Business
Distinct and Direct
In this episode of 'Distinct and Direct,' Seth Godin shares insights from his experience with motivated entrepreneurs, discussing strategies for navigating challenging industries and the imp...
Distinct and Direct
Business •
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Interactive Transcript
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Hey, it's Seth Godin. In the summer of 2012, I had an amazing opportunity to spend three
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days with a group of extremely motivated entrepreneurs, people right at the beginning of building
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their project, launching their organization. During those three days, I took them on a guided
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tour of some of the questions they were going to have to wrestle with, some of the difficult
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places they were going to stand up and say, this is me, this is what I'm making. I'm sorry,
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you couldn't be there, but I hope this is the next best thing. Exorps from the live event,
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unrehearsed, no slides, here it is, enjoy it. But even more important, I hope you do something with it.
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Thanks for listening.
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I would argue that in almost every failing industry, the people in the top get hurt last.
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And so you can milk this cow for a really long time to come if you choose.
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But a big part of it will be making a commitment to marketing yourself quite aggressively and
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changing certain parts of how you do what you do in order to increase your market share as
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the size of the market goes down. But when we saw, let me think of an example, the music business
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falling apart, Van Morrison is one of the last guys to get hurt because even though the number of
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records could get bought, could get bought goes down, people are still going to buy moon dance for a
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Van Morrison. The answer isn't the minute the music business is in trouble stopping the music
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business and opening a bowling alley. The answer might be double down on the music business and
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understand you might have to go tour more often. You might have to figure out how to generate other
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streams of income to make up for the fact that you're doing it, but it's easier for you to do that
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because you're Van Morrison. So that's number one. Number two is I don't think there's ever
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a statement about good or bad or failure or non-failure about a person's decision to quit. This
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is a strategy decision. It is not a moral decision. So if you decide to quit to go do something
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else, you should make that decision because you want the thrill of scaling in a growing market,
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not because you can't think of how to make their existing business legit going forward. If you love
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what you do, keep doing it and grow it in a different way because the industry is not going to
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disappear for a while. On the other hand, if what you love is skiing fresh powder, this is not as much
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fresh powder in the book business because there's way more people stamping it down. You may have to
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step four steps over instead of one step over. But as an industry starts to collapse, there's no
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question that there's more opportunities within that industry and those opportunities tend to belong
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to the person with a track record. So when AOL started to crumble, because AOL was my biggest
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customer, I had more opportunities to do stuff with AOL, not less opportunities. Because AOL said
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we're going from 100 projects a year to 10. Who are they going to give the 10 to? They're going to be
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more conservative with the 10. So they're more likely to give it to me because I'm safer than they
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are to give it to some guy who just shows up. So you can pick up a lot of business, for example,
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at Microsoft, whose business model for the next 20 years is threatened, but they have 20 years
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before it goes away. Someone has a reputation in Microsoft the ability to go in there and get more
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and more contracts goes up. Do you see what I mean? Okay, so that's sort of what I was saying about
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your industry. Not that you need to quit it today, not that you need to quit it today, but that you
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need to see that it's in disarray that the boat is slowly sinking and the deck chairs are up for grabs.
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But if someone who's calm and stands up straight and walks in and starts collecting deck chairs,
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no one's going to question them because it's the captain. Of course, he's allowed to take deck chairs.
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No money means every time someone pays you 20,000 or $50,000, you're putting it back
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into growing your company. The house in the Hamptons is on hold for a long time to come because
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what your market likes to buy is expensive stuff from cash cow leaders.
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Your market isn't sitting there saying, who's got some new data driven way we can analyze things
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and do better tomorrow? That's not what they're saying. So if you're an insurgent brand, which is
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what you are, insurgent brands never spin off cash. Insurgent brands always put the cash into
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becoming cash cow brands. And then after their cash cow brand, like Nielsen is or Comm Square is,
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then you just rate, I mean Comm Square hasn't done anything interesting in years. No one wants
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them to do anything interesting. That's why, not because they suck because they're a customer suck.
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Because raising the money is a dip in it of itself because then people who are waiting to
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invest money in you, with that size are asking for something you don't have right now. They're asking
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for stuff that's more locked down, stuff that's better verified, more clients, more cash flow. They're
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not saying this is like putting a fly or into a $100,000 web start up. They look at the kind of people
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who have come before you and every one of those businesses has been boring, straightforward,
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and accountant driven. The guys who build sound scan, the guys who build Nielsen, the guys who
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run the New York Times bussellis, those are all companies run by accountants, they're not run by
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some guy who's a wild-eyed visionary. And so the kind of person who's going to fund you isn't
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looking for a wild-eyed visionary. So all I'm saying is if you're waiting for the $2 million
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bucks, please go prove me wrong, go raise the $2 million bucks. If you can, go for it. I'm just saying
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I would rather see you do your dog and pony show for customers than do your dog and pony show for
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investors because the dog and pony show is going to be very similar for both. But the customers
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can give you money tomorrow and you don't have to pay it back. I think it is essential that you
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do not rent your friends from Facebook, right? That you need to have a direct controlled connection
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between you and your friends and that group of friends has to get bigger. That first circle has to
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get bigger and email is the best tool I know but if you find a better tool, that's fine. That if
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we look at Twitter conversion versus email conversion when you send out a link, email 10, 20 times
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better. 10 or 20 times as many people will click on a link in an email and then click on a link in
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a tweet. So if you build this connection where 100 or 1000 or 10,000 people want to hear from you
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by email, that is your asset going forward. What I have found is when everyone can have their own
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TV show and when everyone can have their own radio show, the equivalent online, it's really easy
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to decide to become the invisible, no personality conduit. So it's just showing up every week but it's
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really me or Dan or Simon, not the host who's saying something interesting. The problem with that
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is those people aren't really adding any value in the world because the reader already knows where to
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find me. These people aren't showing the guts to say I have a point of view, I have something to say
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and I've once well someone like me shows up but what's really the future isn't that we need more
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trolley roses because we don't. What we need are more people who actually have a point of view and
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are worth following for themselves. So when all these people show up and say please do this, it'll be
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really good for you and I have 400 listeners or 400 readers. I'm like I'm sorry, I don't want to be
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selfish but no it would be really good for you because I have more than you and I know you want
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me to link to it when we're done but I could just write it myself if you want me to write it for you.
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So that's why my advice to 70 was don't expect that the people who have come before you are going to
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automatically make it easy for you to have their readers. The win is to become your own distinct
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voice. Stephanie is 20 years younger than the rest of us, she's from a different part of the world
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than the rest of us, she sees the world differently than the rest of us, we're waiting for Stephanie,
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not somebody who's just going to report what the old white guys have to say. Tina at Swiss
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now has more readers than I do. So if she comes to me and says I'd like to ask you four questions
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about your new book, just selfishly, never mind my part that I like Tina to succeed because she
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came from zero to that many in no time. I'm saying oh that's like being asked to be on TV, I'm more
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likely to do that because those are new readers, more people who are there to hear Tina, not there
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because I'm there. So I'm honored to be asked to do that. And it's not just a numbers game, it's
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distinctive point of view, you know a Mark Marin or Bob Lefzitz, those people honor you more
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when they want to talk to you than someone who's just taking good notes.
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All right, I'll try both. The first is just a simple technique that only works for
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Fortune 5,000 corporations or bureaucratic nonprofits. And it only works when you have an offer
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of significant benefit to the institution you're trying to sell to. Those are the two key precursors,
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but that's fairly common. So what you do, it's from a book called Telling De Vito, you write a
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single page letter that describes not what is on offer, but what sort of offer it is. Meaning,
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I have something I want to tell you about it takes 10 minutes and it's going to increase the sales
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of Microsoft Word by 15%. Or I'm launching a new company, it is in this intersection of this
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and this and I need to find out who you're nonprofit can mention this, you know, what we're doing.
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So it leaves mystery to the question. It is not enough of a question that you can get a no.
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We thought about what you just said, the answer is no. It's, are you interested in hearing about
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the thing that's behind this curtain? So that's the question. And then what you do is you use
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their website and you find six people in the organization who might be in charge of the answer
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to this question. Senior Vice President of this, Vice President of this, Director of this,
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Vice President of that. And you list all the names in the two line of this letter. Okay? And you
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print six copies and you highlight one name for each of the six copies. With me so far, then you
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take the six letters, this still works in an electronic world. You take the six letters and you put
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them into six inter office male yellow things with the names or into just plain enveloped and you
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have six envelopes, Steve Balmer, Bill Gates, blah blah blah blah, six envelopes. Then you call
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the company. So far you've invested two minutes your time, right? You call the company and you
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ask for the mail room. And whoever says the phone in the mail room, you say what's your name?
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The guy tells you his name, you're hanging up. You say thank you very much, you're hanging up.
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And you get a FedEx envelope and you FedEx the guy in the mail room, the six envelopes with a
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post that says please distribute. And what happens is it's his job to distribute them. So six
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six of these letters get delivered to the six people you're trying to reach. We know that they're
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going to get delivered. The person opens it, they see the other five people who got the letter, right?
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There is no recourse other than contacting the other five people to find out who's going to handle
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this. Because they don't want to write you a yes, I want to take a meeting to find out what
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someone else would them a no go away, right? Or the three of them offered you separate meetings.
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So one guy gets assigned to deal with you. And often that person will either call you or send
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your notes saying what's up. And what you've just done is you found one person who's willing to give
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you one minute to find out what it is that you have that's they really need to hear about. Now it's
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up to you. But it's so much more effective than spamming people with their email or leaving
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100 messages on their voicemail system. Because what you've done is you've respected the hierarchy
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and everyone in the system has done what they need to do. So it's nothing I do very often,
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but every time I ever did it it worked. Selling to VITO. The entire book is that.
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It depends on what you and your family need for a piece of mind. My basic suggestion for the
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typical person who wants to do this is to act like you have no money now. To eat black beans and
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brown rice every single night. Never go to a restaurant, never go to a movie, move to a smaller
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house, sell your car, get a used thing. Just cut your costs to zero while you're still making what
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you're making now. And take 80 or 90 percent of the money and just pay it into an account. Get to
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the number in the account to a number where you and your spouse and your family will be happy
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for X number of months without any income. And it might be that you have to do this for three years
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before the amount of money in that account is big enough. But you're still eating black beans
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every single night. So you're paying the price early, not paying it late. And then there will come a day
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when you say the combination of my freelance income, my project income, and my hope is greater
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than my need for this other thing I have going on. And when that moment comes, then with a happy heart
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you can go and take the leap. It's so much easier today to make money for multiple streams of
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income than it was 20 years ago. That there are lots of ways you can string together Saturday
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works, Sunday work, evening work, so that it gets closer and closer to the day. You can say I don't
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need the security of this paycheck. But if you have a spouse, it's really their call because if
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they're not in, it's painful to take the leap when they're not ready.
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I think a lot of it depends on the industry. It's very easy to imagine that the beach head is
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like when I was at Yoyodan and we set up American Express and Procter and Gamble. Like what else do
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you want? We're going to master card next and master card looked at that and said we don't care.
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We don't care that American Express is a happy customer wrote your testimony. We don't care
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that Procter and Gamble is it. So suddenly my beach head wasn't worth a thing,
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except that they paid their bills. So it's very easy to seduce yourself into thinking there's
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this magic customer. I'm not sure in many industries it works that way quite the way it used to.
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Technology industries are a little different because there are people in the technology business
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who want their competitors to adopt you and they will actively promote you because they want
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everyone to be digitizing this or working this way. It helps them. But in general I think
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customers is a customer and a cash flow beats a beach head any day because once you have enough
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cash flow then you have the power to look for a customer prospect in the eye and say maybe this
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isn't for you and start leaving. And when you say that all bets are off. They chase you.
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They're like what? You can live without us. Suddenly they want to work with you. So as we
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talked about in the Shippet thing you can't have a beautiful website that includes everything on
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the same day you could have just your bought. That one would take a year and one would take a week.
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There's almost nothing that's worth waiting the year for if the alternative is to go for a week
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and interact with the market. That's what I'm saying. So the people who come to me and say I've
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just spent four years writing this book. Now I need to start a blog. Have made a huge mistake.
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They should have spent four years writing their blog and now they're going to write a book
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because the four years that they were silent were four years they didn't get to interact with
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people who could trust them now that they're ready to have a book. For you there's only 225 people
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who trust you. Your number one goal is to get to 2,000 people who trust you and you need to start
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tomorrow. A beautiful website is fine but it's not going to be worth waiting for if you haven't
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already built your way to the 2,000. Love that question. I'll give you the short answer.
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That's someone who's married to a lawyer, friends with former lawyers, lived in the law school dorm
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for a year. When I was in college my partner, me and a third guy started a company. We raised
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$5,000 from each other to start it. We spent $3,000 on legal fees. It was stupid.
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A legal document might be an important marketing tool in certain business cases where it is
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skateboarding park where the presence of a dense block of text makes you look more official.
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If that's the case you might want to buy that or get effectively by stealing it because stealing
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legal documents is always a fine thing to do. But generally the goal is not get sued, not to have
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a legal document in case you get sued. So you can write a legal document that will help you not
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get sued. The way you do that is two things. One, you write it in really clear English. So you both
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know what you actually agreed on. That dramatically decreases the chance you're going to get sued because
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most of the time people sue because they are hurt and angry, not because they think they can make
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money. Well, if they know what they signed they're way less likely to feel hurt and angry because
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they know what they signed. And number two, which I've been using forever is you put a clause in
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that says any disagreements we will settle by binding informal arbitration. You pick a lawyer,
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I pick a lawyer, the two lawyers pick a third lawyer. That lawyer spends three hours looking at
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memos that we both write and decide to write. End of discussion. Once that's in there then both
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sides understand they can't outspend the other one because the whole transaction is only going to
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cost $1800. Three hours of this lawyer's time. Right? And so rather than risking a
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crapshoot at that they're trying to find a way to agree with each other because it's just not
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worth it because they know they can't bully their way to victory if they're wrong. So the combination
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of look, me and this is what we are agreeing on. And by the way if I missed something we'll settle
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it this way really goes a long way to helping you out. And the last thing I would say is as you go
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forward and you get bigger what you want is a lawyer who works with you the following way. You write
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down what you want an agreement to do. You do all the hard work of saying what you want it to do.
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And then you go to the lawyer and say all I am paying you to do is make an agreement that does this
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I am not asking your advice about how I should win. I'm just asking you to make the agreement do this.
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And it's going to be a long time before you need what Google has. Google has so many millions of
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users that they have to worry about edge cases. You don't have to worry about edge cases because the
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combination of your handshake and your arbitration eliminates all of it. But I'm not a lawyer and if
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vast majority of imprinted junk is it's invisible. And the reason it's invisible is it's expected.
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So think about everybody here how many of the people in this room did you shake hands with? Almost
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everybody. How many do you remember shaking hands with? No one because handshakes are invisible.
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On the other hand if when you shake hands with people you know you're going like this. People are
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going to remember that for a really long time because you did something that was unexpected.
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So the challenge you know when you came to something with only 20 people in it you didn't expect a
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custom mug with the agenda on it that's why I did it that way. So because it's well maybe you'll
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bring two of these home I hope you will. So when you think about how are you going to give people
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something that they're going to remember? So you could for example go to the bank and get
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a hundred Susan B. Anthony dollars or not even Susan B. Anthony but go to a coin store and pay
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two dollars for a hundred John F. Kennedy big giant things and people say what are you doing? You
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hand them a big fat coin. Doesn't even have your name on it. And they say what's this? Now you have
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a chance to tell them a story. I can't off the top of my head make up a story about why you would give
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them a Susan B. Anthony dollar but you could probably come up with a good one. Right? And
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was they going to do spend it? No they're not going to spend it they might make it their good luck
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coin. In fact you could say always keep this in your pocket because blah blah there is in my
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brag a coin I gave to every single person the day I sold my company and there's a guy Ted
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I see him in New York probably once a year at random on the street and it's been 10 years every
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single time he reaches into it. He still has it and he can tell me the story I told them when I
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gave him the coin. Okay so the point is it doesn't have to be some fancy thing from China or
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imprinted it can be an object it can be a popsicle stick and you're just always giving out lolly
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pops or popsicle sticks and there's a story with it and you that is the icebreaker that you use
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to be memorable as opposed to all that trade show junk that means absolutely nothing.
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Okay so I have three posts about this so you can google it on my site. The short version is
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you start with two kinds of names names it means something names that don't names that don't
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Amazon Starbucks Nike Apple they don't mean anything until the company comes to exist whereas
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workflow I'm making that one up a company that does workflow solutions meant something before
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the company even existed. If you come up with a fanciful name it's a blank slate and you get to
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fill it with meaning right the bad news is for the first year you got to explain what you do
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on the other end if you come up with a name that means something then you don't have to explain
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as much at the beginning what you're doing it fits into a box. The vernacular in an industry
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matters on the web if you have a name that means something people don't think as much of you
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in the investment community because all the people who came before you the Googles and the yahu's
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and the e-bass didn't mean anything so when you say we are salesforce.com I like oh you must not
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be a big idea because you told me what you do already right so the position in the minds of the
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investor journalist shifts based on which name you picked. The second thing is you are
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else still matter because a lot of people don't know how they work and know to type .ly at the end
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or whatever so there's still more value for consumer brand if it ends in .com so then you've got
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to think about what can I get well every English word everyone with six or fewer letters is taken
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and I think seven or fewer letters taken every single word so it can be expensive but you might
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decide it's worth it to go by this and I'm going to tell you the 10 second version of
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schoo-doo is going to be called fisheye and fisheye.com was taken a guy owned a fishing boat
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in the Caribbean and I offered him $10,000 for a fisheye.com and he said no because it was the name
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of his one fishing boat. Anyway flight got canceled I misdirected my plans I ended up on the
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Cayman Islands teaching my son how to scoop a dive it was right after her cane we're driving to
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the hotel shipwrecked on the shore I saw the fisheye the boat literally saw the boat true story
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and but by that I already named the company schoo-doo so fisheye didn't happen.
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Anyway so the easiest way to get a domain is to take two English words and put them together
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right? Red eye fisheye upside down you know this is where the cool people hang out .com
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because length isn't your issue length is free you can have it be as long as you want as long as
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you can remember it and so again depending on how big you want to be and how you want your
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customers to perceive you early on you're going to pick a name that satisfies those goals you will
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not listen to your family you will not listen to your trademark lawyer you will not listen to anybody
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who thinks they should tell you stuff because everyone has an opinion about your name and especially
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about your logo none of their business you just like ignore them that's not the point they don't
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know what it's going to mean the same way you don't have a poll before you name your kid
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you just name your kid and then their name comes to mean something over time okay so on that
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now we're going to wrap up for the day you don't have to come tomorrow I'm not promised to
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anything tomorrow there won't even be muffins here but I did offer that I will be around and I
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will be around I just want to say if I can find out here this the last thing I want to say to you
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um oh where to go
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here it is I made a t-shirt for my new book I'm going to show you what it says and I think you're
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all ready to hear it this is where you I need to head you can't read it in the back fly
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closer to the sun nothing bad will happen I promise thank you guys for coming I'll see you
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you
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thank you for listening to the startup school with Seth cotton to learn more about Seth or
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to subscribe to his daily blog please visit cetgodon.com you can also find his books in any bookstore
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or on amazon.com
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This has been an earwolf media production executive producers Jeff Ulrich and Scott
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For more information visit earwolf.com