I created this. Either I made a bad hiring decision, in which case I need to fix it, or I didn’t provide the leadership necessary to have that employee do the right thing. I’m in control. I’m in the driver’s seat. I’m creating my reality.”

There’s a lot of cheesy stuff out there about this issue, around the so-called “law of attraction” and the idea that “you create your own reality.” I think a lot of this gets overblown and overhyped, and you can fairly have skepticism about some of the more extreme New Age ways that this idea gets expressed—as in that movie The Secret.

But, on a basic level, learning to overcome this emotional liability of “I’m a victim, other people are screwing me over in my career,” is a very powerful way to invest in your own human capital.

Think about the most successful, best leader you can imagine. Either a boss you’ve had, or just an idealization of your perfect leader. This person is highly inspiring, highly motivating, makes you want to work for her, makes you want to bring out your best to perform for the vision she’s setting out.  She provides you really hard-hitting solid feedback, but does so in a very compassionate way that is not aimed at cutting you down, but rather in helping you grow.

Think about the most inspiring leader like that. We’ve all probably had one or two in some context or another. Well, that person has overcome a lot of their emotional liabilities.

I had a very happy childhood, but just from normal growing-up stuff, I accumulated some baggage. We’ve all got this baggage that we carry around, and if we don’t learn to let go of the baggage, it will come back to bite us in the ass.  And this is not just airy-fairy New Age stuff. It affects your bottom line.

In terms of specific take-aways and action steps, this one on emotional liabilities is very hard to do just on your own. Because, as we said, they are blind spots. So you need feedback.

I am a big believer in executive coaching. I’m almost like a religious convert to executive coaching. It has transformed by own life, my own earning power.

I mentioned that in the darkest days of my mental health situation, I earned $8,000 one year. That was only about four or five years ago. Once I finally got my health issues taken care of (which was the second human capital that we talked about) then I was in a place to get my money handled.

I said, “I can’t be in this place any longer. I’ve got to get my money handled.  No woman that I want to spend my life with is going to want to be married to such a financial basket case.” This was before I met Jena. I really had a vision that I needed to get this handled to meet the kind of partner that I wanted to have in my life.

So, I invested in that area of my life, and it was literally a financial investment in high-quality coaching. And I turned my money situation around and got on stable ground.

There are all kinds of workshops and coaching out there you can get. Again, there’s an enormous amount of BS out there.  I’m probably going to piss some people off who are listening to this on the video. But, I would say 80% of coaches I’ve come across are pretty messed up in their own life and they are using coaching as a way to sort out their own life by coaching other people.

That’s a really common meme out there in the coaching world. So you have to find the people out there who aren’t like that.  You have to find those coaches who actually have their stuff already handled and who can help you get your emotional liabilities handled.

What’s the best way to find them? Referrals are always the best way, I think. Find people who’ve got this stuff handled. Find people who are where you want to be, whether in this company or elsewhere in the Valley.  Find people who are where you want to be and ask who they learned from. What books did they read? What teachers did they have? What mentors did they have? It’s possible that those teachers and mentors teach workshops or classes.

I’ll make two recommendations right here if you are looking for specific recommendations. I’m not an affiliate or anything like that for these people. I make no money from recommending them.

One is actually a former Googler, Jenny Blake. She was an executive coach here at Google, and she decided to go out and do it full time herself. She’s great. She’s helped me a lot. She’s a friend now.

I also actually pay an executive coach. There’s a mix of informal and formal. You can find mentors, which is a form of coaching, but I really do believe in investing with your wallet and paying for some executive coaching as well.

I pay for an executive coach, this guy called Peter Shallard. He goes by the moniker “The Shrink for Entrepreneurs.”

I think we all, whether we are employees are not, live in an entrepreneurial environment. We all need some kind of “shrink.” Go out and find one that works for you and make that investment.

The going rate for a really good executive coach, one who knows what they are doing, is about a $1,000 a month.

That might sound like a lot. But compare that, for example, to going back to school for a master’s degree. That could be $50,000 a year is for a good program, plus another $50,000-$100,000 a year in foregone earnings. Much of that will be put on debt, so there’s going to be interest associated with the debt. So, you are looking at possibly $150,000 a year to get that kind of formal increase in your human capital.

Whereas, a really good executive coach might be one-tenth of that in a year. It’s going to be a form of education. But highly tailored to your specific needs and your specific circumstances. Again, this is a guerilla, lean style where you don’t have to leave your job. This kind of education is done in dialog with your job.

All the people I talk to in this book are big believers in the power of mentorship.  Since they didn’t have formal education, since they didn’t have professors, they had to go find their professors in the world. So I have a chapter—the second chapter in the book—devoted to a step-by-step way of finding informal mentors who can help you with these issues.

Mentors can help us get to that higher, cleaner level of leadership where we’re not getting triggered and weighed down by emotional baggage issues. So, that’s the third kind of human capital investment: overcoming emotional liabilities.

Next: Bootstrapper’s Human Capital #4: Bringing Meaning to Our Careers

The last type of human capital that I’m going to talk about today is meaning. Bringing meaning to our careers.

I have another pretty serious personal story around this. After dealing with that whole bipolar health issue, I got out of it. I got out alive.

Pretty soon after that, about two and a half years ago, I was diagnosed with testicular cancer. Four days after I found out about it, I was on the surgery table.  I got the surgery. Everything seems to be okay now, knock on wood. So I am a cancer survivor of two and a half years.

It’s kind of cliché or cheesy, but there’s something about being diagnosed with a potentially fatal illness that gives you a permission slip to start thinking about big issues like: What does my life really mean? What do I really want to do? What impact do I really want to have here on the planet?

I thought about those a lot during the time of the surgery and after. I spent a lot of time thinking about those issues. And I think it’s actually kind of sad that it generally takes a life-threatening illness for us to give ourselves permission to start thinking about these issues in our life.

Steve Jobs just stepped down from his incredible ten year leadership. There’s a really beautiful commencement speech he gave in 2005 at Stanford where he talks about this. He talks about his cancer diagnosis and how he started thinking about these big picture issues facing death.

My hope is that all of us in this room don’t have to face death for a very long time. That we all live very healthy long lives. But I want us to give ourselves permission to think about those big-picture issues of our lives without facing mortality, and do it now.

Again, this is not an airy-fairy concept. It has direct relevance to your success in your career. Take two people again, same educational background, same training, same technical skills.

One of them is just sort of showing up for work. “Hey Google’s a cool place to work. You get this free food. It sounds cool on my resume.” And that’s their relationship to their work. There’s not a lot of meaning.

You take someone else who has a very clear sense of what they want to accomplish on this planet, of what impact they want to have made in their company, in their industry, in the world through their work.

Which one of those two people is going to be promoted faster? Which one is going to advance in their career? Which one is going to earn more in their career? It’s really clear that the latter one will.

I’m going to give you my definition of meaning and how we can add more to it. I’m sure you didn’t expect, coming at noon for a lunchtime talk, to get a definition of “the meaning of life.”

But, I’m going to give you the one I developed after a lot of reflection: Meaning is making a difference in the lives of people you care about.

Making a difference in the lives of people you care about. There are two components to that. Making a difference, and the people you care about. Both of those components need to be there for a sense of meaning.

I have two of the most important people in my life here in the front row—my mother, who gave me life, and my wife, who gives me inspiration and life every day. These are people I deeply, deeply care about.

Jena and I recently had our one year wedding anniversary. A little over a year ago, I was giving her my vows at our wedding, and in those vows, I said, “Jena, I vow to you that if you ever are in danger, if you are ever in harm’s way, I will sacrifice everything. I will sacrifice even my own life to protect you and to get you out of harm.”  I meant those words. There are very few people on the planet I would say those words to, but I said them to Jena that day.

That is a level of meaning that I’m talking about here. That’s the level of care. We all have that in our families. We all have that with people we love. Whether it’s a spouse, or significant other, children, siblings, or parents.

So we understand this intuitively in our personal life: what gives us meaning is making a difference in the lives of people we care about.

But how does this translate into the professional realm?

Well, the level of care may or may not be that intense, but you all work withpeople. We may like to think that we’re doing well in the knowledge economy because of technical skills and training background. But nothing gets done without people. You all work on teams and presumably you care about your teams.

There’s an analogy here. It’s very interesting to read interviews with soldiers about why they fight: Why do they put up with these horrendous hellish conditions? What keeps them going day after day on no sleep risking their life every day?

They may say something about the cause, or their country.

But, if you really dig deep and read the interviews with them, they almost always talk about their teammates, their fellow soldiers, and this profound love and care they experience for the people they are fighting alongside. Caring for teams is a very elemental thing in our psychology.

The more you learn how to get in touch with why you are here, why you care about what you are doing, and the people that you care about, the more powerful your career is going to be.

You only have a certain amount of time each day. We’re talking about how to make it the most effective.

There aren’t books you can read to get in touch with what you truly care about. This is an internal inquiry that we all have to do. That’s an investment of time. And it tends to get put aside for other types of investing.

People when they think of investing, they think of stocks, bonds, real estate portfolios. A common benchmark is placing 10% of your pretax earnings into retirement, and that kind of savings and investment. That’s roughly 10% of your energy going towards that type of investment. But how often do we invest energy into figuring out where we want our careers and our lives to head?

We always talk about stocks and real estate as investments, but we never ever talk about giving ourselves time for these kinds of investments in our human capital.

The self-educated millionaires and billionaires I talked to for the last two years have this as their focus. They are masters of investing in their own human capital in very inexpensive ways without having to go into debt or take out student loans.

Again, I’m not trying to bash those things. All of you have probably done a lot of that in your life. I’m just trying to expand the conversation in a direction that it hasn’t gone very frequently.

In closing, I hope that this talk has inspired you to change the way you view the concept of investing. All of the things I am talking about are actual investments of things that matter to you.

Even more than money, what’s valuable to all of us is time. All of these things are going to take time. I am not minimizing the amount of time that these things are going to take to master. To learn to be a more persuasive communicator about your ideas. To learn to increase the quality of you attention through better health habits. To learn to get over the emotional baggage issues we all have. To do deep inquiry into what is meaningful to you about your career. These will all take significant time.

But in my view, these are extremely powerful, lucrative ways to invest your time, your energy, and your money, and I hope I have inspired you to make more of those investments.

Thank you so much.

***

Michael Ellsberg is the author of The Education of Millionaires: It’s Not What You Think, and It’s Not Too Late, out now from Penguin/Portfolio. It’s a bootstrapper’s guide to investing in your own human capital at any age. Michael sends manifestos, recommendations, tips, and other exclusive content to his private email list, which you can join at www.ellsberg.com. Connect with him on Twitter @MichaelEllsberg and on Facebook.

If you had a book coming out, and you were considering how to get people excited to buy it, read it, and talk about it, which would be most valuable to you:

1.  a 3-minute segment about your book (which is long by TV news standards), including a close-up shot of the cover, on primetime CNN. . .
2.  a 1,000 word piece you wrote on a topic related to your book, published in the Sunday opinion section of America’s newspaper of record, theNew York Times, which reaches the #6 most emailed piece on NYTimes.com within a day. . .
3.  a guest post you wrote, published on the blog of one lone dude in SF obsessed with fat loss, female orgasms, and lifting Russian kettle bells?

If your goal was to cause a lightning storm of book sales, you should pick #3. I know—I did all three.

Today, I want to write about something I’d like to call the “Tim Ferriss Effect.” It’s not exclusive to Tim Ferriss, but he is I believe the marquee example of a major shift that has happened in the last 5 years within the world of book promotion.

Here’s the basic idea:

When trying to promote a book, the main place you want coverage is on a popular single-author blog or site related to your topic.

The most pertinent words in that previous sentence, aside from “popular,” are “single-author.” No, not as in romantically unattached (Tim has a girlfriend now, and I know who she is, but I’m not telling!)

What I mean is, a blog—or other online audience such as an email newsletter—centered around one person who has major influence over a large, loyal audience.

In previous times, before the Internet, this was called the Oprah Effect. And don’t get me wrong, I’d still leap at the opportunity to share my message on cable with arguably the most persuasive person who ever walked the planet. (Producers—you can reach me via my website!)

But as more of our attention (and our book buying) shifts online, its only natural that the mantle Oprah held for a quarter of a century in introducing readers to new books, shifts to a digital native.

And in my opinion, the digital native who has taken up that mantle in the book world, is Tim Ferriss.

I had the fortune of being introduced to Mr. Ferriss well before his storied first book came out. Our mutual friend Doug Price introduced him to me as “this crazy dude you need to know.”

For many years, our relationship consisted primarily of him emailing me from various places he was traveling, and asking me to send him digital music, as he knew I was a connoisseur of Cuban salsa, which he was starting to get into. I knew him as a proprietor of a sports nutrition business, with a penchant for travel and a rather crazy book idea that had been rejected by major publishers 20+ times.

Tim and I developed a friendship, and over the years, I watched him transform himself from Tim Ferriss to Tim Ferriss: the Silicon Valley guru for whom—it seems—everything he touches turns to gold.

Fast forward many years to my recent book launch for The Education of Millionaires. This was the most important moment of my professional life. I had published one book before, which I was proud of, but this was my first career-defining book: a hardcover release, on two topics of current national discussion (career development, in the middle of a nasty economic downturn, and higher education, in the middle of a mounting debate over the value and cost of higher ed.)

I was scrambling to do everything I possibly could to get the word out about this book. I had no idea what I was doing—I had never done a national hardcover book launch before. A lot was riding on this for me.

I tried everything. I basically made the launch up as I went. I released the Introduction and Chapter 1 of my book to my (then exceedingly tiny) email list and Twitter following, hoping that would “go viral.” (It didn’t.)

I did interviews with various radio shows and even some national business websites. I’d do those interviews again—but I didn’t notice a huge spike in Amazon sales after any of these.

(By the way, my main metric in all of this story is Amazon rank, because that is the primary real-time gauge of sales available to authors, allowing you as an author to see the hour-by-hour impact of each specific piece of publicity that gets released. You’ll only ever truly understand this sentiment below, which I posted on my Facebook, until you’ve done your own book launch.)

Before launch day, I did teleseminar interviews with several of my friends who had email lists. I received an enthusiastic response from their audience, for which I was extremely grateful, and I would welcome the opportunity again—but in general their audience wasn’t of the size that would move the needle significantly on Amazon rankings.

By September 28th, 2011, the eve of my book launch (when I posted that Facebook comment), after weeks and weeks of promotion along these lines, my Amazon ranking was up to this:

Pretty darn good. But not earth-shattering.

Then, the next day, around 3:30 PM eastern on official launch day, Tim Ferriss logged onto his WordPress control panel, and pressed “Publish” on an8,000-word guest post I had worked on over the previous several weeks, for his blog.

The post opened with Tim briefly explaining how he knew me, endorsing me as a person, and describing the book (with a link to my book.) It then went directly into my guest post– there was not even an explicit call to action to buy my book or even any positive statements about my book.

An hour later, this:

I was astonished. To see something with my name attached to it, selling on Amazon at a rank in two digits.

Here was another a fun screen-shot from that day:

I beat Tim (often called the Dale Carnegie of the digital age) and Mr. Carnegie himself, for a few days, thanks largely to Tim.

Now, I know, it wasn’t a New York Times bestseller. It wan’t #1 on Amazon. It wasn’t even Top 10 on Amazon.

But also I know a lot of authors who would die to reach #45 on Amazon on launch day. (Including me.)

For the next two months, I tried to day everything and anything to regain the Amazon ranking crack-high that that guest post gave me (unlike crack, the high lasted for weeks, as I stayed in the Top 100 for the next few weeks.)

Never got it back though.

I did all kinds of press in the subsequent weeks after Tim’s post. (If you want to, you can see some samples here.) I’m proud of this press, I’m grateful for the outlets for giving me the opportunity, and I would welcome the opportunity again. No complaints there.

But even the big opportunities that came my way didn’t ever have the effect on my book promotion that that one post on Tim’s blog did.

I had the good fortune of being able to write an opinion piece for the New York Times, related to my book. Now, the editors of the op-ed page of the New York Times don’t give a damn what effect their editorial choices have on an author’s book sales, nor should they. They’re there to provoke national discussion on important topics, and I believe the piece I wrote (with their very helpful editorial suggestions) did exactly that.

But no author in the world is going to avoid at least hoping that coverage in the nation’s newspaper of record might also unleash a torrent of buyers, landing him on that paper’s famed bestsellers list.

The op-ed reached the #6 on their “Most Emailed” ranking on their site. There were two or three days when it seemed I could not log onto Facebook or Twitter without seeing a river or retweets or Facebook shares of my piece.

I thought, with my piece getting to #6 on the “Most Emailed” list, and the s***-storm of social media action the piece was getting, there was no way this thing wasn’t going to hit bestseller list.

But instead:

That was the highest the book ever reached in the days after the New York Times piece and the crazy wild storm of social media sharing it received (up in rank from #1,301 the day before the Times piece went live.)

Similar pattern: A week later, I was on primetime CNN—OutFront with Erin Burnett—talking about my Times piece and my book. That’s a slot any author in the world (including me) would covet, and I’d leap at the opportunity again.

Yet even primetime TV coverage didn’t afford me the break into that under-100 Amazon-ranking I was so jonesing to re-experience:

Nothing to sneeze at—but I still wasn’t able to break under 100 again. Nothing, it seemed—not even major mainstream national media and a social media feeding-frenzy–could match that Amazon-ranking high that a single piece on Tim’s blog afforded me.

What was going on here? Why did one piece on a single blog work such wonders in comparison to major national media?

Next: The Tim Ferriss Effect explained

There is a key distinction that I haven’t seen talked about much in the voluminous verbiage out there devoted to how to promote things:

There’s a big difference between being exposed to a large audience, and being exposed to a comparatively smaller (but still large) audience which isridiculously passionate.

The former is very nice; the latter is priceless.

You know the oft-observed phenonmenon in politics, that a passionate minority can have influence far beyond a diffuse, apathetic majority?

That is the essence of the Tim Ferriss Effect—which goes way beyond Tim Ferriss. It’s better to be exposed to a comparatively smaller group of people who are engaged, devoted and passionate, than to a much larger group of people who are casual readers.

In the past, Tim Ferriss has (for example) recommended that his readers take regular baths in tubs full of ice water. You can bet that, after he recommended that publicly, male and female nipples across America were hardening, submerged in bathtubs full of ice water.

He’s also competed against traditional media directly. In a competition to benefit  education non-profit DonorsChoose.org, Tim outfundraised Stephen Colbert (The Colbert Report) 3-to-1, and beat out TechCrunch and Engadget combined.

All of this has led a handful of brands—including American Apparel, Audi, Sonos, and others—eager to do co-promotions, events, and more for his audience.  But the list remains small, because the bigger brands still go after the largest “impressions,” ignoring the most important factor of all: measurable impact.

Even if the total number who receive the message is smaller than on national media, the percentage taking action is so much higher, it can dwarf the effect you’ll see from national media.

So what’s the relevance of all this for everyone else? Is my lesson “get introduced to Tim Ferriss, and send him salsa music over the Internet, before he’s famous”? That’s not very actionable advice!

(Tim is, by the way, notoriously cagey about promoting books and other products that come in through unsolicited pitches.)

But I do think there are two interrelated lessons to be learned from my experience here, which have wider applicability far beyond me or Tim:

#1) Whatever field your book or product is in, I guarantee you that there is a blogger or other “thought leader” out there who has a sway over your specific field as powerful as Tim has with his own audience. Find those people: in my experience, they are way more powerful for promoting your book than even national exposure on mainstream media. Their (comparatively smaller) audience is much more concentrated and passionate, and will thus take action in much higher numbers. This can result in surprisingly greater results than national media.

#2) The best way to reach these bloggers and thought leaders who can implement this “Ferriss Effect” in your own field is to develop relationships with them over long periods of time. I’d known (and partied and stayed up in late-night bull-sessions with) Tim for years before I ever asked him to do anything for me. This is not a game for people who want results in 2 weeks. This is a game for people who want results in 2-10 years.

This is a game best suited for people who think that many, many evenings out eating, drinking and building relationships counts as part of your “work;” if you’re inclined to think such ways of spending time are a waste, then this is not the game to play, and instead keep sending out those cold pitches to strangers, hoping they’ll promote you, and see how far they get you.

Next: The Million Dollar Question: How do you get on high profile bloggers’ radars?

To get some more perspective on the power of single-author blogs, I asked some other authors of well-known, influential single-author blogs to chime in. Here’s what New York Times bestselling author Ramit Sethi had to say:

“In the past, it was a clear path. If you wanted exposure for something, you went to the mass media. Over time, the ‘TV industrial complex’ grew more and more complicated, more and more fragmented, and there were tons and tons of channels. Now there are channels upon channels.

“So, in a world of infinite choices, if something is not directly personalized to us, we close the window and we’re on to something else. For example with Tim’s site, you have a highly passionate audience of people of a very similar demographic who have really similar goals. If anybody wants to post anything about lifestyle design and get attention, it’s more effective to be on Tim’s blog than to be on the Today Show.”

Ramit used this concept when launching his own book, I Will Teach You To Be Rich, which became a bestseller. “There was basically a book review put up on virtually every major personal finance blog. We could track and see exactly which blogs were sending the most traffic and the most sales, and it was actually quite surprising. Some of the largest blogs did not send some of the most sales. So the beautiful thing is that you can now track what’s effective and what’s not. On a recent launch, we actually prioritized one single-author blog higher than a huge newspaper and a huge TV show with millions of viewers that everyone in the country has heard of.

“You want to find an audience that is highly targeted. I would rather be able to reach 5,000 people who are exactly interested in my topic than let’s say 100,000 who are only marginally interested.

“I was on a national morning TV show and I had a pretty prominent segment where I held up my book and I discussed everything. It was very positive. However, if I had shown you the traffic numbers from that week, you would not have been able to guess which day I was on the morning show. Seriously.

“The Holy Grail is a single-author blog with a large audience that is highly focused, and the author loves your stuff. If you can make friends with them and show them that your stuff is great and relevant to their audience, that can really propel you from one level to the next.”

I asked Ramit the Million Dollar Question: let’s say you’ve identified this Holy Grail blogger. How do you get on his or her radar?

“Here’s the worst way. The worst way is to send one email with a ton of content saying, ‘Hey, I would love for you to review my product. I think it’s great. I think your readers would really love it’ and then it’s just a bunch of gibberish markety stuff.

“Guess what? Any big blogger gets at least 50 of those a week. I wish we could answer all of them, but they just get deleted. The more effective way is to take a long-term approach. The real misfortune is that nobody else does it. So people will nod and say, ‘Yeah, I should really do that,’ and then they don’t.

“You want to focus on the idea, ‘I’m going to add value to this person over time.’ The first thing you could do is leave some thoughtful comments on their blog. Next, you could send them some email saying, ‘Hey, that was really great, but I thought you may have missed this one point. Here’s an interesting article with a different perspective on it.’ If you thought it through and did some research, the author will think, ‘Wow, thanks very much!’ and you are not asking for anything.

“All of a sudden now you’ve differentiated yourself first by adding value. You are not going directly for the kill. Eventually, you could reach out and say, ‘Hey, these are a couple of things I noticed you’re doing that I think that I could help with. I’d love to connect you to this person, etc.’ Then eventually, you can ask, ‘If it’s okay, I just want to ask you for about 60 seconds,’ and ask them about your thing and say, ‘Do you have any advice?’ and ‘Do you think maybe this might be interesting to your audience?’

“No pressure. One mistake people make is they often have a ‘one shot and done’ attitude about this: ‘If I don’t get my pitch in, and they don’t like it, it’s over.’ Wrong. It’s really about building a relationship over the long-term. Sounds like a lot of work? Good! Because 99% of people will not do that. That’s why they will send one email, it will be rejected and they’ll complain that, ‘Oh this blogger’s not nice,’ or ‘Oh, it’s too hard to get media. If only I had connections.’ The point is to reach those people, it’s not about luck or magic, it’s about being really thoughtful and systematic about how you can help them first.”

Ramit has not only been on the receiving end of the power of single-author blogs promoting his stuff—he also now bestows these effects on others. He recently published a piece about microloan charity Kiva. A representative from Kiva later wrote that Ramit’s post “led to our biggest loan volume day ever. . . . I realized, this is just ridiculous. The biggest loan volume day ever, and Kiva.org has been mentioned in various international news sources (BBC, CNN, Wall Street Journal).”

Next: Noah Kagan, AppSumo founder, answers the Million Dollar Question

I also spoke with Noah Kagan about the surprising, disproportionate power of focused blogs for promotion.

Noah Kagan was an early employee of Facebook, then director of marketing at Mint.com, and is now the founder and CEO of AppSumo. He writes his own influential blog as well. He told me:

“AppSumo has been featured in TechCrunch, Venture Beat, ReadWriteWeb—all of these places where start ups and entrepreneurs are really hoping to get featured on. Not to take any of that for granted, but I would take Lifehacker—which is not something that’s mainstream for startups to consider—any day over those guys, because it’s the most effective for the right audience.”

I asked, “What do you see as attributing to that effectiveness?”

“I feel that TechCrunch and a lot of these other sites are more for casual browsing. It’s people reading snippets. Whereas, as a site like Lifehacker, the audience is there to actually engage and take action from the content that’s produced. So we saw magnitudes of differences as far as subscribers and the quality of people coming from Lifehacker. In a like manner, my own guest post for Tim’s blog was the one of the most popular drivers of traffic to AppSumo in the company’s history.

“One big aspect of this is that certain authors, such as Tim and Ramit, have built a lot of trust with their audience around the products they recommend. They give a very clear message to their audience: ‘Here are products I’m recommending that you should actually pay for.’ Implicit in that message is, ‘Paying for something is actually a good thing.’ Someone said to me about AppSumo recently, ‘Some of the stuff you put out, you can find online.’ I say, ‘Yes, you can find it online, but we curate and condense the best information everywhere via the products that we are going to be promoting.’ People begin to trust your taste over time.”

I couldn’t resist, and again asked Kagan the Million Dollar Question–once you’ve identified the specific bloggers you’d like to reach out to, how do you actually get in touch with them?

“Just in self-reflecting right now, who are the people that I actually responded to today? 99% of the people who email me are just like, ‘Hey, gimme.’ Or, ‘Hey, I’ve got this problem, I need motivation, I need help with my business, I’m struggling with this. . .’ But whom do I actually respond to and help out? One guy sent me underwear. He knows that I talk about underwear a lot, so even before we started talking, he’s like, ‘What’s your address, I want to send you something.’ I didn’t know him, and I think that’s a little awkward frankly. [Laughter.] But that got me! People have sent me custom hot sauce. People have sent me different things like that. But it doesn’t necessarily have to be an item that costs money.

“The first email you could send to someone is just a flattering email. Flattery is the killer that no one uses anymore. Email someone and say something like, ‘I don’t really have any other motivations right now, I just want to tell you that I love your stuff and you’ve changed my life,” and then explain exactly how it has changed your life. That alone is an easy opening for me to just be interested in you because you have benefited from my stuff, which makes me feel really good.”

Next: The namesake of the Tim Ferriss Effect speaks out

Of course, I couldn’t write an article on the “Tim Ferriss Effect” without getting a few quotes from the man himself. Here’s what he told me over the phone.

With Tim’s permission, you can listen to the recording of my full phone interview with him here. (NSFW, as we tend to get foul-mouthed when we rap together. The transcript has been edited.)

TIM FERRISS: “People have two unfortunate broad labels that they use which can be very misguiding. Namely, the differentiation between ‘journalist’ and ‘blogger.’ The reason I was successful in launching my first book with bloggers is this: I assumed that I should spend as much time on a blogger with a million-person readership as I would pitching an editor of a publication with a million person subscription-base.

“That’s a point that sometimes gets lost when people are considering pitching media outlets. They’ll spend more time pitching a national magazine that in reality only has a 100,000 person subscriber base (even though they have all these inflated bullshit numbers based on pass along in dentists’ offices.) They’ll spend an entire week agonizing over the email that they’re going to send to that editor. And then they’ll send a 3-sentence spam email to 100 bloggers of equal power as that editor: ‘Hey, I thought you’d really love the book. It’s perfect for your readers. Here’s an excerpt and here’s this and here’s that. Thanks for sharing with your audience.’

“It’s astonishing to me how standard this mistake is. If you take a print magazine with a million person circulation, and a blog with a devout readership of 1 million, for the purpose of selling anything that can be sold online, the blog is infinitely more powerful, because it’s only a click away. The transition from interest to purchase is one click, whereas if someone sees something on Good Morning America, as wide as its reach may be, they need to write that down, and/or capture it in a device and then go online, search for it and purchase it. So the abandonment rate is so atrociously high. Many of the startups I advise have been on national television, and they barely registered any blip, if at all, on their Google analytics.

“But with a feature from some D-list blog, they’ll sell 100 times more. You are not after the biggest audience possible, you are after the right audience. That’s not a qualitative question, it’s also a quantitative question. You always want to hit the right thousand people.

“I always point people to the article ‘1,000 True Fans‘ by Kevin Kelly. If you choose your thousand ideal customers or readers properly and find the single author blog that targets that audience, you never have to do any more marketing. You’re done. That is a lesson that very few product developers and marketers have learned, and it’s unfortunate.

“People don’t trust entities. People trust people. Therefore, if someone reads, say, CNBC, they are reading a conglomerate of largely nameless contributors who are secondary to the content. When somebody reads Ramit Sethi’s blog, when someone reads Perez Hilton, when someone reads Ree Drummond, they are reading and trusting a single person as opposed to an entity. That personal level of trust is a very large responsibility, but it’s also a high-leverage point of influence. That is something that no amalgamation of a hundred or a thousand writers could ever match person-per-person.”

I asked Tim why he thought more people were not hip to this concept, and why everyone seems so focused on getting in general-interest national media over more focused, niche online media.

“I think there are a number of causes for this. The first is that it’s easier to pick out the national media targets than it is to pick out the high-value bloggers. If you walk into any bookstore, you can look at the newsstands and see which magazines are nationally-distributed, and you recognize certain names. Same with television. With the blogsphere, however, you actually have to dig, and know how to use multiple tools to figure out whom you should be speaking to.”

I asked: “What tools would you recommend, besides, say, Technorati?”

“Living in San Francisco. [Laughter] I mean honestly, it’s all about having a drink with someone and they say, ‘You should really check out this blog. You’ll frickin’ love it.’ And then I check it out. Lo and behold, I do love it. The blogs don’t have to be large at all. The audience has to be well-defined, and you have to match your message to that audience.”

I continued: “What tips besides living in San Francisco? What actionable advice do you have for people who want to take this approach, besides becoming friends with Tim Ferriss, which is harder to do now that your dance card is pretty much full. What actionable advice would you give people to follow this strategy?”

Tim told me: “I would say, #1: email is the most crowded channel for communicating with anyone. Telephone is usually an annoyance which leads to an in-person meeting. So if you are serious about developing relationships—not transactions, but relationships with people whom you can share ideas and cross-pollinate audiences with, meet them in-person. Spend the 300 bucks to fly to South-by-Southwest. Spend a week in San Francisco, spend a week in Nashville if music is your thing. Whatever the topic happens to be. If it’s fashion, go to New York City.

“If you are not willing to invest that time, you’re going to get a poor return on your investment. Life will be much less interesting on top of that. I look at those people who spend years and years publishing one book per year and who never quite get to where they want to get—I’ve given people my exact blueprint for pitching bloggers, yet, they still spam the shit out of hundreds of bloggers randomly with template emails.

“The bloggers who actually have dedicated audiences are getting pitched a thousand times more than you think they are. If you think that you are just going to waltz in and they’re starving for content with an audience of 200,000 people, you’re wrong. You’re probably late to the party so don’t walk into their living room and f***in’ kick off your shoes and put your stinky feet on table and yell at their significant other to go grab you a cold beer, because it’s poor etiquette.”

Tim himself has been quite open about how this relationship-building over time (rather than spammy pitching) is how he got his start. In fact, he was a beneficiary of the “effect” I’ve named after him, which in this case should be called the “Robert Scoble Effect”.

Robert is another person who can create these kind of effects for people/products/services he endorses, far beyond what national media (with a much larger audience) could do. Tim credits a great deal of his early success to this short post by Scoble.

How did Tim build a relationship with Scoble? By sending him a cold pitch?

“I met him after meeting his wife at CES in Vegas. More accurately, I never made it to CES. Instead, I went to the nearby Seagate-sponsored lounge called the ‘BlogHaus’ and simply had drinks with bloggers for two days. Robert’s wife, Maryam, was checking people in, and we hit it off. When interacting with everyone else, mostly bloggers, I asked a lot of questions about their craft andnever pitched them the book. Only if they asked about me would I mention working on a book. Only if they pushed further would I even go into the topic. Then I would offer, if they were interested, an early copy with 15 pages or so selected specifically based on their interests, making it clear that ‘I don’t think you’ll like the whole book, and I certainly don’t expect you to do anything promotional, but I do think you’d enjoy the 15 pages I have in mind.”

Since my own book launched, I’ve had the opportunity to see examples of the Tim Ferriss Effect play out in other contexts beyond Tim or my book.

Another figure who exercises thought leadership with a large, loyal, concentrated audience, and who has the power to create massive successes if he thinks that audience needs to hear about something, is Brendon Burchard, founder of Experts Academy.

When Brendon told me that one of his favorite authors was Paulo Coelho, I decided to nominate myself for the chutzpah award of the century, and contact Paulo (a man who has sold roughly 140 million more books in his writing career than I have) and ask him if I might offer him an unsolicited marketing suggestion for the launch of his (then) upcoming book, Aleph. “You need to let Brendon expose you to his audience,” I wrote to Paulo, explaining who Brendon was and what his track record was. Coelho wrote back and said he’d be delighted, I connected the two via email, and this is what resulted, a live public call between the two of them.

My understanding is that tens of thousands of people registered for this call. That is tiny compared to the circulation of a major newspaper or the viewership of a primetime TV show.

But here’s the difference: Brendon’s audience (like Tim’s) is passionate, concentrated, and loyal. So when he told them they needed to check out Paulo’s new book, thousands of them did—all at once. When thousands of people buy a book at once, that get’s you to #1 territory on Amazon very fast. Here is what happened for Paulo within hours after the interview:

Paulo Coelho, one of the most successful authors of all time, has taken notice of this sea-change in book promotion. He told me: “I am trying to tell my publishers world wide that I don’t need to give interviews in major media to sell books. This is a big shift for them, but they are coming to my point of view. I decided to give no major media interviews with Aleph’s launching, and the results were astonishing: the book made the bestseller lists all over the world, except UK. Intuitively, I was investing a lot of time in my blog, and I can reach peaks of over 200k viewers per day.

“Now I am starting to record weekly podcasts on writing books. I just posted the first one, talking about Aleph, and we are over 48.000 in YouTube (less than 3 days).  It had no editing, it was a test, but it worked beyond my expectations.”

Brendon told me: “It’s all about the depth of the relationship with the audience. Traditional outlets don’t have influence, they have impressions. What makes the individual blogger or newsletter owner so powerful is that (a) people subscribed to hear from them, (b) they’ve added real value to their audiences over the long-term, (c) they have a strong point of view and their biases are clear and transparent, and (d) they’re making direct calls to action for people to click a link or purchase something.

“I think we proved this with Paulo’s campaign for Aleph. When the front C-Section article on Paulo came out in the New York Times, in both print and on the web, it never even broke Aleph into the top 100 on Amazon. Our campaign and interview took Aleph to #1 on Amazon that week and #6 on the New York Times the following, with a clear majority of sales for that (tracked through Bookscan) coming as a direct result of our interview. That worked because people have loved Paulo’s previous work and posts, and because I have a very loyal audience.

“But there was one more thing we did. A key reason we could take Aleph to #1 is that we captured reader’s contact information. They gave us their name and email to get access to the interview, which allowed us to intelligently add value to them and then mobilize them to take action later on. This was critical. Mainstream outlets never do this.

“Getting all the traffic and attention from bloggers is critical, but authors who do not capitalize on the attention to capture leads, add value, and make sales will continue to be frustrated. I’m always making the comment that, from a marketing perspective, one of the worst things that could happen is that you get on Oprah, but you don’t have a website and campaign sequence up that can capture and convert all that interest.

“Same thing for getting on blogs—they might drive some initial sales, but to keep it all going an author needs to have in mind the bigger picture of their brand and business, they need to keep capturing and adding value to their audiences, and they need to be in it for the long haul.

“Authors and bloggers are storytellers. They have the same language and make their living by sharing perspectives and stories, which is why their audience match better. If an author hopes to win in today’s world, be a great storyteller, find other great storytellers.”

As I’ve been saying all along, it’s all about developing relationships.  That’s where it’s at. Learn to become a great networker (here and here are my Forbes articles on how to do so), identify the people who can create “Ferriss Effects” in your field, and build relationships with them over a long period of time. The results may astound you.

***

Michael Ellsberg is the author of The Education of Millionaires: It’s Not What You Think and It’s Not Too Late (Penguin/Portfolio). Ellsberg spent two years interviewing some of the world’s most successful people who don’t have college degrees, and who instead majored in “street smarts,” to find out their secrets for real-world success and share them. Michael sends manifestos, recommendations, tips, and other exclusive content to his private email list, which you can join at www.ellsberg.com. Connect with him on Twitter @MichaelEllsberg or subscribe to his public updates on Facebook.