I was having an interesting discussion with a colleague Cris Pearson (founder of Skitch & Comic Life) about pricing models on the web – as soon I’ll be changing the rentoid model.
I asked his some advice and his response was so simple it is till ringing in my ears.He said;
The more choices you give consumers, the less likely they are to do any anything.
He then went on to say ‘choose a price’ not multiple options, to avoid decision inertia. The question for startups is – what complexity barriers have we created which stop our people from buying from us?
5% of our customers wont pay on time
5% of our customers wont pay at all
5% of our employees wont deliver what they are paid to
5% of our employees will steal and or damage company property
5% of business partners will break contracts and even worse, not keep their word
5% the people we meet will be genuinly dishonest and painful to deal with
It’s the 5% rule. In fact quite often business discussion are too often focused on the 5% of times the business model will break down and we will get cheated in some way. The amount of strategy, board room and agency discussions I’ve had about the 5% of people who make business models and ideas imperfect are countless. The point for startups, no less any business, is to accept the fact that all models have gaps. And more often than not these gaps the doing of the 5% rule.
The problems with trying to remove the 5% is that we build gates and protections which often stuff up the 95% which is working. We create unnecessary friction. What we are better off doing is thinking about the problem like water evaporation. It’s going to happening, no matter what we try. But we must remember that the very large majority of people are good.
My advice is simple. Know that it exists, and forge ahead anyway.
I just got back from the gym, and tonight I saw what I see every time I go for a workout. A very out of shape person doing some kind of ridiculously complex exercise for a particular body part. Which any experienced trainer will know is clearly a waste of time.
The reality of weight training is that the entire body can be trained incredibly well with 5 simple exercises:
Everything else really is only for the hardcore and professional sports people. Problem is this truth doesn’t sell books, personal training sessions or gym memberships at locations which look like a NASA astronaut training facility. Success in gym programs is more about eating well and doing simple exercises which well executed with good frequency.
There is actually an important human psychology associated with such behaviour in the gym. We think there is some kind of secret formula. That success is associated with a complex algorithm which we must try and find, unlock and use. That success in the gym is rare because it is difficult to know how to do it. That when we find these special trick techniques, our success will come much quicker. That we’ll be transformed overnight.
As humans in the 21st century we have a preference for irrational complexity. We know the truth, but we’d rather pretend it isn’t so. We’ve been so shaped by the media and a lack of hands on experience that we often believe success is hidden behind secret walls. And so we look for get fit quick schemes (Get rich quick scheme anyone?) rather than a get fit slow routine, which requires a consistent diet and a lot of sweat.
It’s pretty much the same in startup land. There aren’t great deal of tricks out there either. The formula is hard work, a lot of sweat, serving customers well and using the age old business maxims which were written about by Adam Smith over 200 years ago.
Celebrate effort, not results.
Effort always leads to results, but great results are sometimes just luck.