What would Seth Godin do if he had to launch a brand new business from scratch, anonymously, with only $1,000?
What are Seth Godin's marketing secrets?This week’s episode was a special challenge to my guest, the famous marketer, author and entrepreneur Seth Godin.
I asked him to come up with a business idea on the fly, and walk us through how he would launch an online business with $1,000 and market it to success within 3 months.
Join us as he shares his wisdom and marketing secrets to launching a successful business from the ground up.
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Louis: Bonjour, bonjour, and welcome to everyonehatesmarketers.com, the digital marketing podcast for tech marketers who are sick of shady, aggressive marketing. I’m your host Louis Grenier.Today’s a special episode. It seems kind of unreal to me, that Seth Godin, a marketer I’ve admired for years, have agreed to speak on everyonehatesmarketers.com. I knew he was a very impatient person so I challenged him for 50 minutes. I really tried to find the best questions I could ask to really put him out of his comfort zone.
I challenged him to come up with a business idea on the fly. He didn’t know about it before. I challenged him to explain exactly how he would launch it with a lot of details. The catch was he couldn’t use his real name.
Seth, thank you so much once again for being on the podcast. I have some bad news for you. We’re going to have to start a business together. Right now, we’re going to have to come up with a sort of a business idea together. It’s bad news because you have to work with me for a bit and I’m not the best at it, you are. Let me frame that, the challenge I want us to go through together right now.
We’re starting a business. We have let’s say $1,000 to spend and we have to be profitable in three months or less. The only thing that I’d like to set as a condition is that you cannot use your name at all. You have to remain anonymous so you can’t use your audience.
Louis: Let’s start right now. Let’s say we have to start a business together from scratch. Let’s say it’s an online business. We have to sell it. We can use the medium of internet to sell it. How would you go about creating a product that people would actually like?
Seth: Well that’s a great way to start. Let’s understand the first thing which is we are going to be marketing with people, not at them. That is a fundamental shift from the way most business people think. They think they should have a factory, it should be up and running, they should figure out what they make, and then they should do something to people to get those people to notice them and to believe that they need what’s being sold and then to buy it. That method made a lot of sense for a hundred years because you could pay money for media and for that money you got people’s attention. That was the deal.
But what we have to do is begin with the following. We must begin with something that is so on point for the people who we seek to serve that once they become aware of it, cannot imagine engaging without it. That means we can’t pick a giant problem because there’s no giant problem that can be solved for $1,000, those have all been taken.
We have to think of not the biggest possible market but the smallest possible market. The smallest possible market that can sustain us and figure out how to bring that group of people something that they can’t imagine being without so that they will tell other people.
The internet is a symptom of this. It’s a sidelight of this. It’s not an internet company. It’s the internet that’s being used to spread the word about what we did. That’s how I would begin, smallest possible audience in a generous way where no one thinks we’re interrupting them because they can’t believe we have what they need.
Louis: Okay. Let’s get a little bit specific. Do you have anything in the top of your mind? Something of a challenge that you encountered recently or a problem that you seen recently that you think is worth solving for a particular small audience.
Seth: If I have 90 days, I’m just making this up as we go here, what happens if I create a PDF document that is the 150 Best Airbnb Places To Stay In Paris? It’s going to take you a week of real effort to visit places, take pictures, do an analysis, explain which one. In this 40-page document, you’re going to be able to deliver to people real value about where they should stay when they’re in Paris.
We’re going to give it away, we’re going to make it a Medium post and we’re going to put it in other places so that anybody who searches for where should I stay in Paris is more than not likely to discover it. Even better when people do discover it, they’re going to tell other people they know because it’s so beautifully done that this is something that they need.
Over the course of the next month, we’re going to focus obsessively about earning trust. We want to earn trust with the people who are seeking a place to stay and we want to earn trust for the people who are hoping that people will stay with them.
We’re creating a two-sided equation here where the word gets out that we’re the person to ask about where to stay in Paris. We give great free advice and the word gets out among people who are looking to rent their villa or whatever, that this is someone who can find you the customers that you need.
We’ll spend a whole another five weeks doing that. Engaging with 100 to 1000 people a day back and forth, back and forth for free online until we’re the indispensable middleman. Once that occurs, we’ll make more than $1,000, maybe even $1,000 a day because people on either side will come to us and say, “I trust you. You’ve never steered me wrong. Can I give you some money to do x? Take me on a tour, get me into a place I can’t get into, or come visit my villa and write a review of it honestly so that other people will see it.”
That middleman position is not currently filled in Paris. It could be filled by someone who has less than $1,000 and 90 days from now we have an asset which is people who trust us on both sides and we will be able to turn that asset into a cash flow over time by serving the people we seek to serve.
Louis: Let me break that down. First of all, the first task would be to actually create sort of a PDF, free content that is actually really valuable and something that’s niched enough for people to be interested in. I’d like to get deeper than what you just said. Not only we should help people to find a great Airbnb in Paris but I think we should help Americans to find a great Airbnb place in Paris.
Seth: Right because I’m an American. I think everyone is an American.
Louis: I know you said Paris because you think I’m French, I actually am French which is a great guess from you. But only messing, to go back to it, I think if we pick the tiniest audience, the one that are the most uncomfortable with like we almost hear it’s too small, I think it’s a great start.
For Americans that might have specific needs, or we can dig deeper, we’re talking about people from California, specifically. Those people might have needs such as high-speed internet, they want to see monuments from the balcony, they want to discover some food that they’re seeing in San Francisco, but actually are the real deal in Paris.
Maybe, I’m just making that up as well, but by niching down that much rival to exactly understand the problems, we create this big list that you make me do and you pay me to do that, which is great. We have that, we publish that. Because you’re anonymous you can’t use your name, how will we go about promoting it, this first piece of content?
Seth: I wrote a blog post a bunch of years ago called First 10 and it’s still one of my most important posts. What I say is everyone knows 10 people. If you don’t know 10 people, you have to start over. If you know 10 people, you give this thing to them. If they tell other people, it’s good. If they don’t tell other people, you need to make something better.
We don’t have to put my name on it and we only need 10 people. We only need 10 people in this hyper target market. I’m not sure I’d pick California, maybe I’d say people with kids between 3 and 7 years old because they know lots of other people who have kids between 3 and 7 years old.
What we’re seeking to do, another one that’s very similar, is we all know that documentary Jiro Dreams of Sushi that became a sensation. Now, the waiting list to get in to have dinner with Jiro is enormous. I could imagine a business that does nothing but act as a concierge for people who want to eat dinner at Jiro’s. That’s the entire business. That’s super targeted.
But the fact is if you know one person who knows Ed Levine at Serious Eats, Ed Levine will write about what you just did because it’s so hyper targeted and aligned with his audience of people. I picked something that I thought we could do in 90 days but you know what? It might take 200 days and that’s okay because you can do a bunch of them.
My point is the marketers that are disliked by humans are disliked because they have non-remarkable products that cost them to act like selfish jerks. If you begin by asserting that you need something that is remarkable to a unique group of people, you’re 80% of the way there.
Louis: Right. We create this very good content. I might have to update it a few times until I know that those 10 people I shared it to actually really loved it so much that they are willing to share it for free. Those are the first two steps. Then how do we get into this middleman position where people would start to ask us for advice?
Seth: What happens is what we want in a low trust world is someone to trust. Our problem is not piracy, our problem is obscurity. The record industry spent way too long fighting piracy. Piracy is awareness, piracy leads to attention and attention leads to trust. If over time you are able to become trusted, then people who want something extra will reach out to you.
They will reach out to you because my pseudonym Jacques Godin is right there at the bottom with my email address and I answer all my email. Most of the time, if I can engage with someone for three minutes, it’s free. But if you want me to get on a plane or you want me to cross the street or you want me to do something special for you, then let’s agree to charge for it because it’s worth it.
Louis: Alright, I’m going to call you Jack for the next few minutes if that’s okay. What you expect from this piece of content is that it’s so valuable, it’s so insightful, it’s so targeted, it’s so good that people will tend to want to contact you to ask you more questions, to dig into the problems a little bit more.
Louis: By answering them by being kind, by being helpful, you hope that they would trust you in return and therefore trust you enough to perhaps pay for something slightly bigger than what they got from the free content.
Seth: Yeah. Just so we can get out of the consumer mindset, I was looking at learning management software the other day. This is like black org but the next generation that you can run a course on. Turns out there are 40 products in the space and it’s really complicated. If I had a week, I could write a special report about the advantages of each one. If I wrote a report on advantages of each one with no help from Seth Godin, I, Jacques Godin, would easily be the number one SEO match for which LMS software should I buy.
Once you’re in that position, again the number of companies where it’s not their money who will call you up and say, “Look, my boss wants me to buy one of these. I don’t know which one. How much is your consulting fee?” “Well I actually charge $1,000 an hour.” That means that after one hour’s worth of work, I broke even which is what you said my job was.
Louis: You might not be able to charge $1,000 an hour if you’re just Jacques Godin, people don’t know you.
Seth: No, they do know me. They trust me because I wrote the definitive 75-page report on the ins and outs of each one of these 40 pieces of software. I’m just giving people an abundance of confidence by creating an abundance of value and all I’m asking in return is to be trusted.
Louis: Fantastic, okay. To summarize, we create very good piece of content, so good that in return, people start to trust us, contact us, we start to charge for problems that are adjacent to the problem we solved. Let’s say we need to scale the business, let’s say that a few people have contacted us, we made some money, what would you do next? Where would you invest the money?
Seth: I would invest the money in using the process again and again and again. It would be a really long time before I started running ads. Because the fact is the pie is this big and I’ve touched this many people. When I go to an advertiser, it’s to reach this many people. I don’t need to do that yet. What I need to do is give the people who trust me a really good reason to tell their friends.
If you think about how you heard about Facebook or Twitter, you didn’t hear about it from advertising. You heard about it from people who benefited if you started using it too. If you can start creating cycles, where it’s in their interest, not because you’re bribing them, but in their interest to tell other people, they will.
Here’s an example. When I published this book, I put it in a milk carton. Only 5,000 people got it at the beginning and I made no money, zero. I broke even. But if you got this and you read it, you decided that your job will be better if other people you work with understood what you were talking about. People put this on their desk because if it’s on your desk, someone comes in and says, “What’s that?” And you have a conversation about it.
You didn’t say you wanted scale when you gave me this assignment but if you want scale, you got to pick a solution that works better if my friends are doing it too.
One of my favorite examples is alcoholic anonymous. They’re not anonymous, in fact the first rule of alcoholic anonymous is tell other people about AA. Because AA will work better if your friends aren’t drunks but if instead they are like you in recovery. That will make it better for you. That’s how it spreads to millions and millions of people.
Louis: Fantastic. I think that’s a great start for the episode. It’s going to give a lot of people some ideas on where to start. Just to mention to the listeners who are not necessarily watching, you mentioned your book The Purple Cow.
Seth: Yes, my book Purple Cow came in a milk carton. I also want to say since we’re shifting gears, that’s the most innovative, energizing way anyone has ever started a podcast with me. Good for you.
Louis: Thanks. I’m definitely not going to edit that out. But let’s go back a little bit to you. I’ve listened to a lot of things from you, I’ve read your books and I’m not going to repeat what a lot of people will be saying. I’m just curious about the type of kid you were. Were you very curious, were you questioning your teachers to the point where you were annoying them? What type of kid were you?
Seth: Before I answer the question, I have to put a disclaimer here which is that that question is often asked by people who aren’t you as a way of letting themselves off the hook. Because if we are different than the person who has done that other stuff, then it’s not our fault because we’re not born that way.
I’ve studied a lot of people who have done creative work and who are artistic and have made change happen. The only thing we have in common is that we have nothing in common. Tall and short, rich and not rich, grew up with great parents, grew up with no parents, all across the spectrum. Jeff Bezos’ loving family took him in but Jeff Bezos did not grow up in the same kind of nuclear household that I did. Which is it? Which one do you want? I’m not in his league in many, many areas but I’m just using that as an example of someone I’ve talked to.
The point is I was super obnoxious as a high school student. Teachers rolled their eyes when they saw me. My high school teacher wrote in my yearbook that I was never going to amount to anything and on and on and on. But I don’t think that is a requirement to be somebody who learns to look at the world differently. I just think it happened to be true in my case.
Louis: Fair enough. I wasn’t asking that to know whether people like you are more likely to succeed, I’m genuinely interested in the past because that’s usually the best prediction of the future and how people are. Let’s go back to marketing a bit more because that’s what I want to spend the most time speaking about. You touched on it at the start but why do you think marketers have such a bad reputation?
Seth: There are two reasons. The first reason is that most of us deserve it because we’re selfish, lying, short-term thinking scum. We believe that our job is to manipulate people as we market to them.
The other reason, which is just as big, is that people understand that they’re culpable, that consumers fall for short-term stuff. They’re not disciplined enough to ask the hard questions, they’re looking for magic beans and rainbows and pots of gold.
We feel terrible when we get tricked partly because we knew better. The reason that buying a car in the United States is so horrible is because customers insist on it being that way. If instead customers just paid the price the way we do with bread, that’s the way cars will be sold. Car dealers do it the way they do it because even though we pretend we hate it, we do it with them because we want to feel like we could beat the system. That’s a human failing and we get punished for it all the time. It’s both. The marketers are bad and the consumers are bad, together.
Louis: Every single consumer or every single person would think that they’re smarter than the system and try to play the system, right?
Seth: Yeah or we look at all the waterways clogged with bottled water trash. We bought into bottled water hook line and sinker because we wanted to believe that it would make us thinner, cooler, faster, whatever. We wanted that feeling. We didn’t need bottled water. There are countries in the world where they do but not where I live. Consumers are culpable, we look at all the trash and we go, “We hate marketers who got us to buy into this trash economy.” Yeah, but we bought into the trash economy and so it’s both.
Louis: That’s an interesting take. I usually think about that. In the topic of fast food for example, or shitty food that you buy in supermarkets, that you know that are already processed and fat and full of sugar. I talked to my friends about it sometimes I’m like, “I don’t think it’s the people’s fault to buy the food that is cheap. I don’t think it’s them who are at fault. I think it’s the big companies that have the big money behind them who are trying to trick, and lie, and manipulate people into thinking that this is good food, it’s 100% cheap, or it’s 100% whatever.” It’s only this. I don’t think it’s 50:50, I think it’s the big companies’ fault first.
Seth: I didn’t say it was 50:50, it’s really hard to apportion blame. What I’m saying is the thing about responsibility is they don’t give it, you take it. When a culture says we’re not going to stand for it, we have this wonderful process in most countries where the government ought to listen to us and make a rule.
Their companies are incented by the fact that they’re public. As public companies, they have investors. Those investors are us. The investors are short-term, selfish people who want the stock to go up tomorrow and so we push the companies to do the very thing we say we don’t want the companies to do.
It’s this giant circle where everyone is responsible. Who is the most responsible? The well-paid CEO for sure because the well-paid CEO needs to have the guts to look at the market and say, “No, we’re not going to do that. We don’t stand for that and if you want to sell your stock, go ahead.” Yes, that is her responsibility.
But all of the factors at work make it so that she has to make that difficult choice. I refuse to let anybody off the hook. I don’t let myself off the hook. I think that the government is letting us down, the CEOs are letting us down, the shareholders are letting us down and we are all of those.
Louis: Let’s get a little bit more detailed about the bad marketing that we talked about. Is there any particular tactics or things that you see happening at the minute in digital marketing or marketing in general that you would consider to be plain wrong like those so called best practices that are plain wrong?
Seth: Well, where does it start? It begins with the race to the bottom for attention. If you say my only job is to get eyeballs and my job is to get eyeballs as cheap as possible, then you buy into algorithmic advertising, then you buy into sneaking around, tracking people’s data, then you buy into questionable content that you’re busy paying for, then you buy into the degradation of our culture as we rush to make everything dumber and make it more of a click.
All of that starts with this misguided assumption that all attention is the same and that we don’t need to be trusted. That’s part of it. The second part of it is we let ourselves off the hook by making ever crazier promises to people that we know we can’t keep because our competition is making these promises so we feel like we have to out promise them. That’s where the flat belly diet comes from, that’s where the idea of seducing people into going into debt comes from because we say, “It was not me, it’s my competition.” Another race to the bottom.
The reason I’m in this field is because at the same time, there’s also a race to the top. It turns out that if you go on the race to the top, you can win more reliably. It’s just harder. Race to the top is how do I become the most trusted, how do I become the most distinctive, how do I become the most ethical? If you do those things, you win just as well but it’s not obvious how to get there. You need to think hard.
Louis: You mentioned not all the eyeballs are created equal, you shouldn’t really chase any kind of clicks, or all types of clicks. How do we convince those marketers that genuinely believe 100% that attention is the only currency available out there? What would you say to them?
Seth: I need to talk to their boss because the bosses said, “We’re going to make average stuff for average people.” As soon as you commit to that, then the customer wants the cheapest one, the cheapest one that they can find. Now you’re caught again. How do I interrupt more people? How do I make it cheaper? How do I sell it cheaper?
Once you buy into that cycle, everyone’s acting rationally. My problem is buying into that cycle in the first place. Sam Walton said, “The containership is a miracle, how can I build a trillion dollar company or a hundred billion dollar company? Well that’s sell average stuff at junkly-made at the lowest price I can by eviscerating my communities and bringing it in from a low wage country.”
The game theory there said that that was in his interest because he couldn’t build the other kind of company because that spot looked too hard to get to. But each community he showed up in, whether it was investors or customers, let him do it.
What we have to figure out how to do, because on the internet, no one knows you’re a dog. On the internet, anyone can show up with anything, we’ve got to figure out how to create standards so that, “No. You’re not going to see an ad like that on a well-known website.” Or “No. This store is not going to sell those items.” Or “No. I’m not going to do business with advertisers who play this way.” If we don’t speak up that way or get our government to speak up that way, then we’re just going to end up with crap.
Louis: Here’s the challenge for you, I’m just thinking about that now. It wasn’t in the question I was planning to ask you but there is an industry. I live in Ireland but I know from living in France and the U.S., it’s the exact same. There’s an industry that really annoys me, it’s the telcos. Internet providers, phone providers, mobile data and that kind of stuff.
To me, that’s the summary if I have to choose one industry, they’re the one that are really racing to the bottom. They are always competing on price. Every single time they send features. Let’s say we have a brilliant idea of starting our own internet company. We provide internet just like the others but how would you make it remarkable?
Seth: You asked the question exactly the wrong way, I don’t know if you did that on purpose.
Louis: Oh no.
Seth: You can’t begin by saying, “How do we make it just like the others and make it remarkable?” You have to say, “How do we make it different from the others so that it is remarkable?” Then you say, “How do we make it for the smallest possible audience?” That part takes discipline but when I think about the magic of an internet company or a telecom company, what do they do for a living? They connect us to other people, something we desperately want.
There are only two ways to do it. You can connect us to other people the way everyone else connects us to other people, in which case I’d like the cheapest, thank you very much. Or you can connect us to different people in a different way, people I can only reach through you. This is what Facebook does. Facebook says anyone can build the software that’s Facebook. It would take 10 smart people a month because you’re copying it but it wouldn’t be worth it because the people you want to reach aren’t on your site, they’re on Facebook.
The opportunity for someone is to say, “Where’s the minimum sized group of people who desperately want to be connected in a new way? If I can connect them using a hardware and software, they’ll want to be connected because they don’t want to be left out.” From that little circle, if what I’m doing actually works, the circle will get bigger. That is the way it always happens.
Louis: Yeah, I think that’s the way I tried to frame it. We would then start by trying to be average and then reaching the same amount of people that they would be reaching out to.
The other important thing here that you just said naturally as if it was so easy but I think a lot of people struggle with that is you were able to quickly identify the job to be done, the actual core first principle of the reason why people use internet for. I think that’s a very good lesson for listeners is that we always have to think what the first principle behind the product or service we use, that’s the best way to market. It’s really to think where the core emotions, the core feelings, the core things that we do it. I like it really much, very much like that with the answers as well.
In 1999, you came up with the term permission marketing. Since then, a lot of other companies and people have used the term or changed it slightly from premonition marketing to inbound marketing but basically the same concept. You’re pretty good at spotting trends before anybody else. Do you have any methodology behind you? Do you have any way to find things before they seem to be mainstream?
Seth: This is my main claim to fame. I’ll let you know that I started doing it in 1990 and I named it in ‘96. It was thrilling and I was early. One of the things I would say to people is you really don’t need to invent any of these trends, you just have to be a little bit earlier than anyone else. The way you can do that is by listening for the crazy people because the crazy people are always going to talk about it before you will. In the case of the internet, Kevin Kelly, a proud crazy person like me, wrote a book in which he outlined all of it, the whole thing. You can find it on kk.org.
He just wrote it. He was the founding editor at WIRED. I think he wrote it after I did Permission Marketing so probably ‘97. If you read it, there it was, all laid out. What people did was they looked at it and they said, “I can’t see it.” The reason they couldn’t see it is they were reading it the way they would read TIME Magazine. Tell me something I already know. But the trick is to get yourself into a mindset where you can say, “I’m reading this. Tell me something I don’t know.” When you come across something you don’t know, you’re going to have to change your mind because right now, your mind is made up that you know what’s important, that you know what’s working.
If someone says something new, you have to change your mind. It begins with, “Oh, I didn’t know that. That’s important. I didn’t know something that was important and now, I do.” Then you act as if, “Well, what would this mean? What would this mean? How do I take it all the way in one direction?” If it feels like there’s something there, then you can start talking about it like a normal person and maybe other people will want to hear you talk about it.
Louis: How would you identify crazy people?
Seth: I think what we’re trying to do is live in the grey, in the zone between black and white, in the zone between wrong and right, proven and unproven, in the zone of possibility. What we do is live in that zone and so we’re wrong a lot. That’s why people think we’re crazy. Wrong a lot. If you realize that being wrong is really cheap if you do it right, then you can live there for a long time because it’s cheap to be wrong. People don’t remember all the times I was wrong, they just remember the six times I was right.
Louis: When was the last time you were wrong?
Seth: There’s a reason I don’t have any money in the stock market. Because every time I put money in the stock market, I am wrong. But the biggest one that I talk about was when I was sure that the World Wide Web was a fraud and was never going to work. That cost me a couple billion dollars. That was an expensive time to be wrong but I still got to keep playing the game.
Louis: Your core advise here would be to try to identify people who seem to be wrong quite a lot but at least, I think if they are wrong, they are taking risks, right?
Louis: And so, I would say the core advice, I’m not trying to reword what you said, I’m just trying to simplify it so that I understand what you said.
Seth: Sure. You’re doing great.
Louis: It’s trying to find people who take risks quite a lot, who say stuff as they are, who try to write quite a lot or record videos on YouTube quite a lot, probably people who would produce a lot of content as the term is being used quite a lot, people who would take a lot of risk in that aspect.
Seth: Let me just interrupt for a second. I don’t think it has to be value. Eric Raymond wrote a book called The Cathedral and the Bazaar. It described all crowdfunding, all crowdsourcing, Wikipedia, Linux, all of it. This was 20 something years ago. I don’t think he’s ever written anything else. It’s not necessarily that’s a lot. It’s that other people who are crazy are referring to it. That’s efficient.
Louis: Okay. That makes a lot of sense. One thing that I’ve noticed, I’m a marketer myself, I know a lot of marketers and there’s one common challenge amongst marketers. You know that very well. You know this trend very well. People seem to be completely overwhelmed with all the options out there, all the channels, the tactics available. These growth hacking days, Facebook and the bots coming, there are so many things I can think of right now that would really make me crazy if I had to think about it everyday. What’s your advice for people and marketers in particular who are getting lost in the sea of all the things?
Seth: Marketers in 1966 only had to buy TV and they were done. The TV was the magic bullet. We grew up believing that there was a magic bullet. There isn’t one. What I would say is number one the asset you’re building is trust, connection, direct connection with the end user. Whatever method you want is fine as long as it leads to a direct connection with the end user.
Number two is being in a lot of places is not nearly as important as being in a place well. I’m not on Facebook. I’m not on Twitter. It’s fine. You just pick something. It doesn’t matter if you pick the perfect one. You just pick something. By picking it, by choosing it, by saying I’m a podcaster, not a blogger, by saying I speak at conferences, but you can’t find me online. Pick your thing. Own it. Build your asset there in a way that others don’t have the resolute force of will to sustain.
Because that’s what you’re trying to do, is to be the one and only. So you have to build a fort high enough that everyone looks and then say, “I could never build a fort that high.” That’s what you have to do, over invest in your channel so that the people you engage with feel like they can trust you.
Louis: But I guess that goes back to one of your core advice from early on whereby you choose a very hyper local audience. I think if you go to a very specific niche, the tools you’re going to use are going to be almost chosen for you because this particular tribe, this particular niche, would probably only use Facebook way more than Twitter or only use Pinterest way more than Facebook, and therefore, it’s going to go into the obvious. I think those two are connected, aren’t they?
Seth: That’s right. You nailed it.
Louis: What’s the best buying experience you ever had in the last year or six months, quite recently?
Seth: So many that I’d like to talk about. Penguin Magic is a great little company that sells magic tricks to amateur magicians. Professional magicians don’t buy magic tricks because they only need 10 and they just do the same 10 over and over again. But amateur magicians need a lot of tricks because they keep doing it for the same people and they get tired of them so they have to buy new ones.
It’s a great site because what they do is they show you a video of the trick but you can’t find out how it’s done unless you buy it. The tricks cost $10, $20, $30. When you buy it, then they email you a video of them packing your exact item as it gets shipped to you. In the box, when you get it, comes something you didn’t ask for, which is a magazine, beautifully produced, with other tricks that teach you how to this, that, or the other thing.
If you are a regular customer, you may discover that the CEO just sends you stuff in the mail with a personal note saying, “I thought of you when I saw this trick.” How much does it cost them to do all this extra stuff? Pennies. They charge me $10 for a trick that they just email me the answer. There wasn’t even a gimmick. The margins are great. No problem. That’s one example that I’ll give you.
Louis: Let me cut you right there. What’s the trick that you bought?
Seth: I’m not doing any magic for you right now. I’m not prepared. I’m sorry.
Louis: No, no. I don’t expect you to trick me with anything but generally, what’s the trick that you got?
Seth: I do a lot of mentalism, mind reading tricks. The trick that I’m thinking of now, it’s an ordinary deck of cards, I hand it to you, I don’t touch it again. I ask you to separate the cards without looking at them into black and red. Without turning them over, red, red, red, black, red, red, blah, blah, blah. You put 26 in each pile, you’re guessing. I turn the piles over, all the black are in one pile, all the red are in the other pile.
Louis: I’m not going to ask you the question.
Seth: It’s so good.
Louis: To get the trick, you have to pay $10.
Seth: It’s so good.
And then the other one is a little more subtle, which is Danny Meyer, the great New York City restaurateur, has some of the fanciest, nicest restaurants in New York. There’s no tipping allowed. I don’t know about Ireland but I know in France it’s a different thing. In the United States, people tip 15% or so and all the money goes to the waiter, the people in the back who cooked don’t get anything. Danny thinks that’s ridiculous and unfair. He’s betting his whole company on creating a new standard.
As a buying experience, it’s extraordinary because your engagement with the staff, front of house and back of house, is different because the people who are working there feel differently about how and why they are serving you and so that’s no gimmick, super subtle, and the bold responsibility taking that on, I’m a huge fan of.
Louis: That’s something I heard from an episode of Freakonomics, the po dcast. They were saying that this guy has more than one restaurant and he started to avoid tipping with this one restaurant. Let me just think about the benefits that happened. There’s one thing, first of all, when you don’t expect tipping as a waiter, your relationship with the customer is much more genuine. That’s one thing that he said.
The second is, if I remember well, that in the back of the house, those like the cooks and all of those people were generally paid way less. I don’t remember why it happened but they were paid way less.
Seth: Because it’s against the law to give them tip money.
Louis: That’s it. It’s against the law so now that everybody is not on tip, they were able to increase the pay for those people, if I remember right, so that people were happier and they were staying for longer because there was a low retention rates of particular people in the back of the restaurant.
There’s another benefit I don’t remember well. Actually, one of the big benefit that happened, one of the best thing that happened to him and the restaurant is that this move made him so much publicity that he was booked for months and months and months. So I guess he was being remarkable this way. It’s a very interesting topic. In France, you don’t tip. In Ireland, you can tip, sometimes you don’t but it’s not as far as US where you kind of have to tip. It’s a very strange place to be at the minute because you have to judge people based on their performance and then you don’t tip them if they’re bad, or if you think they’re bad, which is not really a good feeling, is it?
Seth: Right. You asked me about the buying experience and what it makes me feel like when I go. It’s someone who’s engaging with professionals who care about equity. That feeling is one of the things I want when I go to a restaurant because if all I want to do is eat, I can stay home and have a can of beans.
Louis: Yeah, it’s all about the experience more and more. I’m interested to know you’ve identified a lot of remarkable companies in the past. Do you have an example of remarkable companies that used to be remarkable that are not remarkable anymore?
Seth: Almost every company I’ve ever mentioned is in that category, that’s why I don’t mention them as often because it’s a curse. What happens is competence is something that a lot of people like the feeling of. As an organization gets bigger, the people they hire tend to be people who want to feel competent. That you join a 500 person company not because you want to be an egg throwing pioneer, but because you want to do a “good job.”
What happens is when you get after 100, 200, or 400 people and you’re good at something, you want to stay good at it. Eventually, you start defending your old win even though the outside world has raised the bar, you’re afraid to because in order to change, you must become incompetent again. Because change always creates incompetence on the way to a new kind of competence. We end up with this cycle.
McDonald’s was a super remarkable company in 1958. In 1958, if you drive across the country, you only had two choices, eat lousy food that might make you sick or eat McDonald’s. That was extraordinary. But then they went through a 40 year period of time when they were just defending something that they stood for. Over time, you can’t keep growing. Over time, it peaks. It was interesting to watch my friends at Lululemon stumble last week because store sales were way down.
One reason they were down is the easiest thing to do if you’re Lululemon is to sell what you sold yesterday. Because if you roll out something new and bold, it might not work, and so you don’t. Again, figuring out which areas you’re willing to be incompetent at is the only way to grow.
Louis: How would you advise a company that have quite a lot of employees where it’s not easy for them to be flexible that much, or at least on paper? How would you advise them to become incompetent again?
Seth: We must begin with what’s your asset? Is it your relationship with suppliers, your relationship with the stock market, your relationship with customers? Because you don’t want your asset to get broken. But if you take part of that asset and put it into an experimental mode, that’s how you can grow with advantage. When I was at Yahoo!, I sat down with the CEO and co founder and I said, “Jerry, here’s what I want to do. I want you to cut my salary by 80%, give me 2 employees, and let me go across the street.
We will build stuff that will siphon just 1% of Yahoo! traffic and keep you from having to buy the next company for $10 billion, that we can be a skunk works to build those things. What assets would Yahoo! put on the table? 1% of the daily traffic, point it to mysterious new stuff. Let the core group do what the core group does. But what you can do is build the skunk works across the street. This is how Lockheed revolutionized the airplane. Tom Peters has written about this extensively.
It takes guts to do that and I was amazed at Jerry’s answer because it was so honest and what he said to me is, “Well, I’d love to do that. But if I did that, everyone else would want to do that job too.” He was concerned that he’d have to say to his core group of 300 people, you have to do the boring work, I’m going to go let Seth do something that’s fun. What he missed was most of those 300 people wanted to do the boring work because they had stock options, they were going up everyday, they were competent, they were having a good time, and they were good at it.
Most people don’t want to give that up. But when you find someone who’s willing to give that up and you give them a place where they can go explore, they will. Another example is John Patrick when he was at IBM. He invented IBM’s entire internet consulting business by himself because the CEO let him have a year and a couple of offices and 10 people and said, “Go. Use IBM’s name but don’t do anything stupid.” He did things that might fail but he didn’t do things that will bring shame upon IBM.
Louis: We go across the streets description. It’s actually on purpose. You wouldn’t advice leaders to let a group of 10 people just walk in the same office, just in another location. You would advice them to get away from the main.
Seth: I think that’s essential because here’s the asset that’s not helpful. The asset that’s not helpful is all the people around the water cooler. The asset that’s not helpful is your instinct to level off and stand off the edges. That’s not what makes your company good. It’s just a byproduct of the fact that your company is good. You got to get away from that and you get away from it by physically leaving the building.
Louis: As a leader, you need to identify people who are willing to take risks, who are genuinely outliers, people who like to take matters in their own hands. Usually, you will have a lot more people who are willing to stay in their comfort zone and be comfortable there. That’s perfectly fine as well. Obviously as a big company, you have to keep running the show and make sure everything runs smoothly.
I really like that. I think that’s a really good take on innovation. That’s a good practical advice as well. I also have a lot of young graduates who ask me, “I want to get into marketing. How should I do that?” I know that you mentioned before that people shouldn’t have CVs, they should have a reputation that presents them. If you link that to the companies, therefore, companies shouldn’t hire by CV. How should they hire then?
Seth: Two part answer. The first part is the best way to learn marketing is to do marketing, not to be part of a marketing department. The beauty of it is marketing doesn’t cost money anymore so go market a cause you believe in, go market a company that doesn’t exist, go market a political thing. Just go and market. Don’t ask anyone’s permission, just begin.
And then from the company point of view, I don’t hire people unless I’ve worked with them first. It’s so much easier to work with someone now. That’s what companies ought to do. Not say, “Oh, he’s good at interviewing, therefore, he should work here.” They should say, “Oh, we worked with him on a project. He does exactly the kind of work we like. Let’s get him in.” The ability to be in the world doing this work and being seen, don’t show me your resume, show me your work. In our field, that’s easier than almost any other one.
Louis: Let’s say somebody is lost or she’s lost in the causes that she cares about or the things that she likes, how would you advice, briefly, somebody to pick something that she should work on?
Seth: By lost, you mean they’re too caught up?
Louis: There’s so much noise, they don’t really know whether they need to work for charity.
Seth: It doesn’t matter. Make a spinner and spin the wheel. Do a thing. My first jobs as a marketer were building a ski club in Buffalo, New York and marketing it to high school students. Then for my dad, writing copy for his ski binding division of the company he worked for. Then starting a coffee shop, and travel agency, and ticket bureau in college, and then marketing computer games for six year olds. They don’t have anything in common. Begin. That’s the secret that people who are marketers are marketers because they know the difference between things that might work and things that don’t and the only way to learn that is to do marketing.
Louis: Just go and do it. What do you think marketers should learn today that will help them in the next 10 years, 20 years, 50 years?
Seth: Humility and empathy.
Louis: What are the top three resources that you would recommend marketers and digital marketers in particular, to read, or to discover, or to digest?
Seth: I’ve written 18 books for you so I would definitely start there. I would read some of the classics of marketing that are now being ignored. David Ogilvy, the book Scientific Advertising. I would read Steven Pressfield in The War of Art. I would definitely read The Art of Possibility by Benjamin and Rosamund Zander. These are books about humility and empathy, not books about algorithmic advertising.
Louis: That’s been absolutely amazing. Before I let you go, anything you’d like to add? Anything you’d like to say to the listeners?
Seth: I would just like to remind them that the thing you’re doing right now is not easy. It’s time consuming. It takes a long time. I hope they appreciate it and you. I’m glad you’re doing this work.
Louis: Thanks, Seth. That means a lot.
Seth: Au Revoir.
Louis: Au Revoir.