The Tim Ferriss Show Transcripts: The Lost Presentation That Launched The 4-Hour Workweek — “Secrets of Doing More with Less in a Digital World” from SXSW 2007 (#548)

Please enjoy this transcript of my very first speech at SXSW in March of 2007! This speech was really the event that put everything into high gear for The 4-Hour Workweek. Influential tech bloggers who had heard the SXSW talk wrote about the book, which put it on the radar of bigger media outlets. Eventually, FHWW made it onto The New York Times Best Sellers list, where it stayed, more or less, for the next seven years. It’s been a wild ride. 

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Tim Ferriss: My name is Tim Ferriss. Ferriss, I prefer Tim to be honest with you, and I’m a guest lecturer at Princeton University in high-tech entrepreneurship. Have been since 2002, and that’s really all you need to know about me for now and I’ll jump right into it.

The 4-Hour Workweek is my first book and it encapsulates my experience over the last four or five years, conducting experiments around the world on what I call lifestyle design, which I view as an alternative to long-haul career planning and solves a lot of the problems that that presents. So three reasons you might want to listen to me today and you’re here already, so that’s a good indicator, but the first reason is in addition to the books that I’ll be mailing out to everyone, I will be issuing a challenge at the end of this, and the prize is a roundtrip ticket anywhere in the world. So please pay attention.

The second reason is even though I don’t have all the answers, I don’t claim to have all the answers, I suspect that we have a lot of shared DNA, so from 2000 to 2004, I worked at various startups in the Silicon Valley, started my own startup as a CEO, and my schedule was 7:00 a.m. to 9:00 p.m., so calls to Europe and England in the morning, to wholesalers and distributors the normal workday as it were and then calls to New Zealand, Australia, Japan, and then three or four hours of email a night, and that was six or seven days a week. Sleeping under cubicles, whether that’s a nap or even at night and waking up and continuing working. I checked email 100 to 200 times a day, send, receive, send, receive, like a rat with a cocaine pellet dispenser, and I was proud of that. I was very proud of the fact that I was able to do that and I was part of the overwork ethic that I think is epidemic not only in this country but elsewhere. And the third reason is that in mid-2004, I unplugged from all of that, and I realized that it wasn’t sustainable. The average worker is going to have 500 months of solid work in his or her lifetime, and it just isn’t sustainable. It’s not a scalable model and I’ll talk about that more.

So in mid-2004, I left the United States and spent the next year and a half conducting these experiments in lifestyle design and what that means is I went through 20 countries, 25 countries, doing everything that I had postponed, everything I had wanted to do but put off waiting for retirement essentially, and even though I was receiving about a thousand emails per week, I checked email once every 10 to 14 days, and in the process, was able to actually increase the profit of my company about 40 percent.

So I want to talk about how that was done, and two questions to keep in mind as I’m going through this presentation which I want to keep short because I really want to get to get the Q&A because I’m sure there would be a lot of questions. Hopefully there will be. Two questions. The first is, how do your decisions and priorities change if retirement will never be an option? All right? So if you are going to have to work in some capacity until the day you die, how do your priorities change? How do your decisions change? Because I would claim I would assert that everyone in this room is way too smart and way too easily bored to ever retire and to give you one example, there’s a gentleman who also used to guest lecture at Princeton University named Frank Slattery, a very accomplished businessman, acquired more than 130 companies in his tenure at a large corporation, and he retired at one point based on the advice of his doctors, because he had had heart surgery, and within two days, he woke up at 5:00 in the morning and was putting on his suit and his tie and his wife said, “What are you doing?” He said, “I’m going out to start another company.”

He was unable to fill that void that he had created after removing work as his identity and that’s something we really want to avoid. The reason he doesn’t speak at Princeton anymore is because he had quadruple bypass surgery, and you can’t do that, all right?

So what if retirement isn’t an option? That’s question one. Question two is let’s say you get what you want in the game that you’re playing. Let’s say that you get 10 percent more customers, you get 10 percent more emails, 10 percent more phone calls every month indefinitely. Is your business scalable? Is your career scalable? And most important, is your lifestyle scalable? And if it isn’t, when are you going to become a bottleneck and when are you going to face imminent meltdown?

So I have a 745-slide presentation I’d like to go through. I’m just kidding. I’m not going to spend much time on the problem. Everyone here knows what the problem is. Whether that’s time famine or worse yet some sense of boredom doing something that is tolerably uninteresting. So let me just jump through this real quickly. So I want to show you sort of the before and after in my case and I’m sure some of you will be able to identify with this. So this is the — oh, boy, here we go. Tech support first thing in the morning. I wasn’t going to use PowerPoint because I hate PowerPoint, but I wanted to give you a few very basic — there we go. So I’ll let you read this. I don’t want to read it for you, but — let’s see. Okay, guys, you know what? Forget PowerPoint.

Speaker 2: Do you want me to come troubleshoot it for you?

Tim Ferriss: No, that’s okay. I’ll save you the trouble and I’ll try to do my sort of dramatic reenactment of what those cartoons were supposed to accomplish. So the first one said, “Hi, my name is Barry, I check email 200 to 300 times per day,” and it was in a support group. I’m sure most of you at some point have felt that way, and then the after was also from The New Yorker and it was a photo of a guy, an executive on his desk, he has a phone to his said and he’s saying, “No, no, Thursday doesn’t work for me. How about never? Does never work for you?” That’s where I would like to get all of you at some point.

Then the last slide was an encapsulation of what I view as the biggest problem and it was a quote by Robert Frost, which was, “If you work faithfully eight hours a day, one day, you can become the boss and work twelve hours a day.” Are you in a game worth winning, and is it scalable? I’ll come back to this.

So what I’m going to do is run through just a few of the principles, the commonalities I have found among people who are able to really design ideal lifestyles for themselves, and that entails controlling three currencies, in order of importance, time, non-renewable income, and mobility, and the structure that I’m going to go through is definition, elimination, automation, and then liberation, and when I look back at my own experience, I really follow that process and it is repeatable and I’ll give you one key concept from each, illustrate it, and then tell you exactly how you can use it as soon as you leave this presentation.

So jumping into definition, definition really entails determining what it is that you want to create from a lifestyle standpoint and how much that costs. What are the financial realities of designing an ideal lifestyle and that requires first and foremost defining not only what you want but actually again in order of importance what you want to do, what you want to be, and what you want to have. I’m not going to go in too much detail here, but define also entails determining what portion of your efforts are producing the results that you want and I just want to give one example of the 80/20 Principle and how that can be applied. Some of you may be familiar with it, it’s also called Pareto’s principle. The 80/20 Principle dictates that 20 percent of your actions, 20 percent of your inputs, will produce 80 percent of your desired results. 20 percent of the people will produce 80 percent of the result.

So looking back at my own history to give you an example of how dramatically a quantitative analysis using the 80/20 can be, in mid 2004, again when I reached my threshold essentially, I had approximately 120 wholesale customers and the company I started was a sports nutrition company, handling everything from design to manufacturing to distribution through about 15 countries. Of these 120 wholesale customers, I realized that five of them were contributing 95 percent of my profit, and because I felt as though I needed to be active from 9:00 to 5:00, I was creating activities for myself to fill that time, and the remaining 115 were only contributing about five percent, but I was spending all of my time chasing them. So what did I do? I took all of those non-productive customers and put them on a holding pattern. Which meant that they could place orders, but I would not contact them by email or phone. I would not chase them. Not only that, but I would make it actually more difficult for them to order. Now why would I want to do this? And what I did is I required them to actually print out, fill in a form and fax it to me as opposed to making phone or email orders. I did this to filter my customers so I would have low maintenance customers.

Because what you’re after is not more customers necessarily but more income, and then I focused on taking those five most productive customers who never complained, always paid on time, never required any management, finding the commonalities and duplicating them. So in the process, I was able to cut my time down from about 60 hours per week with the wholesale accounts to about two hours per week, and I was able to increase profit from that wholesale division about 20 percent within the first two weeks. Just with one additional large profile customer. You can apply this not only to customer base, you can apply it to suppliers, you can apply it to your personal activities. So you need to do a time audit, just as though you would determine where you’re consuming calories when you’re on a diet. You need to know what those sources are. So really sit down and see how you’re spending your time, and the question you need to ask yourself, there are really two questions. The first is what 20 percent of my activities are producing 80 percent of what I’m trying to accomplish, and you really want to ruthlessly eliminate everything else possible, and some of those things will be minimally important, but they’re not important enough to spend your time on. Focus on duplicating your points of strength and what’s really producing results.

The second question is what 20 percent of my activities, of the people I’m involved with, are producing 80 percent of what I don’t want, and you may want to actually eliminate those before anything else. In my particular case, I noticed of those five wholesale customers who were making a huge contribution to my profit, two of them were professional ball breakers. So we’re faced with a dilemma here, and that is they’re contributing quite a bit of money but there was a huge negative carryover. I took their insults, their browbeating, and it carried over into my personal life. Just had a lot of anger and anxiety with me at almost all times because of this, so I fired those two customers, and I would encourage everyone to fire more customers.

The way I did that was I sent them an email, both of them and I said, “Unfortunately it doesn’t seem as though our work styles are compatible. I would love to continue working with you if the following conditions are met. No insults, no profanity. If that’s the case, look forward to working with you. If not, best of luck, take care. Tim Ferriss.” One of them left, never to be heard from again and the other shaped up immediately and was placing twice as much orders on a monthly basis.

So that’s one piece of definition. Another principle that I’ll let you do a little bit of homework on yourself that I can’t go into too much detail here is called Parkinson’s Law, and Parkinson’s Law was introduced to me by Zschau, who was my professor at Princeton before I came back to speak at his class, and Ed Zschau is someone you should know. Ed Zschau was one of the founding fathers of Silicon Valley, but he was on the congressional side. He actually lobbied to have the capital gains taxes lowered so all the investment came in and taught at Stanford Business School when he was 23 which he’s in his mid-sixties now, very uncommon. In any case, one of his guiding principles in life had been Parkinson’s Law, and Parkinson’s Law dictates that a task will swell in perceived complexity and importance in direct correlation to the time that you allot it. All right?

So what we find is there are actually two ways to dramatically cut down the amount of time necessary for any task and to increase your results dramatically. The first is you limit the tasks to the important, so they don’t take much time. That’s the 80/20, and then the Parkinson’s Law is you limit the time so that you limit yourself to the truly important. So moving on to the next, which is elimination. This is probably my personal favorite. Time management, just a few words on time management, I don’t think it works. I think that there is an efficiency epidemic among intelligent people, especially among technologists, to focus on how to do things better as opposed to what to do. I think there is a limit to the amount of information that you can organize. I prefer to eliminate as many inputs as possible. So elimination, what I’m going to talk about just briefly, and this will be one example, is what I call batching and I’ll use this in the context of email. So if you’ve ever ordered T-shirts, or had anything printed, the cost for let’s say printing three T-shirts might be the same as printing 20 T-shirts.

The reason being there’s an inevitable setup cost involved, and that’s the same with any task. The average American worker spends 24 percent of his or her time simply in between tasks, task switching, and once interrupted, 40 percent never go back to their original task and complete it. They move on to yet another task, another task, another task, and this is how you end up with 20 windows open on your computer.

So batching involves letting similar tasks accumulate and then performing them at very limited times. As infrequently as possible to accomplish what it is you need to accomplish and for knowledge workers, which all of you are, who spend at least 25 percent of your time on email each day, email is going to be the single biggest turning point that you can affect directly. So what I would recommend, if you guys are listening instead of Twittering, is that you set an auto-responder on your email, and one of the major keys to achieving a four-hour workweek, which is it’s not a misnomer, it’s not a typo, this is possible, is managing expectations of those around you and training the people around you and your boss if you have one to obey those rules that you set for yourself.

So the auto-responder would go something like this, and I’ve used this on many occasions. “Dear Colleagues, thank you for your email. Because of extremely high workload and pending deadlines and a move to efficiency and effectiveness, I will be checking email at 11:00 a.m. and 4:00 p.m. Pacific Standard Time or whatever your time zone is. If you have a question that requires an immediate response before one of those two times, please call me on my cellphone. Also, if your email does not contain a question but is a confirmation or a statement, I will not respond. Please don’t be offended, I appreciate it =)!” However you want to make that appear very friendly. “Thank you for your understanding, Tim Ferriss.”

If you make that one change and you stick with it, the quality of life that you experience will change so dramatically that you will wish you had done it years sooner. It doesn’t have to be twice a day. I recommend twice a day for a few reasons. You need to let email accumulate. One of the worst habits you can get into is checking email first thing in the morning. Because first of all, chances are not many people have replied. Second of all, you scramble your brain with a collection of disorganized ideas, unrelated ideas. So let your email accumulate. Focus on getting the one most important task that you’ve identified through 80/20 done before lunch so you can’t postpone it and use that as an excuse.

So really elimination is about focusing on the crucial few instead of the trivial many, and most things, the most important thing that I learned from Ed Zschau was that most things don’t matter at all and almost all the rest matter very, very little. So moving to automation, this is something that I’ve experimented quite a bit with in the last three or four years. Of those remaining tasks, so you have determined what your most valuable inputs are, you have eliminated as much as possible. Now you have a certain collection of tasks, some of which are important to perform but very, very time-consuming. That includes your batched tasks, which could be anything from laundry to paying your bills to checking paperwork, filing sales reports, anything of that type.

What I recommend you do is really quantify the value of your time, and I mean that in a very specific way. So if you make $50,000 per year, and you work 40 hours a week, God bless those of you who already do, and you take two weeks of vacation a year, you make $25.00 an hour. What I would recommend is that you outsource anything that can be done for less than $25.00 an hour. Now there are certain tax mathematics that you would want to work into that, so let’s just say $15.00 an hour. Anyone that you can pay to perform a task for you for less than $15.00 an hour, you should sign this task to them.

So as a personal example, I have an army of about 25 Indian MBAs in Bangalore who essentially run my life for me and they cost $4.00 an hour, and there are a number of advantages to this. Number one is it removes the excuse, the ability for you to create crap tasks for yourself that are time-consuming. You don’t have any excuse anymore. The second is they can work while you sleep which is nice. So any type of internet research, any type of spreadsheets, almost any type of work can be outsourced. I have one friend who I interviewed for this book who had a favorite pair of jeans. He had these jeans for five years, they were worn in just perfectly at the little wallet outline. He couldn’t get a replacement for these jeans, but he ripped them right down the groin. Not good to wear around. And he sent these jeans to his group of professional virtual assistants in India, and they had them replicated. He had people his size wearing them, putting a wallet in, replicating the jeans exactly.

If you go to fourhourworkweek.com, there’s a sample of outsourcing life, the chapter, and there’s a bit by A.J. Jacobs who’s the editor at large of Esquire. It’s hysterical. Absolutely hysterical, but this alone has saved me an immense amount of time. So automation. Thinking in terms of rules that you can set for yourself as opposed to responding in a culture of urgency.

Okay, the last piece is liberation, and this is a two-part portion. The first element of liberation is creating mobility. So mobility if you recall is the third ingredient, the third currency of ideal lifestyle design, and for entrepreneurs, how many people are entrepreneurs in the audience as opposed to employees? Okay. How many people are employees or have their time set by someone else? Okay. So entrepreneurs have the hardest time with automation because they fear giving up control. I’m an awful micromanager, this took me a long time to learn. For employees on the other hand, they tend to fear taking control. So liberation from a mobility standpoint, getting out of the office is very intimidating for them. Before you can automate fully or eliminate as an employee, you have to get out of the office, at least part-time because if you’re only working two hours a day but you’re still stuck in the office, that’s no fun at all and you just end up surfing the web all day which honestly is overrated in my opinion.

So there are a couple of approaches to doing this. It can be pulled off and it can be pulled off very, very, very, very well. One key principle in doing this and almost anything else in life is not asking for permission or tripping over chairs, but begging for forgiveness. So I’ll give you a very good example. There’s a case study that I did with a gentleman, he is early forties, lifetime employee at we’ll say HP, it’s actually a company much closer to Austin, and he’s a lifetime careerist. He has no desire to start his own company, he does not have the risk tolerance for it. There was a problem though. Two years ago, he met a wonderful woman and he wanted to propose. The problem was she lived 5,000 miles away in China and he had actually met her on a tech support call that they had made to a client based in China.

So he used what I call the hourglass approach to earning his mobility. What he did is he created an emergency that would take him out of the office for two weeks. He said, “I’m really sorry, this is the situation. I have a family emergency or I need to install my DSL,” whatever your excuse might be. “I need to take two weeks out of the office. I recognize that I need to continue working. I don’t want to take vacation days. This is how I propose we do it.” Notice this isn’t a can I do, this is I need to do, how will we do it. And he took those two weeks, beforehand I should note, he worked each Saturday for about three weeks to make sure that all the communications worked, that he could actually work remotely and he had the discipline to do so. Then he took two weeks and he went to China and he had all of his support calls routed to his fiance’s phone. No one was the wiser and between proposing and eating pig face or whatever he did on that side of the world, they do eat pig face, I lived there for six months, he was able to perfect his approach to working remotely.

When he came back, it’s called the hourglass approach because you start with a large period outside the office, you come back in and then you balloon back out. So he came back to the office, he said, “This is what happened. My productivity was twice as high,” and he had all of the data that he had gathered along the way. This number of extra billable hours. This number of clients contacted. This many projects completed, and he was able to really demonstrate the data to support what he was suggesting which was one day remote per week, that’s all I want, one day remote per week.”

You can always change your mind, which is called the puppy dog close. Just take the dog home, see what you think, you can bring him back. Make it reversible. If you propose a permanent change, your boss is going to say no. “Just one day per week, let’s try it out, this is what I found, I think I would be much more productive.” And even suggest a day in the middle of the week to start, because it won’t appear like you’re trying to get a three-day weekend and the boss will be more open to that. Then over time, you make yourself less and less productive at work and more and more productive remotely, until you get back to whatever degree of mobility you want in your life and there are many examples that I could give you of this, but it is very, very possible within an employment situation.

The second part of liberation, which I don’t have too much time to go into today because I want to get to the Q&A, is taking advantage of the time that you create. So if I only had more time, and then you have this glut of time. The question of what to do with it is a lot harder to answer than you might think. Because spending a week on the beach, that’s enough. You’ll rub cocoa butter on your belly for about five days and you’ll be so bored you want to poke bicycle spokes through your eyes. It’s not a long term career post whatever it is you’re doing now.

So just to give you a personal example, the first day that I left the country, so how did I begin my lifestyle design experiments? Well I began it on one of my many trips to New York City, taking a backpack with a week’s full of clothing and deciding that I just needed to leave the country and I went to JFK and bought the first ticket I could find out of the country which was a one-way to London, and I stayed with two of my former classmates in London and woke up the next morning and I had already set the rule that I would be able to check email once per week, every Monday, and that was not a Monday. And I woke up at 10:00 a.m., my first day without an alarm clock in four or five years, and bolted up right out of bed. I had envisioned waking up to birdsong, stretching like a cat in a Spanish villa, breathing in the aroma of freshly brewed coffee.

Not quite how it happened, I bolted upright like someone had put a foghorn to my head, looked around for my laptop, realized that I couldn’t check email, shouted for my friend, realized they were at work, and proceeded to have a complete nervous breakdown and wander around London for a day, going to see the sights which I find boring, I don’t really like museums that much with some vague sense of guilt, looking out of the corner of my eye at every internet café as I pass by. Once you remove work as identity, once you remove job description as self-description, after you’ve let your interests atrophy for a long period of time, it’s quite a challenge to make productive use of that time and fill that void. So that’s the last part of liberation.

So in summary, I really want to make the point that I believe the point of life is to enjoy it and that the three currencies, the three currencies, time, income, and mobility, are vehicles to achieving it. They are not ends in and of themselves, and I hope that this presentation, at the very least, really my ideal outcome is to catalyze a severe national backlash against information overload and this culture of immediacy. Because life doesn’t improve necessarily with Twitter and dodge-ball and 24-hour access. Having other people wait for you is a symbol of power, and you need to train people to do that.

I was recently in Florianopolis, Brazil learning to surf and a beautiful place, I recommend it. A lot safer than Rio, and I was going through the airport on my way back to the U.S. and there was a huge 20-foot advertisement and it was for a BlackBerry, a brand new BlackBerry model in Brazil and the title was, “Now your email can find you anywhere in the world.” That’s my idea of Hell. I encourage you, I really encourage you to focus on the critical few and ignore the trivial many and it’s possible to do that within the confines of being an employee.

So I want to open it up to Q&A and then I’ll issue the challenge that I promised everyone for which the prize is a roundtrip anywhere in the world. I’m going to open it up to Q&A and I won’t take up any more time, so please, go ahead.

Speaker 3: Yeah, great presentation by the way. I wish I had the stones to fire 80 percent of our clients and the reason I don’t is because we built up — I own an interactive design agency and we built up a really good reputation in our region and we depend on word of mouth. How do you fire 80 percent of your clients without building bad will within the community?

Tim Ferriss: That’s a very good question. Really, fire is a strong word, and what it comes back to is when you start a company, your objectives are often very, very clear. I’m starting this business because I want to be more independent. I’m starting this business because I want to control my time. I’m starting this business because I want to be respected in Community X. It’s very easy to lose sight of that and focus on the insidious quarter by quarter growth mentality. I don’t think indefinite growth is a smart or healthy thing in business or personal life.

So how do you fire them? First of all, you need to do an analysis. It might not be 80/20, it could be 50/50, usually it’s actually more 95/5, and really all I’m encouraging you to do is focus on filtering your clients so you have low maintenance clients who fit your ideal profile, and it’s possible to do that — just to give you an example, so I have a distribution through about 15 countries with our products, and 200 to 400 people work on the entire supply chain and distribution at any given time, whom I pay, and I was able to fire — fire isn’t really the correct term. In my case I was more or less ignoring them, unless they had something pending, and honestly, if you just take that one step, you’re not going to create any bad will. Because if they have a request, you’ll answer that request, but I’m not calling my 120 customers every day to see how they’re doing. Because it just isn’t a good use of my time and it’s not necessary. When somebody calls me, like my real estate broker who sold me my last house, he calls me every three weeks. “Hey, how are you doing?” “I’m fine, how are you?” “Yeah, just calling to see how you’re doing.” “Okay, yeah, I’m in the middle of lunch. I’ll talk to you never again.”

That’s all I’m recommending. So it doesn’t have to be as strong as saying, “You know what? You’re wasting a lot of time. We have more important people to deal with. Please never call us again.” It’s just a matter of not creating activity such as contacting them that you really don’t need to create.

Speaker 4: All right, Tim, so you have a team of Indian MBAs who run the details. What happens when they read your book?

Tim Ferriss: That’s a good question. I’ve thought about this. I’m kind of concerned that they’re going to come out with The 2-Hour Workweek. No, well here’s the thing, is hiring the Indian MBAs is an example of something that I’m quite fond of which I call geo-arbitrage or geo-arb, so how do you take advantage of currency differences and changing economic conditions to really get the most bang for your buck and create the ideal lifestyle? When Estonia is cheaper than India, I’m going to go to [Estonia], and right now India, they can’t really outsource to anybody else. I mean they could try but they’re going to have trouble beating the rates they’re already offering me. But it’s a fair question.

Speaker 5: I was wondering about meetings. So do you have rules set up for running efficient meetings or do you just patch them through to Bangalore? You know what I mean? Like — 

Tim Ferriss: I do.

Speaker 5: Okay.

Tim Ferriss: Okay. No, that’s a very good question. I should say that my entire company is a virtual architecture at this point. I shifted everything in the process of decreasing my hours to a virtual architecture. So I have actually in six years never met any of the main people that I work with. Now that having been said, just general rules for meetings. The first thing is you shouldn’t have a meeting to decide what the problem is. You should have a meeting to solve that problem. So whenever someone contacts me, I’ve had fewer than 10 in-person meetings in the last five years probably, and very few conference calls.

So a couple of things. Keep them very, very short. None of my conference calls or meetings run more than 30 minutes. Define the problem in advance, so if someone says, “Hey, let’s jump on the phone to hash things out,” I say, “Great. Send me an agenda. What are the topics you want to cover? What are the questions that you have for me? Because I want to prepare and I never have conference calls without preparing.” The second thing is define an end time. It’s very, very common to plan meetings, okay, we’ll have a meeting at 11:00, and before you know it, holy crap, it’s gone to 2:00 p.m. and I haven’t had anything accomplished today. So those will be my two main recommendations.

There’s a quote by Dave Barry who says that in corporate America, it’s popular to have meetings because they can’t actually masturbate, and I tend to agree with that. But no, it’s a good question.

Speaker 5: Thanks.

Speaker 6: Hi. I think I have two questions, I’m not sure if I want to ask the second, but the first is about transparency and I have a production assistant, she’s actually fantastic and she’s taken over a lot of work for me and at this point I’ve put my clients directly in contact with her so they CC: me and her on their requests and that works out okay and I’m just wondering how you handle that sort of like — actually, Amy does that kind of thing.

Tim Ferriss: I’m completely transparent. If you send an email, if you want to see a good auto-responder, send an email to timothy@brainquicken.com. That’s one of the products that I’m involved with, and it’s very clear. I’m often traveling for business, it could be seven to 10 days before I return your email. In the meantime, here are the following people, the following links, the following resources that should answer almost any question you can possibly have, and I’ll direct them to those people. Outsourcing is so ubiquitous that I am not embarrassed at all to admit that I use an outsourced fulfillment company for example. Dell ships many of its products from the same fulfillment company that I use, and for those of you familiar with Xbox, Microsoft doesn’t make that, Flextronics makes that, and the top 12 brands of mountain bikes in the U.S. are all made by the same three or four plants in China now. If you’re Cannondale, you might not want to admit that, but I think as a smaller operator, you can actually spin it so that you seem very smart. If you say, “Look, that’s not my core competency. I’m focused on doing this for you, and contact so and so at Group X who will be able to handle that for you.” So I’m completely transparent, 100 percent.

Speaker 6: Okay, so just to continue with that, then how do you deal with — say in my case I want to increase the rate that I charge this client.

Tim Ferriss: So how do you pawn it off to a subordinate while charging them more?

Speaker 6: Yeah.

Tim Ferriss: Well, I’ll tell you what my PR firm did to me. They say, “No, when you hire us, you’re not just working with me. You’re working with our team, and we’re bringing on the breast and…” The breast and brightest! My goodness, where is my mind? I’m sorry. So that’s how I would approach it. You’re recruiting a team instead of just me.

Speaker 7: Hello. So with your email auto-responder, it says if you send a statement, don’t expect really to hear back, which makes sense efficiency-wide. But then what do you say for relationship management? I mean do you think relationship management borders on the real estate guy calling you and being like, “Hey, how is it going?”

Tim Ferriss: As far as relationship management goes, I believe there are very few relationships that are the critical relationships. That doesn’t mean that you’re rude to other people, but I think email has reached a critical mass where people are now ignoring email. If you want your congressman to respond to you, you send them a handwritten letter. It’s almost come full circle. So email, I think people expect a certain degree of — I wouldn’t say coldness, but sort of brisk efficiency in email and there’s a great panel yesterday on the entirety of email and I can talk to anybody more about that later, but for relationship management, I call people on the phone when I have something interesting or important to tell them or ask them, and I also help my clients who are important to me as opposed to just checking up to see how they are.

So I will actively look within all of my contacts to see if I can make introductions between my most important clients. One of my partner companies is a $70 million company and they’re trying to liquidate some of their company to create working cash for the founders and I introduced them to a private equity manager and those are the types of things that I handle by phone call. Very infrequently so that when you do call them they know it’s important they pay attention, they don’t ignore you.

Speaker 4: I was just messing with you last time, man. I have a real question this time. You said that you should eliminate what’s not important and focus on what’s important, which is obviously great advice. I give it to people a lot too, but what people always ask me is how do you figure out what’s important and what’s not important?

Tim Ferriss: No, that’s an excellent question, and it’s something I’d like to talk about, so thanks for bringing it up. There’s a gentleman named Arthur Jones who’s the founder of Nautilus Company. Probably the smartest exercise scientist in the last 100 years I would say. Also the founder of Medex, he’s actually in the Forbes — he was on at the Forbes 400 list at one point. Very smart guy, and he said, “If you can’t measure it, you don’t understand it.” If you can’t measure it, you don’t understand it, and Peter Drucker also said, “What gets managed…” I’m sorry, “What gets measured gets managed.” So it has to be quantifiable. It can’t be I think this is important. How do you measure your results? How do you measure how your day is successful? Is it additional sales? Is it additional clients? What are you counting? If you’re not counting something, you’re flying blind as far as I’m concerned. You need to have a quantifiable metric.

Once you identify that metric, then it’s fairly easy. You say, “This is my desired output. What are the inputs that contribute to that?” That would be the fast answer. So for me, I look at what I call relative income versus absolute income, so it’s very easy to trick yourself when you look at annual income. Say, “Oh wow, I just got a $10,000 raise. So now I’m making $60,000 instead of $50,000.” That doesn’t necessarily mean you’re making more than $25.00 an hour now. If your hours go up, you’re actually making less, and that’s how management consultants and i-bankers who are a lot of my friends end up making less than someone at Burger King. So I look at how many hours am I putting in and how much am I getting paid per hour and what contributes to that on the business side of things.

I 80/20 my personal life as well, but that’s usually related to people. So what are the 20 percent of the people around me, the people involved with me who contribute to my general well-being, happiness, excitement, and I’m pretty ruthless with my social encounters too. If you really want a scalable life and you want to achieve what it is that you’ve set in front of yourself in your personal business life, you have to be very ruthless with that type of elimination. So quantifiable metrics. You need to identify what your desired output is.

Speaker 6: Sorry to ask so many questions. This one’s kind of — I don’t know if I should ask it but would you take me on as an intern?

Tim Ferriss: Sure. I’ll give you $4.50 an hour.

Speaker 6: Well, it’s only four hours a week, right?

Tim Ferriss: Well see, my workweek is four hours a week because I make your week 300 hours per week.

Speaker 6: No, no, I meant a mentorship actually.

Tim Ferriss: Ah, okay. Let’s talk about it. Let’s talk about it. If anybody’s interested in being involved with the book launch, it’s going to be a very, very exciting time, so please let me know. Yeah, absolutely, let’s talk.

Speaker 6: And then maybe I’m cutting to your punchline or something but you mentioned you can get a flight anywhere for free?

Tim Ferriss: Yes. Okay, so here’s — 

Speaker 6: Wait, but you had a technique for doing it, or this the challenge?

Tim Ferriss: No, I’ll tell you exactly what it is, but first I want to see, there might be a question behind you.

Speaker 8: A quick question. You mentioned, certainly with your knowledge and experience, you’ve certainly leveraged that in life. But are there any other tools that you leveraged? Like you said you don’t really like time management but there’s calendar and planners and PDAs and any other tools besides the knowledge and experience?

Tim Ferriss: Sure. No, that’s a good question. Hold on a second. I’m going to dazzle you guys with my technological sophistication. Hold on a second. You ready? This is going to be bigger than the iPhone. All right. This is the first PD I’ve ever owned, and I bought it a week ago. It cost me $99.00, it’s the Palm Z22 I believe, and the only reason I bought this was to have a backup of my Outlook calendar and contacts and the one criterion that I had for a PDA was that it did not have internet access.

So as far as what I leverage, I think the most important skill that you can develop is the ability to deal-make and negotiate. It doesn’t matter if you’re a technologist, it doesn’t matter if you’re an employee. You’re going to have to create win-win situations or the perception of win-win situations to get anything that you want. Because the default answer to anything that you ask for is going to be no, so how do you work from that position? So I would encourage everyone to become a student of creative deal structuring and negotiating. I think that’s the most valuable skill set you can develop that lends itself to every other.

Speaker 9: So I think that — like I’m taking, I’m hearing that you’re saying being connected and constantly being interrupted and a lot of that really distracts you from the things that are really important because all those small things make you feel important in that moment. So that’s like crack, and like everyone in this room is probably Twittering and feeling important reading their Twitters or writing something. So do you have any advice on getting off that crack?

Tim Ferriss: Sure. So I’ll tell you a very brief story. I don’t know how much time I have but I’ll just keep on talking till someone kicks me off. So I went to a friend’s birthday party a few months ago and there were about 20 people there and there was a little bucket of cupcakes, and I ate about 12 cupcakes, because it was a Saturday and Saturday’s my off-day where I’m allowed to eat anything I want. So everyone was staring at me and really thought I was a strange creature, but I sat down next to one guy who had about 12 glasses of wine, so I felt we were — with my insulin levels and his blood alcohol levels, we were about at the same comprehension level. And we got to talking and he asked me the question everyone asks me, which is “What do you do?” And I don’t have a good answer to that because what I do with my time and what I do for income are two very different things. So whatever I say, I end up either sounding like a pathological liar or a drug dealer, which I’m not a pathological liar, I suppose I am a drug dealer to some extent.

And I told him my story. I had just come back from Japan, I spent September in Japan learning how to sword fight, kendo. And I told him about it and he said, “Wait wait wait wait wait. 4-Hour Workweek? You’re full of shit, come on.” And I explained that actually, I was going to call it The 2-Hour Workweek and it was a compromise with my publisher because they felt that two hours was too unbelievable, but four hours, that’s just about right. And he asked me, he said to me, “Look, I have everything. I’m doing everything right, I have the house, I have the car, I have the family, I like my job, I just do way too much of it. How do you create that time?” I told him, “Okay. All you need to do is ask yourself three times a day, “Am I being productive or am I being busy?”

That’s all you have to ask. Put it on your screensaver. Have it pop up. That’s the one interruption I’ll allow you, have that pop up three times a day, and he actually translated that into different phrasing which I think is really helpful which is am I doing a crutch activity. Everyone has their crutch activities that they sort of default to if they want to put off something uncomfortable. Am I performing a crutch activity? And he ended up getting more done in the week that he implemented that than the previous four weeks combined, and he started taking Mondays and Fridays off to work remotely.

Speaker 10: Hi. For most of us who work in traditional organizations with cubicles and computers on every desk and phones and conferences and meeting rooms, when we go back, I mean the structure is so locked in, just by the way it’s designed. What do you advise that people do when they first get back to the office?

Tim Ferriss: Sure. Okay. So that relates to the challenge, so I’m going to segue into that also. The first is I’m an extreme example. I’m nuts. I take this to a very, very ridiculous extreme and that’s just my OCD nature. But for someone in a work environment, if you could just cut five, ten hours off your week, I think that it would make your time here well-spent. But before I even get into that and I start lowering expectations, I would say that the biggest mistake I see employees make is they underestimate their leverage. They underestimate the amount of leverage they have and one good way to increase your leverage by the way, two things that are related to mobility. The first is increase your employer’s investment in you so that the cost of losing you is more painful than granting you permission to do whatever it is you’re asking for. So I really want to take a four week course in X, I really want to have perhaps mentorship time with Executive Y. Really get them to invest in you, and that’s not a deceitful or negative thing to do. This is improving your value to the company, but at the same time, it will make them less likely to refuse requests.

The second thing is that when you ask for things is just as important as how you ask for them, all right? So a very good friend of mine, he’s designed for IDEO and a lot of the design firms like Frog, and he just doesn’t stand up for himself and he was recently given a BlackBerry, and I was with him when this happened. It was a Saturday night and his immediate boss sent him an email, received it on his BlackBerry but we were just going into the subway. He responded on his cellphone two minutes later and the boss called him, “What the fuck? I just sent you an email. You can’t do this.” This is a Saturday, and he said, “This happens again, we’re going to have to have a serious talk with my supervisor.” And what I recommended my friend do, his name is Sherwood, I recommended that he increase his value like I told you, and he’s admitted to me, he says, “I’m so overworked because I have this, this and this skillset and I’m the only person who can do it.” I said, “Sherwood, you have a great hand to play.”

So I told him to wait until a crunch period when he was absolutely an integral part and then he made his request, which was to take three weeks off to go to Oktoberfest in Munich, and he said, “Yeah, I’m just really not very happy and I don’t know what I’m going to do. It could be crazy.” He didn’t say that, but long story short, he got the trip to Munich. So don’t underestimate the leverage that you have. Let’s look at it this way. Let’s say you do get fired. What’s the worst thing that happens? I’ve been fired from every job I’ve had except for the one that I created myself, but it’s for reasons that go well beyond the scope of this presentation. But where the hell was I? I need more caffeine, where was I? Somebody remind me what I was just talking about.

All right, okay. So if you get fired, and a number of my friends have gone out of their way to get fired because you get something very pleasant called severance, is the worst thing that happens is you get unemployment, you take a little extended vacation till you find your next job. Everybody here, if you’ve made it this far in life, your genetic pool is deep enough that you’ll get a job soon enough. Your employer on the other hand, let’s say they lose you in the middle of an important project. That could be fatal. So don’t underestimate your leverage. That would be my first recommendation, and then going into what would I recommend that you do?

This relates to the challenge. So the challenge is this. I want anyone here or everyone here to implement one of the ideas from what we’ve just discussed. Whether that’s the 80/20 Principle, Parkinson’s Law, outsourcing your life. There are two companies I’d recommend you look at closely, Your Man In India, YMII, and Brickwork. They’re both based in India, or some type of liberation play, and you have until this week, Wednesday at midnight, and whoever implements them in the most dramatic fashion will get a free trip anywhere in the world. Free roundtrip airfare I should say. Not going to put you up in a five-star hotel.

So Wednesday by midnight, try to implement any idea from this presentation and tell me how it works, and that’s it. So last but certainly not least, if you continue on the current track, you’re going to have 500 months of work in your adult lifetime. Since 1969, the average American worker works in terms of hours eight weeks more than they did then for the same income if you adjust for inflation. So slow down, take a look at what you’re doing, there’s no rush, okay? So thank you all very much for coming and I hope you enjoyed it.

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