The Skill Set Of The Ask Is The New Pitch with Tracy Chadwell
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Episode Summary:
Have you ever tried not pitching for fifteen minutes? It’s not always easy but you can get better at it by developing the skill set of the ask. Tracy Chadwell shares how this method will help you clearly identify all you need to know to create that perfect pitch, things like creating an investible market, identifying your competitors, learning how to stand out, and more importantly, pricing your products or services to create a successful pitch and close that deal.
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Today’s guest is Tracy Chadwell, who’s the Founder of 1843 Capital. She invests in tech startups specifically in the augmented reality world and she says, “You can’t be what you can’t see,” so that’s why she’s so committed to helping as many women as possible get funded and getting the investment gains. She also said, “You need to tell her some key things in order to get her to fund you. What problem are you solving? What is your secret sauce? Who’s on your team and how big is your market? You really need to show how big this market can be and how you’re the right people to execute it and have you thought about your pricing as it relates to your competition.”Finally she said, “If you don’t know who you are, when you ask someone for something, it will come across as a demand.” She has the three knows, to get a yes: know yourself, know your audience and know that no is not forever.
Listen To The Episode Here
The Skill Set Of The Ask Is The New Pitch with Tracy Chadwell
Our guest is Tracy Chadwell, the founding partner. She has over fifteen years’ experience in venture capital and private equity. She’s part of a team at 1843 Capital and we have a great story there, she’s going to share on where they came up with that wonderful name. She has five years experience investing in early stage companies with a female founder through her personal entity, Coyote Capital. She was partner of a growth capital fund, Baker Capital, which has more than $1 billion under management. She’s a frequent speaker. She’s given a TEDx Talk and a startup competitive competition judge. She has developed a broad network in the Female Founder community and was recently a speaker on women in venture at the Wonder Women Summit, and the speaker on augmented reality at High Court.
Most recently she was a judge for the Refinery UberPITCH. It’s fascinating. You’ll want to see what her one question is that she asked that she’s probably asked people whether she’d rent an Uber with her or not. She’s featured in the chapter of the book, The Internet of Women. She is a trusted board member and she serves on the boards of Marstone and Sachs Insights. Her philanthropic work includes the advisory board of the MIT Enterprise Forum as well as many others. She’s an attorney as well as speaking conversational Japanese and restaurant French. Tracy, obviously you know what you’re doing. We’re excited to have you. Welcome to the show.
Konnichiwa. Thank you so much for having me.
Let’s start with your story of origin. How did you decide, “I’m going to be a lawyer and then I’m going to be an investor?” Or did you just thought, “I’m just going to be a lawyer?” Take us back to your decision to first become a lawyer. Was it in the hopes of becoming an investor? Was there other reasons?
[Tweet “You can’t be what you can see.”]
One of the things that is important and something that I do in my work on a daily basis is I always say, “You can’t be what you can’t see.” Growing up, I had a dad as a lawyer and I saw a lot of people who were lawyers so I was encouraged to be a lawyer, which I did. I went and did that but I didn’t see any investors. I didn’t see any women investors and I’d never heard of venture capital before. That was tough for me to be able to wake up in high school and say what I want to do is go into VC. When I was in high school, there were maybe just a handful of venture investors and they were all in the Silicon Valley area. I went to law school, which I think is terrific training and good from an analytical standpoint. Also, it translates into what I do now in that I am very fluid and functional in terms of structuring businesses and structuring deal terms. The introduction into venture investing came when I was working for an investment bank called Robertson Stevens, which was a west coast investment bank which was responsible for a lot of the technology investing and a lot of the IPOs that were happening during the Go-go nineties.
Did you miss being a lawyer or did you say, “That’s just great skills that I see, that I use.”
I do not miss being a lawyer. I usually say that I’m a recovering lawyer. It’s a very valuable skill set, but I picked up early on. I worked for a small merchant bank and was responsible for doing all the structuring. About six months into it, I said, “Can I go back and take a few classes of business school and can I learn how to do some modeling and work on the deals because this is what I’m really attracted to?” It came down to the fact that, while law is very appealing to some people, and I certainly respect those who are good at it and do it well, for me I saw it as a zero sum game, to the extent that I were to win in negotiations and documents, that makes that other people lose. I decided to switch to a career that much more suited my personal philosophy, which is that I would much rather see everybody build so that everyone wins. I find in the venture capital space that’s what you’re doing. If you are 100% on the team of making sure that these companies are successful, when they win you win.
Let’s talk about where 1843 Capital came from and how you and your co-founders found each other, the story of where that came from. It reminds me of the movie about the women at NASA.
It’s timely now that people are becoming more and more interested in historical figures that were involved in technology. The name 1843 Capital, which is an investment fund that invests in female-founded technology companies, came from Ada Lovelace. Ada was effectively the first computer programmer. She wrote a computer program for something called the Analytical Engine that Charles Babbage had created, and a really interesting fact is that she was Lord Byron’s only legitimate daughter. Her mom was more interested. She wouldn’t let her study anything romantic. She was worried that she was going to grow up to be something like her dad, so what she did is she only let her studied math and science, but Ada even found poetry in that and became very skilled at it. It was a great story.
How did you find your two co-founders? I always love that story.
One of the wonderful things now, and I don’t know how many people are aware of it, is that over the last five years, they’ve developed this incredible infrastructure for women. I met both Christina Bechhold and Alison Reyes through this network of female entrepreneurs and female investors. There are all these incubators, accelerators and mentor groups that have popped up over the last five years, and we met through those things.
You don’t invest in seed rounds. You’re primarily focused on series A and B after someone’s gotten some traction and revenue coming in. Is that correct?
[Tweet “A pitch can make or break someone.”]
Right. 50% of the funds raised last year were seed stage funds, so there are a lot of people who are out there doing that and doing that well. I like to see some revenue. I like to see some traction. What is important is product market fit and then making sure pricing is in place. Pricing can take a long time. When people are pitching and looking for money, they don’t realize that when you’re sitting on the venture side, you’re on a time clock. Your returns or internal rate of returns are IRRs, so we can’t wait for you. It’s costing us money when we’re waiting for you to figure out what your product market fit is or your pricing. If I can de-risk and eliminate those things, I can step up on the J curve as it’s going up the escalator.
Do you have a story of someone whose pitch you heard and they said they got all the boxes checked off and this is somebody we want to invest in?
A pitch can make or break someone. Sometimes you only get two minutes like the elevator pitch. Even when you do sit down for a meeting, you only have 45 minutes to an hour. One of the things that I help the companies that I’m invested in is I help them get additional rounds of financing or help them complete the rounds, and I say to them, “You spend the first fifteen minutes not pitching. Spend the first fifteen minutes finding out who you’re talking to and asking them questions. Because very often they’ll give you keys to what they find attractive or not, and then you could speak to those or vice versa. What concerns that they might have might show up early on.” When someone sits down to talk to me, first of all, I’m always surprised when they don’t ask a word about me. I’m sure there’s a lot that they can find out on the internet, but maybe they want to ask what do I see as interesting in the market right now? What am I interested in investing in? We can shortcut the conversation if, let’s say, I’ve decided that dog food is not the place to be and what you’re selling is dog food. One of the things that really grab me is after someone has spent a few minutes to find out what I’m interested in, if they hit all the high points. There is really a checklist and most investors are looking to go through that checklist.
You can short cut that a little bit by saying right up front, “Here’s the problem I’m solving.” I can’t invest in things that are nice to have. I have to invest in things that have to have, especially if there’s a market downturn. I want to make sure that people are still interested in buying this product. Then what is your competitive advantage? What makes you special? What makes you stand out and why are you going to win over other people? Third, I look for really strong team. Fourth, large market opportunities. There’s nothing wrong with building a business for a small market opportunity. People do it all the time and they’re very successful and they can make a lot of money for themselves. It might not be venture capital investible if you can’t see yourself getting to $100 million in revenues within five years. The last thing on the checklist for me is attractive business models. I don’t want to be a small-dollar amount in something that’s a large infrastructure build that’s going to take a lot of capital going forward where I can risk a lot of dilution. That would be an example of something that I wouldn’t see as an attractive business model. Things that have lower costs are lower maintenance and high perspective revenues are more attractive business models. I always say that nobody can really talk me into investing in them, but they can sure talk me out of it. You have to hit those points.
What I saw you say in the Uber ride that something people need to incorporate in their pitch would be prepared to answer in a Q&A is, “What’s your secret sauce?” You touched on that with, “What’s your competitive advantage? What’s going to prevent someone from doing what you’re doing?” Let’s talk about, since you were in Uber, the differences between Uber and Lyft because that’s an example that comes up all the time. There isn’t a “competitive advantage” except Uber got there faster and raised more money. What are your thoughts on that?
Skill Set Of The Ask: Things that have lower costs are lower maintenance and high perspective revenues are more attractive business models.
Certainly that’s a huge market opportunity. This is one of the places where Uber went in and broke down all of the barriers. They went in and rolled up their sleeves and did all the hard work in terms of the regulatory restrictions, and then Lyft drafted in on their end. You’ve seen that too in things like Myspace. Myspace came in and they broke the barriers of saying, “Being online and creating a community online is something that people would be interested in,” and then Facebook swept in and crushed it. What you’re seeing there is even though there was ability for other people to come into the market, it’s about execution. If there is an incredibly large market opportunity, you’re going to see room for four or five people to be successful in this space, and then maybe get acquired too. That’s always an option. If four or five people are in the space, I don’t see it as a real threat, but if you’re doing something that isn’t that interesting and doesn’t have a large market opportunity, it’s going to be hard to invest in that.
That also speaks to the point of when you’re giving your pitch, explaining who your competition is. One of the big mistakes people sometimes make, probably not at the series A level, but at the C level is, “I don’t have any competition.” I always say, “Then you don’t have a market.”
What they have to be clear about is to show you how they’re going to create a market and how it’s not going to take a lot of capital invested in marketing to do that.
I’m fascinated by when you’re talking about market size. A lot of people share that that’s important, but you said, “Is it the revenue from this person you’re investing in to hit a $100 million in five years or their market size?” Can you clarify that?
No, it’s the revenue. The revenues have to be. To do that, if you’re a far and away winner, you have to have the potential to achieve $300 million, $400 million in revenue because you’re certainly not going to acquire all the available customers. The first 10% are usually a little bit easier than the next 90%. You have to be able to show a clear path to being able to do that and how you’re going to acquire and retain those customers going forward. That’s across the board whether you’re talking about a consumer product or whether you’re talking about an enterprise software product.
That goes to your whole point about pricing earlier, that you have to have thought through if we’re going to scale this, people have to be willing to pay this amount of money because it’s changing their behavior, right?
[Tweet “Virtual reality does have a lot of interesting use cases.”]
Absolutely. You have to find out what they’re willing to pay, who that customer is, and how to go get more of those customers.
How did you decide that you wanted to focus in things like augmented reality in the technology space?
It comes down to market opportunity. People always thought that virtual reality was going to be the next big thing and virtual reality does have a lot of interesting use cases, but truly augmented reality is the larger market opportunity. It’s been estimated that virtual reality is about a $30-billion market opportunity and augmented reality is close to a $260 billion. A lot of that has to do with community. People like to continue to do what they do, and one of them is to connect, share and be with each other. When you’re in virtual reality, you’re very isolated and that’s very difficult for younger people and older people. There are issues. We’re getting better with the latency with virtual reality, but it still give people a little bit of a nauseated feeling. Also the weight currently of the headsets, it’s difficult for some people to maintain. Honestly, one of the funniest things that I thought is when you look at why there hasn’t been as much uptake in VR as people thought there would be. It’s because people don’t want to look stupid. In terms of consumer applications, we’re going to continue to see them in the gaming space. Architecture and the museum space is a place where people are using them a little bit on the education side.
Google has done a tremendous amount of it with putting Google cardboard viewers in the classroom. One of the reasons the cardboard ones are more interesting for the kids, the kids can quickly put them up and put them down really fast. There’s strapping in the headset so they can retain the connectivity with the kids and keep them engaged because of that, which I thought was fascinating. On the other hand, augmented reality could be a hologram or could be something that everybody looks at on a cell phone or an iPad together and communicate together. That’s why I think you’ll see more of an uptake in that space. Also, there are great developments that Microsoft is doing with their HoloLens. The nice thing about that is that you can see through it so you don’t feel so isolated. Also, it has a CPU or the central processing unit in the headset so you’re not tethered to anything. You can walk around. You can have more experiences.
Has there been an augmented reality company that you’ve invested in that you can talk about?
Skill Set Of The Ask: People like to continue to do what they do and one of them is connect, share and be with each other.
Yes, there is a fantastic one. I’ve been watching this space for a while and found it a difficult place to invest in, but I have invested in a company that does virtual reality and augmented reality toys. This is a company called Seedling. It’s fascinating because they had a great supply chain in place, but then they also had great existing distribution. What was nice is they had an existing business but they took this intelligent toy space and they bolted it onto that. Instead of trying to create a market for a new toy, they already had the place where people could discover it. They’re already in Best Buy, they’re already in Toys “R” Us, and they’re already in Nordstrom’s. They have had a tremendous amount of success already and kids obviously are going to be the first that are going to be on the uptake in terms of some of these new technology applications.
Talk about a big market, right?
Absolutely a huge market. I’m very interested in something I call silver tech, which is technology for people over 50. This is something that technology hasn’t penetrated the space. You could argue that in terms of the toys. Grandparents who have all the capital are buying these toys for children. People over 50 control 84% of the wealth in this country. They also control 70% of discretionary spending. The people building a lot of these companies are millennials, and so they’re very millennial pain points. They’re not the people with the capital and or the time. I view as a much more attractive market are people over 50.
Do you see any people you’re doing augmented reality for, people in that age group?
The place where it started first, I’m sure we’ll see more of it going into augmented reality. We’ve seen more on the virtual reality in terms of helping people with health issues using virtual reality. There are also some surgical applications with augmented reality. They’re doing brain surgery now with the HoloLens and laying over the certain aspects of the brain on top of what the surgeon is seeing while he’s doing surgery. I’m building empathy and helping people using virtual reality with they feel like there could be some applications for helping them with loneliness and like that, which are nice. People who have a fear of heights, “Let’s put you in this virtual reality space and let you walk around on the edge of a cliff,” because we can talk to you and tell you you’re safe and you really actually are safe, but it’s a step closer to getting over those fears. A lot of the psychology places you’ll see the virtual reality applications.
Talk about the Wonder Women Summit. The fact that name alone makes me want to hear about it.
This was a terrific summit that brought together a lot of women who are leading the conversation about what is happening in terms of women in technology, the numbers. We’re seeing fewer and fewer women entering the STEM space. This was just a place to get the conversation going about not only how are we going to encourage more women and girls, specifically back to my silver tech, I would love to see more women over 50 getting educated in this space, learning how to code and learning how to do things. Given what’s happening in healthcare now, a lot of people could be living easily into their hundreds. Fundamentally, everybody still wants to engage and still want to feel valued. By re-upping some of the skill sets for both young girls and for older women, they can still be engaged and still be a part of the growth in the disruption that’s happening in our society right now. We had a conversation about my favorite topic, which is the lack of funding for women in space. I’m sure by now everybody’s heard the statistic that last year women got 2.19% of total venture capital dollars, which is really frustrating considering they create 38% of the companies that are out there right now. Those aren’t all obviously venture fundable, but to a certain extent there are a lot of companies that people are missing.
[Tweet “A lot of the psychology places you’ll see the virtual reality applications.”]
Let’s talk about the TEDx Talk you gave. Many people are interested in giving a TEDx Talk, myself included, and I have many friends that have done it. That’s a pitch too. To get a TEDx Talk is a pitch like getting funded or anything else. What was your journey there? Tell us the preparation that goes into it. It’ll be very useful for people to see the prep that goes into a TEDx Talk very similar to the prep that goes into a pitch.
The TEDx Talk, I did not have to pitch for that one. I was asked to give that one at the New York Institute of Technology, and that had led up to that is that I had been giving a lot of other speeches. I was on a panel for the MIT Enterprise Forum, I do a lot of panel judging, and I was part of the Cisco Women of Impact Summit. A lot of those lead up to New York Institute of Technology saying, “We would love to have Tracy participate in this.” The preparation is anywhere from seven minutes up to fifteen minutes, no more than fifteen minutes. That has to be memorized. There’s usually a theme associated with it. The theme has to correlate, and the theme for this was persistence and community. What I talked about was in the vein of persistence of how to ask for things, similar to what you do such a great job of. You’re great about this and have three ways to focus on when you’re talking about doing a pitch. I had a little bit of a different spin because I worry that a lot of people, especially women, have a lot of trouble asking for things. I feel like men, since the time they’ve been fifteen years old had been asking women out on dates, and so they got that muscle memory and they get a little bit of an idea about how to do things. I thought that women could use some guidance on this, especially to help them ask for raises and ask per positions of management, but then also to ask for money for startups.
On ABC, you talked about the skill set of the ask, the muscle memory of asking and getting rejected. If you’re asking someone out on a date, then translate into asking for someone to fund your startup, hire you, be a customer, join your team, all of that muscle. What are your recommendations on how can anybody ask?
It is a skill set. A lot of people are afraid and they don’t know how to do this, and they say, “I’m just not good at it. I don’t know how to ask.”The truth is this is something that everybody can learn. With a little bit of knowledge, you can take away some of that fear that we all have. I look at it as a process and I decided to frame it easily by saying it’s three knows to a yes, which is know yourself, know your audience, and then finally, know doesn’t mean no forever. It’s really important to know who you are, know what your value proposition is, and know what you’re bringing to the table. What I say in the TEDx Talk is, “If you don’t know what you’re bringing to the table, your ask becomes a demand, and you’re not going to get there.”To knowing your audience, this is important because you have to know whether someone has the authority or the interest to do what you’re asking. If you go to the counter at the CVS and ask the woman to give you a raise when you work at IBM, you’re not going get very far. You have to know that you’re asking the right person and know that they can give you what you’re asking for. Then, know doesn’t mean no forever, it just means no at that time for what you’re specifically asking for. If you change either what you’re asking for or ask at different time, you might get somewhere.
Tracy, you’ve said something I’ve never heard before and I just love it, and we’re going to tweet it out. “If you don’t know who you are, your ask becomes a demand.” Did I get that right?
Skill Set Of The Ask: If you’re somebody asking for a raise, you’re trying to show the company what you’ve done in the past.
Yes. That’s just bold faced going up and saying, “I want a raise or I want to have some funding for my startup.” This gets back to what we were talking about before. If you are asking for money for a startup, you can’t just say to me, “Give me your money.” What it has to be is, “I’m giving you an incredibly interesting opportunity here. I have an incredibly interesting business that I’m building and here is what you’re going to get back. This is how we’re to grow this company and this is who we’re going to be able to sell it to, and this is the type of return that you’re going to get.” That’s the value proposition for a startup. If you’re somebody asking for a raise, you’re trying to show the company what you’ve done in the past. Throw out your regular resume. What you need is a value resume to show specifically, “I have caused ten contracts to be signed this year or I’ve been responsible for over $1 million in revenue this year.” You want to be able to quantify that and show people your value so that you go and say, “I deserve a raise or I deserve a promotion. This is why.” If you’re asking a guy on a date, you want to say, “I have something fun to do or I have something fun to offer,” not just, “Let’s go out.” It’s applicable to just about anything.
How can people follow you on social media? We’re going to put the link to 1843 Capital in the show notes and other ways that people can track you on Twitter, etc.
Definitely check out my website, 1843Capital.com, especially if you’re a female founder and even if you’re a male founder as well. I do, under my resources section, offer a lot of places where people can access capital, whether it’s non-diluted funding in terms of grants or all the way down to who are the interested VC groups that are looking for female founders.
Skill Set Of The Ask: The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers
It’s one of the most comprehensive things I’ve ever seen and that’s hard to find all in one place. That’s quite a gift you’re giving everybody.
We all should be able to know how to access things. I am also super active on Twitter and I love to tweet out interesting facts about what’s happening in the space that I’m interested in investing in. If there’s a contest coming up where you could win some money for your startup, I like to tweet that out too. It’s a good reason to follow me at @TChadwell.
Tracy, I can’t thank you enough. Is there a book you would like to recommend anyone to buy either about knowing themselves better or getting funded?
The one I read most recently was Ben Horowitz’s The Hard Thing About Hard Things. If you’re doing something or building something, know you’re not alone. This is one of the things that Ben talks about. He would’ve had all this success at Netscape, but then he went on to his next venture and had struggles through that as well and nearly lost the company a couple times. Understand that sometimes when you’re in the trenches and you’re in the dark, it’s just before you see the light and it’s a good reminder.
What a great way to end. You’ve been so insightful, helpful, and entertaining.
I’m thrilled to do it. Just like I said, “You can’t be what you can’t see.”
We certainly saw a lot from you. Thanks again, Tracy.
Thanks.
Links Mentioned:
- 1843 Capital
- Coyote Capital
- Baker Capital
- The Internet of Women
- HoloLens
- Seedling
- Wonder Women Summit
- @TChadwell Twitter
- The Hard Thing About Hard Things
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Engage People On Social Media To Bring In New Clients with Sean Hyde
Posted by John Livesay in podcast | 0 comments
Episode Summary:
Building a successful business is one of the most challenging yet rewarding things you’ll ever do in your life. The path can be rocky, to say the least, and you’ll encounter numerous learning experiences along the way. Sean Hyde, Founder of Ideation Digital, is no different. He’s made a lot of mistakes when he was starting out. He learned how to transform those mistakes into learning opportunities in order to develop the tools he needs to grow his business. One of the key nuggets Sean shares is the importance of getting the right team to engage people on social media to tell their story to win the clients.
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Our guest on The Successful Pitch is Sean Hyde who is the Founder of a company called Ideation Digital. His real expertise is helping people use social media to tell their story to pull in new clients. I always love to hear the story of how somebody were struggling to raise money with a Kickstarter campaign that didn’t have social media and he gives some really great insights on engaging people with social media. He said, “When you’re looking to get the right team, you want to hire slow and fire fast and don’t ignore the red flags when you’re interviewing people.” He also said that his expertise is having his staff give him what he calls an end of day report. That’s the culture fit to work for him is, “What did you do every day? You have to give a short report on what went right, what went wrong, and what you’re going to do to fix it. He said, “When you make your clients the hero instead of you being the hero, then your business takes off.”
Listen To The Episode Here
Engage People On Social Media To Bring In New Clients with Sean Hyde
Our guest is Sean Hyde. He’s a lifelong entrepreneur at heart. He’s been involved in establishing businesses in real estate, automotive and marketing. He also has in-depth experience and has held designation is in the financial and equity market investing sectors. He’s the owner of Five Day Solution and Ideation Digital, which are two marketing strategy companies that serve businesses at different levels depending on where they are in their development. His company has worked with entrepreneurs and business organizations to help them grow their businesses through innovative digital marketing solutions that include social media, branding, website development, and even search engine optimization. He started three successful businesses with no traditional startup capital and has grown them by reinvesting in himself and his people without the use of traditional small business funding or even angel investors. That’s going to be interesting to hear about. Sean, welcome to the show.
Thanks, John. That was a heck of an introduction. I appreciate it.
You say you’re an entrepreneur at heart. How young were you? Take us back to when you realized that you wanted to be an entrepreneur.
Rich Dad Poor Dad: What The Rich Teach Their Kids About Money – That The Poor And Middle Class Do Not!
To be honest with you, this was a total fluke. It’s the funniest thing. I was doing the traditional thing. I went to school. I was a pretty smart kid. I had skipped some grades and I read a lot when I was nerdy. I was on that straight path and I was about halfway through college and had to go on a flight. I went to the bookstore because I like to read, and I picked up Rich Dad Poor Dad, the Robert Kiyosaki book. I started reading through it. That’s an easy read, but it has a lot of impactful points. One of the things that stuck with me was Robert Kiyosaki discussed how most people’s biggest expense is taxes. He was like, “If you own your own business, if you have your own investments, you can save that 35% right off the top.” I was like, “That makes a lot of sense that I can make 35% extra money or give myself a raise. I can make less and pursue my passions if I do this. If I learn the tax system and I learn real estate investments, I learned how to invest in a company.
After reading that book, I finished college anyway, but I went right to work for a real estate developer who owned his own business thinking that I could learn from him. He had heard about me through his kids who had said, “Sean’s doing all this stuff and he’s learning investing. That’s a guy I need to work for me.” I worked for him for about a year and learned a lot of what I did do. He was a very traditional real estate developer. He was more about cutting corners and playing games with finance, a really smart guy. I didn’t want a business where people were showing up on my door because they need to get paid and they had it or where you are constantly scrounging for financing to that next construction loan. As I decided I was going to leave that company, I went online and I was like, “Let me try and find businesses that have low startup capital.” I was a year out of college, still paying off student loans and I didn’t have a ton of money. I’ve had good profit margins and I found a windshield repair company and I literally, on a credit card, spent less than a thousand dollars at the time to fly out to Las Vegas. They taught me how to fix the windshields for a week. They put me up, sent me back with a kit, and out of the trunk or my BMW because I had started making money and I thought that’s what you do, and you make money is go buy a fancy car. I went to a car dealership on a Saturday morning and start fixing their windshields.
That was a Toyota dealership. We’ve got a Mercedes dealership because I grew up in the New York City area, so we had a lot of big car dealerships. It was a good area for that. They started saying to me things like, “Usually a windshield guy can fix leather tears or paint chips or bumpers.” I was like, “I don’t know how to do that, but I bet you I could figure it out.” I went online again and I started researching companies. I found a company in Michigan that did all of that. I moved to Michigan for two months and I learned how to do everything from fix dents to paint bumpers. I got a van and hired a couple of people. I already had a Jeep that we had bought with the money I started making as part of the company, and basically built a business from there. I had an uncle who had an advertising firm, so he worked with me on some marketing. We went in and made sure we were the best at what we did. Then I developed skill sets from there as far as making sure we were placed well for tax advantages. We had a hard time with sales, so I took a cold calling class and I started learning how to do a pitch and get in there so that we could get into these competitive markets and deal with these car dealers.
[Tweet “Have your staff give you a daily status on what they did to drive revenue.”]
I quickly learned that working on cars was not my passion. That’s how I got into the equity markets and real estate because investing is my passion, like helping other people grow things. I enjoyed going to seminars and meeting other people and mentoring people and saying the same things I learned, “Taxes are costing you money. Real estate’s a great long-term investment. Having your own business is an important thing.” I tried to hand off that business probably a little too quickly and sat back and said, “I’m pretty young and I’ve got some money and I’d had some success. What do you do?”I was like, “You do what everyone says they did when they were older. You travel. You try new things and meet people.” I started traveling the world. Long story short, I spent a few years traveling the world, trusted the wrong people, and made some mistakes as a young person. I lost most of what I had. I learned a lot of lessons on how not to manage your business, especially for around the country.
When you’re talking about growing your business from windshields to fixing bumpers, to me, the big lesson that stands out there is if your customers that are buying from you say, “We would also buy the following five other things,” that’s a great way to figure out that you have something that people are willing to pay for without you having to do a lot of expensive research, as opposed to trying to figure out what to sell people. If they tell you they’ll buy it and they want these other services, that’s valuable whether you’re selling windshield wipers or anything in business.
The other hand on that is customer acquisition for most of us is our biggest expense. If we can sell more of the customers we already have, why wouldn’t you try and do that? In real estate, they’re the same thing where I worked with a guy for awhile that said, “If you have a family renting your house and they’re growing, they’re going to move because they needed more room. Look into the cost of expanding that house because in a lot of cases, it will be worth it to you to have the equity of your home and keep a good tenant in your house rather than having to start all over trying to find a good tenant.” A lot of businesses use that concept where if you have a client or a customer that you love and they’re asking for things that you can give them in addition to what you’re doing, why wouldn’t you?
You also alluded to making some bad decisions in your youth and losing everything. Doing due diligence on people before you hire them, before you take their money as an investor, who you have on your team, even due diligence on who you take on as a client is a valuable thing for people to understand. A lot of people are so happy to have an investor or have a new client or get somebody to fill this job, they don’t take the time. What would you say are things you’ve learned so you don’t repeat that mistake of getting involved in business with the wrong people?
If I can steal a quote from Eben Pagan, it’s to, “Hire slowly, fire quickly.” I was too attached to people. I grew up around people. I was social and I was loyal. Loyalty’s very important and I got too attached. If I hire somebody, I can make it work. Even when I saw red flags, I tried to work through it and that was a mistake. The other big mistake I made was I didn’t put systems in place. I didn’t understand even that concept at that age. I would hire somebody that had worked for an autobody shop and think painting bumpers at a car dealership is going to be no issue. It actually was very different for them and the independence was a challenge for them because nobody’s looking over their shoulder. Those were things I did not take into consideration. One of the biggest lessons I learned was hiring the right people and then giving them the tools and the support they need and how important that is if you really want to grow a business that’s not dependent on you.
[Tweet “Hire slowly, fire quickly.”]
Do you have one cultural fit that you’ve decided for your company, Ideation Digital, that is a filter you use on whether somebody is a good fit for your company so you’re hiring the right people?
For me it, everything else aside, I have to work with results-oriented people, so they can have different approaches. At the end of the day, what did you work on today? What results did you get? What challenges were there and what questions do you have? Whatever you’re doing every day, you need to get some result. Sometimes that results we learned what not to do. You can learn from that and you can apply that. The biggest thing is your team has to be working on growing your business and it’s me gathering information. Especially if you’re building a new business, you’re not going to do everything right the first time, but you need people to understand they have to get out there and make things happen even if they’re the wrong things so that we know what the wrong things are.
Have your staff give you an end of day report. It’s measurable. If somebody is not willing to do that, then they’re probably not a fit for you. That’s micro-managing to be asking me what I did every day. Law firms, they have to say what they did every fifteen minutes for billable hours. There are all kinds of variation on that. Some people are like, “How about once a week?” You’re like, “No, every day. I need to know what the end of the day report is.” How did you come up with the name Five Day Solution?
When I stopped traveling, I did a brief stint in corporate America for two and a half years just to see what it was like. I got promoted out of existence. During that time, I had a girl that worked for me. I was running first class airline. I had 80 bartenders and 100-something cleaning people working for me. One of the bartenders was going through a bad divorce and she was going to lose all the equity in her car because they were literally going to repossess it. She had, let’s say, $8,000. I said, “In real estate, there’s something called a five-day sale, which is how you sell a house in five days from market value.” I was like, “Let’s try this on your car,” and it works. Believe it or not, a car dealer bought it from market value. She got all her equity out of it, sold it in five days, didn’t get it repossessed, and didn’t have to take any more credit hits. I tried this again and it worked. I was like, “I’m going to write an eBook, How to Sell Any Car in Five Days.”
When I moved to Charleston to start working with my uncle who had the advertising firm to develop this new business brand, I’m like, “I know a lot of things that you can do in five days. They’ll have a big impact on your life that I can make these little books about.” I had started studying digital marketing and online marketing strategies when they were still new-ish. I moved here, and I started meeting small business owners that needed help with their websites, their online marketing, and marketing in general with smaller budgets. I was like, “There’s a real need for that. There’s nobody addressing this small business marketing niche out there. These traditional advertising firms want $10,000 to $20,000. No one’s out there on that smaller budget range. Let me look into that.” We kept the name even though we took a shift, but we stuck with it because we do fast turnarounds. One of our things with that first business model was we’re a small business marketing model. Small businesses need quicker turnaround, smaller budgets, more ROI. We’re provable ROI so that’s what we focused on and we kept that name.
You’ve been able to grow your businesses without taking either angel investing or bank financing. What is the secret sauce you have there?
I don’t know if it’s secret sauce. A lot of people will probably tell you that’s a mistake because I’m sure you could grow it faster if you did it the other way in some circumstances. For me, it was like an eat what you kill theory. You want this realistically. I got out there and I said, “We’ve got to make money and we’ve got to be smart with his money if we want to keep growing,” and I do want to keep growing. I want the schedule I want, I want the lifestyle I want, and I want to be able to talk to people. I mentor kids or other adults in business and say, “I did start a business with a small credit card purchase. Five Day Solution, I started with a Groupon. I spent $15 at Groupon. I bought a digital marketing education course. It was this huge comprehensive course and that’s how I started that business. I spent two months working through this certification course and implementing all the strategies. We’ve grown from growing that business to now building a second brand off of that.
Engage People On Social Media: Small businesses need quicker turnaround, smaller budgets, more ROI.
I don’t know that everyone would agree with me. Robert Kiyosaki, who I love would not agree with me because he’s all about leveraging other people’s money. For me, it’s worked very well to be able to keep that motivation and keep control of my finances. One of the problems I ran into with my first business was when the banking markets went crazy. Some of my line of credits were like credit cards so I had a lot of credits. They went from 7% to 23% overnight when the banking crisis happened. You can imagine what quadrupling your overhead looks like when you’re running a business. When we did try that out for a little bit, it wasn’t worth it. I backed away pretty quickly from even using like credit lines in some cases.
You continue to be a good student even though you’ve been out of school for several years to continue to grow your skills. Would that be something you would encourage other people to do as well?
Absolutely. You read in the papers, you see all these memes that every successful person is constantly reading and educating themselves, especially in my industry, digital marketing changes daily. Facebook puts out a new platform or product or new algorithm. It’s the same thing with Google, with Snapchat, good this week or bad? Is Twitter going to implode? These are real questions. Some of the people that I try to follow, the smartest marketers I know, say they get up every morning to read every article that’s out there on what’s going on. What the new abilities are because these platforms, in order to compete, are constantly adding new features and new functions. Some of them are useful and some of them are time wasters. Part of our business success is knowing the difference.
Do you have a story of someone you’ve helped using social media to get them more sales?
We’ve done some interesting things. My uncle runs a traditional but very successful advertising firm. When I started this, he was like, “Social media, that’s all fad. It’s a tool. It will be okay but it’s not going to be a thing.” There was a local woman here who’s trying to publish a book. She got a newspaper column and she got these cooking classes and she even had a local TV show. She was putting out a cooking book and she did a crowdfunding. About three or four days out, she’d only raised about 15% of what she was looking for.
I went to her because I knew her. When I saw what she was doing. I sent her a message. I was like, “April, why don’t you let me help you? I can go to Facebook and find people that have used your specific crowdfunding platform that liked cookbooks and like supporting these events and put your thing in front of just them, and let’s see if we can get someone engaged.” By the end of her campaign, she’d raised 10% more than she was looking for. It took her from not even coming close to being able to publish her book to having more money than she needed. She added in features and gave people bonuses and was able to start her business and her book from there. We’ve done a lot of interesting things like that. I got mentioned in that book. It’s one of my favorite things. I’m like, “If you look into this book, in the credits it says, “Thank you, Sean Hyde, for stepping in and saving the day.” It’s silly but to me that was a big thing. I spent maybe an hour helping somebody out and but now I’m in a book.
You’ve got not just the right people, but you’ve got the right people engaged on social media. What are your suggestions and techniques on how to get people engaged when you make a social media post?
With most business owners, their biggest problem is specificity. I could go to so many business owners and ask them what their offer is. What are you actually offering? Exactly work on that pitch. What is the specific value that you’re offering in exchange for their value and their money? Most business owners cannot define that. You run into that with so many clients where I’m like, “I can just beat people over the head with the name of your business, but that’s not going to get us anywhere. That’s like that old school marketing where maybe if someone sees a Whirlpool ad 3,000 times, when they go to buy a washer, they’ll think Whirlpool. We’re in a place where we can be so much better than that.
[Tweet “With most business owners, their biggest problem is specificity.”]
The one thing that everyone needs to concentrate on whether it’s your strategies, or like recently Donald Miller, he’s like, “Keep it short.” He said, “One of the brain’s main purpose is to conserve energy, so don’t waste people’s energy and making them think. Get right to the point.” Don’t try to be the hero. That’s the other thing that I see a lot of people make a mistake of is they constantly is talking about the products when people want a guide. Everyone wants to be their own hero, but they want someone that says, “I can help you be that hero,” and not someone that’s like, “I’m the hero.” Rather than saying, “Here are the 4,000 products we offer,” we try to work with people on saying, “Here are the results you will get that you want from working with us.” Those are the two easiest things that people can do to create a lot of impact when they’re posting on social media.
Talk about going from stumbling through your pitch to soaring from boring your audience, to inspiring them, and from confusing them to giving them clarity as the outcomes of having a good elevator pitch, for example. What are some of those outcomes and journeys you take people on?
As our brand or when we’re working with customers?
Customers. How about somebody who is compliant?
I don’t even know that we have any of those, to be honest with you. I’m trying to think we work hard with that. I would say some of the clients that let us just handle that are pretty good. A lot of them, they have a difficult time stepping outside themselves and seeing that. We worked with some restaurants and we put together some restaurant posts that were all about what it’s like having the perfect birthday dinner with your friends and then ran that ad on Facebook at people having birthdays coming up in the next seven to fourteen days. Rather than saying, “We have the best menu or we have the best sushi, or we have the best burgers,” it’s pictures of fun-looking birthday dishes with people having a good time and saying, “This is what it’s going to feel like on your birthday when you come here. Don’t risk going to a restaurant that might have bad service or bad food and ruin it. You want to feel like these people that are having fun over here,” and then putting it in front of people probably right around the time they’re trying to decide where they’re going to go to dinner for their birthday or what they’re going to do.
It’s not about you and the quality of your food. It’s the emotional connection because that’s the difference between right brain-left brain engagement. If you’re just giving people information about how good your food is from a nutritional standpoint of view as opposed to how you’re going to feel having the experience at that restaurant, that’s much more engaging. That needs to translate into social media is what I’m hearing you saying.
Engage People On Social Media: One of the brain’s main purpose is to conserve energy, so don’t waste people’s energy and making them think. Get right to the point.
With food in particular, you can do that because we all connect to that. Feeding someone is taking care of them. That’s part of nurturing. Restaurants in particular, if they spent more time with engagement on that level of the experience and the nourishing and the nurturing potential they have as a good restaurant, rather than saying, “We have $4.99 appetizers or we have the biggest menu around,” and then putting it in front of the right audience, which we have a lot of opportunity to do these days with all these different platforms, finding those exactly who we want to find, that’s a great way to do it. You can show them like, “Afterwards, this is how you’re going to feel more important and you’re going to feel more special. You’re going to feel less stressed.” I’ve seen a couple of restaurants adopt these order-ahead-of-time platforms that busy parents love. If you market that to say, “You’re frazzled enough, let us handle dinner,” as opposed to, “Here’s our new little gadget that we have where you can order takeout from an app on your phone. Download our app right now.” You can find some good results with those messages.
You’re also experts at creating websites for people. What’s the biggest mistake you see people have on their business websites?
Usually, they don’t understand basic search engine optimization and their content. A lot of people, the first thing we ask them is, “Is your website showing up when people search for you?”They’ll be like, “Yeah.” When people search for Joel Murphy’s Tractor Company, it comes up first. My first question is, “If I search for tractors in Chicago and Illinois, do you come up first?” They’re like, “No. We don’t come up at all. What’s the point?” I’m like, “If somebody already knows Joel Murphy Tractor Company, there are about 7,000 different ways they could find you. If I’m new in town or I need a new tractor and my old store went down or I don’t want to go to Lowe’s, the first thing most people do is they’re going to go on the internet and look for tractors stores near me. They’re going to look up your reviews and they’re going to look for you, especially on mobile now. The statistics say 54% of people that searched for your business on mobile enter your store the same day.
People that aren’t adopting mobile-friendly websites are considering the mobile experience as another big one. People tend to talk about themselves and talk about their product. One thing we see a lot is they missed talking about their actual product though. We’ll find business managers that get in and they talk about taxes, talking about accounting, and talk about who their clients are. They never actually say, “We’re business managers.” When you type business managers into Google, they don’t show up and that’s something a lot of people miss, what are the fundamental keywords that you need to have on your website as part of your content.
[Tweet “People tend to talk about themselves and talk about their product.”]
What I’ve found interesting for me is coming up with a brand identity, when you can have a tagline that is memorable and tells people what you do. For example, mine is I’m the Pitch Whisperer and I’ve done enough content and been on enough interviews where people say that. If you Google Pitch Whisperer, that gives you all kinds of stuff about me. It’s much easier for people to remember than my personal name. Those kinds of things have some value in creating content that can drive traffic to your site as well.
The other side of that is if I go look for the pitch whisperer and you’re one of ten websites, and there are different Google business pages and images there, that you’re okay. If I have to Google the pitch whisperer and it’s seven different pages on your website plus your video plus ten of your images plus I’m listening to your podcast, you are the pitch whisperer. I’m not looking for that anymore and that’s another thing we work with people on is and especially in smaller markets, you have the ability. One of our clients is a national franchise that does auto work and they were missing some segments. We went into keyword research on custom paint jobs. It’s a huge search market here. You have your franchise site. We could create some YouTube videos, build your own easy small site and do a couple of posts, and literally dominate every search for custom paint jobs in this entire metropolitan market. That’s exactly what we did, hundred searches a month just for that term and maybe another 200 for related terms.
All of a sudden, they’re getting all these extra leads off of that just on doing a couple little tweaks. That’s exactly what you’re talking about that to be of such a multimedia world now, it’s not just the website, it’s who’s pointing at your website that’s saying, “These people are legitimate,” because the search engines want to see that. On top of that, on your website is text and images and videos and audio. Search engine to read that, that’s the other side. Are your images numbered 3561243? That can’t be seen. Is your image called Dinner Special at Charleston’s Best Restaurant? That’s the other side that people forget sometimes.
The importance of video content helps your search engine optimization. That is something that people can even just Facebook Live or Snapchat. What’s your thought on all of that? Will Facebook Live take over or Snapchat? My observation from my little world of people I know who have teenagers is they’re not even on Facebook. They love Snapchat because it doesn’t stay around, their parents aren’t there. There are a lot of psychological reasons why people use certain platforms and I wonder how that fits into your branding and marketing strategy for your clients?
We always look at a product market mix first. We definitely want to look at what you’re offering, who your market is, and then figuring out where your market is and that changes. There are a lot of Snapchat now that they’re facing challenges because there’s competition. Their biggest challenge is that their parents are getting on there because they like the filters now. Twitter used to be the hide out from Facebook, and then Instagram was the hide out from Facebook, and now Snapchat is the hide out from it. Their parents are following that world little by little and they’re trying to hide deeper and deeper in the internet somewhere. To answer your question, I don’t know that Snapchat will last forever. I don’t think they’re going to make the money, but Twitter hasn’t made money yet and they’re still around. That’s not always a great indication, but as newer outlets for the younger generation come out, they will run to those because their parents and their uncles and their grandparents don’t know about it yet, but also because we live in a society where everyone wants to be that early adopter. Everyone wants to be the first one with the new iPhone, even though it’s going to have bugs and be overpriced. Everyone wants to be the first on that social platform even if nobody’s using it because they were the first one there. We’ll always have that attraction and part of the challenge is monitoring them.
Engage People On Social Media: Everyone wants to be the first on that social platform even if nobody’s using it because they were the first one there.
Any final thoughts you want to leave everyone with, Sean?
I agree with a lot of what you say so I’ll keep listening to your show. The clarity of message, it’s a big thing. Everyone needs to work on being able to explain your business very quickly and be able to explain that from the perspective of how you’re going to help the person you’re talking to. What’s in it for them is what everyone tends to overlook. I see this with so many clients when they have their marketing message, and they tell you, “Talk about our products or talk about this or show this.” They’ve got a million-people trying to do that to them. They want to know what’s in it for them. Everyone wants to know that these days. Make sure that when you do it, it’s concise because people don’t have attention spans. Make sure that you’re taking that, “We’re the guide, not the hero perspective,” or “We can help you and here’s what’s in it for you,” perspective. Those are the big things that we see a lot of people having challenges.
How can people follow you? What’s your Twitter handle? What’s your website?
I’m pretty much @SeanPHyde almost everywhere, that’s Twitter. You can find me on Facebook pretty easily. Those are the ones I stick to. I do have an Instagram but honestly, I’m not active, the same thing with Snapchat. I spend so much time on other people’s social media, stick to the ones that I’m good at. Our website for our new brand, which is where we would focus, www.ideation-digital.com. Anyone can go out there. They can reach me at [email protected] with their questions and I’m always happy top help.
Thanks, Sean. You’ve been a great guest. I appreciate your sharing your insights on what it takes to have a successful pitch using social media and making your clients the hero, not yourself.
Thank you, John. I appreciate the opportunity.
Links Mentioned:
- Ideation Digital
- Five Day Solution
- Rich Dad Poor Dad
- Groupon
- @SeanPHyde Twitter
- [email protected]
- Sean’s Facebook
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The Purpose Revolution, Show Your Value And Tell Your Story with John Izzo
Posted by John Livesay in podcast | 0 comments
Episode Summary:
What happens when businesses put purpose at the top of the list? Companies that focus on purpose and people are happier and more successful than the ones that don’t. The Purpose Revolution drives people to do better and be better. Employees become committed to work because they don’t feel like its work when they enjoy doing what they do and where they do it. John Izzo, President of Izzo Associates teaches clients that by connecting with people, you gain competitive advantage with a value level that goes past the product or the service. Learn how you can use purpose to compete with all the disruption and contribute to the social good.
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Our guest is Dr. John Izzo, who is the author of The Purpose Revolution. John has so many great insights as to the importance of having a purpose in your business and in your personal life. He said, “When you connect to people’s values and have a purpose, you get them to become loyal. It also gives you a competitive advantage, but not forever, so you need to act now.” He also said, “One of the best ways to show your purpose is at the point of sale. Can people see what your purpose and what your story of good is when they’re buying your product at the checkout?” He said, “Begin your meetings with anybody sharing an idea of how what you’re all doing as a company is making a difference in others’ lives.”
Listen To The Episode Here
The Purpose Revolution, Show Your Value And Tell Your Story with John Izzo
John Izzo is the President of Izzo Associates. He has spoken to over 1 million people and advised over 500 companies including IBM, Quantas, Verizon, Walmart, and Microsoft. He is the author of several books including Awakening the Corporate Soul, and the The Purpose Revolution. John, welcome to the show.
Thank you. It’s great to be here.
You are a master storyteller. What we love to talk about here on The Successful Pitch are great stories that pull at people’s heart strings and are memorable. Before we get into your book, The Purpose Revolution, I just wondered if you wouldn’t mind taking us back to your own story of origin. Did you always know you wanted to be an author and a speaker? How did your own journey start?
Growing up in New York City as a young boy, I was always a do-gooder. I was always more driven by purpose than anything else. There’s only three careers I considered doing when I was a young person. One was to go to law school so I could go into politics. At the time, I thought of politics as a worthy profession, not some slimy opportunistic one. Another one was to be a journalist to expose bad things and tell great stories, or to become a minister. I grew up in a Presbyterian Church in New York City. I sometimes like to say I have wound up marrying all three of those careers. I’m involved in issues I care about, especially the role that business plays in society. I’ve written books that have mostly been journalistic exercises to hear and find out what’s working and to tell those stories to inspire others to change. Finally, I preach 70 to 80 times a year. Unlike a good preacher, I don’t have to write a new sermon every week. Even though I was a do-gooder, I always was a type-A entrepreneurial person. The world of business always fascinated me because I liked to get things done and I like the energy of business, which is often very pragmatic. I did a lot of various things in my career before starting Izzo Associates 22 years ago. The rest is history.
What a great background and combination of multiple things all coming together. Many times, people think, “Something I did ten years ago is not going to impact what I’m doing now.” I find the opposite. It’s unexpected connections that happen, so everything we are interested in and curious about and do helps pull us in to being uniquely qualified to talk about something that no one else has because we have our own unique experiences.
In my case, I did spend six years as a Presbyterian minister. I got to be with people in the most profound and important moments of their lives. I honed my skills speaking to the same audience week after week and having to come up with a new talk to inspire them. I got a degree in journalism. You asked if I always wanted to write books. I remember writing my first beginning of a play when I was ten years old. I remember my family making fun it, but it did not dissuade me from the writing life. I did always have a passion for writing and telling stories. My publisher, Berrett-Koehler, the President, says that my real gift is to go out and find out what’s working and to tell the story and connect the dots. This new book is no exception that I believe in many ways that’s what I’ve done.
Let’s take a dive into the book, The Purpose Revolution. I know you have a keynote around that very topic as well. The subtitle is also interesting to me, How Leaders Create Engagement and Competitive Advantage in an Age of Social Good. There’s three things that pop out there. There’s been some research that more and more companies are all talking about the importance of social good, not just making money, in the companies that they invested in and what consumers are looking for. What happens when a business doesn’t have a purpose?
The Purpose Revolution: How Leaders Create Engagement and Competitive Advantage in an Age of Social Good
There are three fundamental things as we think about this idea of The Purpose Revolution. First, purpose-focused people and purpose-focused companies have always been happier and more successful than ones that aren’t. If we think about some of the most successful companies over generations, whether it’s Southwest Airlines that always wanted to treat guests and their employees with great dignity, or Vanguard who soon may pass BlackRock as the largest manager of money in the world that began with a very simple purpose to give the average investor a shot to be successful so they started the low-cost ETF movement. Purpose-focused companies have always been, over time, more successful than ones that are less purpose-focused. We know that people who see their job as a calling, not only are they happier but they perform better on every metric that we care about as business owners. They call in sick less, they’re more productive, they provide better service, they’re more committed, they’re more engaged, they stay longer. We know that purpose has always been a key to a happy life and a successful business.
What’s new is a revolution of expectations where three key groups all over the world are saying, “This is a major reason why I would go to work for someone.” Around 80% of employees say that they want to work for companies they believe in. 50 % of millennials say they would take a pay cut to work for a company or a job that had purpose. A full 40 % of the global workforce are using purpose as a major way they decide who to work for and who not to work for. About 80 % of the customers globally say they want to buy from companies they believe in, who are aligned with their values. About 34 % of global consumers are regularly punishing companies that do bad and rewarding ones that do good. What the revolution is about is that people are saying, “I’m demanding this. It’s becoming a major screen through which I decide who to buy it from, who to work for, and who to invest in.” Wells Fargo and Volkswagen, both of whom share prices were decimated by their choice not to be purpose driven to open accounts for people who didn’t want them and to say you were green and creating green diesel, when in fact you created a software that would lie to the people who would measure your emissions. Increasingly, these companies are being punished and good companies being rewarded with retention, engagement, and stock price.
It’s a demand both from the employees and the consumers to have a purpose be a big part of why they’re going to work and why people are supporting those companies. Starbucks was the first one to come up on my radar of not only giving employees benefits when they work part time, but also tapping into local communities and giving back that way. How can people use this purpose to compete with all the disruption going on? How does that become a competitive advantage?
First, there is a revolution. In the first 30 % of the book, we make the case. Here’s the revolution. Here’s how things are changing customers, employees and investors. Here’s why most companies are failing at purpose and failing to benefit from that. The second is engagement. We’ve talked about employees more engaged, more likely to attract top talent, customers are more loyal. We know at organizations like Unilever that brands that have made a purpose connection with their consumers, like Dove and Ben & Jerry’s, are growing on average 35% faster than their brands that don’t have a connection with their customers. The third piece is competitive advantage. When I’m in front of an audience, one of the questions I ask people is, “In an age of commoditization, how do you find competitive advantage?” Think about the traditional levers we use to compete with other companies. Quality is rarely a differentiator because everyone has quality and great customer service. Everyone has a return policy that’s amazing. You can’t be in business anymore if you’ve got low quality or bad service. Some people are a little better, but the game has gotten even. How about price? Almost everyone now has to compete on price. If your prices are significantly higher than your competitors, in all but a few cases, you will have to match their prices. What about innovation and products?
Whenever I’m doing a keynote, I sometimes will ask people at their table to come up with ten companies in the world that are sustainably successful because their products are fundamentally different than their competitors. No table can get to ten. The obvious ones come up, Apple, Tesla. Once you get past three or four, nobody can find anybody who’s differentiated because their products are fundamentally different. Where then can you find competitive advantage? Connecting to people’s values and connecting to their sense of purpose is an advantage very hard to duplicate. Ben & Jerry’s is one of the companies we feature in the book. They know that about 60% of people buy from them mostly because they like their ice cream, but about 40% of their customers are connected to them because of their values and the things that Ben & Jerry’s stands for whether it’s climate change, LGBT rights, or their support of organic and local farmers. Those 40% of customers that have done the research never leave. When Häagen-Dazs and other premium ice creams put their ice cream on sale, these people don’t leave. The reason is because they feel a part of the Ben & Jerry’s story because of their value. This is one of the few true places of differentiation in an age of commoditization.
You’re doing two things. You’re getting people in the story Which is what I love to do when you’re talking to people how you convince anyone to buy anything from you is put them in your story. In this case, it’s the story of what your values are in Ben & Jerry’s. Once people are in your story or aligned with your values, you’ve got the loyalty factor that is that not sensitive to price differentiation anymore. That’s what everybody wants is to not be seen as a commodity. The best way to do that is this new insight that you provided. Connect to people’s values and you get a competitive advantage.
[Tweet “Connecting to people’s values is the ultimate connection.”]
I support Starbucks on a regular basis even though they’re often more costly. I don’t even like their coffee as much as I like some other people’s coffee, but because of the work they’ve done around social issues, how they’ve treated their employees, some stands they have taken on issues that I care about, I support this company. I support them with my dollars, and it becomes where I feel a part of their story. Steve Jobs once said, “Connecting to people’s values is the ultimate connection.” In the book, we talk about Apple as a great example. If you ask people why Apple was so successful, almost everyone will say because of their products. That’s true now because everyone buys Apple, but in the beginning, people forget that when Steve Jobs came back to Apple, they were performing in a very mediocre way. What he did was he started to think different campaign. He said to his leaders, “We will not be able to compete on bits and feats. Everyone’s got that. We have to stand for something.” “Think different” became the value. In the old days, before everybody bought Apple, you knew an Apple user not because they had an Apple but because their glasses were different, their pants were different, and their shoes were different. They bought Apple in part because of the connection to the value that thinking differently was a value to the world. Even some of the companies we think are successful only because of their products are often successful because they somehow connect to a value that is more powerful than the product.
One of the things you talk about in the book is the purpose gap, which is that employees and customers want a purpose but they’re not getting it. We’ve talked about how few companies seem to have it, but how big is this gap?
The gap is a tremendous opportunity. This book is not just for the CEO. Whether you’re running a little store or a small business or a leader with a team, this book walks you through how to engage purpose whether your whole company has it or not. Here’s the interesting thing about the gap. While 80% of employees say they want to work for a company that gives them a sense of purpose and that they believe in, 70% of global employees say, “The company that I work for mostly cares about profits and its own self-interest, not the well-being of its clients, customers, or society.” Think about the tremendous opportunity there. I don’t think 70% of companies only care about profits, but it means that most companies are doing an incredibly poor job of helping purpose be at center stage in their business, of doing the things we talk about, the practical ideas in the book that the winners are doing, creating line of sight to purpose, getting people engaged in purpose, driving job purpose instead of job function. This is a big opportunity because 80% want it and 70% said, “I’m not getting it.”
The same gap exists with customers where 83% of global customers say, “I want to buy from companies that are good,” but they only have confidence that about 6% of the brands are good. They look and are confused. “I don’t know if Procter & Gamble or Unilever or Clorox is good.” Another gap is we want it but we feel routinely confused about who’s good and who’s not. The book is filled with lots of ideas about how to close that gap whether it’s with employees or customers. Unilever did a study that showed about a trillion-dollar opportunity for companies who can close the gap and help customers see the story of good that is authentic. If you could close that gap, there’s about a trillion-dollar opportunity in terms of increased business globally.
What would you say are three things that companies big or small could do to become more purpose- focused?
There’s a few key things. On the customer side, right at the point of sale, can I easily see your story of good in an authentic way? One of the most powerful things we know for customers is on the label, in the store, in the point of sale, is there some believable story of good? My co-author Jeff VanderWielen tells a wonderful story about being in Peet’s Coffee and having right there at the till, the story of farmers that they’re supporting in Africa and all the good that they’ve done for them. “Buy this particular coffee right here and you can help support the work that we’re doing.” He talked about how right at that point of sale, he believed that story. There’s a restaurant chain that we’re familiar with in Europe called Be Good Foods. Anybody can have a title in their restaurant, “Be Good”, but they have a giant sign in their store that says, “What we mean by being good.” It’s a chalkboard so they can change it over time. They tell you, “Here’s five things about what we mean by being good and how we’re living being good every day.” If you have an authentic story of good right at the point of sale, tell that story in an authentic way that’s believable.
Purpose Revolution: If you have an authentic story of good right at the point of sale, tell that story in an authentic way that’s believable.
On the employee’s side, number one, leaders have to start watching how much they communicate about numbers and task versus profit and purpose. Think about the average meeting in your team or your company and the communications that come from leaders in the company. What percentage is about profit and task and what percentage is telling the story of the real difference you are making with clients, customers, and society? Most companies, if they do that audit, will find out that about 80% of their communication is about profit and task, about 20% are on purpose and the difference they’re making. We have to try and flip that around. It’s not just about the formal communication, it’s the subtle communication. Someone was telling me they were in a meeting in their company. The head of customer service was telling a beautiful story about something they had done to make a difference for a customer who had a problem. Halfway through the story, the CEO interrupted him and said, “Could you hurry up a little bit? We got to get to the finance report.”
That leader probably did not intend to send the message that purpose wasn’t the thing that mattered most in that company, but that’s the message that people received. The first thing you can do is start looking at your communication. If I’m a team leader, how about start every meeting with, “Has anybody have a story of how we made a difference for someone, a client, customer, or community since the last time we were together?” Make that the first thing that begins every meeting in your company. Let people get engaged and tell their story. Another thing you have to do is engage people to talk about their purpose. One of the things we talk about in the book is getting every employee to identify their personal purpose and their purpose in their job. Powerful things happen when you start to engage people in identifying their own purpose at work. As we say in the book, “You’ve got to give people hands-on purpose.” It’s not a spectator sport. You can’t give people their purpose. You’ve got to create an environment where they can identify it for themselves.
I want to share how I’ve taken what you’re talking about and what you wrote about in The Purpose Revolution and put it into action in a startup that I’m the Chief Marketing Officer of. We’re sitting around having these conversations as we go out for investors, as we go out for finding people to become advisers, and ultimately creating our message on the website. We all needed to agree before we even started that we all had a similar purpose and vision beyond just making money. We used your book as the guidepost. This concept of point of sale, what we’re doing is called QUANTM.one, which is going to help people who have equity in their house and want to take it out to possibly take some of that cash and send their kid to college. If they do that, typically their only option is to take out a second mortgage. A lot of people say, “My budget is tight. I can’t pay a second mortgage. If you’re going to give me cash in exchange for owning 10% of my home, it’s not a loan, you’re just owning 10% of my home. I could stay in the house as long as I want, and when I sell the house you get a check and we get a check depending on the percentages.” That seems to be a big social impact on helping people get some cash out without going into more debt.
We got excited about that as purpose for what we’re doing. The way we’re doing it is by using cryptocurrency and creating a token. Instead of Bitcoin, it’s going to be the QUANTM token that is going to be backed by actual real estate. For investors, they suddenly say, “I’m putting my money on buying a token that actually has some net asset value because it is backed by some real estate.” Everyone’s winning. The customer is getting money out without another loan and the investors are saying, “You’re giving me something that I can see the value of because it actually has real estate behind it, and that makes me feel less stressed out.” Let’s start with the customer experience. Does that seem like it’s on track? There are a lot of people that want some of that equity out of their house but don’t want a bigger loan. Do you see that that is a social impact?
I definitely think it is a social impact. One of the things around purpose is that the first purpose of every company is to have the best interests of their customers and clients in mind. Don Guloien, the former CEO and now Chairman of Manulife Financial said something that struck me. He said, “Almost every company, small or large, began in the beginning with that purpose, to solve a real problem that people were having.” That’s how Airbnb started, because the founders couldn’t find a place to stay. That’s the basic first purpose is are we meeting a need that isn’t filled in in people’s lives or in society?
What we do at the end of every week is we recap our progress because it’s so easy to get stuck on the task that we need to do and how much money we raise. I was talking to my mom, whose house is paid off, and she’s tapping out on her IRA savings thinking what’s she going to do. She doesn’t want a reverse mortgage and would this work for her? We said, “Yes.” We would give her cash in exchange for ownership of the house. That way, she doesn’t have to worry about any interest accumulating. We all got jazzed that there’s another group of people that could benefit from this. The following week, someone said, “I know someone who’s not retired, but they’ve paid off their house, and yet their financial planner said to them, ‘70% of your assets are tied up in your house. You need to diversify.’” They’re like, “How do I do that besides selling the house or taking a loan out? I don’t want to do either of those.” They said, “We could own 10% of the house and give them some cash. They can either buy cryptocurrency with it, they could remodel, they could invest in anything else besides real estate, giving them some choices.” It’s fun for us to keep tapping into these individual people and how our overall purpose is creating stories, to begin those meetings with how we’re making a difference keeps us all inspired.
[Tweet “Powerful things happen when you start to engage people in identifying their own purpose at work.”]
It’s a great teaching point. One of the ways you fan purpose in a company is to create line of sight to purpose, which is consistently helping people see how our products and services are making a difference. As your company grows, bringing in people whose lives have been changed by this, making sure that those stories are alive inside the company is so important. One of the people we feature in the book is one of the most successful Molly Maid franchisees in the world, a young woman who’s kicking the pants off of much older franchise owners. One of the things that she does is she regularly brings in busy moms to single moms to say, “I can’t tell you what it’s like to come home to an oasis of calm in my crazy life where everything is always a mess,” or the son or daughter of an older person who’s home they clean are saying, “My mother is lonely. She doesn’t get a lot of visitors, and the way you befriended her has alleviated a lot of loneliness in her life and I want to thank you.” That’s what we call a line of sight to purpose. One thing I recommend for you as your company grows is make sure that is continually happening so that people never forget it’s not just about money. It’s actually about truly contributing.
My goal is always to create little case stories of who this is for and what problem it helps. As we get those stories and those people, get little video testimonials or even a couple of paragraphs with a picture, brings it to life. Part of my job as the Chief Marketing Officer is to find other brands that we might want to do business with. I was thinking, “Who makes sense and how could I align with another company who’s got a similar purpose to what we’re doing?”
One of the companies we’re in conversations with is Farmers Insurance because if you’ve got equity in your house that you’re able to take some cash out of, it probably means your house is worth more than when you bought it. 90% of the people do not increase their homeowner’s insurance when that happens. What happens when there’s a fire or an earthquake or mudslide or a hurricane? There’s not enough insurance to rebuild their home. To partner with a company like Farmers Insurance, to say, “If you’re triggering cash out of your house, then you might want to have us take another look at it to make sure that if you need your house rebuilt, there’s enough insurance for that.” After watching all these stories of people losing their homes and fires in California or hurricanes in Puerto Rico, your heart goes out to them going, “I hope there’s insurance to cover that.” That’s where, for me, got exciting from a marketing standpoint of, “How could we not just market with any brand but market with a company that had an impact socially?”
One could see that as just about making more money or one could say, “We really have a chance to make a difference.” Just continually focusing on that is such a critical aspect of leading for purpose.
One of the things you say in your book is, “Don’t be afraid to claim a moral mandate and state it loudly that you care about people and society.” I just wanted to applaud that because sometimes people are afraid, “We don’t want to be seen as a company that’s not focused on profits because investors won’t do it.” That’s why your book is called The Purpose Revolution. It’s a revolution. If you’re not doing that, you’re not only not attracting the right people, you’re repelling them.
What’s so important for people to understand is this is now a major lever. BlackRock sent out this letter to companies all over the world saying, “If you’re not doing good and you’re doing bad, we’re not going to invest in you, so get ready.” This is a tsunami about to hit companies. Here’s the thing that is important for people to remember. First of all, when we have purpose and we focus on the good we are doing, we are happier and we feel better. I discovered most business owners and leaders want to leave a legacy. They don’t just care about profits. 30 years from now when you’re sitting in your rocking chair, you’re not going to be thinking about the quarterly profits. You’re going to think about what the legacy was of your company.
[Tweet “When we have purpose and we focus on the good we are doing, we are happier and we feel better.”]
The second thing is that increasingly, this is going to become a place of differentiation. Don’t think the window is going to stay open very long. I compare this to the quality revolution in the 1970s and early 1980s. Only a few people benefited from the quality revolution; FedEx, Toyota, Honda. The people who adopted quality early on got almost all the benefit from it. Sooner or later, everyone just had to have great quality. The same thing is true with this. In five or six years or seven years from now, it’s going to be very hard to differentiate around your purpose because if you don’t have one, no one’s going to want to do business with you. Because of this gap we talked about earlier, employees and customers want it but don’t feel they’re getting it or are confused. Those who can close that gap are going to have a big advantage at this time in the age of social good.
It is the same thing with those windows of opportunity to differentiate yourself and have a competitive advantage. We can’t wait for everyone else to be doing it. One of my favorite takeaways from our interview is monitoring this 80/20 rule. 80% of the time, are we just talking about profits and tasks and only 20% about the purpose? What happens if we flip that? The irony is if you keep focusing on purpose, the money and the tasks will come.
It’s always important to remember that profits are a reward and byproduct of us fulfilling a purpose, which is solving real problems for people and society. Steve Jobs, he was considered a jerk to work for personally, but he believed in that mantra that profits were a byproduct of purpose, not the other way around. We forget that at our peril that’s why it’s so important to do that. Communication is so critical. A few years ago, I was coaching an executive who ran a big division for an aerospace company. She was very successful, a great numbers person, but nobody thought she was very connected to the purpose of the business, to keep the peace and to protect the soldiers. She cared deeply about this, but her communications said otherwise. All we did was coach her to begin every one of her talks and meetings connecting to purpose, to consistently start telling stories of the real difference that they are making for the country and for the world. I watched over a year period where her brand grows, where she got more meaning out of her work, where people liked her, where engagement went up, where commitment went up. It all began with a leader examining how they were communicating and what they were talking about day-to-day.
What you focus on, you get more of. That’s my motto. Is there any final thought you have?
If you can’t sing the song that you came to sing in the company or the role that you’re in right now, then you owe it to your life to either find another place to sing your song or to find a way to sing the song you need to sing differently where you are. Purpose is a big thing for organizations, but also for us individually. Life’s too short not to have a job with purpose and a place where you can find meaning. It may mean changing to another place or it may mean starting to reconnect with the purpose of your work and the difference you want to make where you are.
[Tweet “Life’s too short not to have a job with purpose and a place where you can find meaning.”]
We all have music inside of us that needs to come out, and if you’re not in the right place that wants to hear that song, then find another place or change your song. Social media, anything you want to share with us?
DrJohnIzzo.com. It’s the same thing for Twitter, follow us there. It’s on LinkedIn as well, so it’s pretty easy to find me. If people want to know more about the book, just go to PurposeRevolutionBook.com. It has all the links to buy the book or download a free chapter. Whether you’re a business owner, a CEO, or someone who wants more purpose in your work, the book is filled with lots of exercises and practical things you can do to connect to purpose and lead purpose at whatever level you are.
I can’t recommend it enough. I’ve read it several times and I keep referring back to it multiple times. Thank you for being a great guest and for writing such another great book.
Thank you for your great work. Keep spreading those positive messages.
Links Mentioned
- Dr. John Izzo
- The Purpose Revolution
- Izzo Associates
- Awakening the Corporate Soul
- The Purpose Revolution
- Berrett-Koehler
- QUANTM.one
- DrJohnIzzo.com
- PurposeRevolutionBook.com
- BlackRock
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