Today’s guest is Pat Flynn, the rock star online entrepreneur who runs the popular website smartpassiveincome.com. Pat calls himself the crash test dummy of online entrepreneurs, and the reason he does that is because he has always taken an honest and open approach in everything that he does.

He always details his successes and his failures so people can know exactly what works and what doesn’t. Pat even goes as far as to posting his online monthly income statements on his website so everyone can see exactly how he’s making his money. He’s one of the guy that helped me out personally the most when I was setting up my online fitness business, so I have to thank him for that.

Let’s jump right in to the show. He gives a lot of gold in this episode.

Jay: Hi, Pat. Thanks for joining the Entrepreneurship in Asia Podcast. It’s really good to have you on the show.

Pat: Thanks for having me, Jay. I appreciate it.

Jay: For the audience out here in Asia … you are obviously somewhat of a household name now in the States, but for our audience out here who might not follow the space, maybe you can give us a quick introduction on who you are and how you became such a successful entrepreneur.

Pat: Well, it definitely didn’t open overnight. That’s the first thing I’ll mention. How it all started was, I actually went to school for architecture and I thought that that is what I was going to do for the rest of my life. I really enjoyed it, but in 2008 I was told that I was going to be let go. I was going to be laid off, which was unfortunate, but in the States here there was a big recession during the time. Everybody was just losing their jobs and I was one of those people. I had always thought that I would just get back into architecture very soon or go back to school. That’s actually what my dad recommended that I do.

When that was all happening, I found a podcast and it was called the Internet Business Mastery. On that show there was a particular episode where somebody was talking about how they were making six figures a year by teaching people how to pass what was called the Project Management exam. I was like, “I’ve never heard of that exam, but that’s awesome that he’s making that much money.” For me that was my big light bulb moment because for me, when I was journeying to become an architect, I took many different exams. A number of them were very hard and difficult, didn’t have a lot of information about them.

I said, “Hey, maybe I can be like this guy, but help people pass one of these exams.” I started to blog and talk about this particular exam, and my experience with it, and tips and tricks that I learned. Over time I just started to gain a little bit of a following. At the end of the year I ended up launching my first book, my first product. It was essentially an e-book, an electronic book that was sold on my website. People could go to this site and download it, and get it automatically delivered to them via email. They could study from that. You could print it out, do the worksheets and whatnot.

I really had no idea how well it was going to do or if it was going to sell any copies at all, but in that first month I had sold nearly 300 copies at $19 and 99 cents each, and it was just a complete game-changer for me in terms of what I saw was potentially possible in the online space.

Jay: Wow.

Pat: It really changed my mind about what I was capable of and it really showed me that there was this thing called the internet that I could potentially utilize to deliver value to people through things like this, like the blog that I had or products I provide, but also get paid at the same time. The coolest part about this, and here’s the biggest difference for me, in my mind … When I was working in architecture, I worked so hard and I still got let go. I never really got recognition for any of the work that I did.

Even when you think about today, Jay, the building that you’re in right now when we’re recording or your home or your office that you’re in every day, if I were to ask you who’s the architect that built that, most people – I would say 99.99% of people – will have no clue or wouldn’t even know how to find that information. But then here I am helping people pass an exam and people are sending me these messages calling me by name. Saying, “Thank you so much for your help” saying that I helped them get a raise or a promotion, and calling me by name and offering me gifts as a result of helping them. It just was so mind-blowing to me that I was able to have this impact.

That’s when I started smartpassiveincome.com, which is where most people know me from now because a lot of people were asking me how this was done. Initially I was like, there are these blogs and websites out there that teach this stuff, but nobody was teaching the full on like, here’s really how it works and here’s the kind of business that you could do where everybody wins. Your customers win, you win, products that you promote, they’re winning. That’s the kind of business I wanted to teach and that’s what I ended up doing at smartpassiveincome.com.

Currently, fast forward eight years later, I have a bestselling book. I speak around the world and get paid to do that, which is crazy because I never thought I would even get on stage, let alone get paid for it. I have a podcast now that has over 30 million downloads, a second podcast called Ask Pat, which answers voicemail questions from my audience every single day for five days a week. I’m being seen as this thought leader in the space, which is … Again, I pinch myself every day. I’m just so thankful for the opportunities, thankful for my amazing audience that is there to support me, and most of all, thankful for the opportunity for me to be able to have a flexible schedule, which allows me to work from home, to be there with my kids. I have two kids, four and six. I’ve been here at home and been able to witness all of their firsts, so absolutely incredibly thankful for that.

Jay: Man, that’s such an unbelievable story and I’m so happy for you because you’re one of the guys in the space, and I follow the space closely, and you’re one of the good guys.

Pat: Thanks, man.

Jay: I always say Pat Flynn is a good dude, even though I don’t … I mean, I don’t know you that well, but just your … I think from the get-go, when you said that people were asking you how you did it and then you basically, at some point, you made a decision, “Look, I’m just going to be an open book and I’m going to tell people exactly, and provide full transparency.” You go as far now … I don’t know if you still do it. I haven’t checked your site in a little while, but you used to give your monthly income reports.

Pat: I still do that.

Jay: Yeah? Exactly what you earn, how earn it. I think that’s unbelievable. For you to open the kimono, so to speak, and just let people see that, I think is just really a credit to your character and then also is good for business, I think.

Pat: Yeah. I mean, a lot of people see those and are like, “Wow.” It’s the wow factor, so I draw them in, but then they read not only the numbers, but the lessons involved with what made those numbers happen. Here’s the other thing. It’s not always wins. It’s often times failures and mistakes that I’ve made, the graphs going down, and talking about why. I feel like I’m so lucky because whatever happens, win or fail, if I share what happens it’s always going to be a win for the person on the other end, so they’re learning from my lessons. That’s why I call myself the crash test dummy of online business because I do these experiments, I’ve built new businesses and sometimes things work out, sometimes they don’t, but it’s always a lesson for everybody else out there who’s kind of following along.

Jay: Man, that’s just unbelievable. I want to take a step back and talk about that first product that you had. You said that you started at some point in 2008, after the global financial crisis and you got laid off from your job. How long did it take for you … There’s a lot of guys out there that are like, “Okay, maybe I should start writing a blog now.” This is obviously slightly different time than when you started. You were probably one of the more early adopters of online blogging, but from the time you started your blog … It’s not easy these days to start a blog and to get email subscribers and whatnot.

I think you’ve come on record saying that the first thing that you would suggest doing is to build an email list. A number of very successful entrepreneurs, online entrepreneurs, say the same thing. From when you first started your architecture exam blog, how long did it take you to get a substantial readership and at what point were you like, “Okay, I have enough that I’m going to be able to launch this product and monetize off it”?

Pat: Initially I wasn’t getting any visitors. I think that’s just something we all have to go through. When you first launch you’re going to have hardly anybody, although nowadays you can build an email list even before you launch a website to get people excited about it, and so when you launch you have many people watching. I’ve done that recently with a niche site over at foodtruckr.com, helping people start food trucks here in the US. That’s the way I would suggest going about it.

Back then, there were months where I was just basically writing for myself, but here’s what I did. I took those articles that I wrote that I knew were really helpful, and I’d start to build the connections with people who I knew would find it helpful, so people in my office, for once, who were still there. I could share this information with them and they found it helpful, and they knew people that would then … they would share it with, and so on and so forth, so it grew slowly that way.

I also found and became very active in an online forum where there were people studying for this exam. I went in there and I didn’t just go in there and just say, “Hey, guys, I have this website. Buy my stuff.” I didn’t even have a book yet at first. I wasn’t selling anything. I think that’s the other thing. I put all this information out freely so when people did find it online, they shared it knowing that I wasn’t asking for anything at that point, but it was also the best information out there. I made it the best information that was freely available about this stuff.

When people see that stuff, they can’t help but love it and share it, and love you for it. The other thing, I was in there active in the communities, and before I even mentioned by website, I would be in there answering people’s questions, talking about the same things I was talking about on my site, but never mentioning the site because I first wanted to establish that I was this person who knew about this exam, who had taken it, who had passed the exam, who was just very helpful.

Pat: Yeah, and so people started to ask me, “Dude, where I can I get more information from you like this? Can I book you for a coaching call?” I was like, whoa, this is cool, but I would have never have done that back then because I was just definitely afraid on getting on a one on one call with somebody, but that was a good opportunity for me, when people asked, to say, “Hey, no, but here’s a website where I talk about all this stuff.” Then people just started to really share it and it started to take off in a hockey stick kind of form and on the graph at that point.

It was later in the year that I started to hear from people saying, “Man, you should package all this stuff up into a book.” Like, “Oh, man, I would buy it right now.” Even then it took me a couple of months to just really understand that yeah, I could do that because I thought people were just saying that to be nice, but they were actually saying it because they would buy it. They were validating it for me and I didn’t even know it. I think part of that also was just the fear of actually going down that route. It was totally brand new to me and I didn’t know if it would work.

I didn’t want to put a ton of work into something and have it not work out, but getting a lot of help and motivation from other people who were successful in online business was crucial. I got a lot of tips and was able to ask questions along the way with people who were just a little bit further ahead than I was in the online space. I eventually launched my book and it did really well, and then I started to add more products like an audio version of the guide for people, which sold really well.

Then I connected with another company and became an affiliate for them selling practice exams because that was something that I didn’t have the knowledge or technical know-how to actually put together, so I connected with this company, promoted their stuff, but then earned a commission every time I sent a customer their way. It just grew into this amazing empire around this little exam that most people have never heard about before. I think that’s the big lesson there.

I could have started and said, “Hey, I’m going to tackle all the different architectural exams out there and provide information about each.” The thing about that is it would either A, take me forever to get all that information to a point where it would make sense, because there was just so much out there, but B, my energy would be divided across all these different things. I wouldn’t be seen as an expert in any one of them. I would just be seen as some person putting information together about each of them. Instead, I took the more authoritative approach. Select one exam, which happened to be one that I was just most knowledgeable at the time, and just did what I could to just crush that, just to absolu-

Jay: Just own it, right?

Pat: Yeah, absolutely. Own it is the right word for sure, and to be the person that when that exam comes up and in conversation, you can’t help but mention by site. That site is still available today. It’s still providing products and offering value. That’s at greenexamacademy.com. It was initially intheleed.com, L-E-E-D, which was an acronym for the name of the exam. I thought that was pretty clear, like in the lead, you’re in the front, but then I got a nice letter from the company that puts on the exam. They were like, “Sorry, you can’t do that because that’s our trademark.” Again, I didn’t know what I was doing.

Jay: You don’t know these things, right?

Pat: No, you don’t. That’s the other cool thing about online business. You can just iterate. You can go, take baby steps, fall down. Think of a baby when they walk, right? They are always falling down. First, they’re crawling, and then they get up and then they fall. What would happen if they fell after that first time trying to stand and they never stood again just because they thought it was impossible? You got to keep getting up, keep training your legs, keep getting your legs under you, and then eventually you’re going to start running, but it just takes time, it takes frustration, it takes mistakes and it takes these experiences to really know just what not to do the next time.

Jay: Yeah. I love your story because basically not only does it display the fact that you can take any niche no matter how small and really, like we just talked about, own it and be able to generate income off of it, but I also like the fact that … Here’s a thing. When people see you and they talk about Pat Flynn they’re like, “He has a million followers now. It’s so easy for him. He could just roll out products and people would just naturally buy” and blah, blah, blah. What you have to realize is that all of the – quote, unquote – greats, they all started from the ground, right? So you have to start somewhere. I have to lay your foundation and it’s building blocks, one on top of the other.

I want to talk about … I have question for you since you’re sort of an authority in the online business space. One of the topics that’s come up before with some of the other guests on this podcast is the state of online businesses. Like back in ’08 when you started your blog, you were probably one of the earlier bloggers out there, so I feel like the landscape has shifted a bit. The flood of content out there now is definitely overwhelming. There’s a lot of junk being floated out there.

Pat: For sure.

Jay: It seems like everywhere you turn on the internet there’s someone that’s selling you how to get X amount of subscribers in one month, and how to make your first million or here’s my Instagram account where I’m flashing Benjamins and I’m a baller, and somehow they’re getting paid for it. I’m observing this and I’m observing fearfully because I’m like, what is this trend telling us? What’s the future of online businesses? Are we trouble?

Pat: Are we in trouble? No. We’re not trouble. I think what you’re seeing is just natural. It happens in blogging. You’re seeing it in podcasting now. You’re seeing it in video. There’s always going to be those people like you just described, but what you don’t see but has always been there, are those people who are incredibly successful who don’t share those things. Why would they want to? They don’t need to because they’re in their own world running their own business and doing really well. They have more important things to think about.

That’s what I try to do on my podcast. I try to find those people, share them and share their success stories, and everybody from … I just recently posted an interview with a woman who was making money on the side with her knitting and then another woman who was making money, six figures a year, in scrapbooking. Then other people in the wedding dress industry, photography backdrops, like all around. Again, like you said earlier, you can master and be the authority, be the trusted advisor in any of these spaces as long as you – and here’s the trick – you stand out of the crowd by, there’s a couple of things you need to do.

You need to be original. That’s the first thing. For me, and you probably know this because you’ve been following me for a while, there’s no better way to be 100% original than just being 100% yourself. I think this is where a lot of people will get into trouble. They see somebody doing something successful online and they try to do exactly what they’re doing, and they try to be like them because, “That worked for them, so it must work for me too” which is not the case.

My good friend Chris Ducker, he always says, “Your vibe attracts your tribe.” What you want to do in the online space is you want to attract the tribe and the best way to do that is just to be yourself because your vibe will attract that specific set of people who are going to follow you f how you teach something. Even though somebody else might teach the exact same thing or something similar, they’re going to come to you because they just like you who you are, so putting more of you in your brand is really important. People connect with people. That’s the trend now. People want to connect with people.

When you try and reach out to a big company on Twitter because there was a complaint or something, do you just want the company to answer with a generic sort of thing or do you want Janis who works for that company to come and reach out to you in a direct message, and actually have a real conversation with you? You’re going to be more likely to stay loyal to that company if Janis does that, which doesn’t take a lot of extra work. That’s the thing and that’s the cool thing about these tools. As much as many people, “Oh, these tools are separating us. They’re making us less human to each other,” actually there’s more opportunities now to be more human with each other because we have a lot more connections and a lot more ability to just truly interact with people in that way like never before.

That’s the big thing now. Of course, I also feel, and hopefully I feel like I’ve been part of the forefront of this, this very open business kind of nature where people are being transparent and honest, but also when you fail or when you do something wrong, you own up to it. You share that and you don’t try to hide things that would potentially tear you down because when people find that out later, it’s going to tear you down even more, so taking always the honest approach and sharing fully exactly what’s happening so people can trust you because again, people want to do business with people that they trust.

You got to get people to know, like and trust you, and that happens when you are yourself you’re attracting those kinds of people, but also that you own up to your mistakes and you’re not afraid to share things that other people may have done. It’s just like with my income reports. Nobody did that before and for whatever reason, I don’t know why they didn’t, but for me it’s been one of the biggest things in terms of getting people to not just notice me, but trust me and see that this is how Pat’s done it.

Jay: Yeah. It’s huge, authenticity and just being yourself. One of my best friends is a director/actor and he says in Hollywood and whatnot, in that industry basically, there’s two types of actors. There’s the ones like Brad Pitt that everybody looks up to and then there’s the ones like Tom Hanks that you relate to. He’s like, you can’t be a Brad Pitt if you’re not born to be a Brad Pitt and so many people, they just relate to Tom Hanks because he’ll be struggling and going through these movies where you’re just like, “I know what that feels like.” That’s so true also in the online business space.

I want to talk about passive income because your brand is Smart Passive Income. You obviously built it out to be very successful now. I think a lot of people have this misconception of passive income because they think that you’re sitting on a beach with a laptop and every day you just log in to your PayPal account, and you see the money just piling in. This is what some of these people, nowadays they’re selling, right?

Pat: Right.

Jay: What exactly does passive income mean specifically to you?

Pat: To me, the passive income is a way for you to live a flexible lifestyle in the way that you want to live it. It can be living on the beach if you want, but you’re not going to just pack up on day one when you decide to get passive income, and arrive on a beach and start working. That’s not how it works. That’s the reward or the time off that you have from when you actually are working. The one thing about passive income I want to say is that there’s no such thing as a 100% passive income. You’re never fully away from your business to a point where it could automatically forever be generating an income for you. There is always maintenance involved, there’s always upkeep and there’s always opportunities to scale, to increase conversions and that sort of thing.

The big thing is flexibility, giving yourself the ability to not have to be tied directly to time with the money that you make. You can invest time upfront so that you can generate an income without you having to be there all the time. That’s the big thing. Now I do go to bed and I wake up, and there is sales that I’ve made overnight while I’m sleeping, which is fantastic. There are times when I and my wife, we just decide on a Thursday, because the kids have Friday off, to go to Disneyland for the weekend. We can just do because we have a flexible schedule.

There are other times where I’m working by butt off because I have a launch coming up and I’m working 16 hour days, and so it ebbs and flows, and goes back and forth. As long as I’m having fun, I’m always feeling like this is awesome, like life is great, but there’s always opportunities to better enhance what it is that you have. The beach thing, the mansions, the Ferraris, if that’s your thing, great, but is it your thing? I think people see that and they feel like they want it just because that’s what they have or that’s what everybody else should want, but I challenge you to think of maybe five years ahead of time right now. What would actually make you say life is awesome? Would it be that?

Would you be actually happy if you had a Ferrari or those mansions or be living on a beach every day? Maybe. Maybe. If so, great, but for many people that’s actually not what would make their life awesome. For me, I’m very blessed in a life right now where I’m working from home. I have security in my finances. I’m able to walk my kids to school every day with my wife. I’m able to have lunch with my wife every day here at home. I’m able to travel and go speak around the world if I want to. We’re able to go to Disneyland on Thursday just because we can.

That’s the life I want and that’s what I have, and that’s what passive income has enabled me to do, so I can take what Tim Ferriss from The 4-Hour Workweek calls mini vacations or mini retirements, he says, I think. Where it’s not like a forever thing, but mini retirements, where you can walk away from the business, have it continue to work for you while you’re not there, instead of the other way around where you’re working for your business and then you stop. Well, you stop making money when you stop. That’s not what we want.

Jay: Yeah, yeah. That’s so true. I totally, totally agree with you, where people are really … You get enamored and you fall in love with the idea of the Ferrari and the watches and the beach vacations, but when you get to the point where you can actually afford them, and perhaps you have owned them and then maybe you don’t want them anymore because you realize that’s not for you. I mean, it’s different for everyone, obviously. That’s awesome. Earlier this year, I believe you wrote … Gosh. Has it been this year or was it last year? You wrote a Wall Street Journal bestselling book. I believe it was earlier this year, right?

Pat: Yeah, it was earlier this year. It feels like forever ago though.

Jay: It does. It does. “Will It Fly?” which is amazing. I bought it right away.

Pat: Thanks.

Jay: It’s really one of these under the hood sort of deep dive from basically zero to one type books for entrepreneurs, which is really good. I loved it. I want to talk about what resources you have available in addition to the book at Smart Passive Income. Let’s say there’s another market crash or maybe some guy is out there as another architect that just lost his job. He’s like, “Pat Flynn, let me go look at, see what he has over at Smart Passive Income that can maybe help me out.” What do you have there?

Pat: Yeah. Thanks, Jay, for letting me share this and for mentioning the book too. I’m just super proud of that. It was self-published, yet it was still [crosstalk 00:24:18] bestseller.

Jay: Yeah. I know. Amazing.

Pat: Which I didn’t even know was possible, so thank you for being a part of that and purchasing it, and sharing it here with your peeps. The number one resource I would share for those who are just starting out would be the Start Here page on my site. We really crafted that so that it could walk people through the beginning stages, show people what’s possible, define a lot of these things like what passive income is just to get your mindset right. On there, there are some specific links to specific podcast episodes that truly are the foundational introduction to how to create this stuff. There are three episodes in particular that are there, which were recently updated, so episode 192, 193 and 194 of the Smart Passive Income Podcast, back to back to back.

They talk about all the different types of passive income that are available in the online world, what it takes to start with each, what to look out for, who’s right for what. I think that would be a great place to start because some people can totally imagine building an online business and selling e-books, and membership sites and that sort of stuff, and other people, that’s not the right answer. For other people it’s something different. Maybe it’s the software instead, where you’re behind the scenes and you’re not the person who’s the face of the brand, but rather you’ve built this thing that solves a very specific problem that people have. That’s where I would start.

Jay: At Smart Passive Income, the Start Here, which is the first tab there on your site.

Pat: Yeah, or you’ll see a giant green button right at the front page.

Jay: Right, right. Okay, so head on over there and you get started. What else are you working on right now? I heard some rumors of potentially another book. Is there some stuff in the pipeline that you can share or is it all …

Pat: It’s so funny.

Jay: Or is it all tightly wrapped?

Pat: No, it’s not tightly wrapped. I am working on a second book.

Jay: Awesome.

Pat: I’m still deciding whether or not it should be self-published or traditionally published. There’s no reason for me not to go self-published because it was so successful the first time around and I’m making more money that way. However, the reason to do it is because I’m the crash test dummy. I just want to see what this traditional publishing effort would be like, and that way I can make a decision and share with people what it was like from the inside. That might happen, but that’s exciting because then I’d be able to expand my reach into bookstores and airports and that sort of thing, so we’ll see what happens.

I also have a physical product that I’m working on. That will be launched later next year in a Kickstarter campaign that has to do with productivity and forming habits and goal-setting and that kind of thing. That’s all I’m going to say about that, but I’m really excited because that’s a whole … Again, crash test dummy. A whole another world I have never explored yet. Manufacturing and physical products and packaging and shipping and all that stuff, that’s something I’ve never done before, so that’s why I’m doing it.

Jay: That’s exciting. That’s exciting. Back to your [know-how 00:27:00] on the book, I read every single … You had three, I think, articles. Maybe two really, really long articles on how you literally step by step self-published “Will It Fly?” I remember reading through the entire thing, seeing all the pictures of when you got your book, the first batch in and what that felt like and whatnot, so I’m looking forward to … whichever way you choose, I’m looking forward to seeing your next book.

Pat: Thanks, Jay.

Jay: Pat, I’m going to look to wrap up here soon because I know we’re a little bit short on time and I’m super mindful, but I just have one last question for you. If there’s one piece of advice that you could give aspiring entrepreneurs, maybe some guys out here in Asia that aren’t as familiar with that building an online business and they have the hitch to maybe do a side hustle or look at something because their day job is just not as fulfilling, what’s the one piece of advice you could give to them?

Pat: There’s a few big things that I would mention. For example, don’t be afraid to fail. Failing is a part of the process. It’s just the fact that you’re getting up with more knowledge and able to take a smarter approach the next time around, so always keep getting up, and failing, that’s fine. Fail faster so you can get to those iterations sooner. That’s the first thing. The second thing would be to connect with as many people as you can. I think that’s the one thing that I wish I knew when I started out, was that these connections that I made with other people …

I wouldn’t be where I’m at today if it wasn’t for the connections that I made. When I started out, I was very shy. I didn’t want to ask for help. I didn’t feel like people would want to help, but there’s so many people out there that do want to help, that would be great to hook up with where you can provide value to them in one way or another, and they can provide value back to you. They can answer your questions and vice-versa. I’m in a couple of mastermind groups, which are groups that meet regularly, where we all understand our businesses and are brutally honest with each other. We share goals and hold each other accountable and that kind of thing, so that’s very important as well.

Beyond that, the last thing is just talk to people that you’re going to serve, so when you have a business idea, talk to people who could potentially use and literally tell them exactly what you want to do. Just get that gut reaction from them and that initial feedback because that’s going to help you shape what this thing actually should be. There’s no worry that somebody is going to steal your idea. The worry is you’re going to build something that is potentially just based on a guess and that guess might not work. You want to really know what people want before you build it and share it, and so that’s why “Will It Fly?” was created and that’s probably the best piece of advice I could give.

Jay: That’s awesome. Man. Pat Flynn, Smart Passive Income. Thank you so much for joining the show, always delivering the goods. It was awesome talking to you today.

Pat: Thanks, man.

Jay: I really appreciate it, man.

Pat: Thank you. Have a good one.

Jay: All right, take care.