Episode 135: Simply Communicate with Carmine Gallo

Announcer:
This is The WealthAbility® Show with Tom Wheelwright. Way more money, way less taxes.

Tom Wheelwright:

Welcome to the WealthAbility Show, where we're always discovering how to make way more money and pay way less tax. Hi, this is Tom Wheelwright, your host, founder, and CEO of WealthAbility. So the number one skill of a business owner or an investor is communication. So today we're going to discover how to simplify our communication and do it in such a way that it's persuasive. We have, I think, one of the foremost experts on this topic, Carmine Gallo, who I know from reading his book on TED Talks and who has written a book on Steve Jobs and now has his new book, the Bezos Experiment, Communication Secrets of the World's Greatest Salesman. And here we have another great disruptor, entrepreneur, somebody who has changed the world and done so as we're going to hear based on how he communicates. So Carmine, welcome to The WealthAbility Show.

Carmine Gallo:

Hey, Tom, great to see you, and congratulations on three years of WealthAbility. I listened to the show and I always learned something new and for proof, when I open my Spotify…

Tom Wheelwright:

You have a business. We're trying to grow the business. That's right.

Carmine Gallo:

This is from November, optimizing your online presence. So I love the fact that even on topics that I think I know a lot about, I always learn something new from your podcast. So congratulations. I know that's hard to do.

Tom Wheelwright:

No, thank you. I will tell you that my favorite part of doing this podcast is everything I learned from people like you. So I'm always the student and I love being a student and always have loved being a student. And so we're going to learn a lot from you today, Carmine. If you would, give us just a little bit of your background so that we know how you got into this field.

Carmine Gallo:

Well, I was a business news journalist for many years in the first part of my career. I started as a broadcast journalist then I went into business news and I covered the stock market and I covered Wall Street. And I realized that television news was not for me, and I made the transition to writing books and also speaking and coaching CEOs and executives on how to improve their communication skills. So that is the last 15 plus, 15, 20 years of my professional life. I've written 10 books, mostly under the category of leadership and communication. So I'm really passionate about leadership but through the lens of communication.

Tom Wheelwright:

Got it. So I've always maintained that communication is the number one skill of an entrepreneur. If we can't communicate, then why are we in business in the first place? What's your take? I mean, you're obviously, this is your field. Why is communication so important? Why isn't it the product? Why isn't it the manufacturing? All these other aspects, team, all that kind of stuff. Those are all important aspects of running a successful business, being an entrepreneur. Why is communication such an essential and maybe even the essential part of being an entrepreneur?

Carmine Gallo:

Well, let's quote Steve Jobs. I wrote a book early on called The Presentation Secrets of Steve Jobs, and at the time I did not use the word storyteller. I was really focused on how to deliver better presentations. And Steve Jobs was considered and is still considered one of the great corporate presenters of all time at Apple. Well, years later, Tony Fadell, who I'm sure your listeners know or they've heard of his book called Build, he is the guy who started the iPod. He built the iPod, and then he went on to build Nest, which was sold to Google for $3 billion. So as an entrepreneur, he's done well.

And years later he was asked what did he learn from working side by side with Steve Jobs? And he said three things. Storytelling, storytelling, storytelling. In other words, you can have the greatest product in the world. You can have the greatest idea in the world. And this is backed by neuroscientists too. They say you can have the greatest idea in the world, but if you cannot express that idea persuasively, then what does it matter? And that's why I've been so focused on communication skills and all of its facets.

Communication is a gray area and there are advanced communication skills and that's what you and I are going to talk about, advanced communication. This is not a public speaking 101. Look someone in the eye, shake their hand with a firm handshake. That's basic public speaking. We're getting into many more advanced skills with this blueprint, The Bezos Blueprint. That's what it allowed me to do, Tom, is get into very deep strategies that Jeff Bezos pioneered to fuel Amazon's success.

Tom Wheelwright:

All right. So you're talking about communication, and you already have talked about persuasion and you talk a lot about persuasion in the Bezos Experiment so-

Carmine Gallo:

The Bezos Blueprint, by the way.

Tom Wheelwright:

The Bezos Blueprint, totally my fault. I have-

Carmine Gallo:

It's okay. It's okay.

Tom Wheelwright:

I have the wrong name [inaudible 00:05:33].

Carmine Gallo:

The Bezos Blueprint.

Tom Wheelwright:

The Bezos Blueprint. I like that. That's way better than experiment. I much prefer the blueprint. So The Bezos Blueprint. And so let's kind of get into that. So first of all, why'd you choose Jeff Bezos?

Carmine Gallo:

Jeff Bezos is a dreamer and was a dreamer in 1994 who had a bold idea and transformed that idea, which nobody said could be done by the way. Most people said could not be done. Even his boss at the time to try to talk him out of it. But here you've got a man, an entrepreneur who transforms this radical idea to sell products on the internet and turned it into one of the world's most valuable companies. And I argue in the book, we can have a debate about it, but you can make the argument that it's also the one single company that impacts your life each and every day outside of the company you work for. But along the way of building Amazon, he pioneered leadership and communication strategies that are credited for fueling Amazon's growth. That's the story that intrigued me, and that's the story I set out to write, Tom, because in that story there are valuable lessons for anyone who wants to build wealth.

Tom Wheelwright:

So let's talk about that. Let's get right into it. So if you look at maybe the top three things that Jeff Bezos does differently or has done differently from your average entrepreneur or business owner, what would you peg those top three things? As we know storytelling would be one of them.

Carmine Gallo:

Sure.

Tom Wheelwright:

What are the others?

Carmine Gallo:

Well, why did you pick three? Why not 28?

Tom Wheelwright:

Well, there's a good point.

Carmine Gallo:

That's a communication strategy. Jeff Bezos used it very well, the power of thirds. So in most of his shareholder letters, and I analyzed all 24 letters, about 50,000 words, there's some very valuable lessons and tactics that he uses. In order to write simply and communicate simply, he breaks things up into thirds. There's three criteria for hiring people. Three things that Amazon is based on. Everything is kind of based in thirds, because I think Bezos either intuitively or he got better at this over time, he understood that in order to get complex ideas across, you had to communicate them simply. And the rule of thirds is one of the most powerful philosophies and communication theory. We can only carry about three or four points or key points of information at any one time. So when you give people a list of 32 things to remember, they won't remember a thing. Give them two or three, and it's a lot easier.

So one of the things that I learned that I think is valuable for everybody is this idea of simplifying your writing and your communication. And what do we mean by simplifying? On one of the pages, page 46 of this book, I have a graphic, and I'm going to try to explain it on a podcast here. But the graphic visually shows all 24 shareholder letters. Actually for our YouTubers here, it shows all 24 shareholder letters and the grade level at which they're written. So there's software that analyzes how easy your writing is to understand. The lower the grade level, the easier it is to understand the writing and to understand the language.

So early on the first 10 years of shareholder letters, Bezos wrote in 10th grade level and some college level writing. But by 2007, almost all of it was 8th and 9th grade level writing. 8th grade level. So Amazon teaches as its executives even today to write memos, write documents for an 8th grade level reader. Here's the key. That does not mean you're dumbing down your content. You're outsmarting the competition because you are writing in a way that is very clear, easy to remember, easy for your customers to remember, easy to absorb, takes less time to read, shorter sentences, simpler words. That's a skill, and it is a skill that anyone can sharpen. It does take a little practice because it's almost easier just to talk in big fancy words and ramble on. It's a little harder actually to keep things simple, but it's a very, very valuable skill. And it was certainly a key to Amazon's ability to communicate both internally, align teams internally, and to communicate with customers.

Tom Wheelwright:

So I'd like to talk about this because one of me… I always tell people my goal is to make taxes fun, easy, and understandable. Really simplify things, and that's my goal. Why is simplicity so important to people understanding and believing the message?

Carmine Gallo:

Because intuitively and instinctively, we gravitate to the simpler words of a language. So let's talk about the English language. I had to do research on this, and I'm kind of a quasi historian. I'm an arm share historian, so I love the historical research. The English language changed in 1066 during the Norman invasion. And so prior to that, the words of the English language were Germanic origin, and they were all one, two syllable words, very short words. And then the French introduced the romance languages, Latin-based words, which were called fancy words, fancy language. Well, that's what we now call legalese. So why do your eyes glaze over when you read a legal contract? Because those are multi-syllabic, convoluted sentences and word structure.

But think about if you want to give someone an instruction that's easy to understand, immediately understandable and easy to grasp and actionable. So if I were to say, “Tom, when you leave the room, turn off the light.” Those are all, I think, one. Yep. Tom, turn off the light when you leave the room. Those are all one syllable words. Those are all old English words. If I want you to get to the point and understand something quickly, I intuitively go back to the old English words. I do not overthink it and say, “Tom, upon departing the premises, reduce the illumination in the abode.” Those are romance, Latin-based words.

So when a leader, this is fascinating to me. When leaders want to get a point across and they want it to be memorable, they tend to go back to the short words. I'm sure all of your listeners and you too are familiar with Warren Buffett's amazing adage. “Be greedy when people are fearful and fearful when people are greedy.” Well, greed and fear are old English words. Warren Buffet knows not to use the word avarice for greed. Instead, he goes back to the old English, greed. And it's one of the most common axioms in the stock market, in the financial services. So again, it's a very interesting thing when you kind of delve into why are short words more persuasive and more effective than longer words.

Tom Wheelwright:

Hey, if you like financial education the way I do, you're going to love Buck Joffrey's podcast. Buck's a friend of mine, he's a client of mine, he's a former board certified surgeon, and he's turned into a real estate professional. So he has this podcast that is geared towards high paid professionals. That's who he is geared towards. So if you're a high paid professional, you're going, “Look, I'd like to do something different with my money than what I'm doing. I'd like to get financially educated. I'd like to take control of my money and my life and my taxes.” I would love to recommend Buck Joffrey's podcast, which is called Wealth Formula Podcast with Buck Joffrey. I hope you join Buck on this adventure of a lifetime.

So how do you actually… This is particularly, I'm in a profession. I'm a CPA. So I'm in a profession of pretty much poor communicators across the board. We're not known for our communication skills, we're known for our math skills, not our communication skills. So-

Carmine Gallo:

Hey, come on now. No, Tom. Don't minimize this. Warren Buffet is known for his analysis and his math skills.

Tom Wheelwright:

But that's my point is that he's very good at it-

Carmine Gallo:

And he's good at it. Yes.

Tom Wheelwright:

He's very good at the simplicity. And I think that's what I think that's had a big impact. I'm not disagreeing with you in any way. What I'm asking is how do you learn how to do that? Because for some of us, it's more natural to us. It's more a natural instinct to make things simple. I mean, one of my mentors is Robert Kiyosaki, who wrote the bestselling financial book of all times, Rich Dad Poor Dad. It's a really simple book. It is so simple. You go, “Well, yeah. Well, duh.” But that's how simple it is, and yet it still outsells every other financial book on the market.

Carmine Gallo:

Yep. Okay, so I was on Kiyosaki's podcast a few years ago, and he and I had a conversation about that. So think about this. Again, this is advanced communication skills. That's why we're saying advanced skills. Tom, this is not easy. It's not meant to be easy. That's why very few people stand out when it comes to communication. We've only mentioned a handful, Jeff Bezos, Warren Buffett, Robert Kiyosaki. And look at how much they stand out. But Kiyosaki was intentional. He was intentional about the topic. He knew that if he were to just write that very same topic in standard financial jargon, that people's eyes would glaze over and nobody would buy it. So he used, what did he use? Rich Dad Poor Dad. You know what that is? That's a metaphor. It's a metaphor for a much bigger topic.

Metaphor. This is a key ingredient of successful communication, and it's one of the reasons why I wanted to write a book on Jeff Bezos, because he's brilliant at it. Great communicators think in metaphors, trying to find an analogy or something different that reflects a similarity to something familiar. That's technically what a metaphor is. So go back to the founding of Amazon. Why did Jeff Bezos choose the word Amazon for his startup? Amazon, world's biggest river by volume, world's biggest selection. He was already thinking catchy, easy, metaphorical. He has a very famous saying called day one. Always think about your company in terms of this is the first day. If this was the first day, what would you need to learn? How would you need to satisfy your customer? Always learn. Always grow.

Most of the themes that I think really gravitated toward employees and aligned teams at Amazon had to do with this metaphorical language. And Warren Buffet is the king, the king of metaphors. How do you look at a stock? You look at a stock for its moat. Is a company surrounded by a moat where it's hard for competitors to get into the industry? I'm sure you've used the word moat, or maybe some of your guests have used the word moat. Where did that come from? That's a metaphor. That came from Warren Buffett who first said that. That had to be be at least 20 or 30 years ago. He started using the word moat. And now every stock analyst that I've heard uses the word moat. Oh, we like that investment. There's a moat around it.

Easy to understand. You can write a whole book on that topic, but Warren Buffett was able to simplify it into one intriguing and understandable metaphor. But yes, it's an advanced skill. Tom, here's the news. This takes work. It takes a little work. That's why it's easy to be boring. It's easy to be long and convoluted and not understandable. It's easy to create a PowerPoint that's boring. Just put a whole bunch of words on the slide. If you take it the extra step though, you'll be far more influential. But it's a skill, and it is a skill that can be sharpened.

Tom Wheelwright:

So how do you sharpen that skill? How does an entrepreneur go about saying, “Okay. Well, I don't typically think in terms of metaphors on a daily basis. This isn't something I'm good at.” How do you get to that point?

Carmine Gallo:

Well, I'm not necessarily good at coming up with those metaphors either. That's why I was so intrigued by some of the metaphors Jeff Bezos created. Remember two-pizza teams? I don't know if you've heard of that term. A lot of entrepreneurs in Silicon Valley where I live use that term, two-pizza teams. Have you ever heard that?

Tom Wheelwright:

I have not.

Carmine Gallo:

So two-pizza teams was another Amazon metaphor, where they were deciding how big should a team be before it's too big to be working on a feature or a product? And Jeff Bezos said, “Well, when we started Amazon, we could feed the entire team on two large pizzas. Why don't we just call them about two-pizza teams?” And that really caught on. So here in Silicon Valley, when I visit with startups or entrepreneurs, a lot of them will say, “Oh yeah, we've got a small team. It's kind of like a two-pizza team.” And I'll say, “Well, that's from Jeff Bezos.” “Oh, is it? Yeah, no. We call them two-pizza teams.” I'm like, “Yeah, I know you do. But that's from Jeff Bezos.”

So I think the answer to your question is just be aware. First just be aware that there are leaders out there who are exceptional communicators. What are they doing differently? Watch, learn, try to understand how they write. Read Jeff Bezos. Read the 1997 shareholder letter, the very first shareholder letter that Jeff Bezos wrote when Amazon was a publicly traded company. To this day, I know of CEOs who say they refer back to that first letter because it really kind of captures what it is to be a startup. How does he write? How does he communicate complex topics?

You mentioned my TED book. Well, TED Talks are free on the internet, available at your fingertips. This is the golden age of learning how to be a better communicator. Watch some of the great TED speakers. How do they create a presentation? How do they deliver a presentation that's on a complex topic in 18 minutes? If you like, get a book on writing. There are a lot of books on writing. One third of my new book, The Bezos Blueprint, is on writing, but I have a number of books on my bookshelf on writing. So there's some good writing books as well. So I think the ability to write simply, write in an engaging manner, present well, those are all skills and skills that not only should you learn, but I think you can learn pretty easily at your fingertips now.

So just keep an open mind, be a… Like you said, you're always learning, always growing, always learning something new. And I give you tips, of course. And I've been giving you tips throughout this podcast, but there's always something new to learn. I went back to writing school for this. I've written 10 books, Tom. I went back to writing school. I watched videos. I read five at least reread about five books on writing. And I contacted prominent experts in the field of grammar and writing so that I could become a better writer. We're always learning. It's a skill you can always learn.

Tom Wheelwright:

Yeah, there's no question. But let's talk about just for a minute here. So we've talked about simplicity, using simple words. We've talked about using metaphors. Does Bezos do storytelling the way Steve Jobs did a lot of storytelling? Does Bezos do that?

Carmine Gallo:

Oh, Bezos is very interesting when it comes to storytelling. So storytelling is a big topic, and I understand it gets abstract. I don't want people to get bored when they hear about storytelling. We're all storytellers. It's in our DNA and even Yuval Noah Harari, the great historian, talks about the reason why sapiens took over the world and dominate the world is because we can tell stories to one another. So it is really storytelling that we are wired for. So if you're not doing storytelling, then you're really missing an opportunity. But I understand that storytelling is a big abstract topic. What does it mean?

I'll tell you what Jeff Bezos does and a lot of good storytellers do. They divide their idea into three acts, just like a good Hollywood movie script. Act one, act two, act three. Every Hollywood movie falls into three acts, almost every successful one. Act one is the setup. That's where you learn about the characters. You learn about their current world and their environment. Act two is the conflict. There has to be a hurdle, a challenge to overcome, a villain. And act three is the resolution.

So if you look back on YouTube, and you'll find some Steve Jobs videos from 2007 when he introduced the iPhone. I know as a fact, because I talked to the people who designed that presentation, I know as a fact that they were looking at the three act structure as a model for their presentation. Act one is the setup. Here's the status quo. Here's your pain point. Here's the current problem with the smartphones that were available at that time. Act two is the conflict. What's the problem? The villain was not one company. It was sort of a category of smartphones. That was the villain, and they're really frustrating you, aren't they? We have a solution to the frustration. It's called the iPhone. And in act three, we're going to solve your problem, and everyone's going to live happily ever after, and we're going to make a lot of money. So act one, act two, act three. I've noticed that when Jeff Bezos talks about Amazon publicly and how it started, he fits it into a perfect three act structure. So it gets really fascinating.

Tom Wheelwright:

Very interesting. Very interesting. So one last topic just for a few minutes, if we can. I'd like to explore this. Every entrepreneur becomes an entrepreneur because they have a problem that they've solved or a problem they believe they can solve. And a lot of times they're tremendous, they're huge problems, they're very good at solving the problem. But they're not good at communicating the problem and making it believable that they can actually solve the problem. And let me give you a perfect example.

When we started out, my company started out 30 years ago. I'd look at somebody's tax return and I'd say, “Well, I actually think we can eliminate your taxes.” Well, that's not believable. So we actually backed off to the GEICO. So I'll go back to Warren Buffet. We went back to the GEICO and we said, “Well, we think we can reduce your taxes by 10% to 40%.” Now people are going, “Okay, well 10% is small enough. I can believe that 40% is high enough I care about it.” Which is why we went to the 10% to 40%. Now we can do much better than that, but we had to make it believable. So what are the components that you see to make your solution? Because you've got to get to that solution. That's the resolution, believable to the general public.

Carmine Gallo:

Wow. That's a fascinating case study. And we do have, people have natural skepticism, and so their red flags go up because we are kind of wired to look for threats. So that whole area is fascinating. It goes into behavioral research, behavioral psychology. So that whole background of you saying you had to go back to that 10% to 40%, which was more persuasive, is very interesting to me. And that's why I think this is why communication is a gray area. Sorry Tom, I'm going off the radar here. But the communication is a gray area. So I would've just assumed that eliminate the taxes. Well, that's pretty powerful. Let me see how you do it. No, not necessarily. That was not as persuasive as what you came up with. So it's a gray area. You always have to keep a very open mind as to what's persuasive and what's not.

So let me go back to Aristotle. I'll give you one practical tip. And this is really powerful because Aristotle was the father of persuasion. And he was the first person really to come up with this idea that you have to tell a story to be a good speaker, and a good story has a beginning, a middle, and an end. The whole three act structure, it all goes back to Aristotle. He was one of the first people to talk about metaphors 2,400 years ago in Ancient Greece. So he was pretty advanced, a philosopher ahead of his time. He said that in order to be persuasive, a speaker has to do three things. They have to have ethos, logos, and pathos. And you may have heard of those terms before. Ethos is credibility. So I have to see… That's your resume. That's the evidence for your argument, the fact that you've been in business 40 years, okay, check that box. There's a lot of boxes to check under ethos, credibility. Now you've given me some credibility for who you are. I can listen to your argument.

The argument has to have logos, which is the data. There has to be data to support your argument. Back in Aristotle's day was just making a logical appeal to reason. Now I call it, it's the data. It's the evidence, the hard evidence. So your logos is 10% to 40%. But Aristotle said you cannot persuade if there isn't pathos. And pathos was connecting to people emotionally through the vehicle of story and other rhetorical devices that you can use to get people to pay attention, to listen, to remember what you said, and to inspire them and take them to that next level. So that whole next level communication, that's the rarefied air that we should strive to get to. But you have to have all three. You have to have credibility, evidence, and story. That combination is powerful. So it sounds like you folks at WealthAbility, either you stumbled on it or you thought about it instinctively, but you kind of came up with those three buckets.

Tom Wheelwright:

Well, in fairness, we did end up with… So the best-selling of my books is Tax-Free Wealth. And so we did go to the tax-free side of that. So in the end, in persuading people to okay, pick the book up, we went all the way. But in persuading people to actually use our services, we backed off because we needed to make it believable. Because people go, “Tax-free wealth? I want that.” Okay, well, but okay, in the end, can we get to tax-free wealth? Well, we can, but let's start with 10 to 40%. So-

Carmine Gallo:

Yeah, you caught their attention though. That's the other part about communication skills. You have to be able to grab someone's attention and filter out the noise. How do you stand out above the noise? Once you grab their attention, then you can make the argument. But grabbing the attention is hard too.

Tom Wheelwright:

Right. Absolutely. So as we wrap up here, Carmine, thanks so much for taking the time with us. What are some of, just a couple of final thoughts that you've got for our audience here?

Carmine Gallo:

Great communicators are built. They're made. They're not born. So let's get away from this idea that I see all the time with CEOs and executives I work with that who say, “I am not good at that. I'm not a good writer. I'm not a good speaker. I'm not as good as so-and-so on stage.” Well, neither were they. Neither were they. They worked at it. If you saw early videos of Steve Jobs, you'd be shocked at how unprofessional and insecure he looked on stage, an amateur. And then he became one of the world's greatest corporate storytellers of all time.

Jeff Bezos improved his writing skills tremendously over time, and he did that intentionally because he understood that writing and communicating were going to be the key to making that seamless experience for not only his customers, but to align his teams. So I know as a fact that it was intentional. It's a skill. Great public speaking, great writing is a skill that you can and should build. So get away from saying, “I'm not good at this.” Because no one is born with a PowerPoint clicker in their hand. It's a skill, like playing the piano and you can learn and you can get a lot better at it and much more persuasive.

Tom Wheelwright:

Well, I love that. So the book is The Bezos Blueprint. The Bezos Blueprint, Carmine Gallo, thank you so much for taking time for us. Remember, this is… What we're really looking for is if you're really looking at building your business, it all starts with communication. All starts with as Carmine calls up persuasive communication. And it's only when we have persuasive communication that we can make way more money and pay way less tax. We'll see y'all next time. Thanks, Carmine.

Carmine Gallo:

Thank you.

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