Why paid masterminds are mental masturbation
jimclair.com
jimclair.com
If these "masterminds" actually offered effective advice, then the best way for them to make money is find likely candidates, PAY THEM to take the advice, and then GET PAID a share of the success.
Sounds ridiculous? It isn't. A wide variety of businesses do some variation on exactly that. For example this is exactly what Y Combinator does. It is how coding camps work. You can find interview coaching that works on the same principle - they get a share of your first year's salary.
But if THEY ask YOU to pay THEM, maybe the advice is worthwhile and maybe not. However their business model should not inspire you with confidence.
That's why Y Combinator has an interview process. Why venture capitalists do due diligence. Why coding camps start with a test to see if you're worth educating. And so on.
The incentives for fraud are also why many variations on this model involve putting a visible investment into you, but without necessarily paying you directly.
If an advisor is willing to accept the potential for perverse incentives on the part of the advisee, that's strong evidence that the advisor is confident about their advice.
If the advisor expects the advisee to accept the risk of perverse incentives on the part of the advisor, then caveat emptor.
There may be good reasons to structure the relationship that way. For example I expect to pay a lawyer, and usually I don't expect to receive financial gain out of the relationship. But conversely it becomes very important for me to establish that this lawyer seems like a good one before I pay too much.
But it all boils down to the same thing. I should be more inclined to trust offers to share in my future profits than offers have me pay now for an uncertain reward later.
In otherwords, you can lead a horse to water, but you can't make them drink.
I agree that a business, like YC, that has been around for a while, monetizes directly with a fee-for-success model, and has good reviews is very likely to be effective. But the inverse does not hold: a program using fee-for-service is not particularly good evidence that the program is ineffective.
[0] https://twitter.com/seanlinehan/status/1505923007096700939
There are challenges with a pay for performance model, but a business that successfully operates on one is sending very strong evidence that they are actually effective.
A fee for service program may or may not be good, but the burden of proof is now on the company that they are worth what you'll spend on them.
I have no knowledge of if the individual involved is credible but in broad strokes, I do love to see it. It's exactly what btilly said. If this guy is actually so good at teaching people to make money in real estate, he should want to fund people to use his advice, not the other way around. Apparently, he does.
If you could hire Michael Jordan as a personal coach, could he help you play better basketball? Certainly.
Will he tell you something you couldn't learn else where? Probably not.
But will it make more of an impression because it is Michael Jordan? Definitely.
Now, instead of a personal coach, Michael Jordan brings on Karl Malone, Stockton, Pippen, AI, and few other 90s all-star players, and you get a chance to meet with them weekly.
Not everyone wants to play basketball like Michael Jordan, but there are people who want to take their home salon business and grow it into multiple locations, and believe that joining a group of other people who have done just that, would benefit them.
https://knowyourmeme.com/memes/dinner-with-jay-z-or-500k
> Will he tell you something you couldn't learn else where? Probably not.
> Now, instead of a personal coach, Michael Jordan brings on Karl Malone, Stockton, Pippen, AI, and few other 90s all-star players, and you get a chance to meet with them weekly.
If I was able to have weekly meetings with Warren Buffet, Jamie Dimon, Tim Cook, and Elon Musk about "how to do business/grow a business I was in control of", how often do you think their ideas would be in alignment versus basically conflicting?
> Michael Jordan tried his hand at three positions during his years in the NBA career. They are Shooting Guard (SG), Small Forward (SF), and Point Guard (PG).
> Karl Malone, Nicknamed "the Mailman", he is considered one of the greatest power forwards in NBA history.
> One of the NBA's best-ever pure point guards, John Stockton is the NBA's all-time steals and assists leader.
> Scottie Pippen: Position: Small Forward
> Allen Iverson: Position: Shooting Guard and Point Guard
Could any of them combine and tell Steph Curry how to play whatever position he is today (magical mythical 3 point drainer)? If each of them had different attributes/style, what could they collectively come together to agree on/teach you on?
> point guard (PG) or 1, the shooting guard (SG) or 2, the small forward (SF) or 3, the power forward (PF) or 4, and the center (C) or 5.
Can any of them teach you how to be a great center?
> If I was able to have weekly meetings with Warren Buffet, Jamie Dimon, Tim Cook, and Elon Musk about "how to do business/grow a business I was in control of", how often do you think their ideas would be in alignment versus basically conflicting?
I wouldn't be able to estimate. Of the three I am aware of, they're all very different, so me personally, I would relish the commonalities, and the diversity of their viewpoints, allowing myself to select which ones resonate best with me.
> Could any of them combine and tell Steph Curry how to play whatever position he is today (magical mythical 3 point drainer)? If each of them had different attributes/style, what could they collectively come together to agree on/teach you on?
Steph Curry? Unsure. While not likely to help him with basketball fundamentals given he is already a superstar in his own right, but I could imagine they would be able to offer their viewpoints on rivalries/post career life/ etc.
> Can any of them teach you how to be a great center?
Great? No. But they would make better than I could be elsewhere. At the very least, it would give me some inspiration to emulate some of their habits.
What commonalities might they have that you can't learn in business school?
"profit good, losses bad?"
However, one of the things they teach you before meeting with an advisor is to have an agenda, and have an ask.
I'd start there, and see how things go.
I tried it with some of my work colleagues and it was super helpful but it was hard to keep together. It was good to be able to work through ideas and share good approaches.
However, it’s more of a mutual benefit society and don’t think it would work for pay as the incentives would be off. With the junto, each member is trying to learn and teach. For pay, the incentive shifts to some are trying to learn and some are trying to sell memberships.
But that doesn't mean that skipping college is the right move. These people are the exception to the rule.
Mastermind groups may or may not be good, but arguing that top CEOs don't use them is not a solid argument.
This strikes me as another one of the many, I didn't do this thing so you don't need to do it either articles.
I think this kind of thing used to happen "organically" on the golf course or at the country club. But at least there you get a round of golf for your money, not just the privilege of being in the same room.
It also makes the mistake of assuming it's an "if and only if" argument. One becomes a Warren Buffett or Bill Gates, if and only if, they don't do X. But there's no proof given for X preventing becoming a Warren Buffett or Bill Gates. The lack of X in some small sample isn't enough to prove this implicit part of their argument.
Their argument fails on multiple levels. Maybe Masterminds aren't great for everyone. But that's orthogonal to their argument.
The burden of evidence is on whomever asserts the positive. There is a dramatic lack of evidence that these mastermind groups lead to success. And therefore we should view with suspicion anyone who says you should pay many thousands of dollars for something with no evidence of effectiveness.
Second, how would you go about measuring success?
Since it's hard to measure the efficacy of a mastermind, especially against a nebulous definition of "success", putting on an economist hat, find a near approximation and measure that.
Turns out, a mastermind is essentially like a fitness trainer that people hire to lose weight.
So does hiring a fitness trainer lead to better weight loss outcomes?
People join mastermind groups because they hope to get specific benefits that the groups advertise that they may give. This is an implicit declaration of success.
For which of these forms of success is there evidence that the group works? When you have to pay to be a member (particularly for celebrities like Tony Robbins), is there strong evidence that it is actually worth the money? Note, there are strong psychological biases that makes us tend to justify money we've spent, whether or not it was actually worthwhile. I'm looking for external evidence.
There is considerable evidence for benefits for various kinds of mentoring and peer groups. We can see that because people who put their money where their mouths are, like venture capitalists, encourage those behaviors. But I'm not aware of any independent evidence that highly paid "masterminds" are actually worth the money that people pay for them.
And, given the burden of proof, it really should be on them to provide that evidence. They don't.
Now to fitness trainers. There are lots of kinds of fitness trainers, on lots of kinds of business models. But it isn't hard to find fitness trainers like https://www.homeexercisecoach.com/personal-trainer-guarantee... who guarantee your results or you get your money back. That's pretty strong evidence that at least some fitness trainers know how to do things that really work. And I'd personally be willing to pay a premium for someone who is willing to provide a guarantee of results over someone who isn't.
This is definitely selection biased, but I have not seen VC's offer advice that is categorically more amazing than the advice you can crowd source elsewhere.
> But I'm not aware of any independent evidence that highly paid "masterminds" are actually worth the money that people pay for them.
I agree, but my definition of highly paid, and yours may different. At $5k-$10k to attend I would not consider that to be highly paid, and have seen (as noted below) what appears to be satisfaction with the results.
> And, given the burden of proof, it really should be on them to provide that evidence. They don't.
Anecdotally, that is not accurate. The limited experience I have with masterminds (I've never paid for their services, but have worked with a few directly, and many many of their clients) is that they do encourage their paying members to actively post about their individual success via social messaging. And as part of an on-going content marketing strategy, will often have successful members take part in a "hot seat."
Edit to add: at $100k for attendance, that already selects a certain individual with a certain level of success. While you may not see evidence that a mastermind attendee has had "more success" after attending than they would have had they not, you also don't see evidence that a mastermind attendee has had "less success" after attending. It appears that masterminds are filling some unmet need, and their clients are willing to pay.
A lot of the "crowd sourced" advice is essentially digested and regurgitated advice that ultimately comes from high quality sources like Y Combinator and Steve Blank. Therefore it would be hard for venture capitalists to have better generic advice than that.
But the fact that they are willing to pay large amounts to be in a position to offer specific actionable advice to those that they invested in (eg by being on the board of directors), can be taken as a good sign that the VC believes that they are likely to wind up being able to give valuable advice that is specific to a given company's situation. And THAT you really can't crowd source from elsewhere.
> Anecdotally, that is not accurate. The limited experience I have with masterminds (I've never paid for their services, but have worked with a few directly, and many many of their clients) is that they do encourage their paying members to actively post about their individual success via social messaging. And as part of an on-going content marketing strategy, will often have successful members take part in a "hot seat."
That's not necessarily evidence of anything.
First, as you note, any such report is an anecdote. The plural of "anecdote" is not "data". Doubly not with such an active selection bias.
But, more importantly, anyone who is familiar with cognitive dissonance will be aware that the act of publicly saying how great X is will find it hard to later question whether X was actually beneficial. Therefore paying members who have posted about their success are likely to convince themselves that the program was more beneficial than it truly was. As well, the program clearly benefits from the advertising.
Therefore such anecdotes do more to remind me that some of these programs have cultlike elements, than it does to convince me that they work particularly well.
> Edit to add: at $100k for attendance, that already selects a certain individual with a certain level of success. While you may not see evidence that a mastermind attendee has had "more success" after attending than they would have had they not, you also don't see evidence that a mastermind attendee has had "less success" after attending. It appears that masterminds are filling some unmet need, and their clients are willing to pay.
If I accepted evidence of this type, then I'd have joined Scientology many years ago.
Or parrot the virtues of Venture Capitalists.
Touché.
That said, I think I'm on more solid ground to judge VCs. First, I personally know a number of people who they helped make rich. Second, I've seen enough cases where they had useful advice, connections, and so on to have personal respect. Not because of their advertising, but because of their results.
That said, there are problems. First, VCs are not all created equal. And the bad ones do their best to sound the same as the good ones. Plenty of VCs just "follow the herd". And, of course, VC returns are dominated by a few hits. So they will push founders to "swing for the fences" - a gamble which is in the VC's interest far more than the founder's.
It sounds like the villain in Inspector Gadget who sits in the leather chair and strokes a cat in an ominous manner.
There's no way this article applies to a significant portion of HN readers.
Masterminds are big fitness community (martial art school owners, gym owners, dance studio owners, etc).
Masterminds are one tactic used to monetize an individual community. This isn't at all dissimilar to the annual conventions various tech companies put together for their customers.
> This isn't at all dissimilar to the annual conventions various tech companies put together for their customers.
Those conventions are of very dubious value.
Susan Wojcicki is a graduate of the UCLA Anderson School of Management, where an EMBA is currently $88,245 for the first year and "TBD" for the second year.
Warren Buffett attended Columbia Business School, which is cheaper at only $80K/yr.
Bill Gates dropped out of Harvard, but even two years there is a cool 100 grand.
The problem isn't that expensive elite all-day meetings don't work. The problem is that the meetings you can get into aren't expensive and elite enough.
Microconf offers Masterminds, they're basically acting like a matchmaker. For your entry fee (determined by ARR) you get introduced to 5-7 other folks at a similar level. Your group then meets up on a regular cadence to discuss topics. My group has been meeting every other week for 6 months or so. I joined for our new project, so $250. We don't get speakers in, but we do get access to a great group of folks to bounce ideas off of, outsiders to offer opinions, and occasionally hold us accountable.
About half our drop has dropped off (and we've added someone new on our own), but I've gotten a fair amount out of participation.
It looks like the title uses the object as an adjective and it just doesn't sound right to me.
Why paid masterminds are mental masturbation
Edit: looks like it worked. (The comment was absolutely dead 4 minutes after it was submitted when I vouched.)
Oh I'm dumb. "On the off chance it gets vouched." My bad.
(For the lucky 10K: https://knowyourmeme.com/memes/hunter2)
(Join the Whatsapp group!!!)
What patterns did they take to write their stories?
Did they lead with boring questions?
Each in a separate paragraph?
Consider the question for a moment.
I’ll tell you the answer.
No.
A few years ago, he gave an interview with New York Magazine[0], and its eye opening. He was just a marketing guy that fell into an internal evangelist role, because he could talk to people at AOL that still had no idea what the internet was.
I really recommend reading it. I came away thinking he wasn't the cartoon everyone thinks he is.
[0] https://nymag.com/intelligencer/2019/10/shingy-reflects-on-h...
This is a new business by Sam Parr of The Hustle newsletter fame.
Check out the recent MfM podcast that talks about it. I think some CEO folks may find it beneficial.
Short summary seems to be that it’s a small community of folks in a similar but unique place in life. Specifically:
- Can be open and vulnerable when it might be tough to do so with others (e.g., employees, investors, friends/family who are not in the same line of work, etc.).
- Addresses some of the loneliness that some ceos feel.
- Highly structured meetings run by professional facilitators.
- Peers can help with finding quality service providers like lawyers, copywriters, etc. as well as using their networks to help with hiring.
The podcast mentions some specific examples.
$8500 per year, iirc.
Edit: Due to the downvotes, maybe I need to elaborate more. Specifically, I think they mastermind groups can be something productive, rather than mental self gratification, when done correctly. I think most of the mastermind folks don’t come close to doing it correctly, but (possibly) Hampton does.