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THE DIP BLOG by Seth Godin




All Marketers Are Liars Blog




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« April 2009 | Main | June 2009 »

Deeper or wider

If you want to grow the size of your customer base, you need to confront the buffet dilemma.

Any decent buffet has foods that please 85% of the population. Meats, cheeses, potatoes... the typical fare.

Once your business hits a natural plateau, it’s tempting to invest in getting more people to come. And what most buffets do is double down. Now, they have bacon, plus they have beans with bacon and turkey-wrapped bacon. Now, instead of one chocolate cake, they have three.

This is essentially useless. You haven’t done anything to grow your audience. The base might be a little more pleased, but not enough to bring in any new business. And the disenfranchised (the vegans, the weight watchers, the healthy eaters, the kosher crowd) remain unmoved and uninterested. And one person like this out of a party of six is enough to keep all six  away.

So, there are two ways to go. Much deeper, or a bit wider.

Deeper would mean a bacon-focused buffet, a dozen bacon dishes, including chocolate-covered bacon. Deeper would mean a chocolate-obsessed dessert bar, ten cakes, fondue, everything.

Deeper gets you people willing to drive across town to visit you. It’s remarkable. It’s not like every other buffet but a little bit bigger. It’s insanely over the top. People will bully their friends in order to get them to come.

The other choice is wider. Instead of adding a handful of dishes that mildly please the people you already have, why not add brown rice and tofu and vegetarian chili? Now you’ve opened the doors to that last 15%.

This thinking isn’t available only to buffet owners. It works for summer camps. Resorts. Conference centers. Spiritual institutions. It works for any business that seeks to attract customers that come in groups where people have different wants and needs.

The next Google

Microsoft, home of the Zune, has just announced that they're going to launch Bing, a rebranding and reformatting of their search engine. So far, they've earmarked $100 million just for the marketing.

Bing, of course, stands for But It's Not Google. The problem, as far as I can tell, is that it is trying to be the next Google. And the challenge for Microsoft is that there already is a next Google. It's called Google.

Google is not seen as broken by many people, and a hundred million dollars trying to persuade us that it is, is money poorly spent. In times of change, the rule is this:

Don't try to be the 'next'. Instead, try to be the other, the changer, the new.

If Microsoft adds a few features and they prove popular, how long precisely will it take Google to mirror or even leapfrog those features?

With $100 million, you could build (or even buy) something remarkable. Something that spread online without benefit of a lot of yelling and shouting. Something that changes the game in a fundamental way. The internet works best when you build a network, not when you buy a brand. In fact, I can't think of one successful online brand that was built with cash.

[For an answer to the popular question: "The next Seth Godin" and a few more pithy Q&A, click here]

[For a preview of the real next Google, check out this presentation of Google Wave. As a presentation geek, I need to point out that the intro (the first 2 minutes) is a fantastic example of how someone (you?) can stand up in front of 4,000 people with no slides and make a significant introduction with no hesitation and no apologies.]

The troll that hates yes

Sonia has a great post about what happens when you try to close the sale.

The difference between marketing and sales

Marketing tells a story that spreads.
Sales overcomes the natural resistance to say yes.

If you don't pay the salesforce (because you go direct, or you go free), then who is going to do that for you? The only answer that occurs to me is, "your users/fans/customers."

This means that a critical element of any strategy that ditches the salesforce is to figure out how you will empower and encourage your customers to take their place. Easier said than done.

Prizes, kindles, subscriptions, tweets

You can get alerts whenever this blog is updated by following @thisissethsblog on Twitter.

Twitter is immersive. It washes over you. But what happens when a great link or clever post goes by?  Squidoo just launched a promotion around the new TwttrList tool. The power of this tool is that it turns the momentary stream of tweets into a permanent sign post. A curated best of instead of a random time-based river. You can chronicle a conference, or highlight great posts about your brand or event.

This lets other people find your collection of the best tweets on Google, or see a series of messages without the noise in between. Here are a few good ones.

Give it a try. Maybe you'll win something.

Challenging convention

The smart guys at Contrast came by the office to talk about their thesis of abandoning conventions. It's the intent of changing what we expect when we use something. Obvious things like the design of a cell phone or subtle things like the design of a door knob. There are terrific benefits to successfully coming up with a solution that invents and leverages a new convention.

I'd argue that there are four things to keep in mind when deciding to challenge a convention. You should incur the costs and hassles of inventing a new way to do things when you can are prepared to deal with all four. The costs can be huge, because a new user convention can slow people down or turn them away. A new financing convention makes it harder to raise money. A new hiring convention causes some people to avoid you...

  1. Notice it. When you make a new way to do something, people are going to notice it. We'll notice it when the volume knob on the radio doesn't work the way all the other ones do, or when the navigation on your website isn't where it 'should' be. Is your creativity about the convention? For example, if you make a stereo that sounds better, it's not clear you should also change the way the volume control works. Noticing the shift in interface doesn't help sell your concept of better sound.
  2. Talk about it. Often, a new convention leads to conversations. People need to teach other about the ideas in your product or service, or complain about it or debate it. Again, no point changing the convention unless what you want is people to talk about your new convention.
  3. Leverage it. Does the success of the new convention in the marketplace actually help you? Sure, you could invent a new kind of handshake or a new pricing structure. But if it catches on, do you win? Is it at the core of your business model? Which leads to the last one...
  4. Protect it. Once the convention catches on, does the new way of doing things reinforce your position in the marketplace and lead to long-term benefits?

Simple example: as a bestselling author, you could upend the convention that books cost money by publishing the first popular book-length ebook. For free. The new convention will be noticed. People will talk about it. They'll share the ebook because, after all, it's free. You can leverage this new convention by gaining attention, new readers, speaking gigs, etc. But can you protect it? Of course not. Now, everyone can make a free ebook, because your act of breaking convention showed them how. But that's okay, because as an innovator, the process was worth it.

Compare this to Kai's Power Tools, which was a series of super powerful image editing software programs that came out a decade ago. The interface had all sorts of new conventions. The problem was the new conventions had nothing to do with editing images, didn't make the software work better, increased the learning curve and ultimately led to failure in the marketplace.

Is marketing an art or a science?

It's both, and that's the problem.

Some marketers are scientists. They test and measure. They do the math. They understand the impact of that spend in that market at that time with that message. They can understand the analytics and find the truth.

This sort of marketing works when it works, but it usually doesn't. That's because we're dealing with humans, the wild card in the system.

The other marketers are artists. They inspire and challenge and connect. These marketers are starting from scratch, creating movements, telling jokes and surprising people. Scientists aren't good at that.

The problem is caused by two things:

1. Outsiders are confused.
Which are we? When we're artists sometimes and scientists other times, we often seem like charlatans, because we're associating scientific results with artistic endeavors.

2. We're confused
. If you don't know if you're doing a science project or an art project, you'll probably emphasize the wrong elements. If you go to school to study marketing and the blowhard professor acts like she's teaching you science, you'll waste a lot of time trying to apply taxonomy and hypotheses to something that is essentially a gut decision. And vice versa.

We need hats. The hat of the scientist and the hat of the artist. You can only wear one hat at a time, which is why I didn't suggest that we need gloves.

Figure out what sort of marketing you're going to do today and go do that.

Saying 'no'

If you've got talent, people want more of you. They ask you for this or that or the other thing. They ask nicely. They will benefit from the insight you can give them.

The choice: You can dissipate your gift by making the people with the loudest requests temporarily happy, or you can change the world by saying 'no' often.

You can say no with respect, you can say no promptly and you can say no with a lead to someone who might say yes. But just saying yes because you can't bear the short-term pain of saying no is not going to help you do the work.

Saying no to loud people gives you the resources to say yes to important opportunities.

When the writer becomes the publisher

Walt Whitman and Ben Franklin were both printers who became writers... one would imagine they did this because it was cheaper to write your own stuff than hiring someone, and having words to print and sell is good business if you’re a printer.

The joke as we know it was unknown before the Civil War (so says Bob Mankoff [Jason disagrees and points us to this article]). Sure, there were funny stories, but not jokes with punchlines. We don't know who wrote the first joke, but by 1920, there were books of thousands of jokes. What shifted? You could get paid for writing jokes. Magazines bought jokes, so jokes got written.

I did a ridiculous series of videotapes twenty years ago, videos that certainly wouldn't have been made if there hadn't been a market for them.

Today, of course, being a printer is no fun. Anyone can be a digital printer, publishing their words to the web. And so we have a mysterious flip, in which writers are becoming ‘printers’, not the other way around.

In a world in which just about everyone is a writer and just about every writer wouldn’t mind benefiting from their work, there’s a huge need for people who can help us publish profitably. Or, failing that, figuring out a way to get your own words published profitably. Some people will happily remain amateurs, but history shows us that the real explosion in content happens after people figure out how to make money.

Mark this down as another job for the new economy: someone who can collate, amplify and leverage the work of writers and turn it into cash. I don't believe that there's one solution, not this time. But I'm confident that around the edges and deep into niches, there's money being made.

On becoming a household name

The guidance office at the high school has a big poster for Wellesley College hanging by the door. It's just a picture of a building, no features, no benefits, no text at all.

Kids apply to schools (a quarter of a million dollar investment) for crazy reasons. A big one: "Well, I've heard of it."

Gonzaga University features basketball players on their home page. No doubt a few people attend to play basketball, but my guess is that the school believes that the fame of their school will somehow get someone who doesn't play to attend.

It's completely irrational and it's also what your customers do every day.

Being a familiar name takes you miles closer to closing a sale. People like to buy from companies they've heard of.

It turns out that this is an overlooked benefit of banner ads. Banner ads are fairly worthless in terms of generating clickthroughs... you have to trick too much and manipulate too much to get clicks worth much of anything. But, if you build ads with no intent of clicks, no hope for clicks... then you can focus on ads that drill your name or picture or phrase into my head. 100 impressions and you're almost famous.

A household name. Not for everyone, but for people who matter.

Nostalgia is a basic human emotion

Kodak created a billion dollar industry by giving people a tool to feed their nostalgia. We don't take pictures because we want to know what we're seeing now... we already know that. We take pictures because it makes us feel good to know that years later, when nostalgia for that moment comes around, we'll be ready.

Marketers spend a lot of time on other emotions... joy, love, jealousy, insecurity, greed... but nostalgia gets overlooked. I think that's an opportunity.

Aside: when you're doing something important, like launching a big project, or a new company, or running some sort of campaign designed to change things, keep a scrapbook. Not a note book, a tool for writing down facts. A scrapbook. Include photos and quotes and clippings and events. Two reasons. First, you'll be glad later (I still have scrapbooks from some of my previous projects) and more important, because it will remind you that you're doing something important and that time is precious.

Your world vs. the world

Jerry reminds me of a story from the launch of the Permission Marketing book.

I recall having a conversation with the marketing folks at Simon & Schuster.  I complained that I had just returned from a road trip and didn’t see the book in a single airport book store.  I insisted that business travelers were the ideal audience.  They came back to me with a simple request:  tell me where you or Seth were going to be flying and they would make sure that the book was in the bookstore in that airport...

So often, you are not the customer for your product. Yet you market it as if you were. Showing up in your world (or the board's world your staff's world) is not nearly as important as showing up in the world of the person you're actually trying to reach.

Creating a Potemkin Village (online or off) in which people who know you see your product pales in comparison with being present in the world where your customers live.

Want to contribute a story to the updated Purple Cow?

In the fall, a new trim size edition of Purple Cow is coming out. The book will include a significant appendix, filled with stories from people like you. If you know a business or service or organization that deserves to be shouted about, I'd love to include it. Your help is really appreciated, and the people you write about will thank you.

Here's a sample from Bonnie:

www.soallmayeat.org is truly remarkable. Imagine going into a restaurant and seeing no prices on the menu. You might think that the food was really expensive, but that's not the case at the So All May Eat (SAME) Cafe in Denver, CO. The fact is that there are no prices on the menu because everyone pays what they can, many people pay more. There's no cash register, just an envelope that patrons get with their meal. In that envelope goes a few dollars, a fair price for the meal, a hearty donation or nothing at all. The envelope then goes into a simple wooden box. Everyone gets a great home made meal at a price they can afford. If someone can't pay anything at all they are asked to help out in the kitchen, serve some soup or clean up for an hour or so...and they are willing and happy to help out. It's not a free ride or a handout, it's honest work for an terrific hot meal. Founders Brad & Libby Birky not only make a difference by providing a free meal but they have also created thriving community of people who care and are cared for.


And here's one from Jay:

Two things are guaranteed at the remarkable DinTaiFung restaurant in Taipei: the extremely long line outside and the size/weight of their world famous steamed juicy pork dumplings. Each dumpling uses only the freshest ingredients, weighs a precise 0.74 oz, and has exactly 18 folds.  In 1993, NY Times named DinTaiFung as one of the top 10 restaurants in the world.  Even with many outlets worldwide today, thousands of tourists still visit Taipei every year just to eat at its original location. One of the stories told about the restaurant owner is that he takes the tour buses to hear what people say about his restaurant.  One day, he found that bus stopped before reaching its destination and tourists were encouraged to use the restrooms so that they can avoid using the ones at his restaurant.  He went back and installed the most advanced toilets available in the restrooms and made sure that they were cleaned every 15 minutes.  Since then, the restrooms at DinTaiFung also became one of the most talked about topics for tourists.


Deadline is May 24th at midnight New York time.

Before you click this link to enter your story, please read the simple rules:

  1. It can't be about you or about an organization you are part of.
  2. It can only be 200 words maximum.
  3. It should be about something new and now and relevant. No stories about Abe Lincoln please.
  4. Please don't get all PR and pitchy on me. If you don't like to write, have a friend write it.
  5. Proofread!
  6. You get credit by name (and your url or @id if you want one)

You guys are so brilliant, my standards are high. No promises, except that I'll read each one. Thanks!

Eternal September

Our story so far...

Back in the 1960s, TV shows took great pains to catch you up on what had happened so far. Batman spent a minute or so recapping last week's story. So did The Fugitive. The thought was that while most people had seen the show just seven days ago, what about the people who missed it?

Fifteen years ago, someone coined the term, Eternal September. Because each September sees an entire crop of freshman showing up at college, you need to assume that you have to start teaching protocols all over again. Once a year, it's a whole new audience, and they need to learn the ropes.

The Internet has been stuck in September ever since. Every day, new people show up at your blog, on Facebook, everywhere. Every day it's a whole new crop that need to figure out what RSS is and how to subscribe. Every day there are people who spam their address book because it feels like a fine thing to do, then learn their lesson and never do it again. There are new people who need to learn the proper etiquette for interacting on your site. Can you imagine if the real world worked this way? If people walking into your store had never been to a store before? If drivers on the highway had never driven on a highway before?

It's going to be a long time before the medium stabilizes enough for the newbies to catch up, so the only alternative is to accept that it's always September.

A clean sheet of paper

The range and availability of freelance talent is greater than it has ever been before. World class designers, artists, illustrators, photographers, strategists, potters, copywriters, programmers--they're all one click away.

There are two ways to work with talent.

The first is to give someone as clean a sheet of paper as possible. "We have these assets, we have this opportunity, here is our budget, go!" That's a great way to build a house if you have a ton of money and brilliant architects.

The second is to give someone as strategic and defined a mission as possible. "Here are three logos from companies in other industries, together with the statement we want to make, the size it needs to be, the formats we need to use it and our budget, go!" If you do this, you're almost certain to get something you can use, and almost certain not to be blown away with surprise. Which is the entire point.

Confusing these two approaches is the #1 cause of client dissatisfaction when working with talent.

The strategic mission takes more preparation, more discipline and more difficult meetings internally. It involves thinking hard without knowing it when you see it. It's also the act of a mature individual, earning his salary.

The clean sheet of paper is amazing when it works, but involves so much waste, anxiety and pain that I have a hard time recommending it to most people. If you're going to do this, you have an obligation to use what you get, because your choice was hiring this person, not in judging the work you got when you didn't have the insight to give them clear direction in the first place.

Bravado

Decades ago, a guy came to me with a nutty business idea. He was filled with energy and enthusiasm. "It'll cut through the market like a thresher through a wheat field," (actual quote). He practically shouted, "like a hot knife through butter."

This sort of energy is contagious, but without a plan, it may not be productive.

I still remember a guy who used to work with me who came to me with a grandiose plan for a book he wrote based on a TV show. He had two data points: zero, where he started, and one appearance on one talk show as a result of one pitch. Drawing a straight line between the two points, it quickly reached infinity. Of course, very few things (even online) reach infinity any time soon.

The problem with bravado is that it forces you to suspend reality when making your plan. Optimism is self-fulfilling, bravado can be toxic.

"It doesn't hurt to ask"

Actually, it does hurt. It does hurt to ask the wrong way, to ask without preparation, to ask without permission. It hurts because you never get another chance to ask right.

If you run into Elton John at the diner and say, "Hey Elton, will you sing at my daughter's wedding?" it hurts any chance you have to get on Elton John's radar. You've just trained him to say no, you've taught him you're both selfish and unrealistic.

If a prospect walks into your dealership and you walk up and say, "Please pay me $200,000 right now for this Porsche," you might close the sale. But I doubt it. More likely than not you've just pushed this prospect away, turned the sliver of permission you had into a wall of self-protection.

Every once in a while, of course, asking out of the blue pays off. So what? That is dwarfed by the extraordinary odds of failing. Instead, invest some time and earn the right to ask. Do your homework. Build connections. Make a reasonable request, something easy and mutually beneficial. Yes leads to yes which just maybe leads to the engagement you were actually seeking.

Luxury vs. premium

Luxury goods are needlessly expensive. By needlessly, I mean that the price is not related to performance. The price is related to scarcity, brand and storytelling. Luxury goods are organized waste. They say, "I can afford to spend money without regard for intrinsic value."

That doesn't mean they are senseless expenditures. Sending a signal is valuable if that signal is important to you.

Premium goods, on the other hand, are expensive variants of commodity goods. Pay more, get more. Figure skates made from kangaroo hide, for example, are premium. The spectators don't know what they're made out of, but some skaters believe they get better performance. They're happy to pay more because they believe they get more.

A $20,000 gown is not a premium product. It's not better made, it won't hold up longer, it's not waterproof or foldable. It's just artificially scarce. A custom-made suit, on the other hand, might be worth the money, especially if you're Wilt Chamberlain.

Plenty of brands are in trouble right now because they're not sure which one they represent.

Trouble accessing gmail remotely

Here's an unrelated tech tip:

If you access Gmail using a program on your computer (like Mail.app or Outlook) sometimes you'll get an alert telling you that Gmail has rejected your password.

It turns out that there's a hidden link Google provides that lets you do a Captcha test to prove that you're a human. It doesn't change your password, it just resets the flag that Google was using to block remote access.

Anyway, it works for me, every time, and I figured you'd want to know about it. Please don't ask me other technical questions because I'm an untrained savant, unlikely to have any other information other than this.

Thanks. And good luck.

The best billboard in New York

2IMG_0244  The rules of a great billboard (great = cost effective) are as follows:
1. "Next exit"
2. EZ off and on
3. Free parking
4. Major thoroughfare
5. Take action now
6. Credible promise

Billboards are useful for building brand trust, but only if you run them for a very long time and over a wide area. In other words, it's an act of faith.

This billboard, on the other hand, probably started paying for itself before they finished painting it.

Betting on the wind

No project, no brand, no company exists in a vacuum. You make bets about external forces when you build something.

If you want to cross the Atlantic by boat, you can build a sailboat. Your bet is that the wind will be right when it's time to sail. Or you can build a motorboat and deal with the noise and expense, but insulate yourself from the wind.

If you launch a $100 million magazine, you're making a bet that the advertising environment will support you a few years down the road. If you spend four years getting an advanced degree in computer engineering, you're making a bet that there will be plenty of high-paying jobs still waiting for you when you graduate.

If I had a hundred million dollars to invest in a business magazine, there's no way I'd invest a hundred million dollars in a business magazine. Why put all your chips on one medium, one source of revenue, one model?

The external factor is not disconnected from your bet. It is your bet, your decision. Damning the gods of fate because you made the wrong bet makes no sense. I rarely see business plans that have a section entitled, "External forces we're depending on." Acknowledging that things out of your control will change is the first step in hedging your bets in advance, just in case.

Marketing intolerance

Until 1967 (when I was seven) it was against the law for a white man to marry a black woman in Virginia.

Marketing is a complicated beast. It's not just advertising. It's stories that spread, it's editorial content, it even includes interactions and facial expressions. Marketing amplifies human nature. We had no trouble living with racist laws because that racism was confirmed by the media we consumed.

When someone stands up in front of a crowd at a political rally or in a church, they're marketing. And when a Hollywood filmmaker turns someone of a particular race or sexual preference into an object of ridicule or contempt, that's marketing too. Politicians market every time they speak up at a press conference.

When Michal Grzes, an elected representative in Poland stands up and criticizes a zoo for housing a gay elephant, he's doing marketing as well. If you want a cheap laugh, all you need to do is make fun of the minority, treat them as lesser, or separate.

I'm surprised and delighted that online media is being used to market tolerance more than intolerance. But it's an uphill battle, and until we get to the point where homophobia and racism (even for laughs) is unheard of, we have a long way to go. Marketing is too powerful, imho, to be wasted diminishing someone's humanity. And no one ever got ahead (no one, ever) by limiting the equal rights of someone else.

What kind of open are you looking for?

If you hear someone talking about "open source," it's quite possible that this isn't what they mean. One major soft drink company, for example, was talking about turning their brand open source. Pretty unlikely. Do you think that they meant allowing anyone to use their brand in any way they chose on a share and share alike basis? As change swirls around, the terms matter.

Mike sent me a list of different types of open. I amended as below:

  • open source : a program whose source code is made available for use or modification as users or other developers see fit. If a car goes open source, then you're permitting others to copy your engine and body design, improve it, put their improvements back into the pool and share some more.
  • open infrastructure: Amazon's cloud is an example of this. You build the pipes and allow people to rent them to build their own systems on.
  • open architecture: A system (hardware or software) where people can learn how it works and then build things to plug in to extend it. The IBM PC had an open architecture, which meant that people could build sound cards or other devices to plug in (without asking IBM's permission).
  • open standards: relying on rules that are widely used, consensus based, published and maintained by recognized industry standards organizations. It means that you're not in charge, the standards guys are. Bluetooth is an example of attempting this, so is USB.
  • open access: APIs that make it easy for people to get at the data on your platform (twitter is a great example, so is Google maps.)
  • open video: the combination of a p2p platform, open standards, free to share and open canvas.
  • open canvas: when your platform permits users to express themselves. Wordpress and Squidoo come to mind.
  • open book: this is a form of management in which all your employees see all the books, thus bridging the gulf between management and labor.
  • open sesame: the best way to get into a cave.
  • open mike: when anyone who shows up can be part of the show.  I guess the difference between this and open canvas is that this is more linear. "Who's next?"
  • open forum: users comment, rate and rank. Digg and Zagat's come to mind. We could probably divide into the approaches that are more social (Chowhound) and those that are less (Yelp).
  • open door: simple method to allow individuals speak truth to power. Getsatisfaction is one example.
  • open engagement: when individuals in power are available to all comers for questions and answers and dialogue.
  • open bar: the alternative to a cash bar. You pay one fee and then get all you want. In a world where selling is more expensive than delivering (things like bandwidth) this makes more and more sense.
  • open borders: your data is portable and you can walk out with it at any time. Amazon has closed borders (your history stays there) but OPML is open borders for RSS.
  • open elections: when anyone can vote, not just the elites, or registered users, or those that pay.
  • open house: allowing prospective buyers to walk around inside your product before deciding to buy.
  • open sauce: a company talks about its business methods publicly to build a brand. For example, Fred Wilson talking about how he invests or DUI blogger talking about how to beat a breathalyzer. (HT to Alex).
  • open to all: the opposite of a country club. A trade show or meeting or event that doesn't work to screen out attendees.
  • open identity: A protocol for carrying your identity from site to site, at your discretion.
  • open interaction: when previously private conversations (like customer support) are handled in public (via Twitter, for example).
  • open and shut: the kind of answer you rarely get.

Ignore sunk costs

Stationary The most important decision-making rule you learn in business school is still largely misunderstood.

When making a choice between two options, only consider what's going to happen in the future, not which investments you've made in the past. The past investments are over, lost, gone forever. They are irrelevant to the future.

You have two pieces of land. One you bought for $1,000,000, one for $10,000. On which one should you develop a gas station?

I know. The one that's right next to the huge subdivision being put up, not the one next to the condemned shopping center. Does it matter how much the land cost to buy? No. Not at all.

You have tickets to the Springsteen concert. They were really hard to get. You spent four hours surfing StubHub until you found the perfect seats for $55 each.

On your way into the event, a guy offers you $500 cash for each ticket. Should you sell?

It turns out the amount of time you spent getting the tickets is irrelevant. If you wouldn't be willing to PAY $500 for these tickets (and you weren't, or you would have) then you should be willing to sell them for $500. Spend $250 on dinner and go buy better tickets for tomorrow night's show.

Or say you make a mistake and go to the concert instead of selling (those seats are $500 seats now). But Bruce is sick and Manfred Mann is substituting for him. You don't like him so much. But you paid $500 for the seats! Should you stay?

[Just because the guy spent a lot on the sign for his store doesn't mean he shouldn't spend more to spell the biggest word properly. The amount he already spent is irrelevant. What matters is what the benefit of spelling 'stationery' properly will be.]

Ignore sunk costs.

The TED Tribes talk is now live

You can visit the site to email it to friends or post a comment.

You can find the book and other information here.

And you can watch it below:


Do you have customers or members?

If you changed your model to have members instead, what would that look like? If people had to subscribe, or be admitted, or apply... and if you had to please the membership, not convert new strangers.

The web likes businesses that have members.

What to do with people who aren't going to go away quietly

Stalling provides a hurdle that allows you to filter out requests.

If you put people on hold for six minutes, the trivial calls hang up. If you tell people that they can have something they've requested but will have to wait a long time, the unmotivated will go away. (I'm not proposing that this is a good way to handle customers, I'm merely saying that it does in fact triage the incoming requests.)

The question is, what do you do with the people who, from the start, are obviously not going to go away?

If a woman is in labor, you can try every demotivating tactic you can think of, she's still gonna have a baby. Might as well accept this and get her a room in the maternity ward, right now. Anything else is just annoying and a waste of time.

Don't try to talk a vegan into eating the chicken-fried steak just because the chef will yell at you if you ask for one more plate of steamed vegetables. It's not going to work, might as well skip the discussion and go get the veggies, with a smile.

It takes judgment to figure out who's not going to go away, but once you know, embrace the situation, don't struggle with it. It doesn't matter if it's not fair or not convenient. It is, it's here, it's now, and you win and they win when you accept it.

Two halves of the value fraction

In a down economy, marketers fret a lot about price. We think that since times are tough, people care about price and nothing but price.

Of course, people actually care more about value. They care about value more than they used to because they can’t afford to overpay, they don’t want to make a mistake with their money.

Value = benefit/price. That means that one way to make value go up is to lower price, right?

The thing is, there’s another way to make the value go up. Increase what you give. Increase quality and quantity and the unmeasurable pieces that bring confidence and joy to an interaction.

When all of your competitors are busy increasing value by cutting prices, you can actually increase market share by increasing value and raising benefits.

Too much free

If you want to know who’s a newbie on a film set, just watch what happens at lunch. Major films have huge buffets laid out for cast and crew, and the newcomers can’t resist. It’s FREE! Over time, of course, the old-timers come to the conclusion that it's just lunch, and the crew gets a bit more jaded and learns some self-restraint as well.

The first time a previously expensive good or service is made free, we’re drawn to it precisely because of the freeness. The fifth time or tenth time, not so much.

Free online has two distinct elements, then. Breakthrough free, like the first free ebook or the first free email service, and sample-this free, which decreases the cost of trial and lowers boundaries of the spread of an idea.

But they shouldn’t be confused. As the market for free gets more crowded, we’ll see more and more people promoting their free products, stuff that people used to have pay for. A complete shift from ‘you will pay’ to 'it is free' to  ‘I will pay for ads to alert you it’s free' to ultimately, 'I will pay you to try it'.

Free by itself is no longer enough to guarantee much of anything. (Here's Kate's take, which I just discovered.)

Strangers and friends

Most marketers are organized around more. More share. More customers.

And if you want to do that fast, it means marketing to strangers. Strangers that don't care about you, don't trust you and aren't listening to you.

You market to a friend differently. A friend isn't necessarily someone you went to summer camp with, it's someone who gives you the benefit of the doubt. Someone who will listen, at least once, to your pitch.

I was talking to an author about his next project. The question I asked him was, "are you writing this for strangers or friends?" The implications are huge. It impacts how you design the cover, how you price it, what it's about, where you sell it, when you publish it, how much you pay for store displays, etc...

You need to treat friends differently at every step along the way. First, don't confuse the moments you're supporting them or connecting with them with the moments when you are doing business. Second, understand that the most powerful win is when your friends tell their friends about you. This is worth 1000 times more than you talking about yourself.

The cool thing is that now, everyone has ten times as many friends as they used to. The social graph online is a fascinating, exponential factor in growing the list of people who might be willing to hear what you have to say (once).

Which means that your site and offer and products can be organized around friend selling instead of stranger setting.

Guaranteed: if you sell a friend the way you sell a stranger, you've made neither a sale or a friend.

Ten years of Permission Marketing

When I wrote Permission Marketing, people thought I was some sort of crackpot (some people still do, fortunately). One author wrote that I was "delusional" and skeptical marketers were sort of amazed that the idea caught on. The Direct Marketing Association viewed the very concept as a threat to their future.

The best ideas are like that. The book published on May 6, 1999, which feels like six lifetimes ago.

Ten years later, ethical email marketing is a billion dollar industry. Many companies have been built on the foundation of this simple idea, and some of them are quite profitable. Daily Candy sold to Comcast for more than $120 million and it is nothing but a permission marketing engine. More important, I think, the attitude of anticipated, personal and relevant messaging is changing the way organizations come to market.

search on the term shows a bazillion matches, though I wish spammers would quit using the term to pretend that they are actually doing something worthwhile. It delights me to see my neologism enter the language, used by people who didn't even know that it came from a book that's only ten years old.

The biggest impact of Permission Marketing isn't that there is less spam. In fact, there's more, because it's so cheap. No, the biggest measurable impact is the growth of truly opt in marketing, from close to zero to a number big enough that we've all seen it and are part of it. Not just email lists, of course, but RSS feeds and yes, Google AdWords.

Some lessons about accidental success:

  1. Fred Hills, the editor who worked with me at Simon & Schuster, had worked on books by Nabokov and others. The fact that he didn't do a lot of business books gave me the freedom to write the book I wanted to write. Thankfully, he largely left me alone to make my own mistakes.
  2. Because I got a small advance and wasn't a key book on their list, I had a lot of freedom. They let me art direct the cover, which ended up being a big win for the book and for my brand.
  3. Brian Smale, who took the cover photo, was one of the new breed of magazine photographers who worked hard not to take boring photos. In those days, that was a revolutionary idea.
  4. This was the first book where I started my tradition of using the ideas in the book to market the book. In this case, a simple permission offer: if you visit permission.com, I'll send you the first four chapters of the book for free. And you'll never get another note from me as a result. The only reason my publisher approved this idea is that they believed it would never work. Ten years later, I have no idea how many millions of people have written to that address, but it's a lot. (Yes, it still works).
  5. I didn't have a grand organized promotional plan. I didn't orchestrate a movement. I just wrote a book and talked about it and tried to take my own advice.

There's a lot of updating that the book could use, because when I wrote it there was no Google, Facebook, Twitter, universal email access, widespread high bandwidth connectivity, browsers that rarely crashed or iPhones. But I'm going to let it stand as is, because keeping it up to date is a never ending task. I hope the general concepts stand the test of time. The biggest thing I'd change is the emphasis on games and prizes over promises and connection and information. I think the latter end up scaling better and are more universal and reliable.

Short version: Don't be selfish. You're not in charge. Make promises and keep them. It's like dating. It's an asset, it's expensive and it's worth it.

The Houdini technique

Make easy things look difficult.

Make difficult things look easy.

Flying a plane from one city to another, on time, is incredibly difficult. There’s a million things that can go wrong. And yet, for years, the airlines worked hard to make it appear easy. They wanted to appear competent and to make us feel safe.

The other day, as I waited for a flight, I heard the dreaded announcement. The flight was delayed, there was a mechanical problem. Angst filled the gate area.

Five minutes later, they announced that the problem was fixed, and we could board... we ended up leaving ten minutes early. Joy throughout the land!

Where did the joy come from? It came from the rapid shift in expectations. For a moment, the airline made it look hard. then they did the trick and we were saved.

Houdini never said, “check out these trick handcuffs and watch how easy it is for me to take them off."

Thinking about business models

A business model is the architecture of a business or project. It has four elements:

  1. What compelling reason exists for people to give you money? (or votes or donations)
  2. How do you acquire what you're selling for less than it costs to sell it?
  3. What structural insulation do you have from relentless commoditization and a price war?
  4. How will strangers find out about the business and decide to become customers?

The internet 1.0 was a fascinating place because business models were in flux. Suddenly, it was possible to have costless transactions, which meant that doing something at a huge scale was very cheap. That means that #2 was really cheap, so #1 didn't have to be very big at all.

Some people got way out of hand and decided that costs were so low, they didn't have to worry about revenue at all. There are still some internet hotshot companies that are operating under this scenario, which means that it's fair to say that they don't actually have a business model.

The idea of connecting people, of building tribes, of the natural monopoly provided by online communities means that the internet is the best friend of people focusing on the third element, insulation from competition. Once you build a network, it's extremely difficult for someone else to disrupt it.

As the internet has spread into all aspects of our culture, it is affecting business models offline as well. Your t-shirt shop or consulting firm or political campaign has a different business model than it did ten years ago, largely because viral marketing and the growth of cash-free marketing means that you can spread an idea farther and faster than ever before. It also makes it far cheaper for a competitor to enter the market (#3) putting existing players under significant pressure from newcomers.

This business model revolution is just getting started. It's' not too late to invent a better one.

Can you change everything?

You might not be as permanently stuck in a rut as you think. The rut you're in isn't permanent, nor is it perfect. There are certainly less perfect ruts, but there may be better ones as well. The certain thing is that you can change everything...

  1. Buy a competitor
  2. Sell to a competitor
  3. Publish your best work for free online
  4. Close your worst-performing locations
  5. Open a new branch in a high-traffic location
  6. Hire the best salesperson away from the competition
  7. Join the competition
  8. Host a conference for your competitors
  9. Connect your best customers and organize a tribe
  10. Fire the 80% of your customers that account for 20% of your sales
  11. Start a blog
  12. Start a digital bootstrap business on the weekends
  13. While looking for a job, spend 40 hours a week volunteering and freelancing for good causes
  14. Go on tour and visit your best customers in person
  15. Answer the customer service line for a day
  16. Learn to be a killer presenter
  17. Let the most junior person in the organization run things for a day
  18. Delete your website and start over with the simplest possible site
  19. Call former employees and ask for advice
  20. Move to Thailand
  21. Listen to audio books in your car instead of the radio
  22. Sell your cash cow division to the competition and invest everything in the new thing
  23. Find more products for your existing customers to buy
  24. Become a gadfly and tell the truth about your industry
  25. Quit your job
  26. Move your operations to another city
  27. Become a vegan
  28. Have all meetings in a room with no chairs, and everyone wears a bathrobe over their clothes
  29. Open your offices only four hours a day
  30. Open your offices 24 hours a day for a week
  31. Find every project that is near the danger zone (in terms of p&l or deadlines) and cancel it, no appeals
  32. Go for a walk during lunch
  33. Get an RSS reader and read a lot more blogs
  34. Go offline for longer than you thought possible
  35. Write five thank you notes every day
  36. Stop sending spam
  37. Do your work somewhere else. Set up your chiropractic table at the mall
  38. Have everyone at work switch offices
  39. Give your most valuable possessions to a stranger
  40. Go see live music
  41. Start a company scrapbook and take daily notes
  42. Hire a firm to make a documentary about your organization
  43. Buy some art
  44. Make some art.
  45. Do the work.

Friction saves the medium

Email is dying because it's free. If you can send an email for free to 100 of your closest friends, instantly, you probably won't abuse the privilege. But someone else will because they might define 'friend' differently than you or I.

100 times 100 is ten thousand. Spam.

So now, people don't reply when you send them a resume, because it costs too much to do that ten thousand times.

Twitter is next. The paradox is obvious: to grow, you need to remove friction from the medium. If it's not easy and free to use, people won't. But then it gets big and it becomes profitable, so people use it too much.

The churn rate at twitter is reported as more than 50%. That's because of lack of friction as well. Easy to get in, easy to get out.

Stamps are underrated. Friction rewards intent and creates scarcity.

The banal brazenness of telescammers

I got a call a few weeks ago from a telemarketer at Premier Impressions. (Her number is 800 778 6304).   She told me she was selling ads for a free directory being published by my local library. Actually, first she said she was calling from "Westchester County," but when pressed, said she was working with the County, and then when pressed further, acknowledged that she was working with the local library. I was Googling and taking notes the whole time. I told her I was concerned about her approach, and that I was going to write a story about what she was doing. I even read to her from a website complaining about stuff like this her firm had done in the past.

Well, I know the folks at the local library and asked who she was working with. She told me the head of the library's name (!) and I said I'd check with her and call back. The telemarketer insisted on giving me her full name and number so that after I checked, I could call her back and do business.

You've already guessed this: My library had never heard of these guys. But plenty of other organizations have. I called the company for comment, was transferred to their parent company and they refused to comment.

I'm just astonished by this organization. Astonished that the telemarketer would be willing to do this all day--defrauding small businesses in the name of a local charity or institution. Astonished that a company in the US can do this for years and years without someone shutting them down. Most of all, amazed at how trivial the whole thing is. Drip, drip, drip it apparently ends up with enough money on the table for people to sacrifice their ethics.

Mechanics vs. intent

There are a thousand things you can do to improve the mechanics of people spreading the word about you, your conference, your product, your event, your service. You can create hashtags, provide kiosks, host discussions, give out free postcards or hand out bumper stickers. There are plenty of useful tactics available to you.

Mechanics are important, no doubt.

More important by far is creating a desire to share. If people intend to share, they'll find a way, the mechanics are just a convenience. But if you don't go the extra mile and I end up not caring, all the tactics in the world won't help.

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