I recently spoke with Ramit Sethi, the founder of Plutus Award-winning blog I Will Teach You to Be Rich (Most Controversial Personal Finance Blog, First Annual and Second Annual), author of the New York Times best-seller I Will Teach You to Be Rich, and the creator of a variety of courses designed to help everyone earn more money through lessons learned in behavioral finance and psychology.
Ramit and I discussed what it takes to go from blogger to financial expert with millions of readers and students, from an unsuccessful informal class on a college campus to an online empire with revenue over $1 million.
What was the initial driving force behind I Will Teach You to Be Rich?
I felt that I had something the world needed to hear. Looking back that was a little bit arrogant, but I also think sometimes it’s okay to be a little arrogant when you have a message you want to share with the world.
My initial interest with personal finance came because I took my first scholarship check — I came from a middle class family, and I had to pay my way through college — and I invested the first scholarship check in the stock market. I lost half my money immediately. I still remember some of the stocks that I invested in. I used to think investing was about picking stocks, and I invested in companies like Excite@Home, which is now gone, and I just realized I better learn how this money thing works.
A lot of people don’t know this, but I Will Teach You To Be Rich started off with me trying to teach an informal class in college. When my friends at Stanford were eating in the dining halls and complaining about their overdraft fees or credit cards, I’d say, “Hey, come take this class, it’s free.”
I set up a one-hour talk, and I spent a year and a half trying to get people to come to these classes. I’m sure that a lot of people who have blogs have felt this way. It’s actually pretty hurtful. You get good at something, you spend so much time doing it, and you know that you can help people, but they just don’t listen.
I was pretty down in the dumps in terms of I Will Teach You To Be Rich for about a year and a half. I was resentful. Why am I the one doing all the work to try to get them to come to my class for free, and they don’t even come?
Eventually I realized that this wasn’t working. I decided to try to start a blog, and I figured maybe these lazy college kids will read it from their dorm rooms. That’s when things started to change. Initially it was just because I lost some money in the stock market and I needed to learn how it worked. I spent many, many years learning about money and psychology, and eventually I just felt that the world needed to hear what I had learned.
Many people might have been in the same situation, seeing their friends doing odd things with money and not really getting it. But you took the initiative to try to invite your friends to this class that you formed. Why did you take that approach?
I always had this pattern in my life of trying to get good at something and then going the extra steps and sharing it with the world, and I can probably trace it back to my parents. They used to have this phrase for me: “Why don’t you just write that up?” No matter if I had an idea that was interesting or not, they said, “Why don’t you submit it to the newspaper?”
And it’s funny, neither of them are writers, but they just got the wheels turning in my head that maybe I had something interesting to say. Once I had learned about money, and I really started to understand how it worked, and I started to get more control over it. I wasn’t thinking, “Oh my god, how much am I spending, it’s so worrisome.” I started getting control over my money, and I looked around and I saw this problem everywhere.
I saw tons of people having money problems — in college, the problems are a little different than they are later, but they’re still problems — and I saw the advice was horrible! The advice was written by older people, for older people, and none of it resonated with my friends. So I’m sitting there just looking at this, and I thought I had the answer.
I’m going to try to help a few people, and honestly I never ever thought it would turn into a business. Once I started to blog, I didn’t even make a cent for several years. I felt just that I had something I wanted to share with the world, and if I could just craft it the right way, maybe, just maybe, people would listen.
What changed and caused you to start looking at I Will Teach You to Be Rich, the blog, as a business?
There were several pivotal points. One of the first was six months in, when I had learned how to make friends with journalists and eventually got covered in the Wall Street Journal, and that was a big day for me. I realized that this thing could really be big, but I had no idea how big it could be.
The first inclination that this was actually a business was in late 2006, when I created this e-book, $4.95, and I called it “Ramit’s 2007 Guide to Kicking Ass.” I created it because I’d been writing for so many years, and I just wanted to do a little experiment: will anyone pay for content online?
Honestly that was one of the scariest moments of my entire business. I was petrified people would call me a sellout. I was scared that nobody would buy it. I actually had such low self-confidence that I didn’t even set up a payment processing solution. I literally just put a PayPal button and I was going to email anyone who paid me because I thought I was going to sell less than 50 copies.
And actually, a lot of my fears came true that day. The comments are still up; you can look at them. People called me a sellout, they said “I will teach Ramit to be rich!” That felt incredibly debilitating because I had been writing three years for free, putting my heart and soul into it. If you read those posts from 2004 to 2007, they’re very long. Then the first time I try to charge a paltry $5, some people called me a sellout! They said, “Oh, this site has jumped the shark!”
It took me three years to master my emotions and my psychology around selling. Three years. That’s a long three years. But what the interesting part of that is, is there were these people calling me a sellout and saying I jumped the shark, but actually a lot of people bought the e-book. Well over 1,000 people. And those people weren’t complaining. They bought it, they were sending me amazingly positive notes, and most importantly of all, they were actually taking action. I could quantify it mathematically, they were opening their emails more, they were reading more, they were responding.
They say the Emperor has no clothes. I started to realize there was something going on here that I didn’t quite understand, but I wanted to. That’s when I realized maybe there is something to this, but it took me a few more years to really realize that this could actually be a solvent business.
How did you move from the e-book and your New York Times best seller to offering online courses? What did you see as an advantage there?
I actually launched a little-known course before the book. This was another pivotal moment. The economy crashed, and nobody cared about reading about investing or anything like that. They just wanted to know how to save money, so I created this 30-day free series called “Save $1,000 in 30 Days” and instantly it was the most popular thing I’d ever done. Tons and tons of traffic and press.
And as I was in about day 15 or 20, I realized I had so much momentum, so I wondered how I should keep this going? I actually ended up creating a course, a very simple course, I think it was $7.95 per month, called The Scrooge Strategy.
My goal was to show people they could save much more than the cost of each monthly fee. The tips were pretty good, focused on saving money, and we ended up doing relatively well with that course with a recurring subscription. Then my book came out, and that was really the moment when I realized, “Wow. this thing is way bigger than I ever thought.”
I honestly had no clue that it would get to the number one book on all of Amazon. I had no idea it would sell out. I honestly thought that maybe I’d get to the top 100, but I had no idea it would knock Twilight off that and be a New York Times best seller — I had no idea.
As I went on a book tour just a few weeks later, I went to about 13 cities. Every city I went to, I asked people there, “What do you wish I wrote more about?”
They said, “I love your personal finance stuff. It’s great, but I want to know how to earn more money.”
Honestly, I didn’t believe them at first. I said, “Isn’t that kind of scammy? I don’t know.” But city after city, I started to really pay attention.
I call them seagulls. When sailors were sailing, they’d see seagulls or certain types of birds, they would pay attention, because they knew they were close to land. When I heard people saying “earn more money” in multiple cities, I listened. I leaned in like they were seagulls and I listened.
I came back and I told my very small team at the time, “Let’s look into this thing.” I knew how to earn more money, I had been doing it for awhile. But we ended up creating a course called Earn $1k, and this is still one of our best sellers to this day.
It took us over a year to create, and then another year to really perfect it into the 2.0 version. And that blew my mind at how successful it was — not only financially, but more importantly, in getting results for our students.
There’s been a pivot towards offering courses as products within the blogging community, probably because advertisers budgets are unpredictable and people like having something of their own that they can put a lot of effort into up front, sell, and then hope for residual revenue down the road. What tips can you give to other bloggers who want to create a successful course?
There are massive, massive rewards in being the best. Being the best might take ten times as long, but it gets you 1,000 times the result. The world doesn’t need another $5 or $10 e-book of recipes. People want more than information; they want solutions. Creating those doesn’t just happen by sitting in your room and coming up with a table of contents. It fundamentally starts with talking to your readers and listening to what their real problems are.
If there’s one “secret sauce” for I Will Teach You To Be Rich, it is the exhaustive customer research that we do. A lot of our courses take two or more years to create. I’m working on something right now that probably won’t come out until 2018. It really takes time to understand what people want, so that’s number one.
Number two is you lean on the shoulders of the giants that have come before you. So if you’re creating a course, study what other people have done. Make sure you’ve bought other courses. You wouldn’t believe how many people sell e-books and courses and I ask them, “Whose courses do you like? Whose have you bought?” and they say, “Oh, nobody. I don’t buy courses.”
I say, “What? How would you expect anyone to pay you if you haven’t paid anyone else?”
And the third thing is to really just remember it’s a long-term strategy. It’s incredibly hard to go from a readership if you’ve been telling them for years and years not to spend money on anything, how do you suddenly turn around and say, “By the way, buy my e-book!”? That doesn’t make a lot of sense.
So really understanding who your audience is, and understanding that sometimes it takes years to be able to show them why it’s worth investing in themselves. That’s one of the hardest, but most important, things you can do for your readers.
You are obsessed with metrics and testing and data. How can bloggers take value from testing and tracking, and what should they be testing and tracking?
We do pretty extensive metrics at I Will Teach You To Be Rich, and we collect a lot of data and we use it in many different ways. Honestly the best data that we get is from conversations with people. I would rather have real emails, one-on-one conversations with people, and even phone calls which I receive every week, with our readers.
I’d rather have those than 10,000 survey responses with yes or no questions. So for me, the best thing you can do is start by asking, “What are your biggest challenges? Tell me more.” And really do one-on-one emails. This surprises people a lot. They think there’s some magical data dashboard that we’re using, and that’s cool, you can build that, but that stuff comes later.
The easiest thing to do is to get into one-on-one conversations, not try to sell them on anything, and just listen. “My challenge is losing weight,” or, “My challenge is this,” or, “My challenge is that.” Tell me more. I have no interest in selling you a thing, I just want to know more, and if possible, I’ll recommend somebody to you or help you. That’s the first and best thing that I can recommend.
Starting off small is the best thing you can do. We didn’t do Facebook advertising for about eight and a half years, and people don’t believe that. That’s crazy. We didn’t do any social media or SEO for about seven or eight years, in a really structured way. But what we did do was listen. And the best way you can listen is by having a relationship with your readers. Emails, regularly to them, not just where you’re trying to sell them but actually talking to them. Blog posts where you’re responding to comments. Those conversations are worth more than any metrics you can get at first.
You mentioned earlier that you thought maybe out of the gate you might have been a little too arrogant, but one thing you definitely have now — perhaps as a result of that — is a really strong personal brand. How do you think that the way your personality comes through has helped you, and do you think there’s any disadvantage to being a little arrogant?
That’s a good question. First of all, I’m exactly the same as I write as I am in person. I think if anything, people are a little surprised; when they meet me the think, “This guy isn’t ranting all the time. He’s actually listening, and curious, and he’s pretty thoughtful.” Number one: if you’re trying to be someone you’re not, that’s never a good thing.
I meet my readers a lot. In fact, I’m on my way to meet one and we’re having dinner. When I go to meetups, the first question readers ask anyone who knows me is, “What’s Ramit really like?” I just don’t think you can put up a façade for that long. So one thing I learned was to embrace it. I think it’s really common when you start to try to hide a lot of your weaknesses, and I did it, and I think a lot of people do it.
I actually learned to embrace my weaknesses and even make fun of them, so I have videos of me falling down at the bowling alley. I make fun of my love of Whitney Houston. That would have been really embarrassing for me a few years ago. Now I’m like, you know what? People actually appreciate how weird you are if you’re just open about it.
Speaking to the point about arrogance, there is definitely a certain brashness just with the name I Will Teach You To Be Rich, but if you look deeper, I’ve never tried to be bombastic or tell people, “You’re stupid and I’m better than you.” I never make fun of people for not knowing something. I do make fun of people for saying stupid things, but that’s my personality and it’s refreshing to be called out in this day and age where people are so politically correct.
Ultimately, what I’m concerned with is the result. If you get a $25,000 raise for following my steps, then you’re going to love my steps. If you are turned off by a joke I make, and you don’t want to engage anymore, then that’s okay. You’re probably not right for my audience and I’m not right for you.
Having a brand and being clear about who you’re for and who you’re not is really, really important. I make jokes about frugalistas. People who try to cut back by taking out the oven light from their oven to save two cents a year. Yes, I’m making fun of that. And guess what. Those people know, “This site probably isn’t for me.” Even if it’s a joke, they know that this site’s probably not for them.
But guess who it is right for. The people who stay and read. I would never make fun of anyone just for the sake of making fun of them, and I think if you look beneath the surface, a lot of it is not arrogance. It’s actually deeply caring about people by challenging them to be even better than they thought they could. But you can’t change people’s perceptions overnight, and my goal is just to focus on the readers who I’m helping. I think that we’ve done a good job, but we could do a lot better.
I will tell you that there are definitely some negatives. First of all, the name I Will Teach You to Be Rich. Oh, boy. I don’t know if I would choose that name again. No matter how good your material is, if you have that name, people come to the site with their guard up. There’s no getting around that, and I’m not stupid, I know what that does. I’ve seen the reactions.
I’m sitting on a conference panel and there’s a CEO of this and a CEO of that, and I’m the CEO of I Will Teach You to Be Rich. It’s a little weird. Similarly, I remember there was a very large company in Seattle that wanted to fly me out the first year or two I was in business, and they said, “We’ll fly you out if you change your name.” And I politely told them, “Go to hell.”
I’m glad I did, but I also think that the name presents its own problems. People come with their guard up. We don’t have the kind of sharing that other people do strictly because of the name, and we have all kinds of challenges with that name. So it’s great for the people who come and get engaged in our audience, but it has its own challenges, there’s no doubt about that.
Does someone who is a little more politically correct and wants to stay authentic as they write at a disadvantage for creating a loyal fans because they don’t have as strong a personality or they’re not as controversial?
Definitely not. First of all, you don’t have to be bombastic, you don’t have to be ranting, you don’t even have to be funny. Most people are not funny! That’s okay. There are so many different ways to communicate as the person you are. Number one: You probably have to work out of your comfort zone. So if you just want to keep doing the same things you’re doing, don’t expect to get a big audience or a deeply-connected audience. This takes work. It takes work to get over your fears, it takes work to learn how to build products, it takes work to learn how to engage an audience. There’s no getting around that.
The second thing is you don’t have to change the core of who you are. You probably do need to get a little bit more polished. You probably do need to learn your verbal tics and fix those and watch videos of yourself. That’s painful, but you gotta do it.
I’m not gonna become a really soothing, kumbaya-singing life coach because that’s not who I am. And similarly, if your audience is not my audience, which tends to be young, male, 29 to 34, etc., it makes no sense to talk like me! So I know plenty of different personalities who do millions of dollars a year in revenue. Some of them are super calm and soothing. Some of them are really loud and extroverted. There’s a full gamut, but I just don’t accept it when people use their personality as an excuse for not succeeding.
All you need to say is, “Here’s my personality. It’s not immutable. I can change it and improve it, but the core will always stay the same. I can stay true to myself, but I can figure out ways to use my personality to connect with the type of people I want to serve.”
What’s next in your evolution? What do you see yourself doing for the next five years or so?
Definitely continuing this. We’ve expanded from personal finance to entrepreneurship, to careers, to psychology — we’ve even dipped our toes into fitness and food. So we’re really working on some things that are just expanding the gamut of what a rich life means. Not just topics like fitness and food, but also ways of helping people get a rich life.
So courses are one. You’re gonna see a lot of physical ways to connect with people, make new friends wherever you live, and I also think that part of us growing up is giving back. I Will Teach You To Be Rich and me personally — I haven’t done a great job of giving back as much as I can. That’s why I wanted to talk to you today, and share a little bit of what I know with the community. Part of it is sharing, part of it is taking what we know and making even more of it freely available.
We give away 98% of our stuff for free, and I try to make my free material better than anyone else’s paid stuff. Second, we turn down anyone with credit card debt from joining our flagship courses and that’s a very strong ethical stance that I made because I believe it’s the right thing to do. That decision costs us over $2 million a year. So when people say, “Oh, it’s just about making money,” that couldn’t be further from the truth. We could be making millions of dollars more, but we choose to focus specifically on the types of people that we believe we can help and that it’s ethically right for.
So we want to give back even more: more material, more to charity, more different ways of connecting with people across the world.
Thanks to Ramit for taking the time to share his experiences and insight.