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THE DIP BLOG by Seth Godin

All Marketers Are Liars Blog

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« September 2010 | Main | November 2010 »

Marketing Halloween

Some things to think about while the doorbell rings...

There are communities that have moved Halloween from today, because they don't want it to be on a school night.

There are communities that abhor Halloween, arguing that it is a day for Satanists and other ideas that are anethema.

And there are communities where the goal is to obtain as many chocolate bars as possible. (The hobo costume will always remain the official teenager get up, because you can make one in three minutes).

How did fruit end up as treat non grata?  How did the few giant candy companies end up stamping out variety, selling giant bags of cheap chocolate instead? (Hint: there's huge pressure to do 'the regular kind' as many consumers/homeowners are afraid to stand out in this regard). A great example of peer pressure meeting the race to the bottom.

And in the last few years, how did a trivial kids' holiday turn into a multi-billion dollar bacchanal for adults, complete with ornate houses and bespoke costumes? Is it because of some well-orchestrated Halloween Marketers of America initiative? It just seemed to happen, didn't it?

My take: Marketing home runs usually happen because the market/tribe/community is itching for a void to be filled, not because a marketer committed some brilliant act of promotion or pricing. The art, then, is to pick your niche, not to freak out about how to yell about it. You can't make a perfect storm, but you can find one.

Just because he's angry

... doesn't mean he's right.

... or even well-informed.

Something to think about when dealing with a customer, a leader or even a neighbor.

It's easy to assume that vivid emotions spring from the truth. I'm not so sure. They often come from fear and confusion and well-told stories.

Won't get fooled again

I know you say your media returns results better than anyone else's. I've heard that before.

I know you say that this stock is a sure thing, even better than gold. I've heard that before.

I know you say you'll work full time on business development even though it's hard work and there are distractions everywhere. I've heard that before.

I know you say that your promotional strategy for this movie is huge and we should run more ads and promote it more as a result. We've heard that before too.

The reason that people don't believe you isn't that you're a liar. The reason we don't believe you is that the guy before you (and the woman before him) were unduly optimistic hypesters and we got burned. We believed, we leaned into it and we got stuck.

If you catch yourself making a promise that's been made before, stop. Don't spend a lot of time and effort building credibility with this sort of promising, because it doesn't pay off.

Make different promises, or even better, do, don't say.

Pushing back on mediocre professors

College costs a fortune. It takes a lot of time and it takes a lot of money.

When a professor assigns you to send a blogger a list of vague and inane interview questions ("1. How did you get started in this field? 2. What type of training (education) does this field require? 3. What do you like best about your job? 4. what do you like least about your job?") I think you have an obligation to say, "Sir, I'm going to be in debt for ten years because of this degree. Perhaps you could give us an assignment that actually pushes us to solve interesting problems, overcome our fear or learn something that I could learn in no other way..."

When a professor spends hours in class going over concepts that are clearly covered in the textbook, I think you have an obligation to repeat the part about the debt and say, "perhaps you could assign this as homework and we could have an actual conversation in class..."

When you discover that one class after another has so many people in a giant room watching a tenured professor far far in the distance, perhaps you could mention the debt part to the dean and ask if the class could be on video so you could spend your money on interactions that actually changed your life.

The vast majority of email I get from college students is filled with disgust, disdain and frustration at how backwards the system is. Professors who neither read nor write blogs or current books in their field. Professors who rely on marketing textbooks that are advertising-based, despite the fact that virtually no professional marketers build their careers solely around advertising any longer. And most of all, about professors who treat new ideas or innovative ways of teaching with contempt.

"This is costing me a fortune, prof! Push us! Push yourself!"

On buying unmeasurable media

Should you invest in TV, radio, billboards and other media where you can't measure whether your ad works? Is an ad in New York magazine worth 1,000 times as much as a text link on Google? If you're doing the comparison directly, that's how much extra you're paying if you're only measuring direct web visits...

One school of thought is to measure everything. If you can't measure it, don't do it. This is the direct marketer method and there's no doubt it can work.

There's another thought, though: Most businesses (including your competitors) are afraid of big investments in unmeasurable media. Therefore, if you have the resources and the guts, it's a home run waiting to be hit.

Ralph Lauren is a billion dollar brand. Totally unmeasurable. So are Revlon, LVMH, Donald Trump, Andersen Windows, Lady Gaga and hundreds of other mass market brands.

There are two things you should never do:

  1. Try to measure unmeasurable media and use that to make decisions. You'll get it wrong. Sure, some sophisticated marketers get good hints from their measurements, but it's still an art, not a science.
  2. Compromise on your investment. Small investments in unmeasurable media almost always fail. Go big or stay home.

And if you're selling unmeasurable media? Don't try to sell to people who are obsessed with measuring. You'll waste your time and annoy the prospect at the same time.

I spread your idea because...

Ideas spread when people choose to spread them. Here are some reasons why:

  1. I spread your idea because it makes me feel generous.
  2. ...because I feel smart alerting others to what I discovered.
  3. ...because I care about the outcome and want you (the creator of the idea) to succeed.
  4. ...because I have no choice. Every time I use your product, I spread the idea (Hotmail, iPad, a tattoo).
  5. ...because there's a financial benefit directly to me (Amazon affiliates, mlm).
  6. ...because it's funny and laughing alone is no fun.
  7. ...because I'm lonely and sharing an idea solves that problem, at least for a while.
  8. ...because I'm angry and I want to enlist others in my outrage (or in shutting you down).
  9. ...because both my friend and I will benefit if I share the idea (Groupon).
  10. ...because you asked me to, and it's hard to say no to you.
  11. ...because I can use the idea to introduce people to one another, and making a match is both fun in the short run and community-building.
  12. ...because your service works better if all my friends use it (email, Facebook).
  13. ...because if everyone knew this idea, I'd be happier.
  14. ...because your idea says something that I have trouble saying directly (AA, a blog post, a book).
  15. ...because I care about someone and this idea will make them happier or healthier.
  16. ...because it's fun to make another teen snicker about prurient stuff we're not supposed to see.
  17. ...because the tribe needs to know about this if we're going to avoid an external threat.
  18. ...because the tribe needs to know about this if we're going to maintain internal order.
  19. ...because it's my job.
  20. I spread your idea because I'm in awe of your art and the only way I can repay you is to share that art with others.

How media changes politics

If you want to get elected in the US, you need media.

When TV was king, the secret to media was money. If you have money, you can reach the masses. The best way to get money is to make powerful interests happy, so they'll give you money you can use to reach the masses and get re-elected.

Now, though...When attention is scarce and there are many choices, media costs something other than money. It costs interesting. If you are angry or remarkable or an outlier, you're interesting, and your idea can spread. People who are dull and merely aligned with powerful interests have a harder time earning attention, because money isn't sufficient.

Thus, as media moves from TV-driven to attention-driven, we're going to see more outliers, more renegades and more angry people driving agendas and getting elected. I figure this will continue until other voices earn enough permission from the electorate to coordinate getting out the vote, communicating through private channels like email and creating tribes of people to spread the word. (And they need to learn not to waste this permission hassling their supporters for money).

Mass media is dying, and it appears that mass politicians are endangered as well.

Last call for the Los Angeles road trip event

This is my only public west coast gig this year... I hope you can make it. November 9th at the fabulous Zipper Hall. Full day tickets are here. Use discount code sethsblog. It seems there are only twenty tickets left.

Inexpensive breakfast plus one-hour interview tickets are here.

Organizing for joy

Traditional corporations, particularly large-scale service and manufacturing businesses, are organized for efficiency. Or consistency. But not joy.

McDonalds, Hertz, Dell and others crank it out. They show up. They lower costs. They use a stopwatch to measure output.

The problem with this mindset is that as you approach the asymptote of maximum efficiency, there's not a lot of room left for improvement. Making a Chicken McNugget for .00001 cents less isn't going to boost your profit a whole lot.

Worse, the nature of the work is inherently un-remarkable. If you fear special requests, if you staff with cogs, if you have to put it all in a manual, then the chances of amazing someone are really quite low.

These organizations have people who will try to patch problems over after the fact, instead of motivated people eager to delight on the spot.

The alternative, it seems, is to organize for joy. These are the companies that give their people the freedom (and yes, the expectation) that they will create, connect and surprise. These are the organizations that embrace someone who makes a difference, as opposed to searching for a clause in the employee handbook that was violated.

Change and its constituents (there are two, and both are a problem)

People who fear they will be hurt by a change speak up immediately, loudly and without regard for the odds or reality.

People who will benefit from a change don't believe it (until it happens), so they sit quietly.

And that's why change in an organization is difficult.

Efficiency is free

Philip Crosby wrote a seminal book (Quality is Free) in which he argued that it's cheaper to build things right the first time than it is to fix them later. Obvious now, but heresy in Detroit 1980. Quality quickly became not just a better way to manufacture, it became a marketing benefit as well. Not only was quality cheaper to make, it was cheaper to sell.

I'm struck that we need a new book, call it Efficiency is Free.

It's cheaper to build carpets that don't create poison gas than it is to do the easy thing and let people suffer later. It's cheaper to build an 8 passenger car that gets 30 miles per gallon than it is to suffer the consequences of the 12 mile per gallon Suburban. It's cheaper to design smaller, lighter and recyclable shipping containers once than it is to buy and hassle with billions of foam peanuts in the long run.

So why doesn't everyone do this? For the same reason the quality revolution took a full generation to take hold--it costs more right now. It takes planning right now. It requires change right now.

Right now will always be difficult. But efficiency is still free.


Avoiding counterfeits, building permission

Smsproof Catherine Casey shared this picture (click to enlarge) of a medicine sold in Nigeria, where counterfeit drugs are a huge issue. Each packet comes with a scratch-off number. Use your cell phone and SMS the number to the company, and the company will text back whether the packet is legit. I'm sure clever counterfeiters will try to game the system, but it's not that hard to make it work.

It's easy to imagine ways that this could be used to increase after-sale connection (offers, insight, instructions, coupons) for all sorts of items, particularly in parts of the world where SMS is cheap and ubiquitous.

Two problems with whining

The first is that it doesn't work. You can whine about the government or your friends or your job or your family, but nothing will happen except that you'll waste time.

Worse... far worse... is that whining is a reverse placebo. When you get good at whining, you start noticing evidence that makes your whining more true. So you amplify that and immerse yourself in it, thus creating more evidence, more stuff worth complaining about.

If you spent the same time prattling on about how optimistic you are, you'd have to work hard to make that true...

The sales you don't make

Do a search on great jazz singer "Emily Barlow" in Amazon and you'll find... nothing. That's because her first name is spelled Emilie and Amazon gives up.

Do a search on Lord of the Flies and you'll find tons of matches, but none of the top ones are for the book--they're all for expensive annotated or educator's editions. Broken search = no sale.

It's extremely difficult to figure out why people walk out of your store, throw out your brochure, leave your site... but in fact, this is fertile territory for dramatically increasing sales. You won't find what's broken if you don't look.

The shipit journal is back in stock...

For those following along, I've been discovering that creating and shipping a physical product can be lumpy.

I printed more copies than I thought would sell, but they sold out in 2 days. I then printed another batch the same size, which also sold out in two days. So this time, I printed 20,000 more workbooks and they're in the warehouse, ready to ship. (Currently there are sets of workbooks at two different prices, but they're the same, so grab the cheap ones while they last).

If this batch sells out, you'll be able to place an order and we can reprint and ship them as soon as they're ready. And I'll stop bothering you. Sorry.

I'm told that selling out is a good problem to have, but I'd rather have the right amount. Thanks for your patience. I think we're getting less lumpy now.

Deliberately uninformed, relentlessly so [a rant]

Many people in the United States purchase one or fewer books every year.

Many of those people have seen every single episode of American Idol. There is clearly a correlation here.

Access to knowledge, for the first time in history, is largely unimpeded for the middle class. Without effort or expense, it's possible to become informed if you choose. For less than your cable TV bill, you can buy and read an important book every week. Share the buying with six friends and it costs far less than coffee.

Or you can watch TV.

The thing is, watching TV has its benefits. It excuses you from the responsibility of having an informed opinion about things that matter. It gives you shallow opinions or false 'facts' that you can easily parrot to others that watch what you watch. It rarely unsettles our carefully self-induced calm and isolation from the world.

I got a note from someone the other day, in which she made it clear that she doesn't read non-fiction books or blogs related to her industry. And she seemed proud of this.

I was roped into an argument with someone who was sure that ear candling was a useful treatment. Had he read any medical articles on the topic? No. But he knew. Or said he did.

You see a lot of ostensibly smart people in airports, and it always surprises me how few of them use this downtime to actually become more informed. It's clearly a deliberate act--in our infoculture, it takes work not to expose yourself to interesting ideas, facts, news and points of view. Hal Varian at Google reports that the average person online spends seventy seconds a day reading online news. Ouch.

Not all books are correct or useful. Not all accepted science is correct. The conventional wisdom might just be wrong. But ignoring all of it because the truth is now fashionably situational and in the eye of the beholder is a lame alternative.

I know this rant is nothing new. In fact, people have been complaining about widespread willful ignorance since Brutus or Caesar or whoever invented the salad... the difference now is this: more people than ever are creators. More people than ever go to work to use their minds, not just their hands. And more people than ever have a platform to share their point of view. I think that raises the bar for our understanding of how the world works.

Let's assert for the moment that you get paid to create, manipulate or spread ideas. That you don't get paid to lift bricks or hammer steel. If you're in the idea business, what's going to improve your career, get you a better job, more respect or a happier day? Forgive me for suggesting (to those not curious enough to read this blog and others) that it might be reading blogs, books or even watching TED talks.

As for the deliberately uninformed, we can ignore them or we can reach out to them and hopefully start a pattern of people thinking for themselves...

Killer apps now shipping (early days)

You may have read about my proposed apps:

One made it easier to run and manage meetings, and the other made it easier to present a powerpoint-style slideshow on the iPad (but better).

I'm delighted to report that early versions of both have been built by loyal readers who read the posts and chose to take action.

Meeting Mngr Pro lets you manage timing, share images and connect among many iPads.

Nonlinear lets you import a PDF or PPT file and then jump around. It's not for building slides, it's for navigating them, and even includes a way to drive an external monitor in a clever way.

For ver. 1.0 products, they're both cheap and pretty cool. I have no doubt that with feedback and loyal users, they'll each develop into very cool tools.

Four roads

You might be stuck because you pick the wrong fork on a looping road. You keep getting better at the route you cover, but it doesn't go anywhere, you just keep doing it over and over. Nine years of experience is very different from one year of experience, nine times.

You might be impatient or unable to stick to your decision to take this particular road, and thus you're always starting on a new road. Since the new road is always strange to you, you rarely get any better at getting where you're going.

You might be on the wrong road. Sure, you get better at navigating your way, you can walk faster, you feel more comfortable--but this road is never going to lead much of anywhere.

And, if you're lucky, you might be on the right road, and getting better as you go.

You're famous

What makes a celebrity special? She was just an ordinary person a month or a year ago, but now, suddenly, your heart goes flitter-flutter when you meet her, or you want an autograph.

One way to consider fame is that it increases the options for the person at the same time the number of demands go up. In other words, celebrity makes the celebrity's attention more valuable.

It's exciting to shake hands or get an autograph from a famous person, then, because the celebrity has something others want, you're getting a slice of attention from someone who has other options. But she didn't exercise those options--she chose you.

By this definition, you're famous. Compared to just a few years ago, more people know you, you have more options and your attention is far more precious than it ever was.

Not just you, of course. Your customers too. They're famous now.

Time to start treating them that way.

Hacking education

"You teach kids how to succeed when they successfully foil the educational system."

Arlo Guthrie

Merchants of dissatisfaction

Many marketers are able to sell their wares by making us dissatisfied with what we already have.

It's not that far from, "This will make you happy!" to "You're unhappy/ugly/lonely/using obsolete technology, better buy this which will help fix the problem."

In fact, if you chart consumer happiness against advertising spend, I bet you'd find a juicy relationship. If the ads exist to make us unhappy (unless we buy the product, of course), then why is it surprising that we're less happy after we encounter enough ads? Just as the goal of cable news is to make us nervous so we'll tune in for more.

Why we stand for this is a mystery to me. Photo ht.



Fred had an inspiring post about the ability to always add one more thing. His old roommate called it N+1. Just when you think there's no more, you find a little room.

Perhaps it's worth considering an alternative. N-1. There are tons of things on your to do list, in your portfolio, on your desk. They clamor for attention and so perhaps you compromise things to get them all done. What would happen if you did one fewer thing? What if leaving that off the agenda allowed you to do a world-class job on the rest? What if you repeated N-1 thinking until you found a breakthrough?

Heroes and mentors

Mentors provide bespoke guidance. They take a personal interest in you. It's customized, rare and expensive.

Heroes live their lives in public, broadcasting their model to anyone who cares to look.

The internet has created a long tail of heroes. There are tens of thousands of musicians, artists, entrepreneurs, social leaders, politicians (okay, maybe not thousands of these), coders and colleagues to find and emulate. WWHD. What would my hero do?

I find heroes everywhere I look. I find people who speak to me over my shoulder, virtual muses, who encourage me to solve a problem or deal with a situation the way they would. This is thrilling news, because there are so many heroes, so freely available, whenever we need them.

For all the people out there using the fact that Jeff Bezos (or Jacqueline Novogratz or Husain Abdullah or Chris Anderson or Anne Jackson) won't be their mentor as an excuse for inaction, there are a dozen who realize that their example is enough.

Like a custom made suit, a mentor is a fine thing to have if you can find or afford it. But for the rest of us, heroes will have to do.

The book of the year

Kevin Kelly publishes books rarely. Each one is a keeper, and a new one is a special event.

His new one is out today. If there's justice, it will win the Pulitzer Prize.

Kevin's book could be sketchily summarized in fifteen or twenty blog posts, and I'm tempted to do so, but I think you should do the more direct thing and just read it. That way, as I steal from it again and again going forward, you'll nod your head in recognition of the power of what he's writing about.

Hint: it's as good as Guns, Germs and Steel, which I consider one of the most important big-thought books ever.

Bonus! Steve Pressfield's The War of Art is coming to ebook format for $1.99...

Time to get off the brandwagon

Marketing involves spending money and it's fraught with the fear of failure (because it often doesn't work).

This mix creates the perfect opportunity to play it safe and to follow the leader.

Jumping on the brandwagon, if you must coin a phrase.

Here's the thing: while the second imitator might make it pay, the third, the fourth, the tenth--not so much. The more you try to fit in, the worse you do. The more you rush to follow the leader, the less likely you will be to catch up.

What does 'pro-business' mean?

What makes a policy or a politician pro business? Some would tell you it includes:

  • Lower or eliminate the minimum wage
  • Eviscerate OSHA and other safety and pollution inspections
  • Make it difficult for workers to easily switch jobs from one company or another
  • Educate the public just enough for them to be compliant cogs in the factory system
  • Fight transparency to employees, the public and investors
  • Cut corporate taxes

I think these are certainly pro-factory policies. All of them make it easier for the factory to be more efficient, to have more power over workers and to generate short-term profits.

But “business” is no longer the same as “factory”. (Aside: Factories don't have to make stuff... they're any business that focuses on doing what it did yesterday, but cheaper and faster.) It turns out that factory thinking is part of a race to the bottom, to be the cheapest, the easiest place to pollute, the workforce that will take what it can get.

It's not surprising that there's tension here. If you are working hard to cut prices and improve productivity, you might view labor as a cost, not an asset, and you might want as little hindrance as possible in the impact you have on the community. On the other hand, a business based on connection and innovation and flexibility may very well have a different take on it.

I grew up not too far from the Love Canal. It’s a world famous toxic waste dump. While it helped the short tem profits of Hooker, the chemical company that dumped there, it’s not clear that looking the other way was a pro-business strategy. At some point, a healthy and fairly paid community is essential if you want to sell them something.

The oil sands project in Alberta Canada is a factory-friendly effort. So was the lead excavation in Picher, OK. Creating systems that leverage the factory can often lead to financial success (in the short run). The problem is that the future doesn’t belong to efficient factories, because as we train people to look for the cheap, we race to the bottom--and someone else, somewhere else, will win that race.

Perhaps we could see pro-business strategies looking more like this:

  • Investing in training the workforce to solve interesting problems, so they can work at just about any job.
  • Maintaining infrastructure, safety and civil rights so we can create a community where talented people and the entrepreneurs who hire them (two groups that can live wherever they choose) would choose to live there.
  • Reward and celebrate the scientific process that leads to scalable breakthroughs, productivity and a stable path to the future.
  • Spend community (our) money on services and infrastructure that help successful organizations and families thrive.

Once you’ve seen how difficult it is to start a thriving business in a place without clean water, fast internet connections and a stable government of rational laws, it’s a lot harder to take what we’ve built for granted.

Capital is selfish and it often seeks the highest possible short-term results. But capital isn’t driving our economy any longer, innovation by unique people is. And people aren’t so predictable.

Linchpins are scarce. They can live where they choose, hire whom they want and build organizations filled with other linchpins. The race to the top will belong to communities that figure out how to avoid being the dumping ground for the organizational, social and physical pollution that factories create.

Getting smart about the hierarchy of smart

Don't talk to all your employees, all your users or all your prospects the same way, because they're not the same.

The Dreyfus model of skill acquisition posits that there are five stages people go through:

1. Novice
--wants to be given a manual, told what to do, with no decisions possible

2. Advanced beginner
--needs a bit of freedom, but is unable to quickly describe a hierarchy of which parts are more important than others

3. Competent
--wants the ability to make plans, create routines and choose among activities

4. Proficient
--the more freedom you offer, the more you expect, the more you'll get

5. Expert
--writes the manual, doesn't follow it.

If you treat an expert like a novice, you'll fail.

Do you need a permit?

Where, precisely, do you go in order to get permission to make a dent in the universe?

The accepted state is to be a cog. The preferred career is to follow the well-worn path, to read the instructions, to do what we're told. It's safer that way. Less responsibility. More people to blame.

When someone comes along and says, "not me, I'm going down a different path," we flinch. We're not organized to encourage and celebrate the unproven striver. It's safer to tear them down (with their best interests at heart, of course). Better, we think, to let them down easy, to encourage them to take a safer path, to be realistic, to hear it from us rather than the marketplace.

Perhaps, years ago, this was good advice. Today, it's clearly not. In fact, it's disrespectful, ill-advised and short sighted. How dare we cheer when a bold changemaker stumbles? Our obligation today isn't to spare the feelings of our peers from future disappointment. It's to establish an expectation that of course they're going to do something that matters.

If you think there's a chance you can make a dent, GO.



You have my permission. Not that you needed it.

When the long tail is underwater

There are millions of songs on iTunes that have sold zero copies. Millions of blog posts that get zero visitors each day.

The long tail is real... given the ability, people create more variety. Given the choice, people seek out what's just right for them to consume. But, and there's a big but, there's no guarantee that the ends of the long tail start producing revenue or traffic. And a million times zero is still zero.

Sometimes, the best strategy isn't to to head farther and farther out on the tail. No, you don't have to make average stuff for average people. But it also doesn't pay to brainwash yourself into believing that super-extreme is the same as profitable.

Beware the Nile perch

It's a huge freshwater fish, easy to catch and eat, and tempting to introduce into non-native waters.

And when it shows up? It will eat everything it can and probably drive competitive smaller fish extinct. Good intentions are rewarded with plenty of Nile perch (for now) but a degraded ecosystem in the long run.

There are bright shiny objects you can bring into your life (that project, that employee, that new office) that might just push the other useful items aside. You get hooked on them or they demand more attention or they make too much noise and the less-shiny projects or people whither away.

An art museum brings in a traveling show from a famous artist. It's important, expensive, time-consuming and brings big crowds. For the next six months, all eyes are on the big show. And then, of course, a vacuum, because the important but less glamorous work didn't get done.

A lawsuit or a merger or a shift to a new office space might seem like a good idea at the time--but be careful what you wish for.

The Nile perch is nefarious yet applauded (in the short run). Don't be afraid to call it when you see it.

Ubiquitous distribution is overrated

Some industries (like book publishers and analgesic makers) believe that they best serve their audience when the product is available everywhere. It's pretty rare to find a book that's only available in one chain of bookstores, or a pain reliever that's only in one sort of drugstore.

The thing is, scarcity creates value. You can't get a Pepsi at McDonald's. You can't buy Hermes at Target. By limiting choice, you can create value. Exclusivity is often underrated.

Generous gifts vs. free samples

Free isn't always generous. Free can be a legitimate marketing strategy, an ultimately selfish way to increase sales. Once you spread your ideas (and free is the best way to do that), there are all sorts of ways to profit. But don't be confused. Free samples and free ideas and free bonuses are not necessarily generous acts.

A generous gift comes with no transaction foreseen or anticipated. A gift is a gift, not the beginning of a transaction. When you see a Picasso painting at the Met, Picasso doesn't get anything (he's dead). Even his heirs don't get anything. His art is a gift to anyone who sees it.

Giving gifts is a fairly alien endeavor. In most families, even the holidays are more about present exchange than the selfless act of actually giving a gift.

The cool part, the punchline, is that giving a gift for no reason and with no transaction contemplated is actually incredibly powerful. It changes your approach to the market, it changes your relationship with the recipient and yes, it changes you.


The assembly-line mindset is a natural defense mechanism for the work we're asked to do all day.

One more form to fill out. Six more articles to write. Yet another soundcheck for yet another band playing at the venue where you work. You know there were hundreds before, there's one now, and there will be another soon, perhaps in just a few minutes.

So you sit down to remaster a classic album and you can't help but phone it in. There's another around the corner. You sit down to write another blog post and perhaps you cut yourself a little slack, because another one is due soon. This sales call? Don't worry so much, the call list is endless...


You might have already guessed the problems (there are at least two.) The first is that this is no way to do your work, your art, your chosen craft. Averaging the work down, achieving the least, getting it done--that's no way to spend your day. You deserve more than that.

The other problem is that you have competition. And for them, perhaps even this time, it's not just another in a long line of tasks. It's the one. The one that matters. The competition will bring more to the table than you do, and you suffer.

Perhaps the alternative is instead of thinking, "next!", we can think, "last!"

This might be the last time I get to do this.

If I do it that way, it increases the chances that it won't.

The business of software

Inspired by a talk I gave yesterday at the BOS conference. This is long, feel free to skip!

My first real job was leading a team that created five massive computer games for the Commodore 64. The games were so big they needed four floppy disks each, and the project was so complex (and the hardware systems so sketchy) that on more than one occasion, smoke started coming out of the drives.

Success was a product that didn't crash, start a fire or lead to a nervous breakdown.

Writing software used to be hard, sort of like erecting a building used to be hundreds of years ago. When you set out to build an audacious building, there were real doubts about whether you might succeed. It was considered a marvel if your building was a little taller and didn't fall down. Now, of course, the hard part of real estate development has nothing to do with whether or not your building is going to collapse.

The same thing is true of software. It’s a given that a professionally run project will create something that runs. Good (not great) software is a matter of will, mostly.

The question used to be: Does it run? That was enough, because software that worked was scarce.

Now, the amount of high utility freeware and useful free websites is soaring. Clearly, just writing a piece of software no longer makes it a business.

So if it’s not about avoiding fatal bugs, what’s the business of software?

At its heart, you need to imagine (and then execute) a business that just happens to involve a piece of software, because it’s become clear that software alone isn’t the point. There isn’t a supply issue--it’s about demand. The business of software is now marketing (which includes design).

The internet has transformed the software industry in two vaguely related ways:

1. It makes it far more efficient to communicate with people who might buy your software and,
2. It enables software’s most powerful function: communication between users

Let’s take them one at a time:

COMMUNICATE TO USERS: As we’ve seen in just about every industry, marketing involves effectively communicating a story about benefits to (and among) the people who will appreciate them. For software entrepreneurs, this means identifying a group of people who need the utility of what you can offer them and who are willing to give you permission to educate them about why they should buy. Without either element, the software is dead.

Over time, this permission becomes the core asset of the company. Selling upgrades, for example, is a great revenue path for software companies because of the ease of alerting current users about the upgrade.

I think niche opportunities for software are largely unexploited. There are countless tribes of people who would eagerly try and ultimately benefit from software optimized for their needs. A simple example: is a website for firefighters. They have tens of thousands of members and hundreds of contributing writers and bloggers. Is it possible to imagine software that would help a fireman during a typical day? If you could, here's a group ready to listen.

The amplification of tens of thousands of tribal niches online creates a significant opportunity for specialized software worth paying for.

So, the questions I’d ask:

  • Who can I reach?
  • Is the product so remarkable that they will talk about my product with their peers?
  • Can I earn and maintain permission to continue the conversation?
  • Once they learn about the utility offered, will they pay for it?

ENABLE COMMUNICATION BETWEEN USERS: This is the holy grail of software, and has been since multi-player games, email, ICQ and the web revolutionized the way we thought about computers.

It’s hard to imagine, but twenty years ago, this is not what we thought about when we turned on a computer or went to the store to buy software. (Yes, the store--that’s where you bought software). The purpose of software was to interact with a device, not another person. Old software had no network effect.

The network effect is the increased utility of a device that enables communication. One fax machine is useless, two are good, a thousand are a vital tool. One user of software is lonely, a million is a sea change in the way we communicate. Software enjoys a central role in the network effect--if you can improve productivity or satisfaction by connecting people, then people will selfishly help you do your marketing.

When building a software business that uses the network effect, I’d ask:

  • Does the connection this enables create demonstrable value?
  • Is there an easy and obvious way for someone who benefits to recruit someone else to join in?
  • Is it open enough to be easy to use but closed enough to avoid becoming a zero-cost commodity?

Worth taking a minute to think about that last question. eBay, for example, is a business because instead of developing an open protocol that would have enabled anyone to run an auction anywhere on any platform, Pierre Omidyar built a piece of software that was easy to use and open to changes in content--but required all the users to use his software. Compare that to the many pieces of software middleware that depend on Twitter content to work. Since the feed from Twitter is software independent, it’s very difficult for a middleman to earn the privilege of charging much at all. The user can easily switch to a different middleman with little or no hassle.

What you’re looking for in a connected world is a piece of software that sits in the middle of a sphere, enabling the user to make valuable connections, to build utility in a way that they couldn’t without you. That’s worth paying for and not worth switching out of.

LAST THING: Paying for it

In a competitive market where the marginal cost of an item is zero, the price will move to and eventually reach zero. If it doesn’t cost you (or your competitors) anything to add one more user, then in a truly competitive market, there will be a race to add users, even if the next one doesn’t add any revenue.

The goal, then, is to create a dynamic where the market isn’t competitive. Back to the eBay example: copying the functionality of their software is now easy and cheap. You could probably build something way better, in fact. But switching is hugely expensive for the user, because all the buyers and all the sellers are there, not with you. It’s not a competitive marketplace.

The other condition that’s necessary, though, is that users have to believe that payment is an option. The web has trained the vast majority that interactions online should be free. That makes the act of selling software, particularly to people who haven’t used it yet, really difficult.

There are two ways around this:
1. Free samples. Many software companies (37signals being an obvious one) have discovered the drug dealer model, in which the software is free for a month, connections are built, utility is created and then it begins to cost money.

2. Move to a platform where commerce is expected. They sell a lot of candy at bookstore cash registers, because wallets are already out and people are feeling in the mood for a treat to leaven their purchase of some intellectual tome. The app store for the iPad is like that. The expectation is that this software is going to cost money. It’s far easier to sell a serious app for the iPad than it is on the web, because the platform is organized around commerce.

A long post, sure, but I wanted to help you realize that just because you can code something that doesn’t mean it’s a good idea. The issues of permission, of networks, of scarcity and of the desire to pay are inherent in the business part of the business of software. I think we’re at the very beginning of the arc of software as business, and I can’t wait to see what you come up with next.

Demonstrating strength


Defer to others

Avoid shortcuts

Tell the truth

Offer kindness

Seek alliances

Volunteer to take the short straw

Choose the long-term, sacrificing the short

Demonstrate respect to all, not just the obviously strong

Share credit and be public in your gratitude

Risking the appearance of weakness takes strength. And the market knows it.

Your ecosystem

The tropical acacia tree has hollow thorns, nectar and protein-producing leaves. All perfect for the stinging ants that live inside the thorns and eat the nectar and the leaves.

And what's in it for the tree? The ants keep birds and other pests away, as well as killing off small shoots that might grow into competitive trees (ht: Jerry Coyne).

The ecosystem combines two elements that can't live without one another. Each produces something the other needs.

Too often, businesses (and freelancers) focus on making it on their own. In fact, the secret of being indispensable is making it together.

The buddy system

Here's the best way to improve your business plan or your resume:

Have someone else write it.

Find a friend of a friend, a document-buddy, someone who needs the same thing done for them, but not someone who is a close friend. And then interview each other and write the other person's plan.

Don't show them the existing plan or document, and don't read it to them. Have a conversation. Tell your story. Answer questions. And then see what they come up with.

Writing about yourself is infinitely harder than writing about someone else--and you're going to discover that the story you thought you were telling probably isn't the story that's coming across.

Seek scarcity

If you're managing a project, figure out what the scarce resource is (it's not usually money). Climbing Everest? It's warmth and weight you care about, not how much the sleeping bag costs.

If you're creating a business, figure out what contribution you make and what you offer that your competitors can't. If 1,000 people can provide typing services the way you do, don't expect to get paid a premium.

Scarcity creates value.

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