From SETH GODIN
[For the small-time marketer, the non-profiter, the freelancer and the local small town entrepreneur... -DS]
The tyranny of low price
If you build your business around being the lowest-cost provider, that’s all you’ve got. Everything you do has to be a race in that direction, because if you veer toward anything else (service, workforce, impact, design, etc.) then a competitor with a more single-minded focus will sell your commodity cheaper than you.
Cheapest price is the refuge for the marketer with no ideas left or no guts to implement the ideas she has.
Everyone needs to sell at a fair price. But unless you’ve found a commodity that must remain a commodity, a fair price is not always the lowest price. Not when you understand that price is just one of the many tools available.
A short version of this riff: The low-price leader really doesn’t need someone with your skills.
“If I were you…”
But of course, you’re not.
And this is the most important component of strategic marketing: we’re not our customer.
Empathy isn’t dictated to us by a focus group or a statistical analysis. Empathy is the powerful (and rare) ability to imagine what motivates someone else to act.
When a politician or a pundit vilifies someone for her actions, he’s missed the point, because all he can do is imagine what he would do in that situation, completely avoiding an opportunity to see the world through someone else’s eyes, to try on a new worldview, to attempt to imagine the circumstances that would lead to any action other than the one he would take.
When a teacher can’t see why a student is stuck, or when an interface designer dismisses the 12% of the users who can’t find the ‘off’ switch… we’re seeing a failure of empathy, not a flaw in the user base.
When we call a prospect stupid for not choosing us, when we resort to blunt promotional tactics to get attention we could have earned with a more graceful approach–these are the symptoms that we’ve forgotten how to be empathetic.
You don’t have to wear panty hose to be a great brand manager at L’eggs, nor do you need to be unemployed to work on a task force on getting people back to work. What is required, though, is a persistent effort to understand how other people see the world, and to care about it.
Patient capital, markets that work and ending the endless emergency of poverty
Multiply the population of the US by three. That’s how many people around the world live on about a dollar a day.
Do it again and now you have the number closer to $2. About forty percent of the world lives on $2 or less a day.
What’s that like? What happens to you when you have two dollars a day to live on. It’s almost impossible to imagine. I mean, $2 is the rent on your apartment for about 45 minutes. $2 buys you one bite of lunch at a local restaurant…
And yet, two billion people survive on that sort of income.
The key issue is ‘survive’. Subsistence income means that you have the barest possible cushion, that every penny is spent and you are on the edge at all times. It makes life an emergency.
If every single thing goes perfectly, then you and your family will go to sleep tonight healthy, not too hungry and fairly safe. But of course, every single thing almost never goes perfectly. If you are bitten by a malaria-carrying mosquito, you need to buy medicine and so there’s no money for food. If you need more water, you have to spend two hours walking to and from the nearest half-decent water spot, and those two hours are the two hours you were going to spend harvesting the food your kids need.
From a fundraising point of view, this endless emergency is exactly what a non-profit needs to find and close donors. A dollar donated today will save someone’s life. It will. One dollar, one life. That’s urgent. As urgent as it gets.
The problem, of course, is that it doesn’t save that person’s life forever, it saves it for today. Tomorrow, there’s another emergency, and yesterday’s dollar is gone. So you need another dollar. Two billion people, two billion dollars. Every day. Today, tomorrow, the day after that. It’s an endless emergency, and it never gets better.
That’s where patient capital comes in. It starts with this belief:
If you’re one penny behind, then every day you fall further back. Every day, the emergencies get worse, the stress gets worse, your ability to survive (never mind thrive) gets worse.
If you’re one penny ahead, though, just a penny, then every day you build a reserve, every day you are able to invest in productivity or peace of mind, and soon you are two pennies or a dollar or five dollars a day ahead. And then you can send your daughter to college. And then you can buy something from the merchant next door. And then you can plant a better crop. And then you have a stake in the community, and then the world changes.
So, how to create this micro surplus? How to prime the pump of the system to improve productivity enough that things get better?
When two people trade, both win. No one buys a bar a soap unless the money they’re spending for the soap is worth less to them than the soap itself.
When someone in poverty buys a device that improves productivity, the device pays for itself (if it didn’t, they wouldn’t buy it.) So a drip irrigation system, for example, may pay off by creating two or three harvests a year instead of one.
What does that do for the family that buys it? Well, if you have one harvest a year and you’re living at subsistence, it means your income is zero, or probably just a little below. If you can irrigate and get two or three harvests a year, though, your income goes up by infinity. Now, instead of making -1 pennies a day, you’re making 100 or 200 pennies a day. That’s a surplus of $700 a year. That’s enough to participate in other productivity or life-enhancing investments, like a well, or a roof, or health care. Now, the edge is a lot further away.
And what does that do for the family that sells it? When markets arrive, productivity increases and new innovations can be diffused more quickly, because change is brought in by the market.
How does Acumen Fund create these markets? The answer is patient capital. The companies that are selling solar lamps to replace kerosene or water purification systems in tiny villages, or housing projects for peasants in Pakistan or even ambulance services in Mumbai fully intend to make a profit, but the venture capitalists on Sand Hill Road aren’t in a hurry to invest in them. The investments are a little too risky, take a little too long or a little too unproven to take a chance on.
So Acumen finds these entrepreneurs on site in the developing world, funds them, teaches them and pushes them to build really big organizations. A to Z has literally thousands of people in their modern factory creating malaria bed nets in Tanzania. And so it grows.
I’m thrilled at the work Acumen has done, and excited about where the fund is going. I’ve got some interesting fundraising ideas to share with you this fall, and I thought it was worth taking you through my reasoning as to why I chose this organization as the recipient.
Any entrepreneur or marketer can learn a lesson from how new systems create new markets, and how an infinite increase in income or productivity can change everything. Everything.
How to make money online
- The first step is to stop Googling things like, “how to make money online.” Not because you shouldn’t want to make money online, but because the stuff you’re going to find by doing that is going to help you lose money online. Sort of like asking a casino owner how to make money in Vegas…
- Don’t pay anyone for simple and proven instructions on how to achieve this goal. In particular, don’t pay anyone to teach you how to write or sell manuals or ebooks about how to make money online.
- Get rich slow.
- Focus on the scarce resource online: attention. If you try to invent a way to take cheap attention and turn it into cash, you will fail. The attention you want isn’t cheap, it’s difficult to get via SEO and it rarely scales. Instead, figure out how to earn expensive attention.
- In addition to attention, focus on trust. Trust is even more scarce than attention.
- Don’t worry so much about the ‘online’ part. Instead, figure out how to create value. The online part will take care of itself.
- Don’t quit your day job. Start evenings and weekends and figure it out with small failures.
- Build a public reputation. A good one, and be sure that you deserve it, and that it will hold up to scrutiny.
- Obsessively specialize. No niche is too small if it’s yours.
- Connect the disconnected.
- Build an online legacy that increases in value daily.
- Make money offline. If you can figure out how to create value face to face, it’s a lot easier to figure out how to do the same digitally. The web isn’t magic, it’s merely efficient.
- Become the best in the world at something that people value. Easier said than done, worth more than you might think.
- Hang out with people who aren’t looking for shortcuts. Learn from them.
- Fail. Fail often and fail cheaply. This is the very best gift the web has given to people who want to bootstrap their way into a new business.
- Make money in the small and then relentlessly scale.
- Don’t chase yesterday’s online fad.
- Think big, act with intention and don’t get bogged down in personalities. If it’s not on your agenda, why are you wasting time on it?
- Learn. Ceaselessly. Learn to code, to write persuasively, to understand new technologies, to bring out the best in your team, to find underused resources and to spot patterns.
- This is not a zero sum game. The more you add to your community, the bigger your piece gets.
A few years ago I put my book The Bootstrapper’s Bible online for free. You can find it here.