If it hasn't been obvious in my previous posts, Seth Godin is one of my absolute mentors. Although we have never met, his books, audiobooks and blog have been a compass for me over many years.
This podcast, although unedited and unpolished, is an extraordinary insight into Seth's thoughts about startups. Seth's welcome message sums up the purpose of the three-day workshop, with featured content within the five-hour podcast.
Seth's welcome message:
In the summer of 2012, I had an amazing opportunity to spend three days with a group of extremely motivated entrepreneurs. People right at the beginning of building their project, launching their organization. During those three days, I took them on a guided tour of some of the questions they were going to have to wrestle with, some of the difficult places they were going to strand up and say "this is me, this is what I'm making".
WHAT HAS INSPIRED ME (AND MAY INSPIRE YOU TOO)
In this section of the post I'm going to highlight a few insights that have inspired me along with a short riff of my own thoughts. Some of these insights may inspire me to write another blog post specifically on that topic. In this case, I'll edit this post that you're reading and link you to the new blog post. Enjoy.
The distinction is critical because the emotional cost is high if you think you're one type and act like the other. In its simplest form, a freelancer rents themselves out to someone else to perform valuable emotional labour, whereas an entrepreneur organizes resources (people, connections, capital, time) to build something bigger than themselves.
There is an art and science to marketing. There are courses, books and consultants who teach the science (4-P's, market segmentation….yada…yada…yada). However no matter the execution, if the story doesn't resonate with the tribe you're connecting with there will be no transfer of emotion. They will feel nothing, they won't respond, you'll be ignored. Perhaps this happens when we try market to the masses instead of selecting our tribe. It's easy to ignore someone you walk by in the middle of Sydney, but much harder if it's in Antarctica.
If you're in B2B sales, your prospect only has one decision to make: "Would this purchase deliver a good story to please my boss? or will I get fired?"
I've been on both ends of the conversation: the buyer and the seller. This was something that I never realised and is an incredible insight into where you should focus your time. As someone with a story to tell to another business, you can get that message to CEOs, VPs and middle managers through different channels. You can't ring up the CEO and pitch an idea like you could do with a middle manager. However you can equally build trust in the organization with an investment of time to work out the networking events where these CEOs and VPs meet up. Buy a few minutes of stage time to simply tell your story and don't even think of selling anything on that night.
Now you've got the ability to say to the manager "Why don't you have a chat to the VP or CEO, they've heard me tell this story before." If you're bad at story telling, you didn't build trust with the audience or they don't have the problem that you can solve, you're not going to get any further. However you'll be able to control the process if you're respecting the hierarchy and putting the story before your pitch.
The job isn't to find more customers for your products but to find more products for your customers.
This is at the heart of tribe leadership thinking. If you're putting your contribution to the tribe before your interest in making money from its members, those who you serve will trust you. Alternatively, if you're trying to find more members to fit existing products, you will make compromises on who you will sell to and reduce the value and sentiment within the tribe.
Let's say that your tribe is people with tribal tattoos and you have a photo gallery website for all members to post their tattoos for others to comment on. To make money, you have products where you collect affiliate commissions. To make more money the calculation is: more members = more unique page views = more clicks on affiliate links = more money in the bank. Here's the twist: If you simply accept anyone, whether they have a tribal tattoo or not, you're going to be attracting the wrong sort of people that tribal tattoo people want to hang out with. Bad move. You're better off charging the members a $10 monthly subscription, stack the value offered, and explicitly keep people out unless they are worthy of being a member. Customers before products.
What's the hard part of your business? If you don't have a hard part, you don't have a business. Spend all of your time on this.
There are so many easy parts of your business. If you're about to do something, it will fall into these three categories: planning, organizing or contributing. From my personal experience, as well as through advising other entrepreneurs, the first two parts are easy and that's where many spend their time. Wrong move. Way too often will an entrepreneur spend their time planning what to do and organizing things. These are activities that should be a) minimized and then b) outsourced. This is why you hire a CEO, CFO and COO right? Contribute to your business by spending time on asking and answering the hard questions.
The problem isn't that someone is copying, it's that not enough people are copying. This helps share the message across the tribes. If you have it right and focus on a remarkable product experience, you will win.
We humans are indeed funny. Too often we act like we're one of the many inventors of the light bulb instead of like Thomas Edison who commercialised the electricity grid. From my experience with Apathco Group, our biggest problem wasn't that we would lose a customer to a competitor, it was that we would lose a customer to inaction. We found that more competition in the marketplace actually helped us stand out as experts and could tell a more compelling story to our niche.
What have you built into your assumptions that you could skip to help scale successfully while still being scarce and remarkable?
As was the focus in Seth's Purple Cow, scarcity creates value. As a freelancer, what is the most scarce resource that you have? Your time. If your time is scarce, that means you are scarce. But being scarce isn't good enough. What's the difference between earning $12 per hour and $1200 per hour? How remarkable you are to me.
When you're remarkable, people talk about you. They tell your story and it spreads amongst the tribe. When you're remarkable, more people want you. This creates demand but your supply is constant at 10 hours per day (or week). The more remarkable you are, the more you can charge. As an entrepreneur, the same theory applies. However it's not you that needs to be remarkable. It's the story of the organization.
Start with people who value the thing you do best instead of trying to be someone else.
As an entrepreneur myself, I totally understand you. We aspire to live, learn, create and inspire others. That's okay, but the tip is to simply look at what people value about you now to get started. You'll almost certainly get another chance.
Launching is overrated. What matters is that the first few people trust you and the value you can provide.
Annnnnndddddddddd LAUNCH! …………. frog croak…………… What's worse than someone hating what you have to sell? No one noticing that it's up for sale. The bigger the launch, the more you're going to be disappointed when not many people notice. But for those who do, honor them. Treat them like the only customers in the world (oh wait, they are!). If you build trust, they'll respect you and tell their friends.
In the early stages, be super clear what in you're doing and where the weak parts are so that people can help to scrutinize how to improve. Do this too late and you will be defending the weak points.
Defending the weak points of your business - oh it's one of the hardest moments when being asked to be an advisor to a struggling company. Particularly when you were brought in after all the hard questions were ignored and covered up. The worst part of defending is that it's contagious - once it's part of the culture, everyone does it. Personally, if I'm asked to be an advisor of a startup, I'll only accept if they're willing for me to ask all the hard questions first and then i'll make up my mind. I'm not looking for the right answers, just whether they are covering up their mistakes.
Connect with the world. Work on things that are difficult, not distractions. Focus time on sharing your story if it matches our worldview and then work on the mechanics of delivering.
This sentence has an order. Feel free to test it, but it's there for a reason.
When an industry declines, there are pockets of passionate micro communities who are connected and ready to be buy. Don't get caught up in the macro.
Apple Retail is the best in the world at selling their iPhone. The iPhone destroyed the monopoly that Nokia had on the mobile phone industry. Want to be the only business selling 10-year old Nokia 'brick' phones? You have the opportunity to be the best in the world too.
Position your product against another object, schema or understanding in the customer's head. Reposition against the market leader and encourage diversion of spending.
You can position nearly any service against another. It doesn't have to be 100% correct but you need to connect with the same worldview that your customer has.
- LinkedIn is Facebook for professionals. Advertise with us because you sell to professionals not teenagers.
- Pinterest is Twitter with only pictures. Contribute your products because pictures tell a story that words can't.
We are scared of asking questions because we are scared of being rejected.
Ask enough questions so that you get rejected at least 5 times each day. Why would you want to get rejected? Just like taking cold showers, the anxiety of being rejected (or cold) is much worse than it actually happening. Start small by calling up for your telephone/bank/electricity provider and ask for a better deal. I really liked the concept behind Charlie Hoen's Negotiate it app, give it a try if you like the video.
What do you say to someone in 20 seconds to make them want to hear more?
I admire Steve Jobs for getting this right. He could put together a 20-second story that sparks more interest than my 1-minute ramble (and this is something I'm working on!). For me, I feel that positioning your 20 seconds will give you more clarity than adding another 40 seconds of clarification or justification for why you started talking. Start with why. Use 20 seconds to position your intentions and what's in it for the other person. If appropriate, ask for their permission to share more.
If you are a freelancer ask this before every gig: "Will you write a letter of recommendation when we are done?" When you get to 50, you won't need to ask any more. You eliminate the one thing from keeping you from being hired.
The trick to asking for a letter of recommendation is doing it at the very start. Once you have asked, you can forget about it till the end and then hold your customer to their word. Something along the lines of: "If we proceed and both find this is relationship valuable, is it okay if I ask you for a letter of recommendation?" (These days you could ask for a LinkedIn recommendation too.)
The Challenge: gain respect, grow your tribe, and never worry about making money again
And what a challenge! In Kevin Kelly's 1000 True Fans, we learnt that the magic number of followers for a creative professional to earn a reasonable income from their art is 1000. The focus here shouldn't be 1000, but it should be respect and trust with each and every member. Make a habit of removing members if they are simply not a good fit. Perhaps suggest that they look to other people for inspiration. You're still helping them, and if you're right, they will move away from you to them because it feels right. If you grow 1000 over three years (remember we said never worry about making money again?…it won't happen in a few months), then all you need to do is delight, inspire and learn from one person per day. Remember that we're talking about a true fan, someone who would cross the street to shake your hand and if you recommended the coffee one mile away, they would check it out.
Do the hardest stuff at the beginning, face the fear, and everyday gets easier from there. Don't do the hard stuff a few months in.
After a few startups under my belt - lots of failures and a few gems, this makes so much sense to me. There are things that are hard: business partner relationships that you know will be strained, markets that may not be ready, investors who have a different outlook to the entrepreneur, the list goes on. UseSeth's Ship It Journal and identify what is hard and what is easy. Schedule the things that are hard in the first 30 days or shut the business down. If you don't have that conversation, that investor meeting, that customer feedback, you don't have a viable business.
We feel alive when we dance in the edge of failure.
It doesn't have to be a lottery to be the edge. The edge of failure is the risk that it might just fail. Risk is likelihood multiplied by consequence. Therefore you will discover that you feel more alive after surviving a 50% chance of your heart failure, rather than a 1% chance of losing your house. Both are significant but the consequence of losing your life trumps everything else. Pick your edges, understand the likelihood and consequence of what might just happen. Seth said that he has never signed a personal guarantee because he doesn't want to play a game where his family are at stake. Facing the prospect of failure is much less scary once you eliminate any consequences that you can't live with.
When going into business with partners, everyone earns equity over time.
The example given was that if you have a sales partner, agree that they will earn 1% of the business for each of the 50 critical sales that they bring in within the first 90 days. If the other partner is in technology, perhaps you could peg their ownership against certain milestones of product development (and redevelopment). The idea is that no one, including the founders gets a free ride. If you’re having arguments and someone is making excuses after 90 days, there should be an option to buy them out if they leave at an agreed price to reset the equity that they earned. You don't want an equity holder on board who isn't aligned in the long term strategy of the founders and investors.
People aren't motivated by money, just the story they tell themselves about money.
Even though the story can sometimes be about what someone imagines they will have, it's more likely to be about who they think they will be once they have money. This often doesn't materialize. If you want to inspire people and use money as an incentive, work with them to create their own dreamline.
Raise more money than you need, treat it like the last money you'll ever get.
Raising money requires doing the dog and pony show for investors who may be interested in the growth of your business. This takes time, energy and emotional labour. You don't want to do it more than you need to so raise more than you need, calculate your cash burn rate and then discover how many days you have to stay in business.
Track one metric: how many days can I stay in business?
There are so many metrics that you can track when you have a startup. You'll soon work out that cash flow is the most important thing to watch and to cut it even coarser, it's how many days before you're bankrupt. When the number is too low, you need to do some freelance work or a few small quick-revenue projects to raise more money. In your startup planning, it's worth you knowing what this will be in advance.
In my first business Apathco Group, we had a contract that I won with the state government to provide small businesses with energy audits for $150 (even though we received $600). We were never going to grow with these projects but they were easy to find, quick to complete and we would have the money to reinvest into our bigger plans.
When shipping a project, thrash at the beginning. Then take people off the project as it gets closer to ship date.
Take a deep breath if you have ever missed a deadline to ship a project. Yes, that's me too. There have been times when it's me trying to make things perfect, but that doesn't happen anymore. Every time it happens now it's because there were too many decision makers who haven't finished making decisions at the end of the project. This is about environment and expectations. Shape the environment in your favour. Make some rules:
- When it has been signed off, you will not make any changes or suggestions until it ships.
- When the CEO is making a critical pivot decision, everything stops until she has made it.
The reason why we answer a 10 word question with 100 words is because the other 90 words are there to distract the other person so we don't have to say the 10 words that are true. We don't want to say those 10 words because we are scared of the other person saying 'you should be ashamed of yourself'.
BONUS: YOUR GUIDE TO THE PODCAST
Episode 1 - Freelancer or Entrepreneur?
Welcome to the first episode of Seth Godin’s Startup School. Join best-selling author Seth Godin as he provides business advice for entrepreneurs and freelancers from this rare workshop. During this week’s episode Seth discusses creating a monopoly, describes the differences between freelancers and entrepreneurs, and talks about how a business is connected to marketing.
Episode 2 - Adjusting the Course
Learn how adjusting your course is beneficial on today’s episode of Seth Godin’s Startup School. This week Seth describes how being a consultant differs from being an entrepreneur, explains how he came to own a 40 billion dollar t-shirt, and starts to ask the group a series of questions that every entrepreneur should be able to answer.
Episode 3 - Creating Scarcity
Find out why scarcity is the only thing worth paying for on today’s episode of Seth Godin’s Startup School. Seth discusses having McDonalds milkshakes for breakfast, the lock-in effect, the large world that is the app market, and how your job is not to find more customers for your products, your job is to find more products for your customers.
Episode 4 - Appealing to Consumers
Figure out if you’re selling a product that will appeal to early adopters, people who need it, or the masses on today’s episode of Seth Godin’s Startup School. This week Seth explains how Google makes billions through clickable ads, discusses the difference between making something cool versus making something that works, and talks about how a Thai place in Queens became one of the best run restaurants in New York.
Episode 5 - Permission and Trust
On this week’s episode of Seth Godin’s Startup School we learn how to build a community and gain their trust. Seth discusses how easily you can become paralyzed in the pursuit of perfect, why launching is overrated, and how Kickstarter works.
Episode 6 - Raising Money
Learn about the different ways on how to raise money and how to pay that money back on today’s episode of Seth Godin’s Startup School. Seth discusses television, the importance of advertising, and the long tail.
Episode 7 - Advertising and Competitors
Seth answers questions from the group regarding advertising on this week’s episode of Seth Godin’s Startup School. Seth discusses false objection, dealing with competitors in the marketplace, and taking the marshmallow.
Episode 8 - Making Ideas Travel
Figure out how to help your ideas travel on today’s episode of Seth Godin’s Startup School. Seth talks about how getting rejected early is helpful, the sale cycle, and Bob Lefsetz’s email newsletter.
Episode 9 - Compromising
Seth explains what compromises you’re going to have to make to get what you want on today’s episode of Seth Godin’s Startup School. Seth talks about finding out what your feeder channel is, the story behind charity, and why it’s better to do the hard work first.
Episode 10 - Tactics
Learn about the tactics that will make your dream into a business on today’s episode of Seth Godin’s Startup School. Seth discusses the Yellow Pages, WTF with Marc Maron, and the roadblock in pricing. Seth also talks about cheerleading, having a partner who will have your back, and explains the purpose of a Cap Table.
Episode 11 - Cash Flow
On this week’s episode of Seth Godin’s Startup School we learn how to solve the cash flow problem. Seth discusses why people are rarely motivated by money, how people can’t tell you what to do if you don’t run out of cash, and raising money & treating it as it’s the last money you’ll ever have.
Episode 12 - The Dip
This week Seth talks about the ins and outs of The Dip. Seth explains why you shouldn’t start a project unless you are prepared to reach the end, how finding your fear will benefit in the long run, and answers questions from the group regarding The Dip. Be sure to pick up a copy Seth’s book The Dip.
Episode 13 - Building The Truth
On this week’s episode of Seth Godin’s Startup School we learn how to build the truth and why trust is at the heart of all transactions. Seth discusses why Amazon is successful, the difference between a CFO & COO, and the importance of an advisory board.
Episode 14 - The ShipIt Journal
This week Seth takes the group through The ShipIt Journal. Seth talks about figuring out what the hard part of your project is, describes the difference between perfect and good enough, and explains why shame is the project killer.
Episode 15 - Distinct and Direct
On the final episode of Seth Godin’s Startup School we learn the importance of being distinct and direct. Seth explains why people at the top get hurt last, why e-mail is the best direct connection to your customers, and why it’s important to have your own distinct voice. Seth shares a technique to get an appointment with impossible to reach top decision makers, discusses why it’s better to act like you don’t have money now, and tells us why he’d rather spend 4 years writing a blog before writing a book in order to build an audience. He also talks about how not to get sued, giving people a souvenir to remember you by, and the rules on naming your company.