Once upon a time simple forms of industry knowledge were a significant competitive advantage. The little things we knew about our industry from working in it mattered. We had to earn expertise over long periods, and the release of that expertise to prospective customers. We traded in trade secrets. But now those days are coming to a close.
In a market where anyone can know anything about an industry (from the worlds experts) with just a few key strokes, then we need change our view on what creates an advantage. Knowledge of products, prices, places, who does what and who owns what are all knowable. We are quickly approaching a market of perfect information. And when everyone can know everything, and prices quickly level out, the only thing left is trust. And a great way to build trust is by sharing trade secrets. By being generous with our knowledge well before we want to do business with anyone. We need to share what we know so others can navigate the market and reduce their risk.
When it finally comes down to doing business, customers have a much higher probability of trusting those who gave them the most trust first.
This post by Seth Godin got me thinking about how to generate trust when we are a new brand or startup on the block. Here is what I think:
Building trust is simple. Create stories by doing things which exceed expectations. One customer at a time. When we do it, they share their good fortune to have done business with us. Trust never comes from the brand owner, but the interactions with the brand recipients. They then deliver that trust to others who buy the brand off them metaphorically. Thought they’d get X and they got X+1. They tell people about their win. We win by being generous.
Startup blog says: Generosity is the fulcrum of trust.
In the super terrific web series Comedians in cars getting coffee, Jerry Seinfeld (the host) was asked what he thinks has more value in comedy:
A funny story which is suitable for talk show
A small bit more suited to a stand up session
Jerry had an unequivocal answer. He said; ‘A bit is gold’. He went on to say it was superior in every way to a longer piece that requires more explanation, and that’s why you leave long stories for the talk show. The gold bits need to be left for the stage – where it really matters. It’s in this episode we can hear Jerry tell the tale.
It’s the same when it comes to marketing copy or web copy or pitching for a startup. There’s a temptation to not want to leave anything important out. To give all the details so the person can work out the important bit about the project. In some ways it is a form of justification of what we’re doing. A basic fear of the simple. Almost as if we are short changing the audience if we give them less. The ironic thing is that we almost always want less. When it comes to branding and marketing, just like comedy – sound bites are gold. They are customer winning, they are pitch winning and they are life winning. The longer story is inferior.
The added beauty of the soundbite is that the receiver creates the longer version. So soundbites work harder with more people. They tell themselves whatever story they want to from there. They add the layers they want according to their perception. The sound bite is the seed, and the recipient is the soil.
Organise the worlds information
Change the world 140 characters at a time
A computer on every desk in every home
Yes we can
If people can remember our soundbites, that’s all they need to know.
All forms of study and industry have their own theories and jargon. They mostly exist to provide knowledge shortcuts and play books, but part of their function is to exclude. If someone knows the industry jargon, we can be sure they value what we value. We can be sure they read what we read, and mostly there is a chance they believe what we believe.
As time goes by theories and jargon fall out of favour. They become old hat and not cool to reference. That’s also part of the game of being in touch with a community. It show’s whose invested in what we do and who is a fly by nighter. It’s important though that we don’t think this makes the old descriptor less true. Especially when it comes to business. Sure, new theories and knowledge emerge in science which render the old ideas incorrect. But many business philosophies are thousands of years old and aren’t about to change any time soon. I like to say that the Ancient Egyptians invented ‘lean’ methodology…. I can’t possibly imagine the pyramids being built any other way, surely they would have ran out of capital!
Last night the super Ben Rowe delivered a talk at PauseFest (A nerd web festival in Melbourne) using Maslow’s hierarchy of needs. An older theory that doesn’t get much coverage these days. It doesn’t make it any less compelling and real though. It was one of the most insightful presentations I’ve seen in recent times and I loved that he mashed up the new world with an old theory.
The thing it pointed out to me was that it doesn’t matter so much which tool we use to do things, but how we apply it to create new meaning with our audience.
Kim Dotcom sent out a tweet a couple of days ago on how to stop digital piracy. It was the most succinct realistic view of the digital market place I’ve read. While the stop part might be an overstatement, it would certainly minimise it. I’ve taken his points and listed them below:
How to stop piracy:
- Create great stuff
- Make it easy to buy
- Works on any device
- Same day global release
- Fair price
The last four on this list really speak volumes. But the thing which is really standing out to me on this list, is that most media companies seem to have forgotten the reasons why they did things a certain way prior to the digital era. Most of their decisions were based on what was possible. The limitations on selling their goods were physical realities. Although these physical realities no longer exist, they seem to have forgotten why they did things a certain way. That way was the only way. The stability of the media system pre-web seems to have distorted their minds to the point that they forget the ‘why’. I’m going to reference the recorded music business to show how their rigidity has failed them. In fact the digital world is actually what they always wanted, and that piracy is not the problem, but the industry’s poor memory.
Make it easy to buy: In a digital age, the best advice anyone can give, is to sell it in as many places as possible. This is always the case for any mass market product. Rewind back to the pre digital music industry and you’ll remember that record companies would sell their records in any store that would stock it. Kmart, Target, Walmart, the local independent record shop. So long as it was out there they were happy. Sales representatives were judged on the number of distribution points they got their stock into. But for some reason they seem to have forgotten this fact. They now decide to hold back on potential distribution points for no apparent reason. The early iTunes revolt being the easiest example we can all remember. Totally counter to what they did before the format changed. So why the music industry don’t embrace this and make it ‘easy to buy’ is beyond me.
Works on any device: It used to be really hard for the music industry to do this before digital. They had to invest in manufacturing for vinyl records, then cassette tapes, then beta, then VHS, then CD…. but they did it and moved quickly to have their content available in all formats. So why the change of heart now? Why don’t they move as quickly as they used to? This is especially strange given that they no longer have to make physical stuff to make their content available on any device. Or even worse, when it’s already loaded up onto a content platform and they restrict usage depending on the device you a re retrieving it from. Vevo on youtube is the classic example. If a song won’t play on my mobile via Vevo, I’ll just listen to a another song. No revenue for you! It’s much easier to do now than it was then.
Same day global release: If you can, then you should. Simple. Here’s the thing the recording industry has forgotten about their pre digital staggered global release programs. Every new market (country) they entered had extra associated costs with it. They used to have to make more stock (records, CDs) to sell. Pay to get their content promoted on TV and radio. (Now we’e all immediately aware of of any big music launch once it happens) They had to change the formats to suit particular markets. They had to ship records on boats for 4+ weeks across oceans. They wanted to be sure the record would be a hit before they invested all the money into wider market expansion. They had reasons to delay global release plans. Reasons largely around stock, promotions, production and mitigating financial risk. None of these reasons exist today.
Fair price: When people get a raw deal, they find an alternative. They even cheat. People know the costs of content distribution are minuscule compared to the pre-digital era. This ought be recognised more than it has been in many digital channels. I truly believe most people will pay a fair price. And in the words ‘fair price’ I would like to add the idea of purchase without friction. Simple ways for us to give you our money so we can get on with enjoying the content. Not a million hoops to jump through. I’d go as far as saying that most people want to pay those who bring them joy with their output. In a world of zero cost digital duplication, then fair pricing would mean taking out 100% of the now removed physical production costs.
Once we get over the fact that anything which is both digital and good will be pirated by some people, then we can get on with business and just know it’s a fact of life. A cost of doing business. We shouldn’t let it paralyse us into avoiding new methods.
The laws of nature tell us much about piracy or lost revenue. If we don’t distribute the output it goes bad. Stored water which isn’t sent out via distribution channels evaporates, natures form of piracy. The longer we wait, the more we lose. We can add to this the frustration distributors have with non global release plans. So much so that distributors are becoming makers (Netflix) because they can’t get what they need. The end result is a great demarcation with all things digital. If we can’t get it, we’ll make it ourselves or source it elsewhere. The best approach would be to embrace the reality omnipresence and immediacy.
Famed musician Billy Joel needs little introduction. I find the back story of artists and musicians full of lessons for entrepreneurs – especially during the halcyon period of the music industrial complex circa 1950-1995. But today I read some things about Billy Joel which really inspired me:
Firstly, he didn’t finish high school because he took a gig playing in a piano bar at nights to support his single mother. At the end of the year he didn’t have enough credits to graduate:
The final irony is that he now has 6 honorary doctorate degrees from famous colleges.
It seems that the #BBB podcast has been providing me with some clear blog ideas recently. Below is a comment I made in one of the podcasts in regard to the Super Awesome Micro Project – and well, projects in general costing us much more than we ever estimate.
Now I’m starting to think our human delusions on the real time and cost of embarking on activity helps us grow and expand. So when it comes to time and cost on our next project in 2014, we should probably know it’s wrong, and just do it anyway.
A bad decision is better than no decision. Yep, I’d rather get it wrong than suffer from inertia. I will point out that I’m talking here about non life threading concepts, or decisions which could lead to total financial disaster. But generally, most the of the decisions we need to make personally, in business and startups fall into neither of these categories.
The power of a bad decision is the real world feedback they provide. They allows us to cross one of the possibilities off the list. Not doing anything or procrastinating on a choice is the enemy of momentum. And momentum is game winning.
I can recall working in large companies and how often they’d research the daylight out of ideas. I’m certain they did this to avoiding making a call. Managers making sure they remove accountability from themselves… they could use research to save their ass. In this decision time they could’ve tried multiple activities, and instead choose to pontificate on the possibilities. A decision on the other hand would uncover what actually works, save money on research and opportunity cost. The final irony being the majority of these slow corporate decisions still turned out to be wrong.
So in the spirit of new beginnings for a new year – I say embrace bad decisions. Ultimately they will lead us to the right ones.
Had a few ideas in my mind for blog posts. But thought I’ll just soundbite them now and go deep later:
1. Selling Potatoes: Startup ideas are often far too clever. Often they represent what is technically possible, rather than what is technically needed. I keep coming back to the idea of selling potatoes. That is, selling something demand already exists for. If we do this, we can stop wasting resources trying to creating demand. Instead we can just do a better job connecting and serving the existential market. Buy for price X and sell for X2. I’m wondering why a ‘potato’ business is rarely considered by aspiring entrepreneurs. We ought resist the temptation to 3D print ceramic fur balls for imaginary cats.
2. Market Validation: Real market validation must be with strangers, not colleagues. If it’s an online business, then validation can’t be done in person. If it’s a physical business then validation can’t be done on line. We ought match the real world. Real market validation should involve money, and avoid surveys.
3. Size & Attitude: The bigger the company the harder it is to maintain a cool attitude. When companies go public, their DNA changes. It’s just a fact we ought accept. At this point founders don’t care, they’ve already made bank. When our favourite companies get big it is inevitable we will suffer from a little bit of startup nostalgia.
4. Business Model & Problem Solution: I often get pitched startups that have a great business model with no real human problem. Or a solution to a human problem which struggles to find a business model. Our chances of success increase dramatically when we have both. We should work hard on having both of these elements when conceiving our next startup.
5. Quiet Self Esteem: It is what we are doing when no one is actually looking that matters. The actions we take that only we will ever know about. This is what we should focus on.
6. Half Baked Ideas: These are the best ideas to play with in the short term. It means we are in the kitchen experimenting. It doesn’t mean we should try and sell these cookies at the market, but we should always throw a few new recipes in the oven.
7. What VC’s Really Invest In: Justifiable failure. They don’t aim to fail, but before they invest a dime they know they will get it wrong more than 9 times out of ten. They’ll never admit this, but they are only ever investing in what will sound like a good bet to their partners. So that when it does fail (and it will more than 90% of the time) it is justifiable to those who stumped up the money. Hence, when seeking capital all we need be is justifiably worth the risk.