How Relational Capital Outperforms Marketing | Jay Abraham

Business strategist and growth expert Jay Abraham explains how relational capital—trusted relationships with organizations, individuals, and platforms—can accelerate business growth more efficiently than traditional marketing. In this episode of Strategic Edge, Abraham demonstrates how aligning with partners who already have credibility and access to target markets allows companies to scale faster, reduce risk, and maximize resources without large advertising budgets.

He explores how partnerships, endorsements, and strategic collaborations transfer trust, unlock market access, and substitute for infrastructure investment. Abraham also highlights the “Rothschild effect,” showing how association with respected entities instantly builds credibility, and shares examples of businesses that leveraged relational capital to achieve rapid growth while minimizing cost.

Key discussion points:

• Understanding relational capital and why it outperforms traditional marketing
• How partnerships can replace advertising and reduce upfront investment
• The “Rothschild effect” and trust transfer as a growth multiplier
• Scaling through access to existing assets rather than building infrastructure
• Using strategic collaborations to lower costs, improve margins, and accelerate learning
• Mindset shifts for small and mid-size businesses competing against larger organizations

Transcript

Why Partnerships Outperform Ads

Speaker 0:18

Jay is one of the top people on the planet who knows how to maximize a business and its reach to his customer.

Speaker 0:26

You're watching Strategic Edge with Jay Abraham exclusively on ASBN.

Jim Fitzpatrick 0:32

Mr. Jay Abraham, thank you again for joining us on this show. I mean, it's uh we're as I said before, we're getting so many positive responses from our viewers out there that are appreciating all of the content that you're sharing with them and these incredible ideas, these strategies. Strategic Edge is the name of the show, and it's that for a reason because you're giving everybody a strategic edge. Thank you. So thank you for uh for joining us on today. Today's topic is uh how strategic partnerships outperform traditional marketing. I know that you are known as a marketing guru uh globally, so we're so happy to have you here. But uh how how are strategic partnerships outperforming traditional.

Jay Abraham 1:11

Let me give you an answer that will fascinate you.

Trading Unsold Inventory For Reach

Jay Abraham 1:16

So Carnival Cruz went from one secondhand uh boat to the dominant multi-billion dollar player in the market by initially partnering with radio stations to do an exchange of of uh unsold cabins for advertising. That's a great idea. Okay, that it's one thing. I did $250 million worth of seminars in three years, and I spent $300,000 out of pocket. The rest of it was I got uh Entrepreneur Magazine, Success Magazine, all the in-flight magazines to endorse me. I got Tony Robbins to endorse me, I got 40 different newsletters to endorse me. I got the number one uh uh conference promoter in the UK, in Japan, in China, in Vietnam, in Malaysia, and in uh Singapore to promote me. They put all their salespeople, all their uh databases, they put up the money for all the seminars, they put up all the promotion, and I got half the profit.

Jim Fitzpatrick 2:25

Wow.

Jay Abraham 2:26

Uh there is a there's a a fun story.

Relationship Capital And Newsletter Power

Jay Abraham 2:29

It's called the Rothschild effect.

Jim Fitzpatrick 2:31

Okay.

Jay Abraham 2:31

Supposedly many years ago, somebody went to Baron Rothschild, the the wealthy uh financier, and they wanted to borrow 100,000 uh I guess it would have been euros, it would have been pounds. Okay. And he said to the person, I won't give you a dime, but I'll do something infinitely more valuable. I will walk arm in arm with you across the stock exchange twice, and when we're done, everyone there will loan you all the money you want. That is the power of relationship capital. It can be joint ventures, it can be strategic alliances, it can be co-branding, it can be recommended provider, it can be endorsement, but it is the most singularly powerful and the most profitable imaginable. I had a client in the uh days right when gold was re-legalized, a long time ago, but gold was legal, then it was illegal, then it was re-legalized, and everyone started buying gold. And I had a client that was very tiny. They were doing $300,000, very, very minor, when I started with them, and they were trying to do the same thing as everybody else. They were running ads in the Wall Street Journal and Forbes and all the other places. But I realized that the real audience were the very conservative entrepreneurial type of financial newsletters that had the people who were into hard assets, meaning gold, real estate, and uh wanted to hedge their bet against inflation. He didn't really see that. I went to, I think we had at our at our peak 20 or 30 newsletters, we became the recommended provider. Wow. Instead of running ads, every time somebody would subscribe to a newsletter, they would get the the welcome kit from the newsletter, and ours would be in it. It would be all about the case for hard assets, gold, silver, rare coins, collectibles. We went from having about a thousand clients to over five hundred thousand in um in 18 months, and we did over a half a billion dollars just because of the power of other people's influence. That's that's not uh everything. Let me give you a couple more examples and then I'll go into the the real the real science, the the the psychology and the uh and the dynamics of it. I'm trying to think of a really good story that would fascinate you. Uh okay, let me give you another example.

Building Your Own Endorsement Channel

Jay Abraham 5:01

Uh years and years ago, Colonial Pen, the insurance company, started out and they were set up to be a group type of insurance company, and they were not doing well. They were not doing well. This is a reverse concept of the power of endorsement and the power of partnering. And after about three years of struggling, they got a new board of director, and he was very strategically inventive. And he said, if we can't get an organization to endorse us, let's start our own. And they started one that was called the American Association of Retired People. Okay. So they would have a client that would endorse them, and they became the captive, and all of a sudden they built it to 14 or 18 million members, but they also created billions of dollars of insurance. And the only reason they're still not there, it was considered a monopoly, and so they had to divest themselves of it. But the point is there are going to be people, there are going to be entities, there are going to be organizations, there are going to be associations, they're going to be uh influencers, they're going to be authors, there are going to be all kinds of entities that have access to a market that you are targeting.

Borrowing Assets Under Management

Jay Abraham 6:11

Right. They have the trust, they have the credibility, they have direct access. And if you can make them either your financial partner, or you can make them uh your you you can be for them your right the recommended provider, or you can find a way to co-brand for them, or you can find a way to if you have a very high repetitive product with a very low cost to fulfill, like a SAS, you make your product either a bonus with theirs with the first usage of the first quarter or the basic, you can transform your business overnight. Because I look at it this, uh, and this is a little sophisticated for all your audience, but hopefully they'll understand it. There's a concept called assets under management. If you are a wealth manager, if you are an asset manager, if you're if you're a uh you can be a broker, you have assets under management. That's all the money people give you to invest and manage and hopefully grow and protect. Well, in the the case of partnering, you have all these assets that you get to manage for nothing. So let's say well, I'll give you mine. So my so I had all these newsletters endorsing me. Each one had a staff of about fifty, they had payroll. Each one were mailing at the time, because it was in the mailing era, they were mailing hundreds of thousands of letters every month at the cost of uh a million dollars each. Each one had a an editorial staff that was putting out content that was value enough that people trusted it and if the investment advice paid off. So they were making money and they correlated that to the trust they had. I got all of that assigned to me for nothing but sharing on the back end. Same thing with the magazines, same thing with the people that were the promoters in in China. That's the power of it. Now, there are about uh 260 some ways you can use partnering. We created a a course one time. It was called the Unlimited Business Checkbook. Let me give you another story that's very interesting.

Grow Without Bank Money

Jay Abraham 8:24

I used to do these very expensive seminars all over the world when I was younger. First time I went to China when they were friendly and embraced us, this is a long time ago. Uh, I did a very expensive sold-out uh program for about a thousand people. At the end, on the last day, I would always do QA through translation. A young man comes to the microphone and he asks a question through translation. What do you do if you're too small and the bank won't lend you money to grow? And I said, tell me more. And it turns out he was a small local motorcycle manufacturer. Now, only in China, where you might have a hundred million population city, would you be a local motorcycle manufacturer? But he said, if I could get the capital, I I I would go all over Asia. I would open a factory, I would then uh put offices in all kinds of countries, I'd hire salespeople, I'd recruit dealers, and I'd sell motorcycles everywhere. I said, Okay, so what's the problem? And he thought I was being really rude and craft. And he said, they won't give me the money. I said, You don't need money. You need the equivalent of what the money would buy. Somebody else already has that. All you have to do is show them that you are the solution to their bigger problem or opportunity. I said, go on a trip all over Asia, find someone in a complimentary, not a competitive field who has a huge manufacturing plant with underutilized second shift, who has offices selling whatever this complimentary product is all over Asia, salespeople, dealers, and work a deal at it. It took me a little longer than that, but that was what I said. 18 months later, I came back and did another one in China, and the guy comes to the mic again, and now he's smiling like the Cheshire cat. And he said, I did what you said. Now, ironically, I answer questions, solve unsolvable problems, untangle gritty knots all day long. I didn't remember anything. I said, What did I tell you? He told me, I said, What did you do? He said, I went around on a trip. When I got to Kuala Lumpur in Malaysia, I found Asia's largest lawnmower manufacturer. They had a massive factory that was underutilized second ship. They had all the equipment, they they uh they were willing to hire the people. I had to come oh, by the way, they had offices in ten countries, they had a hundred salespeople, and they had thousands of dealers. Wow. I had to only bring the tool and dyes. Anyone doesn't know what that is? Those are the metal that helps mold the parts and the assemblies that make whatever the product is. I had to teach them how to do it. I had to teach the sales people how to recruit dealers. Right. They already had the dealers, they just had to expand them. I had to teach the dealers how to merchandise and sell. And he said, in our first full 15 months together, because it was very quick to set up, he said we both made profit of $20 million. That's the power of other people's relationship. Right. Does that answer the question?

Jim Fitzpatrick 11:08

It definitely answers the question. And there's the we've talked about it before, about the importance of partnering with other uh players out there that are in similar fields. I mean, it it just continues, it's like the gift that keeps on giving, right? And for little or no capital.

Jay Abraham 11:22

Uh yeah, and and Jim, most people d don't even think about it for revenue generation, but it's huge

The Myth Of Doing It Alone

Jay Abraham 11:29

for that. But you can do it for cost saving, you can do it for knowledge sharing, you can do it for I mean, I've had clients that shared a booth at a trade show, I have clients that shared salespeople, I've had clients that shared buying advantages that somebody else had, I've had clients that's at shared technology, and uh and it it's a it's infinite. Yeah. What you can do with it is infinite.

Jim Fitzpatrick 11:52

For sure, for sure. Um you talk about the myth of doing it all yourself. Um is that pretty much goes along with the partnership?

Jay Abraham 12:00

Well, let's just say this. If you started out tomorrow from scratch, and you could have you'd have gyms, I don't care what product you have, and you're gonna start knocking on doors and you're gonna start running ads and you're gonna start or let's take a different thing. You're gonna go into markets, you wanna you wanna set up an office, right? First thing you have to do is find the office. So you're gonna fly in, look at a bunch of places. Then you've got to negotiate the lease, right? You got your attorney involved. Then you gotta put a big amount down if it's a long-term lease. Oh, yeah. Now you've got a long-term lease on an empty building that you have to put equipment in. Right. That costs money. Now you've got an equipped empty office that you have to put people in, right? That's right. Okay, so now you're gonna pay recruiting, you're gonna pay hiring, you're gonna have to spend a lot of quality time doing it, and you may not get great people, and now you're gonna have to have salespeople, right? And that is in addition to your advertising or all the other things. And it takes a lot of time, it costs a lot of money. Oh, yeah. And most people who do it uh initially, they have to basically uh replace half the staff, not because the staff are bad people, they just don't choose well in the beginning and they can't tell to the comments. Yeah, they can't tell till they're way into it. And you know, so now we've got you about a couple million dollars.

Jim Fitzpatrick 13:24

Yeah.

Jay Abraham 13:24

Whereas if tomorrow morning you were able to convince not one, but three or four or five or ten companies that already had salespeople, offices, distribution, credibility, trust, and they would take your product through their distribution.

Jim Fitzpatrick 13:44

That's right.

Jay Abraham 13:44

So I have a story, and it's an older one, but it I I've got a couple of them. So many years ago, when a certain kind of exercise was very popular, somebody came to one of my programs and they had about five really cool uh clothing items that that supported this exercise modality. But they were starting to they were starting to get stale. And they were they had distribution in 5,000 of the best retail store chains in all of America. Okay. But they were struggling because they didn't have a great new product coming and their sales were diminishing and diminishing. And I looked at them and I said, Do you understand your asset is not your five or six products? It's the distribution relationship you have with the buyer who buys lots of other things. So I said, just go out, go to all the hot, uh, the hot uh exercise places in the hot markets, LA, Beverly Hills, Santa Fe, South Beach, and you'll find that somebody has created a creatively beautiful item that they're selling four of there, and that's all they're selling. Go to them, get the rights to that design. Don't buy them from them, give them 5% and put it through your distribution. They did that in their business quadrupled. So it's be it's the ability to realize that relational capital, meaning the relationship somebody has to audiences, to buyers, to sources, supply, to uh to financial sources, to anything can be more valuable. And doing it yourself, it's either arrogant or ignorant. I mean, think about it. If you were starting a business and you do it yourself, first of all, unless you are uh a a trust fund baby, you've never done that business before. Right. Even if you work for a company, you've never done it from scratch. So you're gonna put a lot of money in it, and the odds are you're not gonna do it perfectly in the beginning, and you're gonna have to probably reset a couple times. And you're gonna burn capital and and time and marketing and advertising and travel and trade shows. And it's a it's it's like a Sisyphus pushing the ball up the hill in the beginning.

Jim Fitzpatrick 16:10

Yeah.

Jay Abraham 16:10

Whereas tomorrow morning you could be distributed by the number one company. I have a story that a guy did, a guy that came to my program one time was an ex ed ex-executive at both Siemens and the old NCR. And he wanted to be an entrepreneur. And when he came to my program and learned all about this, he realized that he had access to all these companies and he could get control of technology businesses that were embryonic and put them through them, and he could get 50% ownership for nothing just by doing that. Wow. And the first one he did, they made $8 million on the first deal he did, and he made basically $4 million a year just from that connection. Oh my gosh. And he had the equity in the business they sold on top. So it's just it's a whole different, much more high leverage, but no risk way. You have no downside, only upside. That's right. You get to capitalize on all these assets under management for no investment.

Speaker 17:09

Yeah.

Jay Abraham 17:10

I mean, you get and most people don't even do one, let alone all. And you can do it for revenue generation, cost saving, cash flow, inventory management, better buying, better technology. I mean, you can get a license from somebody else and just pay on results, on savings, on productivity, on sales. I mean, I can go infinite on it, but it's just to me, if you took every one of my 97 methodologies for exponential uh business growth away and I had to keep just one, it would be that. Because it's infallible.

Jim Fitzpatrick 17:42

Yeah.

Jay Abraham 17:42

Somebody always has, and it's not just singularly somebody, some many buddies always have access to the same market as you, and they're not competitive, and there are going to be big ones that are hard to negotiate with, and they're going to be entrepreneurial ones that are easy to negotiate. And even if you had to give them an option for an equity in your business, does it really matter if on your own you build this million-dollar business and through partnerships you build a 20?

Jim Fitzpatrick 18:06

That's right.

Jay Abraham 18:07

Who cares?

Jim Fitzpatrick 18:08

That's right. That's right. You start off by saying it's either ignorance or arrogance and uh and and ego, right? Yeah, in many cases.

Jay Abraham 18:15

And usually it is. I want to do it myself. Why?

Jim Fitzpatrick 18:17

Right.

Jay Abraham 18:18

I mean, why do you want to recreate the wheel? Right, right. Why do you want to start from scratch?

Trust Transfer And Final Takeaways

Jay Abraham 18:23

And today, more than ever, it's it's brutally hard because there's everybody and their brother is competing, the consumer is apathetic, they're they are untrusting, they are, you know, their their concentration, their open-mindedness is diminished.

Jim Fitzpatrick 18:39

That's right.

Jay Abraham 18:40

But if they already trust somebody that they've been doing business with, and that company has already delivered, and they're they are the trusted provider in a related but not a competitive product, and that company either recommends, endorses, or co-brands with you, it's almost a no-brainer.

Jim Fitzpatrick 18:57

Yeah. Yeah. There's no question. Yes. Yeah, no question. This is why we love having you in. Jay Abraham with Strategic Edge. Uh, I know that as I said before, so many of our entrepreneurs uh that are watching, and small business owners, medium-sized business owners get so much out of your visits with us here today. These are phenomenal strategies.

Speaker 19:16

So thanks for watching Strategic Edge with Jay Abraham exclusively on ASBN.