How HBO keeps making hit shows

Today I’m going to show you how to use the “lens” of business models to understand why businesses do what they do.

Let me show you what I mean.

Think about your random friend who’s always complaining about how dumb some company is. I always love when I hear some rando complaining about a multibillion-dollar corporation: “McDonald’s sucks! If only they’d use fresh meat! LOL!”

Yes, I’m sure McDonald’s is dying to hear the advice from Joe M. Turpentine from Des Moines, Iowa.

It’s not that McDonald’s is stupid. They’re very smart. Smarter than you, Joe. Even smarter than you, Asante, and certainly smarter than me.

If you want to understand a certain business’s decisions, don’t just pay attention to their marketing. In fact, don’t just pay attention to their products.

Pay attention to their business model. It explains way more than you think.

These businesses are successful because of their business models. Those business models can be a boon — or an anchor around their necks.

Let’s take a look at a simple example using TV stations: What’s the business model of ABC vs. HBO?

Business model (very simplified, don’t email me telling me I glossed over stuff, I know I did):

ABC – Makes money on advertising. Shows suck.
HBO – Makes money directly from customers. Shows are good.

BTW, if you just started drafting an email telling me why “Designated Survivor” is better than “Westworld,” just unsubscribe from this list.
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ABC can do all of the edgy marketing it wants with its massive network budget. It’s just not as good. Why?

The answer is NOT:

ABC doesn’t know this (they are very smart)
ABC doesn’t have the right talent (they have enough money to hire anyone, anywhere)
ABC is just old and behind the times

The answer is THEIR BUSINESS MODEL.

ABC’s true customers are advertisers. Therefore, it has to build shows that fit their key demographics and in general, don’t offend the mass market.

This explains so much. It explains why you see such generic and idiotic information in financial magazines. It’s not that all the writers are stupid. They simply have a real customer — advertisers — who demand mass market–friendly consumer advice like “Save 13 pennies a day and in 31 trillion years, you’ll be a millionaire. Now download our app!”

I used to wonder if I would see the writers for Money Magazine in hell one day. Now I know the answer is yes, but it’s not their fault. It’s the business model.

You think Panda Express doesn’t know people make fun of its orange chicken? Who would like that, anyway? Oh, I dunno, maybe the mid-market consumer who shops at malls during the weekday and loves high-caloric, salty, crispy food as a “treat.”

McDonald’s knows what people think of its burgers. But in a lesson that took me 20 years to truly understand, their business model is more important than any individual product (re-read that last sentence, maybe you can shave off 19.9 years from my learning time). They’re not stupid. They just have more important concerns than listening to a random Redditor about how their beef patties are 2.2 micrometers too thin.

How this relates to our business

We thought a lot about our business model at IWT and GrowthLab.

And we intentionally chose to sell directly to consumers. No middlemen. No backdoor deals. Just products that we create and sell directly to people who decide to hand us their hard-earned money or not.

If our products are good, we win. If they’re not, you ask for a refund and we either get better or we go out of business. It’s as simple as that.

We give away 98% of our material free. The other 2% is premium — and worth every penny. That’s why our students get results like this, this, and this.

Many of the other personal finance bloggers who started out years ago ended up going the affiliate route for their business model — linking to credit cards and banks. I never wanted to be beholden to anyone. That’s why I named names in my book — including the best banks and the worst. Bank of America hates my fucking guts. Good. Their bank account sucks.
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In business, the ultimate sign of value is a customer opening up their wallet and happily paying for your product. That’s why I love putting our work on the line and showing you every single day — with our free emails and our 20+ products on psychology, careers, and business — that our courses work.

When you succeed, we succeed. If you don’t, we don’t.

That’s why our top 1,000 customers account for $8.6 million of revenue. They come back over and over.

We don’t need any backdoor deals with advertisers or shitty banks. We create amazing products for amazing customers, and if you love us, you’ll keep coming back.

Want to see what I mean? Try one of our entry-level products and compare it to anything out there. We’ve put years of work in research in products like How to Talk to Anybody because if we screw up, we don’t help our students and our business suffers.

I hope this inspires you to pick your business model carefully. And to think about how you can build a business that aligns with your real customers. I can tell you from first-hand experience that there’s nothing as amazing as a customer consciously deciding to pull out a credit card, pay for the product you painstakingly created, and getting an amazing result — and them becoming a customer for life.