SAMBA Blog

Hello World

The first time you ship something, the world will probably ignore you.

The second time you ship, the world will still ignore you.

By the third or fourth time you ship, you start to learn about the world in a way that only the act of shipping teaches.

The more you ship, the harder it gets for you to ignore the world.

The more you ship, the harder it gets for the world to ignore you.

Time Warner Cable, Disney, Dr. Phil, and Selfish Parents

I love watching Dr. Phil tell it like it is.


And when divorcing parents involve their children, using them as pawns to improve their positions or to exact revenge on each other, boy does he let 'em have it! 


"Don't burden children with adult problems" is one of his most important parenting rules.  Because doing so is irresponsible, reckless, and the children will end up resenting both of you.

I wish Dr. Phil worked with businesses.  Because in the heat of Time Warner Cable and Disney's recent nasty contract negotiation dispute, they've felt it necessary to reach out to their customers in an attempt to garner support for their own selfish causes.  This, as much of the programming that we watch, hangs in the balance. 

Both parties are working hard to convince me, to blame the other, and asking me to take action.  But here's the thing:  I don't care.  It's not my problem, it's yours.   I don't want to hear from you until you fix it.  So call me when you do.

Customers are to be respected and cherished, not to be held hostage and used as bargaining chips.  The only thing that is achieved by this pathetic and frankly insulting strategy is that I lose respect for both companies. 

As for the children of immature divorcing parents, it's not reasonable for small children who are being mistreated to leave, they don't really have the power.  Fortunately for TWC/Disney Customers...we do.

Going Against Demographics

Demographics is destiny. Marketers, advertisers, politicians all believe in the inevitability of demographics.

It's a difficult position to argue against. Demographics can be seen as the tide that lifts or sinks all boats. It's why the smart money is fleeing to China. It's why some economists believe that Social Security will inevitably collapse. It's why many pollsters believe Democrats will soon enjoy a permanent majority. It's why Major League Baseball laments the disappearance of the African-American baseball player. It's why so many "intractable" problems seem intractable.

Going against demographics is the riskiest of all propositions. 

Yet the most entrepreneurial-minded amongst us understand that some of the riskiest propositions hide the greatest opportunities. It seems you can't change demographics. But you can change mindsets, frameworks, and worldviews. And when you sufficiently change the way masses of people think, that's as good as changing demographics.

It's not an easy thing to accomplish but that's why great rewards await.

Maybe you shouldn't specialize?

By now, we know that specialization leads to excellence.  Having the discipline to focus on one thing, just one thing is what makes individuals and businesses truly great.

BUT

We have to continue to remind ourselves that often the greatest innovations come from those that didn't completely specialize.  Those that engage in two (or many many more) seemingly unrelated disciplines and combine them in a way that's magical.

These people didn't restrict their focus to just one thing.  And because they didn't, they were able to creatively connect ideas across industries, develop insights among multiple disciplines, and develop diverse experiences that allowed them to see things that others couldn't...

If economists stuck to economics and psychologists stuck to human behavior, we'd never have behavioral economics.

If orchestra conductors just focused on their music and business experts focused on leadership...we'd never have Benjamin Zander.

Until someone thought to combine the training of the mind, the spirit, and the body, we didn't have yoga.

Choosing to specialize in something is incredibly powerful.  But we also need some people to resist specialization, pursue a wide range of disciplines, combine them, and create brand new specialties.

How does one become a leader?

Leadership is an interesting phenomenon. It comprises two elements. Ideas & Bravery.

Leadership cannot have one without the other.

You may be brave but bereft of new ideas. You are not a leader.

You may have many great ideas but lack an ounce of bravery to take action. You are not a leader.

To engage in the practice of leadership, you must have both new ideas and the courage to push those ideas through action.

When you possess both, you'll find that leadership is an organic outgrowth. You don't need permission, you don't need to be elected, you don't need to ask for approval. People naturally begin to look to you for leadership.

The hidden reason behind that first sale

The first sale is always the hardest isn't it?


And in the early days of a startup we want to believe that our first sale will be made because of the strong value proposition of our product and our stellar salesmanship.


But the reality is, without a solid brand or track record, the sales made very early on, are often made in large part because of simple social psychological forces rather than the strength of our offering.


Forces like:


Consistency.  A prospect may initially agree to a phone conversation just to be polite.  Next, they accept an in person meeting just to hear you out in full.  And now, as Cialidini tells us, that person is psychologically compelled to act consistently with those two small commitments they've already made.  This may eventually lead to a sale.


Sympathy.  A prospect might see a salesperson's passion and might want to "give them a chance".  They may subconsciously identify with them, remembering times when they've been in a similar position, and feel compelled to help.  And thus a sale is made.


Reciprocation.  We may intentionally or unintentionally induce reciprocation by giving our prospect something.  It could be a gift, a compliment, our friendship, or some kind of free value.  The burden of reciprocation on the part of the prospect is certainly strong enough to end with a sale. 


These forces aren't good or bad they just are.  I think we tend to discount these forces when really we should appreciate them and accept their often critical role in making that first sale. 

The Power of a Single Word

A picture is worth a thousand words. So the saying goes. Usually true.

Sometimes, a single word can be more powerful than a picture. A picture lends itself to countless chaotic interpretations. A single word possesses singular meaning.

STOP

Sure, you can put a red octagon around it but it's still, at its core, a word. Not a picture. A picture of a hand may be more universal but not more powerful. That's why the French, Spanish, Chinese, and other people prefer to use their native word for stop and not a picture of a hand. Use Google Images to see for yourself.

A different kind of cost per click

Paid search marketers think differently than other marketers.


While most marketers try to generate as many clicks as possible for their advertisements, paid search guys operate more carefully, because in their world...every click costs more money.

Astute PPC marketers intentionally use advertisements that under-entice and that are descriptive enough to prevent clicks from anyone who won't be perfectly suited for the landing page. 

In this way, you increase the likelihood that the people who actually make it to the landing page have an experience that exceeds their expectations.  This maximizes your budget and reduces costs.

But maybe this strategy shouldn't just apply to Paid Search.  I mean when you think about it, isn't there always a cost per click?

The cost might not be monetary like Google Adwords, but when it comes to the subject line of your email newsletter, affiliate marketing link, the headline of your article, etc., doesn't every click from one of your users put on the line, your reputation, your brand, what your customers think of you?  


Every click earns you a chance to either win points when you exceed expectations and lose points when you don't.  And in the case of the latter...that can get extremely expensive.

Long Stories in a Twitter World

Common Sense: Keep your message short and sweet because we don't have a tolerance for long, complicated pitches. This has become a law across the land.

Thus, entrepreneurs are told to hone their elevator pitches. Bloggers and journalists agonize over the length and impact of their titles. Television commercials run for less than one minute. Twitter thrives on 140 characters.

Uncommon Sense: Word of Mouth is the only medium where we have any patience for deep discussions. 

This is because it doesn't feel like a pitch. Someone we trust wants to share a story about something they found remarkable. They want to get into it with us and we give them our attention. The more they rave about something, the more details they give us, the more passion they pour into their testimonial, the more we want to know.

Organize around the sales call

One large organization I know allows customers to buy their basic 15 hour package, and later upgrade to their premium 25 hour package simply by paying the difference.


It turns out this makes it easier for the operations team if a customer changes his mind after the sale.  Makes sense for the Ops team...


But doesn't that make it infinitely harder for the sales team to sell the premium package? Absolutely it does.


This might seem like a small issue, but it points to a much larger one.  Things like pricing, product development, policies (oh yeah, and almost everything else too) should more times than not, be organized around the sales call (and of course I mean marketing too).  Sales brings in revenue, the lifeblood of any organization.


Sometimes though, especially in organizations where the sales department isn't so glamorous (like in call centers) and taken for granted, they're highly underrepresented in the meetings that produce these decisions.


But every company decision should keep in mind how it impacts the sales conversation.  The sales department technically works for the company, but in actuality the company should be working for the sales department.

The Optimistic Side of Dunbar's Rule

Anthropologist Robin Dunbar suggested that 150 is the maximum number of people that one person can have meaningful social relationships with. Check out Rebecca Goldstein for more on Dunbar's Rule. It's not a hard and fast rule. I know some people who couldn't have meaningful relationships with more than 5 others.

It's hard to fight human evolution and how we're wired. But we do change. Sometimes quickly, sometimes slowly.  

We're starting to see some people experiment and push the upper bounds of Dunbar's Rule. Social media and social networking seems like a natural catalyst for this.

For those of us who want to expand the number beyond 150, I suggest applying another rule. Pareto's Principle or the 80/20 Rule. Concentrate on helping your network. Concentrate on only the 20% of everyone's stream that is important enough to have an impact on your life and their lives. Concentrate on meaningful.

"Listening" to your social network has become an exhausted cliché. It's how you listen and what you listen for that will help you break new ground and enlarge your circle.

This takes incredible discipline.

Business Ideas vs. Inventions

Most business ideas (or new product ideas) don't really describe businesses, rather they describe inventions.


Inventions (as I define them) are devices, processes, or even simply concepts that attempt to solve an existing problem in a new way.  It turns out a lot of people are really good at coming up with inventions, but a real business idea should express a plan, vision, or at least one competitive advantage for acquiring customers.


Customers, customers, customers.  A business is built on customers.  It sounds obvious, but 99% of the business ideas/pitches you and I hear on a daily business be it from a friend or on Shark Tank focuses on the invention part, and completely neglects the marketing part.


The unsaid presumption is that if the product is good enough, the marketing will take care of itself.  But as most of the people reading this post already know, this is a nasty lie.


A rigorous focus on marketing is what almost always separates an inventor from a true entrepreneur.

 

Facebook Credits, and Foursquare Badges, and Linden Dollars! Oh, my!

Lot of talk about virtual items and currencies as the next big thing in Silicon Valley. No doubt a few companies and marketers will derive great traction and value through virtual goods. Some persistent souls will actually become "real world" rich off of trading them.

Forms of virtual or alternative currency and items have been around for a long time. For a fascinating case, read about Warren Buffett's experience with Blue Chip Stamps. Yesterday's trading stamps are a great analogy to today's Linden Dollars, Foursquare Badges, Facebook Credits and World of Warcraft Gold.

They're working really well now so everyone is rushing to market with their own versions of virtual goods. The problem is that your virtual good will be no more remarkable than my virtual good. We'll be awash in a sea of commoditized virtual goods. What happens when most virtual items are unremarkable?

Principles to keep in mind when designing around your virtual good:

• The virtual good should be intrinsic to your product or overall story. If it feels like a bolt-on and blatant marketing, people will reject it.
• The experience of your product or service should not be completely horrible without buying your virtual goods. Virtual goods and currencies should increase the fun or value not introduce fun or value. Customers or players should be able to have fun or find value without buying in.
• Virtual goods cost next to nothing for you to produce so the temptation is to make as many as your customer base will buy. Try to keep it scarce and desirable. The less supply you have, the more your customers will demand and be willing to pay.

The difference between requests and declarations

A request is a question.  The outcome is determined by someone else. 

Can I take a vacation next month, Mr. Clark?

A declaration is not.  You've already decided the outcome.

I'll be taking a vacation next month, Mr. Clark. 

The most powerful persuasive people I know, don't make requests when, really, they mean to make declarations.

Do you?

Tighten

Always, always, always, always, always tighten your sentences, paragraphs, ideas.

Tighten until they seem dry to you. If you can convey the same idea with two sentences rather than three, you will whet your readers' appetites.

The Power of Goodbye

In business, the fear of loss, drives so much of our behavior.  Whether it's closing a sale, keeping our job, or maintaining market share, the fact that we're so terrified of the worst case scenario  ensures we have little bargaining power.

That's a shame, because as soon as you consider (i mean really consider) the possibility of walking away it changes everything.  It changes your your confidence, your creativity, your strength...essentially your ability to be effective in the relationship.


That doesn't mean you should walk away...it just means that just your ability to ask (and answer) the question, "What would happen if I did walk away, leave, or didn't care about the outcome?  puts you in a powerful position.

Many people have a tough time with this mindset.  What about loyalty some will cry?  What about the determination to never quit short of success?   These are noble character traits, but owning the power of goodbye doesn't  mean you have to sacrifice them.  There is a duality to some of our most important virtues like:

Speak softly and carry a big stick. 
Trust but verify. 

So why not this one:

Be committed, but not attached.

How to Double Down

Maslow knew that you needed to get fed before you could create art. But being fed is a low threshold. We have pesky things like rent, health and car insurance, utility bills, an endless list of needs. A constantly moving target.

So entrepreneurs or would-be entrepreneurs don't know what they're shooting for.

You should shoot for changing the world in a drastic way. Your technology, art, business model innovation, marketing, or whatever is your unique advantage should be disruptive.

But what if you're just trying to get enough to secure a solid foundation? What if you're just trying to earn enough so you have the freedom to double down?

You only need $2 million in the bank. That sounds like an impossible number. But others, many others have done it and in many different ways.

Assume you can earn 5% returns every year. That's $100,000 you can draw without ever touching the original principal. I know of very few people who couldn't live on $100,000 per year or would feel like a beggar.

If you don't need that much per year or you need more, adjust the assumptions and the original principal required.

The stock market used to average 10% returns per year. That's why I cut my assumption in half. Go find a high dividend stock. Or ask an investment advisor for some relatively safe high yield bonds. You can argue over the investment strategy but that's not my point.

When you have that baseline amount in the bank generating income every year, you can double down. You can work for free. You can build a company and never need to sell it. How does that change your posture?

You now have a concrete number to shoot for. 

Optimization vs. Innovation

In business we spend a lot of time creating systems that work. 

And once we do, the tendency is to "optimize."  Optimization usually refers to small tactical changes that yield incremental results. For example...

• We add another table in our pizza place to serve more customers.
  
• We change the color of our signup button to increase conversion.
  
• We reorganize the machinery in our factory to improve output.

In an optimization mindset, we focus on how we can improve by 1%.

This type of mindset is incredibly valuable and effective, and necessary...but if you're not careful it can stifle the type of creativity that leads to explosive growth.


That's because game changing ideas, projects, initiatives, and products come about from an innovation culture.  One where people dare to ask the question, "Forget 1%, how can we improve by 100%"


This type of mindset forces the consideration of large, scary, strategy changes

• What if instead of changing the store...we got rid of the store altogether and sold our pizza online?
  
• Instead of obsessing over the color of the signup button, what if we had the guys from contrast turn the entire site into a web app instead?
  
• Instead of moving the machinery in the factory...what if we moved the factory?

I think having a culture of optimization is just as important as innovation, and I think you can balance the two.  But if I had to pick one or the other, I think it's pretty clear which one I'd choose.   But that's just me.

Why Retailers are Harassing Producers

If you make something and sell it in multiple channels, you're getting a lot of pressure as a supplier. But where are you getting the pressure from? Not your end customers who buy stuff off your website. No, you're getting pressure from the retailers who also carry your stuff.

Why are the retailers telling you that they are your real customers and not the people who actually use your stuff? Is it because they know they have all the power to make or break your company? That used to be the case when the only way you could make it big was to get carried in Macy's or Nordstrom or Walmart.

They don't like competing with you. And they know they can't make or break you. They see the shift of power taking place. Consumers have the ultimate power and want to buy directly from producers who have remarkable products backed by remarkable service. And these consumers don't care if they're buying directly from your website or your retail store on 5th Avenue. The buyers at Macy's and Nordstrom are fighting scared for that last remaining patch of land they have left.

This is the reason why CEO Leigh Rawdon of Tea Collection should double down on direct-to-consumer and build the website and a retail store near the United Nations in New York City. It's why One Lucky Duck, Sarma Melngailis' raw and organic food phenomenon should focus on winning customers' hearts and minds and not on winning distributor accounts.

So expect to see more pressure and scare tactics from your retailers. Keep making nice but be ready to pull the plug. 

On the other hand, if you make a commodity product, you better fall in line. 

The cost of FREE

Sometimes we can't fathom why others won't sign up for our FREE offerings.  I mean, the economics of it seem pretty simple:  Our offerings have incredible value, yet the cost to enjoy them is zero. 


Zero?  Are you sure?  What about these costs:


1.  Time

2.  Reputation

3.  Limited attention

4.  The feeling of being tricked

5.  Feeling indebted

6.  The burden of reciprocation

7.  Privacy concerns

8.  Scary unknown consequences


When you think about it, FREE can be rather expensive.  FREE used to be a way to build trust.  Now, more and more, trust comes before FREE.