seven and so as you recall I promised you 13 lectures so this is where
crossing the middle of it so the usual introduction myself liby who wants me to
scream and ay and obviously ruy who is not in here what to give me your picture
next time we’ll add you here okay so what is Smart Up Academy I always repeat
this our purpose is to teach the profession of building a company
okay uh what what I believe in is that
we can teach people entrepreneurs how to build a company that there are
principles very much like in any engineering profession that you can teach many of the problems you face or
are going to face have been encountered before and there are solutions for them
and so what we try to do in here is expose all of these issues in advance and teach you how to deal with
them so this is called the foundation course and the first thing we want to do
is tell you what do we consider to be a successful company and we put three
principles for for a successful company first and foremost is it should be
profitable second it should be fast growing and third it should have a
modest investment so a company that um raised $50 million and was sold for $30
million is not a huge success even though the exit was $30 million so what
we’re trying to show in here is how do you build a company with uh relatively Ellie there’s
a chair right here uh with a relatively modest investment what is a modest investment
anywhere from a few hundred, up to three four five million what today in today
parlance is uh preedee which is kind of
ridiculous and we also have workshops to deal with specific subjects and the most
important thing is I can teach whatever I want I can give lectures I can say materials and the moment you face the
problem you forget everything I said and you’re going to do what you got tells you to do that’s life so the only way
that I believe to learn is by practicing and for that practicing I put the
picture which reminds everybody you’re not going to go to any doctor that finished MD school after six years and
he’s on the D’s list but I’ve never seen a patient you would stay away until he
spent three four five years in the hospital and then maybe you will go but you would like to really talk to the
head of the department why because he has 20 years experience so that’s what we’re trying to do
here so since we are in Midway I thought I will give a very very quick recall or
summary of the previous lectures I’ll do it very quickly here if we have time at the end I took two or three slides from
each lecture so I can repeat and talk a little bit more about what we learned in the last six lectures but here we’ll
just really touch it on you know so the first lecture was about the Venture Capital
model and compare it to the smartup model which I think is the core of a lot
of what people believe today a smart startup should look like comes from what
VCS need in order to return their investment so we talk about how the
money flows in a venture capital firm we explain why they need must have an
exit within a relatively short period of time which is about seven years maybe with a little bit of
extension and really that working with with us we’re talking about a very
different Target which is profitability and we’re talking about the infinite game no exit so we want people to build
the company to as long as they want without any outside uh constraint
brains the second lecture we talked about branding first and the idea there
is um before you start developing the product before you invest anything in
R&D and do all of that stuff try to make sure that people heard
about you know something about you that your name is out there how to do that we
talked about in the following lecture talked about SEO
longtail talked about repetition that you have to be out there that people know about you we brought in the
advertising of the absolute vodka which I think is the Hallmark of repetition
they had like 3,000 ads all different from one another and all have the same
theme talked about thought leadership which is how Gartner build their brand
the Gardner magic quadrant and we spend a lot of time on it and talked about the competi by the Inc 5000 how they build
their brands around the competition so there are many many ways of building a brand we covered it in the third
lecture fourth lecture was about what is a business model and what we did there is we built
a spreadsheet basically a business model is a spreadsheet that looks at the income the
revenues and the expenses and and the difference between one and the other is hopefully profit at the beginning it’s
probably a loss but what we did in here is we also
tied the three principles be profitable grow fast and uh small investment to
three measurements that we do on the business model which is the number of months to
profitability how fast can you become profitable the investment you need obviously correlates to the invest
and the number of months to repay the investment so if you raise $2 million
when do you generate enough profits to pay back the $2 million I know that it sound like a heresy
for tech companies startups returning the money what are you talking about but
in reality in every other normal business when people give you money they
want to see it back if you invest in real estate the first question you ask is when can I get my money back right
it’s just the Venture Capital Hightech all of that bubble live in a very
different Universe yes how what do you mean byid generate generate enough profit
that cover the expens if you really return it or not it’s a second question but how do you meas profits just
accumulate the profits let I invest something let’s let’s move on talk to you later okay because I’m just
repeating what I talked few lectures ago all right if you were few lectures ago I
would have happily answered you uh obviously if the top line is revenues
then the question of pricing models is critical we talked about several things
on how you can uh change the price different market segments usually you
can charge very different prices you just need to be smart about how you differentiate market segments depends on
the positioning do you want to go and be Upstream do you want to go after businesses do you want to go after
individuals and our recommendation because you want to be profitable it’s
much easier to be profitable when you charge $100,000 than if you charge a $100 but obviously everything has to
change if you want to charge $100,000 so we talked about that as
well and the last lecture was about jobs to be done and we talked about the four
dimensions by which you can analyze and measure what is the job to be done by
the functional what is the specific jobs customer want to do contextual in what context when do they want to do it where
do they want to do it you know why they want to do it emotional many many times there is an emotion like people buy
dresses or or watches or a car standard symbol they want to feel good about it
right and same goes for social so that’s kind of a very very quick summary of
what we discussed until now and today I want to talk about a whole different
concept which is a growth engine what is a growth engine so a
growth engine is a process let’s first with that okay it’s a process that the
company does or plans to do many times and repeatedly it’s not a onetime process it’s something that you kind of
do as part of the company uh operation and it can be in any part of
the company okay so branding marketing manufacturing sales accounting customer
support you name it there is a process somewhere there and what I want to talk
is what is a growth engine in each one of those okay so a growth engine is a
scalable process and what do I mean by scalable you can double the
output with a very small increase in the input and the input is efforts okay or
money or whatever you want to do a linear one is if you want to double
the output you double the input right it’s a linear this is not I avoided calling it
exponential okay but it’s clearly something that many many times you have a beginning investment you build some
infrastructure and then you can get a much higher output because you’re hey infrastructure we’ll see a million
examples uh throughout this presentation the grow engines are really
critical to accomplishing the three uh targets that we want without
building your company thinking about the concept of a growth
engine chances are you will never accomplish this okay so it’s a mindset more than
anything else you have to do a job it’s repeatable it’s happening all the
time spend the time to think about how can I do it more efficiently more
efficiently means scalable I need to do it 10 times bigger but I don’t want to
increase the expense 10 times okay
okay I want to talk about what is kind of people think about them because of the word growth is tempting to think
about it so I call them growth opportunities but they’re not really growth
engines so I hope that by giving you that list you will start seeing the distinction I’m making between growth
engines and other things so strategic partner right you have a startup company and suddenly you
get a phone call from a big company and say oh we heard about what you do we’re really interested uh we want to talk to
you right strategic partner we want to do something together is that a growth engine the
answer is no it’s a one-time event it’s not
scalable and in most cases with a strategic partner it’s the fly telling the horse
look at how much work we did right they don’t you know strategic Partners usually are a mismatch to a small
company so don’t waste your time even on it very large customer again
tremendously tempting to spend all the effort the problem with a very large customer again unless you’re you know
much bigger company you have one of those it’s not scalable and they know they are very
large customer so they basically you’re laughing right they basically own you
because they’re dragging you around to they suck
your resources completely okay so don’t call those growth engines it’s not an
engine okay important distributor again you’re
doing something you get a phone call from India and somebody tells you wow you know I’m the biggest distributor of
XYZ things in India and I heard about you good things blah blah blah blah blah blah stay away from that it’s not an
opportunity he’s calling you because he’s in a distress you don’t want
to maybe yeah you know but I’m just saying because I’ve seen it time and again with companies they come in and
they’re excited and they tell me they got this phone call and and wow you know no it’s not wow that’s not a growth
engine critical trade show well I don’t know how many of you ran a company but
in most companies there is an annual or twice you know the year huge trade show
for the specific things that you are doing and your VP marketing tells you we
have to be there because if if we are not there there’s a statement that we are total failure we have to be there
and the booth cost $100,000 and sending the people is another $50,000 and blah blah blah blah a quarter of a million
dollar but it’s really really important for us to be there the answer is there’s better use of quarter of a million
dollar you can go there as a visitor you know you spend $500 and you enter the
the hall but why because it’s not scalable even if it was successful you
can’t do another one following months you just can’t so it’s irrelevant kind
of I’m really digging into it just to give you a sense of what is scalable and
it’s a growth engine you can turn it on and on and on versus things that are one
time or just noise even though they look so important marketing okay so you hire VP
marketing and they pull out their plan which is the same plan they used in the last company and in the last two
companies and in the last three companies and in the last four companies it has the same plan we’re going to put
blogs on the internet we’re going to write articles we’re going to issue press releases and most important when a
new VP arrives they Chang the logo I have about 10 different logos of Zoom info because every VP marketing that
came in Chang the logo I didn’t let them but there was like a sun with a lot of
rays and each VP marketing one of those so we started with 11 and I think we
ended with seven so so just so that they feel that they did something why is it
not a a growth engine it’s not a growth engine because the other side doesn’t
look at it you can write as many press releases as you want nobody reads them it’s that simple if you want your
blogs to be interesting it’s really difficult to do and after you do two or three of them unless you’re really
phenomenal writer most companies produce two or three good ones and then they stop it’s just hard to do good writing
interesting and Innovative every week or every month okay same goes for articles
so they are not a growth agent because it’s very hard to sustain not the end of
the world but it’s very hard very few companies succeed and it’s difficult to invent content that people will read
it’s just very difficult and obviously the next big feature if we just had that future the
whole world will buy no they never heard about you so forget about it
okay company attention must be focused on identifying and building
growth engines okay I said it before this slide and I’m saying it
again you really have to be obsessed with thinking how can we do it better
and if it’s an important activity you have to be haunted how can we do it
better because that’s the only way you’re going to grow fast and become successful and
profitable so let’s look a little bit about what other companies did you will already talked about many of these
things but you will see it again so we talked about SEO which is companies that build very large presence or very large
data sets of information on the internet get a lot of people so how do they do it this time what I’m going to do
is instead of talking about the technology of the SEO long tail I’m going to talk about the growth engine
embedded in it okay it’s just a different view a different angle on the same
activity so LinkedIn what did they do they basically built an empty
platform who puts the content that is worth so much you and you and you and
you and you and you right their success was in convincing all of you that it’s
important and valuable for you to put your input your data your information
into it whether you are a company or a person okay but remember they growth
today this is a growth engine has very little to do with their investment because it’s the impact that they had on
people that they come in on their own will and they put the information in by the way because of that they
lost the lawsuit there was a company that scraped them they sued them the
company said but you don’t own the data it belongs to the people the only reason they put it is for others to read it I’m
other and I’m reading it and they won okay which is why Zoom info had all the
data from LinkedIn they sent us a letter CIS and desist and while we were
debating with them the courts solved the problem and said no you don’t own the
data people advisor so PR advisor started by seeding the internet or their
site with list of locations and hotels they just put the hotel basic information address a few pictures and
then people they didn’t even expect it people started writing a lot of uh input about the
hotels about the locations and it started attracting more people and then they figure out how to make money out of
it again I knew the founder but here is again they build the foundation but the
data is coming from users okay yel same thing okay you can even
find in Yelp if you look carefully you will find a company called Alon Technologies up on River Street in
Cambridge uh that’s the name by which Zoom info was created in the year
2000 um and they have a very old database where this information is still there nobody en reached it for whatever
reason I don’t know why but you will find Alon Technologies there Facebook
very similar okay except that it’s not just that it was empty you have the network effect so nobody will put
information there unless there are readers so people invite other people to connect with them to see what they do
and so forth so that’s a typical classical Network effect again I’m not
saying it was easy to do okay don’t misunderstand me I’m just trying to show you what an growth engine is and how it
feeds on itself in this ways uh Zillow again but Zillow is somewhat interesting which is why I put
it in here it’s basically a page per address in the US every address in the
US appears there they used it they begin it with you know just a mapping
application but then they started automatically enriching it by connecting it to other databases for example every
house in the US that is sold or bought is reported so they can get in the
public domain data so they can take this data enter it into it and then they can start doing an analysis that in this
neighborhood in this city the average price per square foot is so and so and so forth so they did all of these
connections but from then on the information is updated all the time automatically okay so that’s the growth
engine of it okay and obviously Amazon no need to
talk about it what I want to do again is go over
something that I described I think in the second or third lecture which is one of the companies in smartup called
offer those of you who were here heard but what I’m going to do is actually
look at it again but this time look at it from a perspective of a growth
engine okay how did we do it with very little resources and how did it grow
afterwards Okay so it’s a tool for devops engineer I trust
that nobody here ever heard about elastic search or elastic search clusters doesn’t really matter and the
prospects were devops engineer elastic C devop engineer and we were looking for a
way to create a brand okay so that was the question we were facing and the way we did it again those
for you who were not in the uh lecture we started to look at the problem not
the solution okay because we didn’t have a solution at the time well we knew there is a problem in maintaining elastic search
clusters and so we asked ourselves if a devop engineer encounters
a problem what do they do okay and the
answer became you know I asked it several times and then suddenly Z who was the founder said well I don’t know
there are error messages that they produce and they put them in a log so
you can you know I look at a log many times and I see the error messages so I know what’s wrong said oh interesting
how many error messages are there so let me first show you the examples okay
could not lock index writer is locked delaying a location for
unassigned shards next remember basically mumbo jumbo none of us
understand what it means okay um but what we did is is we took all of
this information and we built a page per error
message and we published it and lo and behold
because this is Google we put the first line you see could not lock about whatever it is and we are the first
place and the reason is there was no competition who on Earth is going to put
information on elastic search error logs nobody in the world except obster so
when people copied it from their log and put it in Google we came up first okay
so that was an easy give um and how did we do that so I
asked Z tell me how many error logs exist he says I don’t know I said can you know said yeah piece
of cake give me a few minutes he wrote a script because it’s an open source right he wrote a script I don’t don’t ask me
what was in the script and he answered that there are about 700 different error
logs so I asked him okay let’s take a few aogs tell me what they mean he looked at
them and he said honest to God I have no idea so we’re developing a product we
don’t know what it is right we’re trying to build the brand we have a direction
and we have no clue what it means
okay so what we did is the following we took the 700 and I’m explaining it in
detail because I want to show you how you build a growth Engine with very
little investment so we took those and we said what can we say about them so
okay we can copy where the arrow log is printed and put three lines of code above and three lines of code below and
presented great we can also show you in what part of of the code it is so you
know if it’s in the indexing if it’s in the search if it’s whatever okay and we
added some UMO jumbo if we find some MBO jumbo on the internet mainly at stock at C over
Flor okay and we published it and here’s what happened we published
the 700 pages and we discovered that about 60
Pages generated the most traffic so that means that these were the error logs
that were of the most interest to people so what we did that which is not rocket
science is we went to experts and we asked them what do they really mean and
most people didn’t know but they did the research and we enriched about 6 60
pages so what we got think about the amount of work we invested which was
very very little we got the best real content on this on the web with very
little investment and that’s the key issue here that’s what I call the search engine uh
growth engine okay so here are the results you can see the traffic growing over time
the reason it ends in 2022 is that year later we sold the
company um so traffic is great but we needed
customer so we need another trick of a gross AG this trick is you develop a free
product and you give it to people the only thing you request is when they use
it or download it they put their name and email address and so forth right so you convert all of these Anonymous
traffic into real people and this was it welcome to obster
Free checkup and you can just take two files that you can take from the elastic
clust and put it in there it analyzes it and you need to create an account and
this again we made an investment to develop Czech so that was I don’t know a
month two months of an engineer time but from then on it worked forever growth
engines remember you want a small amount of effort that can scale up this is very
different than dealing with a strategic partner or big customer who sucks up all your resources we did that kind of on
the side you start to get the feeling of what this growth engine
is okay very low customer acquisition cost
so we pay we spend very little money in order to get this and these are the numbers you can see it growing okay the
uh red is red new ones and the blue is the total number
okay but um we wanted to continue to do this
was the first content we developed what I showed you but there was a hunger in
the market for a lot of explanations in how to on elastic search it turns out
that elastic search was pretty bad at um writing content about the how
to how do I do this how do I do that with my system and I’ll explain in a moment why
only good Engineers can produce good content but what do the good Engineers do they write
codes so the VP marketing says I need you to write at least one how-to article
a week and he says sure no problem and then a month later they come and say so where is it oh I was busy
there were these issues and nothing happens okay so that’s why there was not
good content on the web about how to and here’s how we did it so what we did
is we we encountered the same problem internally okay so we weren’t that smart we tried to use our Engineers to write
good content and we encountered the same problem so the Marketing Group were very
smart and they said I have a solution and the solution was let’s use our very
sophisticated talented technical people just to tell me what they want to be
written not the the writing itself just what is interesting what howto are interesting so they sat down and they
put a curated list of let’s call it titles subjects I want you to tell me
how to do this how to do that write me an article about this so we had a curated
list and then we published it and we are you know on app work or
whatever I don’t remember where we P we publish in several places and we ask people who understand elastic search if
they want to beid for that and that we’re going to pay $300 per
article and we got you know several good bites and people did it and then we took
what they wrote and they sent it to the same people who curated the list and we asked is that what you expected is that
good enough or not good enough and we narrowed down the writers to about I
think there were five or six at the time when the company was sold uh that were writing really good
content so what each one of them would do is they go on the list pick a subject
put their name next to it and write it and there was a person in the uh
marketing team happened to be my daughter uh that Managed IT and made sure that they do write it and they gave
her the time when it’s going to be ready and she was bothering them to get it ready but
um we we edited the Articles when they uh technical people said it was good
enough my daughter looked at it and corrected the English and we consistently published several articles
a week consistently why because we outsourced
the work but in a way that we had full control over the outcome at a fraction
of the investment this is why I went into the details remember it’s a growth engine
you want something that is sustainable that can continue to work we
people came in and out of the you know uh group of people who were writers some
of them went on vacation some of them did two or three articles and stop but all the time we were hiring people per
article with a process of figuring out whether they’re good writers or not we
produced the list of subjects and it continued to produce all of
that as I said the company was acquired and it was acquired for what I
wrote in the auto Ops was the main product which was extremely important for uh
elastic but also for the content and the brand that we created so they integrated the auto
tools the auto Ops tool into it but more importantly what for me at least is that
they took the marketing team to recreate the same process
literally they took the marketing team they used the same writers outside
writers okay same process exactly the same process and they said we heard it
later on that they tried for years for years to produce this content
unsuccessfully drove them crazy the reason they bought us is was because their customers started to turn to us
much more than they turned to them and the tech support Engineers when they people call them and say how do I do
this oh I’ll go to officer they will tell you that really angered them so
again a growth engine because the amount of effort we put in was very very small
compared to the output give you another example okay card
scan uh you can see the picture it’s a scanner I’m now talking about the mid90s
1995 1996 uh you want to connect any hardware
this one specifically any hardware to your computer they had a desktop
box you open it there was a bus bus is like you know where you put things you
had to control board you put it in here in there and basically I showed the demo
to my board of directors and Chris one of them said
Jonathan there’s no way anybody is going to do that and I said you’re absolutely right
but that’s the only product I have so well we’re going to sell what we have later on with this product we
already had a parallel port it’s something that I don’t know that anybody here remembers that there is a par you
guys are too old okay anyway however I look at it
installing card scan was tough was tough people called the tech support the
number of tech people grew very very fast and it’s to totally linear with the
number units we sold and that was scary because remember growth engines
you have to grow the output without growing the input and here we just did one one to
one so I called all the text tech support people and we sat down and we
said we need to figure out a gross engine in here we have to figure out a way to do it so we started looking at
what takes the time you know why are we wasting time what’s going on in here so
obviously the first thing you wanted to do is identify the problems and solve them right so that when people try to
install it will install and not get into problem so we created a weekly meeting
every week the tech support Engineers sat down with the engineering team and they said here’s the top 10 items that
we saw this week I think later on we did it once a month and we basically solve
those problems so that they don’t become a tech support call but I think the real
Insight was the following you call a bank or any company
you expect to get uh you are number 13 online if you
want we can call you back put your number in here wait three hours and we’ll call you back or whatever nobody
answers the phone nobody right nobody answers the
phone so we looked at it and we said this is a phenomenal opport
Unity to change people opinion about card
scan what happens if we answer the phone we put a Target to answer the phone
within 30 seconds 30 seconds and we
measured and the idea was the following the phone rings the first line which is
somebody We Said Today you first line okay picks up the phone that’s his job or her job and what you try to do is
triage like in a hospital right you pick up the phone and you find out is it something simple you
can solve if it is not simple then you tell the person let me move you to a
more advanced technician now people feel great right I called I got an answer
they think I’m serious a big problem they’re going to move me to the expert wonderful and they were willing to wait
then okay because they got they answer the phone we ended up solving a good number
of the issues in the first call then what happened is that in the
second you know the the uh expert call you have many times this is PC right you
do something you now need to reboot the computer remember this reboot reboot
took about four to five minutes in the old days before we did the changes uh
you just started talking about baseball the weather and all the American nothing so we told them okay reboot the
system it should work if it doesn’t work call us again no no no no no I have you on the phone sir how long did it take
before we answered the phone he says well that was a real surprise you answered the phone we will answer your phone again don’t worry about it it will
work and if not call us again and people went off the phone so we finished the call and if there was a problem they
called again not a big issue we grew and grew and grew we ended up doing about
100,000 units a year with four Engineers that’s it we never added another
engineer here what I’m trying to say in here when I talk about this growth engine think
about it in every space of the company whatever you do and try to say how do I
grow the output without growing the
input this is the question that will make you grow fast and make
money and I’ve shown you until now a lot of areas in a company where that can
become interesting okay I want to compare Apple
and Samsung first of all who here is using a
Samsung phone raise your hand wonderful question how did you decide
which of the iPhones of the uh Samsung phones you want to buy how did you decide and how long did it
take you to say this is the model I want you raise your hand how long just the
latest model but there are a lot of different models
there news articles what else anything else ad advertisements what comparison
right okay how did you decide where to
buy did you compared prices right okay okay and did you make any decision about
when to buy like on Black Friday
Amazon okay so there is a reason ask all these questions you will see it in a moment so let’s look at comparing them
by numbers okay so Samsung wins they sold 271 million units by the way I got
all of this information from CAD GPT I tried to look at where they took took the information but no guarantee the
numbers are correct okay but they are I looked at the original articles by the way if you want
to do that you have to go to Edge use co-pilot in Edge and then they give you the source of every piece of information
so it’s important so Samsung sold 271 million unit and Apple only 238 the
market share doesn’t work out because you can compare the two numbers and they don’t represent 20 and 16 but
to my benefit they said that’s the market sharing Q3 whereas the top one is the entire unit and revenues again they
win they did about 246 million in that unit remember these are all conglomerates and apple says that about
half of their $394 billion doll was from the iPhone so about half 200 million
that’s what I put so who wins Samson
okay but let’s look at that share of the phone industry
profits doesn’t look at all like what we looked before 15% goes to Samsung and
75% of the entire industry profits goes to
iPhone gross margin per phone Samsung less than 20% Apple over
55% and the Imp is in the last line Samsung is worth about 400 billion apple
is worth eight times more $3.2
trillion any idea why these numbers don’t generate these
numbers branding branding branding but The Branding should come here say should
sell more phones here is what you go and find on the Apple
website iPhone 15 Pro iPhone 15 and surprise surprise iPhone 14 and if you
look I copy it below iPhone 13 so Apple’s idea on how to do put
different price points of their system is not to introduce several models at
different prices is to basically introduce an new one and then relegate the previous year
to the next level of pricing and two years ago to the third level of pricing
they accomplished several things number one their entire
engineering and production team is focused on a single phone single phone
think about how many people they save by not worrying about it I only produced
One phone this year okay the lifetime of the older phones is
now three years okay so they have cleared everything about it they don’t have to
deal with obsolete models because they keep selling them okay so now you start to understand
where the growth margin comes from but the the real issue here is the following
okay this is the same comparison but this time look at the number of models the reason I asked you about it is they
have Galaxy S Galaxy Note Galaxy a Galaxy M Galaxy Z fold and zip and blip
and dip and I don’t know what else I tried to figure out once which one I’m going to buy and honestly I couldn’t
figure it out now the reason I asked you a question is the following and we’re going to get to it
later on I call those Inhibitors of friction when a company wants to grow it
it has to make the purchase process as simple as possible and you will see many
examples later okay you want people to not have to think when I say go and buy
an iPhone I don’t need to tell you which one to buy there’s only one to buy
iPhone 15 you don’t need to compare you don’t need to read articles you don’t need to do anything one phone your
entire thinking is do I’m going to put my going to buy an iPhone or am I going to buy a Samsung that’s about it when
you say I want to go to buy an Samsung you ask quick people which one do you recommend how does this work blah blah
blah blah blah you wasted four weeks that Samsung didn’t see your money just
think about it okay pricing apple is
adamant that you buy the phone for the same exact price in every single outlet
at store now this is illegal this is illegal I’ll explain by
American antitrust rules you can decide at what price you
sell it to the store the distributor or whatever and you cannot control the
price they sell it to the end user because they want to encourage
competition so Apple doesn’t tell you at what price you should sell it to but if
you sell it that below the price they told you then suddenly they run out of inventory for you which is totally legal
I mean I ran out of inventory so very quickly the market realized that if they
want to work with apple they have to sell at Apple’s price now I’m a huge fan of Steve Jobs I
think the guy is one of the biggest Geniuses in business and Engineering so I copied that in card
skan we made sure that card skan had the same price everywhere you go there were
no promotion no nothing every day of the year you didn’t have to wait till
Christmas or New Year or whatever it is again every one of these things is friction that delays the purchase which
means it delays the money to Apple or Samsung right so I want to show you that
why is that so delivery persons okay they give them a call Vault Courier
partner you’re not an employee by any chance okay you can earn money by delivering orders to local customers as
if you control the local right when and where you want they are staying away from adding
people to the process because that gives them tremendous flexibility okay no
fixed employment cost payer delivery no benefits no insurance no
vacations no anything that’s why they do it again it’s a growth engine they can grow
significantly just by putting an ad in anybody who wants to count count really simple they also can shrink
easily they just don’t have things to deliver so the person doesn’t come
that’s it which means they have tremendous flexibility to grow and Shrink by
demand which makes it much cheaper think about the iPhone and the Samsung and all
of that stuff okay I’m trying to give you examples that you to start to understand what an engine means what
power it gives you now there’s another company who didn’t stay behind it’s called Amazon so they have delivery
service partner program the basics about being owner
operator again not my penny you do it okay of your own Amazon your own Amazon
delivery business work as an independent contractor they made it very very clear we are not your employer we’re not going
to give you any money forget it you do it on your own same
idea you can see that in many industries that they Farm out the work today you
see it a lot Airbnb same thing right all of these platforms do the same things
when I was now in Boston we needed somebody to help us carry slap 12 suitcases from third floor down and my
daughter said why don’t you use task rabbit I said what is that
and they said oh you can ask whatever you want and people could not do it you
all you want is somebody to come in and slap 12 suitcases three flight of stairs that’s it so we did it and somebody
showed up he’s doing his Masters in physics I was the best uh person I ever
met okay so C scan
again so we began by producing the scan ERS but our CFO was a really
really aute manager and what he wanted to do is
become almost like a vault when somebody buys card skin I’m going to buy it somehow and ship it to him but I don’t
want to own any inventory I don’t want to invest anything so with a lot of hard work he
figured out a company that could reduced all the stuff that was not just
a scanner and he convinced the scanner manufacturer to manufacture it in thaan
send it overseas to California on their Penny and from California drop ship it
to this person whenever they requested without us giving a
penny when we got an order we send the order to these people the order shipped when we saw the
shipping uh chart we paid the money so that means from a cash flow perspective we can grow
and Shrink as easily as possible same idea how did he do that
don’t ask me I don’t know I asked him several times and he says I know I’m pretty convincing I guess but that’s
what he did then I bought in a new CEO and he
did something that really shocked me what we used to do I’m not now talking
about end of 1990s you know maybe 2001
2002 when we sold let’s say to compa or Office Depot Office Max or any of these
stores so they told us we need let’s say three scanners in each store time 200 stores send me 600 units we sent them
600 units we gave them an invoice for 600 units and we got
paid and then we kept shipping every time they told us in this store they’re missing two this store they’re missing
one and we cryptos when we switch to the Next Generation which happens once a
year we had to take back 600 scanners or whatever it is and we had to give them
the money back on those scanners which made our financials look like look like
that which was a horrible thing to do he tried to convince them to put it on
consignment which means when I ship to you 600 scanners I don’t send you an invoice okay
I you only pay me for units that are sold to end users and I said to him that’s stupid we
want the money and he said you’re right but because it is so hectic it’s very
hard to manage the company in a rational way because all of these big spikes
drive you crazy and I argued with him and he was absolutely right the funny thing is that
the store were not ready to do that they couldn’t do it it took them two years before they changed their accounting
system to allow us to put things in Consignment which is kind of funny so
they were eager to pay us money and then start to get the money back then just do this but it made a huge difference later
on because it allowed us to really understand our business on sales to end users that don’t come back example from
another angle and then we will start digging into what is and what isn’t a
growth engine and how they work so at Zoom info we collected about
99.3% of invoices which is a very high standard for those of you
who are not familiar of Collections and the interesting thing is
that the whole thing was done by a single person her name is Donna
angelucci my dear friend and when even when the company was approaching a $100
million she was the only person in
collections she had a lot of connections with the Boston police but many of our customers were not in Boston so what was
the process the process was fairly simple whenever we issued an invoice and
it was uh Due about 30 days so two weeks in advance she sent a reminder then she
called and she said I hope it’s already in your system we are going to pay it yes no and so forth and basically made
sure that nobody didn’t know that they ow money and she also figured out that
small customers were a big pain in so she said we’re not selling to any small
customer unless they give a credit card up front and we charge it um and also if
a customer didn’t pay she immediately escalated to the salespeople salespeople hate talking to C customers who don’t
pay because they already got the commission right so they don’t care and they don’t want to alienate anybody she
told them well if he doesn’t pay I turn off his account and she did it several times and salese learned that they don’t
F around with her so she built a system that without working really hard she was
also the gossip Center in the company so she had time to hear all the gossip and communicate to me and so and all of that
while accomplishing that so the reason I gave all of these anecdote is just to show you the various
areas where this concept applies so how do you build a grow engine right you
were sitting in here and saying wow you’re not talking for about an hour but how the hell do I do
that and the answer is simple first of all you ask yourself
okay I’m doing this what will be the benefit if I can scale it up if the
answer is not serious then don’t worry about it if you can see a lot of benefits in scaling something up that’s
a good area to start thinking okay the second question is even more
critical what stops you from
escalating I call those Inhibitors sometimes I call them
friction and the difference is not big there is a difference but what are the Inhibitors so anything in red is a
question what is the most common inhibitor that
you can think of and those of you who heard me about a 100 times say that please don’t answer I want the people who never heard what my answer
is what do you think is the most common
inhibitor people you know the famous saying if it wasn’t
for the employees and the customers business would be so easy
so people that’s the bane of business and of Life basically so what’s the
problem with people remember you want to build a growth engine so that means you want to grow you want to add more people
that means you need to find people and it’s very hard to find the right people
always I am a little bit older than many of you I hired many people I fired more
people than I hired and I still never
ever was able to figure out how to choose the right people I even learned something more
serious those of the people that I met and told me I’m a genius at hiring people I know exactly how to hire people
when I asked them to do it for me they were total failure so I feel a little bit better
that I’m not the only idiot in town anybody who tries to tell me that they know how to hire people I take them with
a not a grain of salt but a big pile of salt second it’s very hard to recruit
you know you have to talk to them it’s expensive it’s inefficient and the results are
questionable me and my brother have a joke he also had a fairly big company and we said usually it’s the third
person you hire that turns out to be a good hire so can we somehow skip
directly to the third person uh we haven’t yet figured it out so here is my statistics at least
10% of the recruits are a joy a joy means you tell them what to do they do it you don’t pay attention to them the
work is just done they’re nice they smile and they’re smart as hell and they get results 10% one out of 10 that’s
kind of my experience 10% are also easy they’re a disaster you know you tell
them what to do they come after a week and they ask you did you really mean that no I said this okay fire then the
problem is the 80% in the middle remember they are not Joy because Joy was the 10% and they are not a
disaster and I’m not talking about the crowding here you are all in this category
Okay so present people excluded I’m not talking about you the fact that you are
here already made you a joy but that’s the reality okay and
anybody who thinks differently should leave the room so I give you a few laws about it
so I I like that one it’s really funny it’s a guy called Derek J deasa okay
price it’s a British sociologist historian and he’s started looking at
articles in the uh science literature because they started
collecting references you know they now great uh people in academics by how many
people refer to their articles and refer to refer and all of that great stuff so all of this is is now in databases it’s
very easy to do research on it so he did research on it and he took a few areas
of research and he found something really bizarre let’s say that there were thousand
articles uh written on that subject in this area of research and there were a 100 writers 100 scientists working on it
then 50% of the Articles like 500 articles
were written by the square root just to make it more scientific the square root of the number of writers which is
10 okay so out of the Thousand articles 500 were written by 10 people and 9
other people rote the other 500 or a small percentage of individuals
in any organization then they both they took the same law and checked it are
responsible for most of the toll output and results from my personal
experience it is true you look at every company even the huge ones and you look
at the number of people that really made a big influence on company not by their
opinion by their opinion even the receptionist made a huge difference Parkinson law those of you who uh that’s
a um an English writer who did some research on the uh British Navy and he
figured out the following rules in every organization people promote themselves
by hiring a team to do their job why because if they want to uh promote
themselves when they have a boss they can’t kill the boss it’s illegal so they don’t kill the boss but they can expand
their scope by hiring people so a job that was done by one person five years
later there is a department of 10 people with three layers of managers in there to do the job why for obvious
reason and the second law um which I call it the last egg
boiled egg for Shabbat is that the work will expend to fill the time plan for
its completion why I’m calling that because it was my mother’s story she made all the Shabbat preparations on
Thursday the only thing she needed to do on Friday was boil eggs for Shabbat but
because that was the only thing she needed to do it took the whole Friday okay so and now I’ll give you my laws
okay so my laws are that managers spend most of their valuable time on employe
way they end up firing think about it I have gazillion
examples why because you’re not sure there are the 10% that are a disaster or the low
end of the 80% so you spend so much time on it instead of spending time with your
best people and helping them and working with them that’s reality anybody who manages know that’s true if you look at
what you spend your week on you will realize how many hours you spent with a person you really detest and you want to
fire Second Law every three people somehow calls a
fourth person to be hired and I explain okay you have a really good
engineer he’s working he’s doing tremendous amount of work and you’re ex excited about it and you tell him how
can we make you produce more and he says my cousin is really a genius we should hire him as well you say okay so you
hire his cousin and the two of them work like a couple you know it flies it’s
phenomenal 1+ 1 equal 2 and a half it’s great now you are enthused you have
another Uncle no but I have my neighbor who is really good okay they bring the
neighbor now you have three people wait a minute three people need a
manager they need a team lead right okay so now
you have two choices take one of the good engineers and make him a team lead and lose a good Engineers or bring a
team lead from the outside most companies end up bringing a team lead from the outside now what does a team
lead do he talks to the other team leads because he’s not going to waste his time
with his people right every three people bring a fourth
person and the rest of it is you know it’s uh iterations so I think you
understand what why this is happening so if you think about the
impact on it on profitability 70 to 80% of any technology company cost is around people
salaries rent overhead travel I mean you name it you look at the end of the the
budget that’s about the biggest cost ever
and these are rigid expenses okay you cannot tell an
employee you know what I don’t really need you next week so don’t come next week don’t get paid uh in September I
might need you for a few days it doesn’t work this way remember Vault and Amazon and all of these the moment you hire a
person on the 30th of the month the check goes out whether you like it or
not and if you get want to get rid of that person it takes you have to know Shima right all
of that crap so even if you decided to get rid of the person it’s still expensive to do this is the worst
expense you can have in terms of rigidity it’s totally not
flexible oh and by the way celeries always go up I tried to make them go down didn’t go very well I don’t know
why so rule number one when you want to buy
to build a growth engine is replace work done by people with software and processes that require less people in
most cases in most cases you cannot reduce the number of people
but you can increase the output without adding people so just to be realistic
okay you want to grow you want to make money and you want to have it scalable
don’t hire people I’ll repeat it if didn’t you didn’t hear don’t hire people
it will kill your growth engine because only the third one might
work remember that okay the first two are a disaster and again not the current
present people in here all of you are just a dream
okay so how does it come into uh numbers you know I like to do
numbers so there is a measure called sales per employee which is basically a
very important measure and an indicate indicator and I found this chart unfortunately it’s from
2017 surprisingly I didn’t find anything newer even though the numbers are out
there because every public company has to publish the number of employees and the revenues but I haven’t seen anything
like that for the most recent news Okay so not surprising to the right is Apple
which talked about it Facebook alphabet is Google and you start seeing that the
tech companies that have figured out growth engines are out there okay but as
you can see sales per employees in those good companies are in the hundreds of
thousands of dollars in up where salaries usually average salaries in those companies is maybe 150,000 so the
rest of it is profits which is why they are worth so much money okay so if you ask yourself how
well am I doing calculate your sales per employee take your revenues divided by
the number of people you have and if you are below
200,000 you can improve dramatically that’s usually where most
companies at the early stages are about $150 $200,000 which is not
great okay so now understand that there are Inhibitors and Inhibitors are all
the things that stand in the way of scaling up the process so and friction are all the things that just slow down
the they don’t inhibit they just make it longer like what I described about the Samsung phones you need to write read
articles talk to friends it just slows down the process it’s friction okay when
you want to build the growth engine think very carefully about what stops
you and what delays you every step of the
way so what are the enables they fall into two very broad
categories continuous removal of Inhibitors in friction when I say
continuous and I put an underscore for it is you keep thinking about it because
the inhibitor you removed yesterday reveals the next one it’s always like
that okay so you have to think about it all the time how can I make it faster
better cheaper and it’s usually removing problems okay and there are endless
number of problems don’t ask me why but every time I try to get to the bottom of it I found another turtle underneath it
okay so there are turtles all the way down and those of you who don’t understand the joke I’ll explain it at
the end or obviously what you all of you thought new ideas how to do things
efficiently I’m not you know making fun of that but in most cases just
removing hurdles and frictions and Inhibitors makes a big difference and don’t hire
people figure out how to remove all of this without hiring people okay I’m going now into a
slightly different subject and want to share with you a real dilemma okay so obviously L when I
talk about growth engine all of you think about sales right obviously but when you go to sales there
is a dilemma you can build the sales organization but there’s a problem in
sales organization the number of people is linear with the sales
grow which is absolutely against what I just said and I did
it why you can do it and I’ll explain how but this is really a decision you have
to think about okay sales organizations are the only exception where
unfortunately you keep growing it if you want to grow other options is to develop
e-commerce right all of you say why don’t we do it e-commerce but it’s good only for small
transactions now nobody’s going to put the you know credit card for $50,000 or
$220,000 so you have a problem you either do this or that
or a combination and actually we have many
many examples of combinations and the combination goes like that you have a free
product then you move to e-commerce and then you move to the
corporate sale and you can find it all on the web you don’t have to worry about it with my
text if and we will translate it into Hebrew and even write it in Arabic okay
so hopspot you can start free I think two seats or something like that I don’t remember then if you want to really use
it you pay something and then as you keep growing they you get a phone call
from a salesperson he says oh I see you guys are using it let me give you our best offer blah blah blah blah blah okay
look at the list Zoom video the same thing right you can as a user use it for free after 4 40 minutes it
uh stops uh Zoho Salesforce slack LinkedIn Google workspace bahahah look
at all the companies almost and they have figured out this unfortunately at Zoom info I didn’t
figure it out I went the other way around and this is really critical to
listen to what I’m saying now so I started with that I built the sales organization and
the reason I did it it was easy I bought in a Salesman I didn’t know who I’m going to sell to I fig didn’t figure it
out was the year 2001 just bought a person actually on
the first one I fired the second one worked so I didn’t have to wait to number three that was a big luck because
I knew the second one I brought him from a recruiting to to become sales and sales grew fantastically we
sold for about a license was about $11,000 a month and we bought in more salese and
we grew and then we said this is ridiculous we need to develop an e-commerce um option the only difference
between the corporate one and the e-commerce one was the size or the amount of data you
get and there we encountered the problem when we introduced it the salese went on
a riot literally on a riot and they said look I was working on a $10,000
deal the customer went on our web ite he saw that he can for $99 start working
with it so he told me I still interested in the 10,000 one but let me first use
the lowend one for two three months see that I really like it and then we will
talk and the sales people said you hold me responsible for the quot and you pull
the rug from under me I tried six times
to introduce e-commerce and failed they still don’t have real
e-commerce ining why because I did it wrong and think about it if you take
anything out of this lecture today this is the most deep lesson I can share with
you start by think this and how does that work
okay yeah this means start with
free Ecommerce and corporate sales I’m not sure it really you know works in your organization I don’t know but it’s
a thought process what you basically want to do is
say individuals even if they are corporate individuals they work for a
company but as they use it individually then they can just put a
credit card pay $99 a month or whatever or maybe even have a version that is
free but when I start seeing Traction in the organization then I have a sales organization that calls and says hey I
see you have 10 people who pay you know individually we can give you a better deal and it has all of these other
features and just force yourself to think can you
do that it’s not always possible but I didn’t even think about it it was the year 2000 I didn’t think
about it and and I paid a huge price honestly you know I later on
learned how to do it but I was already on my way out you know didn’t didn’t
interest me anymore okay any questions on that one
yes you need the organization to work me once you
startg just one person I don’t know how to solve your specific problem I’m just
saying I failed and it was tremendously painful
and stupid I mean the company was successful I made a lot of money all of the good things but that’s not the point
the point is I felt like I tried six times to do it and I failed each and every time and I know that the right
thing was to do this and I couldn’t do it
so every time I failed was because the salese basically went rioting literally
rioting they were standing in front of my room and they said we’re not going to meet our quar because you just ruin the
quar you just added friction and inhibitor to my yeah I could fire all of them but
that would be really stupid I don’t know I’m just saying try to think this way if
you can okay that’s all what I’m saying I don’t have solutions for everybody I’m just sharing with you mistakes which is
the most valuable thing I can do is share mistakes with you okay all right
so we talked about sales organization right that it’s people you I think you
kind of understand my opinion about adding people and it’s linear with the number of sales people what can you do
okay the reality of it that most organization hire salese and I don’t think they’re stupid
okay but what can we do so I introduced this very simple measure it’s common
measure I didn’t invent it okay called cost of sales what is cost of sales is
the total cost of the sales organization including all the managers the commissions the rent whatever you want
to include in it but everything that has to do with the sales organization as an organization okay including the sales
force Char everything that you need and you divide by the revenue generated okay
so the cost of sales usually is between 15 to 25% of revenues
if you are at the 15% you’re doing a really good job if you are at 25% uh you
need to improve we were hovering around 19 most of the time and again it’s
fairly rigid why is it rigid because you hire a person you give them a quar so
kind of person the cost of the person and the quar is basically this okay you
me only the organization the marketing without the marketing without the
marketing again you can do whatever you want you just have to understand what you measure okay so how do you reduce
the cost of sales okay what you need first and foremost without it don’t even
bother hiring people is you need a stable and reliable source of leads okay
and you need a clear path training of and training to reach the quot in a few
months so what I’m teaching you now we showing you now is actually all due to a guy called Peter
Wayman uh he is a physicist MIT graduate an
engineer uh a little autistic and VP of sales um genius and he built the sales
organization at Zoom info on scientific or engineering grounds and it taught me
a lot which is what I’m telling you now okay so think about the last line when
you build an organization that is going to grow if you want to grow okay it’s
going to grow you have to build around middle of the road people you can’t
expect to bring in the best salese time and again time and again it just won’t happen so don’t bring see pipio but you
should build the organization to perform well on be people which means reasonable
salese salesperson who is willing to work reasonable hours he listens to you
that’s about it nothing genius he’s not going to cold call he’s
not going to discover opportunities forget it what you want him to do is give him a
lead and have him convert that lead to a sale above average on the organization
that’s all what you want to do but for that you need a stable source of leads and you need to tell them how to do it
and you need to train them we brought brought a new person from day one to reaching qu in about 4
months and the qu was around $800,000 so they reached $800,000 a year
run rate in about four months because everything was standardized everything was
standardized and you want them to be successful so you want the complain to be something that they are proud of what
he instituted is that everybody pretty much everybody was above qu I asked him
that’s stupid so you put the quar below what they do cuz how do you get them to do above quar you lower the round right
that’s easy lower the bar and everybody’s above the bar he says yeah I know I do it on purpose and I said why
because they are excited says everybody feels a winner
and he built the compl so that the cost was the right cost doesn’t matter but philosophically he wanted B players to
feel great that they succeed that’s what he wanted and he buil
it so that’s what you do if you have no choice second that I want to talk about
is what are the friction let’s call it on the way to
sales and what I’m going to tell you now is similar to what I told you about people which is kind of counter to what
most people think when you do B2B most salese say I
need the ability to negotiate you know I know the customer I talk to the C if I
just gave him 10% discount he would have bought right now you’re laughing again right the
people who managed it know exactly what I’m talking about I’ve yet to see a Salesman not saying that the fact that
you don’t let me negotiate is stupid it’s against everything I did in my life
I’m a successful salesman I’m above quarter blah blah blah blah BL blah why can’t I discount the product
and the reason is think about the supermarket where you walk in the line and you start negotiating about every
piece of bread I don’t want to stand in that line efficiency when the price is fixed
it’s far more efficient when you do discounts here’s what happens the guy on the other side say
wait a minute he just gave me 10% discount so that I move I’m mean no
rush if I wait another week I will get 20% discount so what and by the end of
the quarter exactly right I’ll get to the end of the quarter don’t
worry okay so what they do is they say I really really appreciate the 10%
discount I need to talk to my CFO because I far as I remember we don’t have the budget for it then he comes
back and he says my CFO really wanted to thank you but he wants 50% discount because we don’t have the budget and if
you really want to sell this quarter we need to do with the budget we have blah blah blah blah blah okay so it
lengthened the negotiations and so people my salese
said and by the way I failed okay what I’m telling you is my wishful thinking I
failed my salese discounted we brought it to a rational level because Peter
Wayman was nice you allowed them to do about 10% discount but I told myself
people said listen if the guy insist on a on discount say oh no problem sir
absolutely no problem but in our company the only person who has the authority to
authorize a discount is the CEO here’s the phone number of the CEO I’m sure he will be happy to talk to you I never got
a single phone call maybe they didn’t say it I don’t know but I never got a single phone call what do you do you
don’t say no you just put friction on the way to a discount that’s all what
you do okay nobody wants to talk to a CEO of a big company because it won’t
okay second problem with the discount is the next year when you renew the prod
wait a minute last year you gave me 20% discount and this year you want to take it away but you we talked about it’s in
the agreement yeah I know we talked about it but if you want me to renew I
need the this right and worst when customers talk to one
another and they find one paid less than the other it gets to be really really
really ugly you don’t want to be there promotions okay guys for Christmas
we do a promotion people expect promotions to be year round that’s the reality so they delayed their
purchase that’s what happens why is Christmas you know like Christmas season 30% of sales of the year because they
they just waited that’s all right it’s really simple it’s not that they generated more money Christmas Eve they
just waited you get this price if you buy before the end of the months right you
wanted to see that and what we found out is small customers negotiate and waste more time
than big customers why because they don’t have money it’s really simple they really don’t have money so they
negotiate like crazy and it’s not worth the effort especially as uh liby knows
if they are from a certain subcontinent uh to our East
um and another friction which there’s nothing you can do about it except be ready is that big customers have
processes that you can’t avoid security sock two data security legal compliance
you name it you just will have to go through that so the only way to deal with it which we did with zoom we
basically prepared for it we had a stack of documents and things that when the customer said we want this this this and
this we just pulled it out of the computer and we sent it and sometimes we had all kinds of variants of it because
some customers wanted it differently okay what
else pricing scheme remember what I said about
Apple I’ll go back to Apple as I said Steve Jobs is one of my the people I
really admire when he introduced iPod he also
introduced the iTunes right made it really really simple to buy a song and
lo and behold regardless of how good the song was it was 99 Cents that was it
doesn’t matter what song you wanted it was 99 Cents you didn’t have to think
about anything it’s 99 Cents reduces fiction
product options sometimes you look at the product you have no clue what’s included what’s not what’s the
stuff okay this is a big thing every time you need to think about
what you do we lose you so multiple decisions are much worse
than one decision I’ll give many examples nowadays all of us are aware of
automatic renewals right so you purchase anything with renewals they tell you it’s going to automatically renew unless
you notify them s 30 days in advance right why do they do it so you don’t have to think you can still conso but
you don’t have to think about renewal Amazon Prime it’s an ingenious
thing so they did free two-day shipping on all products Right started with it
costing $79 today it’s $139 the interesting thing is it increased
sales dramatically and not so much because that it because you paid for the freight
right but because you didn’t have to think it’s kind of I just pay for the
product I bought I don’t worry about it’s their problem yeah I paid for it in advance but it’s their
problem and that increase sales significantly I tried to find the numbers I couldn’t but I’m remember
reading it 200 million subscribers at about $140 each just that just that is
about $30 billion annually just those subscriptions just so you understand the
power of these things Microsoft Office again they went
through gazillion iterations and structures and whatever until they figure out I’m going to bundle this four
pieces of software in most homes they don’t use all of them they use one the other whatever it is
but they made it simple $99 a year for the whole family on many computers you
don’t have to think about it just think about it you don’t have to think I have it on my laptop I have it on my PC at
home I have it on my PC here my wife has it it’s just simple simple simple not
thinking keep it that way phone app stores right the first thing
you do there is you put your credit card and you forget it’s there from then on you just click and something happens in
the background and you just don’t feel the money goes out right it’s just it’s two levels away credit card is already
not real M it’s just a piece of plastic and a few numbers and this is not even a credit card it’s just a I just clicked
nothing right friction friction friction and of course all inclusive
vacations you know cruises Club made all of those again I don’t need to think I go with the kids we eat breakfast we
drink we ate ice cream I don’t need to think remove frictions these are just
examples okay I’m not saying this is what you need to do I’m just trying to explain what is included in a growth
engine every friction every hindrance reduces the efficiency of the system
okay I think we’re getting close to end of the time I just want to talk about two more things what is the difference
between rending and marketing okay so let’s start with marketing is the process to generate leads and sales
right direct I want to generate leads I want to generate sales branding is the
gr agent behind it it just makes it easier to
accomplish think about it as this is the foundation and on top of it I bring build the m
Mar but what are the inbut when doing common marketing so we all do marketing
right as I said you bring in a VP marketing they change your logo and then they start thinking so we do email
campaigns what’s the problem with email campaigns nobody reads them I want to see in here how many of
you read 100% of their emails no volunteers I’m shocked okay advertising
advertising is an interesting example I won’t have the time to cover it this time it’s expensive and
usually the results Google and other platforms make sure that you kind of pay
what is worth so it’s not a big Bonanza High customer acquisition cost C is
customer acquisition cost trade shows we talked about expensive and not scalable
and content so we talk about content but it’s hard to create new and interesting content so how do you handle all of
these inhibitors and frictions webinars hard to produce okay
all that stuff so I want to share with you a few ideas and each company can do it with
their own ideas so the two obvious I talk a million times about is the longtail SEO long tales and free
products but it’s not always easy to come up with these ideas but I want to offer or suggest
another way of doing things which I think can be adopted and done
by many companies um ideas for easily creating
an interesting engaging content thought leadership what is thought
leadership it’s basically research and the first point is the most important
one there is a magic to Numbers if I tell you that 40% of stores
don’t have a planogram it’s really interesting right the fact that I have no clue what
percent really have or not have a plan is irrelevant you write 40% don’t have a
planogram and that’s the number it’s kind of bizarre and you can then even create a
pie chart and you say company you know companies with up to 10 stores 30% don’t have and from 10 to 50 stores that it’s
amazing they go bananas over it nobody asks where the hell did you get the numbers
from just don’t and people love it that’s called
facto I would call it Li you know I’m sorry from livee but doesn’t matter it’s not a fact but people love pie charts
they love graphs they love numbers presented nicely graphically and don’t
ask them to multiply or divide or anything just show it to me okay so if
you can take and start collecting data from your market then you can start producing
content that is very interesting for people because it’s easy to digest I don’t have to read an article I don’t
have to read 500 words I can glance at this spy chart read the few lines beh below it and I’m so
excited okay so what do you do you start calling potential customers
and you just interview them now you say why would they talk to me chances are n
out of 10 will not talk to you but enough that 10 people talk to you you have enough data to start with just
fudge the numbers don’t say 10% that 20% said that say 9% this 11% that you know
just so that it looks like you have a bigger sample they always love talking once you
get the first data and you have the effect facto you send
it to all your potential customers because now you have something to tell them that is easy to
digest and it’s interesting and it’s cool and you put another server in it and you say oh our next question is this
click in here to answer now you will get 20 responses you create again a nice py chart and a nice facto and whatever and
you talk to them again gradually you start talking to a lot of
people and you start creating a more meaningful database it starts to be even
valuable for you okay so this is really really
interesting and the interesting thing is when a lot of companies don’t do that you have sales people they have
bdrs they talk to customers but they never really collect data systematically
but if you tell them here’s a chart I want you to fill out when you talk to potential customers they will do the job
while they are trying to sell because anyway the first thing you need to do in sales and understand your customer right
so just tabulate prepare the questions and CH tabulate it and you get
tremendously valuable data that you can publish you
can cross you can do things very interesting let’s move
on so the next thing is to also show up
as a thought leadership so what you want to do is have The Luminaries of the
industry talk about you reality of it there’s no chance they’re going to talk
about you because they never heard about you they don’t know who you are you just
bothering them but that’s not what you tell them what you tell them is I’m
organizing a round table of The Luminaries of the industry and I already have Joe and
Linda and Joseph and all of these people and we also want you because you really
have significant in it is being the cxo of this
company and you get people you’ll be surprised and you say I’m going to send
you the the questions we want to discuss in the round table you put them in a round table by Zoom so it’s very
inexpensive very easy to do 30 minutes you record it obviously and you promise
them that you’re going to send them these 30 minutes as well as short video
about themselves that they can post wherever they want so you really produce content for them and remember people are
vain they really want to have videos of them saying smart stuff and being in
this context and so for so they will participate and now what you do is you
organize this because you will have the logo of your company on one side of the
screen and the logo of the speaker on another side in a big title he is the
cxo of such and such conglomerate and without saying anything most people who
see it believe they’re customers why because why else would they be on your round
Table Right you didn’t believe it until two minutes ago so you send subtle messages that you
are the thought leader in this industry add to that
all the charts and graphs that you produce and you suddenly become a known entity that people talk about and think
about oops sorry and the last point because we need
to finish is there is a group of people that really would love to talk to you now most of you are too young but there
comes an age usually is around 67 and until
yesterday you were sitting in a nice room and uh people would come to you and say onathan what do I do here I need
your permission I need your signature you know we want you to speak here you’re busy the following day you
celebrate you go to the golf club and you say thank God I don’t have to work anymore the following months you wake up
in the morning and you have your idea what you’re going to do today you’re sick and tired of playing
golf your wife gets on your nerves and nobody really calls you nobody you
are a nobody and you are very open to people saying we really want to talk to you
about the industry because after 30 years of being the cxo in X you really
understand the industry and you write his title with a small ax as you said on the side and
they are the best people to engage they love to be engaged because they are bored and nobody cares about them
anymore so what I’m trying to convey to you here is a growth Angel remember we talking about growth angine and
marketing okay stay away from all what everybody is doing because it’s not going to work try to be creative on how
you create content in a way that is scalable you can do a round table once a
month easily and you don’t have to think about the content there are four other people who going to talk you ask them you have to invent three questions okay
and they will talk believe me you you will have to stop them okay and once you did three of them they
will call you and say where is the next round table you forgot to invite me because all my friends are already there
and what about me so you just have to start the engine which is very different
than writing blogs where you are online okay so I’m trying to give you ideas on
how to think about branding and marketing in ways that are growth engines
scalable hope I succeed seeded thank you
