Pitch Secrets From Top Investor with Vic Pascucci
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Episode Summary:
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Listen To The Episode Here
Pitch Secrets From Top Investor with Vic Pascucci
Our guest is Vic Pascucci, who is the Managing Partner at Lightbank in Chicago. He’s been a venture capitalist with over nineteen years of professional experience including Fintech investing and he has an amazing background with Fortune 130 companies and early-stage ventures. He’s really big in corporate strategy as general counsel. His specialties are Fintech and consumer. He’s got over $650 million in venture capital in M&A transactions. Welcome to the show, Vic.
It’s great to be here. I appreciate it.
I like to always ask my guests to take us on their own story of origin. Are you from Chicago? Did you dream of being a venture capitalist when you were in high school? How did this happen to you?
I think in high school, I dreamed of being in Chicago. Growing up as a kid in Cleveland, I became infatuated with the city like this although I didn’t get accepted to any colleges around here. Once I started working, I became infatuated with becoming a venture capitalist. Just like everything else, nineteen years later, you have an overnight success. When it comes to my career in venture, I like to tell people when they ask how did I get into venture, “I did it in a completely non-traditional way.” I fought, punched, kicked, kneed, elbowed and scrapped my way into it. I didn’t go to school in the right part of the country. I don’t have the right degree. I didn’t work for the major consulting companies. If you look at most venture capitalists, they have this punched pressed resume of Ivy League, consulting startup, went to the right country clubs, and worked their way up. I’m speaking broad-brush just to make it more exciting, but if you look at most people’s resume in venture, that’s what they look like.
[bctt tweet=”What is your unfair competitive advantage?” username=”John_Livesay”]
I started my career as an attorney, which a lot of venture people do. I started as a trial lawyer. I was trying cases right out of school. This is the early ‘90s to mid-‘90s and I was going to court every day and just was tearing things down. I was a trial lawyer. I would go and beat the hell out of everyone, witnesses, statements, and I’ll just destroy. I’ll put on a bunch of drama in front of a jury, go to win and move on. I noticed all these brilliant people around me that I meet, they were in technology. The way I look at it, they were building things every day. They are building technologies, building companies.
I had a midlife crisis in my mid-twenties, “How do I want to spend my life? Building or destroying?” The only way I knew how to get into venture from that standpoint was to teach myself how to do technology law, teach myself about corporate finance, and start my own law firm that did those types of things. From starting my own law firm with no clients, this is in the late ‘90s, beginning of 2000, so after the first technology crash. I was starting a firm with no clients, focused on technology companies. Building that from no clients, no business, to enough work to keep five lawyers busy. One of the guys I was working my ass off to get his business finally said, “I’m not going to give you my business, but I will give you a job as my first general counsel.”
Up into that point, I was doing a bunch of advising on venture and finance. I have always loved the venture side of things, representing some financiers, representing the State of Illinois for their seed stage investing. Before I knew it, I was out there raising money, managing teams. Once I got inside the “the belly of the beast” on the startup side, I loved it. From there, I progressed from one software company got bought by another. I ended up in Texas where I got a job. I sold the software company, then end up with a job with a Fortune 130 company which was the completely other end of the spectrum, working in this huge 25,000-person company. It was highly regulated with all these processes, completely conservative and conventional. I came in as the young guy that was supposed to represent their CTO, CIO, and CISO.
As their lawyer, what I’d see are deals that come across their desks. They would be an early adopter for desktop virtualization or security or some internet-based business. I just kept forcing them to say, “We should do deals with these companies.” They say, “We are.” I’m like, “No, you’re not. You’re just buying stuff. We need to invest. We’re going to rely on them. They’re going to rely on us. The best way to align is by investing.” They said, “No, we don’t do that here. Shut up. You’ll get fired.” After breaking that ice after a couple of years, I turned around and fast forward a couple of years, I’m managing a $330 million venture fund for them. It’s a top performing fund. We have a bunch of IPOs. We have a bunch of acquisition exits and a really active pipeline. That started it all officially. Throughout the course of those investments, I was able to meet my partners here, Brad Keywell, Eric Lefkofsky, this fund that they had started. They traded some deal flows, traded some pings and deals on sectors, and then a couple of years later when they were ready to bring in someone else to manage and run this fund, it’s how I got here.
Pitch Secrets: People just assume that all teams have great relationships, but that’s not the case.
That is quite a journey. I think that there must have been some skills around storytelling being convincing as a trial lawyer that has helped you on your career path because you obviously had to get other lawyers to join your team when you were starting your own firm and then getting people to engage with the vision of other startups.
Getting them to accept my bullshit, specious legal arguments in front of them, it helps to tell when people are telling a story with passion versus the people are just posing in bullshit. When it comes to entrepreneurs and pitching, there are the big picture things I am looking for and then the micro. The big picture, I’m looking for that compelling visionary that truly believes that they’re doing something bigger with this company. When I say something bigger, “I don’t want to sell more loans. What I’m trying to do is sell for the financial security for families everywhere because their incumbent banks won’t take care of them.” I need people to see something bigger and I need them to communicate it and tell that story in a compelling way.
That storytelling capability, I need to know that they’re exceptional at because they need to be able to inspire people to come work for them because I invest at the earliest stage of startups. I have the seed and Series A. These companies go through amazing ups and downs. They’ll face death and go out of business almost on a monthly basis. Unless you are that inspiring leader that can keep people going in the good times and bad, you’re not going to be able to do that. It starts with how well can you pitch. Not only do they need to be convincing me and their employees and their partners, but they’ve also got to convince the later stage investors. They’re going to be the type of person that can tell a compelling story to them. Get those people to part with their funds and invest in the companies, and give them the understanding that this is an incredibly competitive business on both sides. Both with VCs like myself trying to get deals, but also entrepreneurs pitching venture capitalists.
There are hundreds and thousands of deals we’re looking at. What is it that’s going to help them stand out and are they able to tell that story? Storytelling is a critical part of things. On the more tactical side, what I look for in every pitch and entrepreneurs are actually really good at doing this, they’re actually pretty blatant about it. I want to see an unfair competitive advantage. “Why are you going to win versus everybody else?” Tell me, “Why you? Why this company? Why this team? Why?” Unless they can articulate that, then I know they’re not really going to have what it takes to get through. There are so many deals, so many opportunities, so many people chasing financial services or banks or this and that and the other consumers.
Some of that unfair advantage could be a distribution channel. It could be a technology architecture. It could be the team itself in their relationships. It could be their approach. Something has to be there. I invested in Coinbase back in 2014. Those guys were really clear. Fred Ehrsam was like, “Here’s my competitive advantage. We have the best UI. We have more people. We are the biggest Bitcoin company in the world right now. We have the power law of scale on our side and then here’s our roadmap of how we’re going to take that and expand it.” It was clear. They did have an unfair competitive advantage at that point.
I love that you spelled out what the unfair competitive advantages are because so many people will think, “Is this one or is that not one?” It can be something as basic as a distribution channel. A lot of people have Uber on their phone, maybe they’ll do one other one like Lyft, but they’re probably not going to do a lot of other apps. That’s a distribution channel example. When you talk about the relationships that the team has, I think that’s a really interesting angle to take a look at. A lot of people just assume that all teams have great relationships and that’s not the case. Especially if you’ve got really great advisors who also have great relationships who was just part of your team to not overlook.
Pitch Secrets: I’m getting people to engage with the vision of other startups.
Through that storytelling, are they able to bring on great advisors? Through that storytelling, are they able to keep the relationships they have? We just invested in a company, it hasn’t been announced yet. It’s in the legal tax space, bringing automation to the legal field. This founder, this is the second time he’s doing something in that space. He’s got connections throughout the industry. It’s not exactly what he did before, but similar. His people on his team, they worked with him in the past. Then when we mapped the marketplace as to where his technology fits and where it’s going to go and what is his distribution channels, the people he’s going to rely on are the CMOs, the CTOs, the EVP of sales and distribution. All these were major channel partners that he’s going to rely on to go to market. You map it out, you see it and there’s the unfair competitive advantage.
I love that you paint the picture that once you explain what your unfair competitive advantage is, then here’s the roadmap of how we’re going to use that. It’s the next step of connecting the dots for people to really understand it. Sometimes an unfair competitive advantage can be traction that the competitors don’t have. It could be the technology, but also even if it’s just something that is so complex and needs a lot of SCC requirements around it and you figured out how to do that and that’s a barrier to entry to competitors, any of that is considered an unfair competition.
It can even be your subject matter expertise. There’s a company we invested in that I’m on the board of, Clearcover. It’s championing the concept of incidental insurance. I’ve been in insurance and Fintech for a while and everybody comes in to pitch with, “Incumbents are slow. They’re stupid. They don’t have the technology. It’s a huge market and I’m going to win.” Kyle Nakatsuji, on the other hand, has been in insurance for ten plus years. We walked through the entire regulatory roadmap of how he’s going to get his products approved in each of the 50 states. How he’s going to establish the laws of adjustment expense ratios. How is he going to run the rate combined? What is going to be his underwriting factors? His unfair advantage is one, he’s an awesome entrepreneur. Two, he goes deeper on this space than anybody else out there.
Here’s another important qualitative aspect because at the early stage, it’s truly a qualitative game. You’re betting on the non-tangibles because it’s early. We all think we know where these companies are going to go, but at the end of the day you don’t know how the market’s going to react, competitors, regulations, anything like that. For me, when I’m looking for an entrepreneur, you need to see that level of grit. There’s got to be that hustle, that grind and grit because despite what you read in WIRED and TechCrunch and everything else, startups are not fun and glamour. You’re in the trenches biting it. Are these the type of people that at the first sign of difficulty, are they going to turn? Are they going to give up?
[bctt tweet=”Can you tell a great story when you pitch?” username=”John_Livesay”]
I’m always looking for those people that are hustlers, they’re grinders. Are they going to grind it out no matter what? Are they going to see what’s going on in the market and see what’s going on, make the necessary pivots, and also hold their ground when it’s time to maintain those visions? The entrepreneurs, that it was too easy for them or they have layups or they were spoon fed a bunch of opportunities. They look great on paper but again and again, you can stand back and just watch flame out after flame out. We’ll always bet on those grinders and those hustlers that are able to articulate their unfair competitive advantage and can tell a great story.
Especially for you and your background, that makes a lot of sense. You had to be scrappy and not be spoon-fed to get to where you are so you can appreciate that in other people.
Generally, if something turns off an investor in someone’s background, those are usually the things that turn me on like, “What do you mean you’re waiting tables for three years in Brooklyn?” He was doing that to pay back student loans while he figures out this business plan. I’m like, “I’m good with that. That’s what I want to see.” “What do you mean you took two years off between high school and college?” He was selling Cutco Knives in order to pay the bills to help his mom. It doesn’t have to be about dire straits. We have people like, “Yes, I want to pursue my dream of becoming a musical theater actor in New York. I went after it and I realized after two years, I wasn’t that good at it. I went back, got a part-time job, got my MBA and dropped out of there because I thought this was wrong with financial services. I thought I’d go after this untapped market.”
Let’s change gears a little bit and talk about what’s happening in the blockchain since you said you were one of the early investors in Coinbase. I see a lot of investors who are Angel investors of the Seed round or a Series A saying, “ICOs and blockchain stuff are really not our business model, yet we want to get into it but we don’t know how to make it work.” I’m fascinated that you’ve figured out a methodology. Is it a different criterion? How does that all work for you? You’re typically not getting equity in ICOs, you’re getting tokens.
I watched the first craze and bust happened from 1999 to 2000. Then I watched it happen again in 2008 both as an investor as well as an operator. When I see technology that infatuates me at its most nascent stages, I still go back to the very fundamentals. Blockchain itself stepped away from the technology. Not only is it a new technology that enables both incredible things to happen across lots of different aspects of life, but if you’re going to sell through and around anyone, the regulated industries or to larger enterprises, it’s a completely different way for them to do business. When I’m looking at those teams that are getting into it, I keep going back to those fundamentals. Is this the team that has what it takes to change the way an entire industry operates?
If you think about the biggest enterprise sales that are out there, like when Oracle went after their competitors, when IBM tried to sell this, large enterprise sales are incredibly hard to do. That’s just when you’re changing and swapping out technologies. These companies and these product pioneers and their CTOs and the CIOs, they’re all doing business the same, just with different technologies and supposedly technology is supposed to get some lift efficiency. With blockchain technologies, you’re going to change the entire way they do things. You’re going to take out an entire floor of securities traders and replacing them with smart contracts. You better be the best salesperson, the storyteller in the world to get them to do that. Don’t give me like this bullshit of, “We’ll do a pilot. I’ve got a pilot with everybody and they all paid me fourteen cents for a pilot but I’m in everyone’s innovation lab.”
When are you going to see production? Are they even talking to the people that can put you in a production? My point is the people that are going to the blockchain, that we’re going to bet on, are the ones that understand their industry that they’re going into and have that ability to tell the story that can change the way the whole industry works. Those people are few and far in between. The men and women that are doing that, they’re going to be the next Steve Jobs, the next Bezos, the next Elon Musk, the next Eric Lefkofsky, the next Brad Keywell. They’re going to be those special entrepreneurs that can do the unthinkable. It’s just not going to be like, “I wrote a white paper and here’s my use case. Here are all my coins. I’m going to keep 20% for myself and I’m going to sell the rest out.”
[bctt tweet=”Sometimes, an unfair competitive advantage can be a traction that the competitors don’t have.” username=”John_Livesay”]
To me, that’s not going to do it. That’s not how I’m going to invest. I’m going to invest in the people and the companies. Yes, there could be some tokens but at the end of the day, it’s going to be the people and their businesses that I’m going to invest in. There are some interesting enablers going on out there for companies trying to do better trading of tokens and those types of new technologies. The true ones, they want to change how eCommerce works or change how consumer product goods or assets are tracked or securities are traded or insurance is put together. Those are the ones I’m looking for. What’s the next Coinbase going to be at the enterprise level? Coinbase has announced where they’re going with those types of things. It’s going to be those people like Fred Ehrsam that they knew that industry. That guy knew more about money transferring than anybody out there when talking to him. I was already in a financial services business with bankers and treasury offices that had been doing it for four decades. Fred knew it better than they did. It was awesome and so it was great.
Pitch Secrets: You had to be scrappy and not be spoon-fed to get to where you are.
The real takeaway I think is some people are really good at understanding their industry but they’re bad storytellers or vice versa. They might be a great storyteller but they don’t really have a competitive advantage and they don’t really have the expertise to make you feel like they could execute it. When you meet those teams, that’s why most deals are only funded 1%, you hear 2,500 pitches and fund 25. It’s because of that rare combination. It’s almost like a casting agent looking for the next big movie star. It’s like they’ve got to have that it factor, which is great storytelling and expertise combined. A lot of people who are technology-oriented are not really great storytellers. When you get those skills in one person, it is like this incredible hybrid that comes to life.
That’s a great point and that’s spot on. There are also teams that they know it like, “I’m the product person and this is my BD salesperson and we come together. I know the technology. She knows how to sell and build a team. Together, we’re an awesome combination.”
Which goes to the point of complementary skill sets, not the same skill set. It’s a big takeaway. Any last thoughts on recommendations for someone who is looking for Seed or Series A round in addition to all the great things you’ve said? Any last thoughts about being really be prepared for the Q&A in addition to the pitch or anything like that?
Just do your homework. To me, that speaks volume. If you’re talking to a Seed and Series A person, do they write Seed and Series A checks and what’s their definition of Seed and Series A? Is it the same as yours? Start at the most fundamental level. Are you talking to the right type of investor? Then from there, do they do the investments and the types of sectors or the sector of the industry that you’re in? Can you have the conversation with them? Look at the investments they’ve done. The reality is most investors are going to take pitches that come to them through warm introductions. Very rarely do you come in cold. Every now and then, some people do or even the ones that come through like a friend saying, “Will you please take this pitch?” “Fine. I’m happy to.”
[bctt tweet=”We know where these companies are going to go; but at the end of the day, you don’t know how the market’s going to react.” username=”John_Livesay”]
I do like to help people and talk with them and help even if I’m not going to invest. Those have been some of my best relationships. It’s like, “Do you understand what I’ve invested in? Please don’t come with the pitch on how you’re going to try to take out a company I’m on the board of that I lead umpteen millions of dollars in investments in.” Know that you shouldn’t be pitching me if that’s the story. Do your homework on the investor. Know what they invest in. Know how they invest. Know what their style is and know what their track record is so you can understand if you should be in front of them in the first place.
Since you brought it up, I’m sure that everyone is going, “Don’t let him go without answering this one question.” What do you define Seed Round from and where do you think Series A starts because it’s all blurred these days? Is Seed Round $1 million and under for you? What are your parameters?
At the Seed, I’m going to invest anywhere from $500,000 to $1.5 million and to me Seed Rounds are priced anywhere from a $4 million to maybe an $8 million to $10 million. If it’s going up near $8 million, that’s going to be a special type that has some unbelievable traction. It’s just that they took a while to take some outside capital. We still consider A as a traditional A. It’s $5 million to $12 million raise on an evaluation that somewhere around there, they’re going to give up 20% to 30% of the company.
Pitch Secrets: A lot of people who are technology-oriented are not really good storytellers. So when we get those skills in one person, it is like this incredible hybrid that comes to life.
We’re not the type of firm that’s going to take part in a $40 million Series A investment. It’s just doesn’t make sense. We’re fortunate enough that Lightbank is a top performing venture capital firm, one of the top twelve results. When you measure us against our top decile, it’s because we stayed disciplined in the evaluation and we stayed disciplined in our approach. At the Seed stage, I just want to see people that have done the work and have a model that makes sense. It’s mostly hypothetical and notional at that point because you’re maybe not a marketer who just got the supplications. Show me that you’ve done the work, that you’ve got a reasonable financing plan, a reasonable strategic go-to market, how are you going to get the product market fit, and then how you’re going to get to scale from there. We’re looking for a founder-product fit and then just try to get the product-market fit and then it’s scaling out from there.
Thanks so much for sharing your story, your insights, and most importantly the kinds of people that you’re looking for. Now, we have a roadmap. For our audience, it’s much better prepared on how to tell a story, have your competitive advantage and really know who you’re talking to and do your homework. Thanks again, Vic.
It’s my pleasure.
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Rob Nance on Local Investing, Venture Funds, Cryptocurrency, And NYCQ
Posted by John Livesay in podcast | 0 comments
Episode Summary:
Managing partner of CityBlock Capital Rob Nance gets down into the business of local investing as he shares his new venture called NYCQ, a tokenized venture fund for investment into New York City startups. Starting with his origin story, he relays the milestones that led him to his successful career, from his interest of banking to taking on the opportunities to expand with venture fund. He covers topics about blockchain and cryptocurrency in relation to how his tokenized venture has revolutionized investments by digitizing. He also talks about the role of fundraising and the essence of communication.
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Our guest on The Successful Pitch is Rob Nance, the Managing Director at CityBlock Capital. He loves to fundraise and he’s going to share with you his secrets on how he has reframed dealing with rejection, how he is willing to leave after five minutes if it’s not a fit in a polite way and really letting go of focusing on getting to a yes versus getting to know instead. It’s such a play on words by getting to know someone versus getting the no. What he’s doing in the blockchain at CityBlock is going to be really interesting for people who want to know how they can possibly invest in real estate in a way that’s never been available before specifically commercial buildings in New York to start with. He’s got an exciting pre-webinar coming up that you’re not going to want to miss. Enjoy the episode.
Listen To The Episode Here
Rob Nance on Local Investing, Venture Funds, Cryptocurrency, And NYCQ
Our guest is Rob Nance, who is the Managing Partner of CityBlock Capital, which launched the NYCQ, a tokenized venture fund for investment into New York City startups. CityBlock Capital sources capital globally and it allocates to proven local investors with track records of profitable exits. Rob is also the Managing Partner of Edgewater Equity, a fully invested early stage venture capital fund based in New York City. He manages a portfolio of early-stage companies around the globe. In addition to all this, he advises a diverse group of operating businesses, everything from restaurants to medical cannabis. Rob holds a Bachelor of Science in Finance from Winthrop University and a Master of Science of Law in International Taxation from Thomas Jefferson School of Law. Welcome to the show, Rob.
Thank you for having me, John.
I always ask my guests to take us back to your story of origin, when you were getting your Bachelor’s in Finance or maybe even before that. Did you always know you wanted to get into venture capital? Did you always know you wanted to start your own company? How did all that start to take place in your head?
I spent a lot of time in banking. It was an interesting place to be because I got to work with a lot of wealthy companies and individuals who had been very successful. While I was always interested in the venture, an opportunity presented itself when one of my clients came to me and said, “I want to start a venture fund. Do you want to come to start it with me?” I said, “That would be an amazing opportunity.” I left my career in banking and started Edgewater Equity, which is an early-stage venture fund. We had a bifurcated investment thesis. The first was invested in enterprise SaaS companies. The second was what we coined Consumer Product Technology. Consumer Product Technology is investing in companies that are bringing material science to industries that haven’t seen innovation in decades. A great example would be laundry detergent or the beverage category. I spent a lot of time doing that, primarily investing here in New York City at the Silvertech incubator. Silvertech is owned by the Silverstein family that owns the World Trade Center site. They have an incubator run by several experienced venture capitalists. I was investing heavily into that incubator.
I met Jon Avidor, who is a co-founder of CityBlock Capital. Jon and I were investing a lot of the same deals. We came up with the idea that it makes a lot of sense for us to co-invest and start a fund together for our fund too. It was his first fund as well. As is typical, when you get ready to start your second fund, you go back to your investors in your first fund. You say, “Give me more money,” for lack of a better term. As one of my investors eloquently put it, he said, “Rob, I like you but the average venture fund lasts twice as long as the average American marriage. I don’t want to marry you twice.” I laughed but actually, it’s a problem. It’s a problem because your money’s locked up for eight to ten years in a typical venture fund. Think about the individuals that invested in funds that invest in Uber. That company still hasn’t gone public and their money’s been locked up for eight years or more. The only liquidity that has come through that is when someone like SoftBank comes in and does a secondary offering at a discount. I started to think, “How can we solve this problem?”
What I saw in the market was a lot happening with blockchain, a lot happening with cryptocurrency, and a nascent market coming up within blockchain, which was the security token market. What’s interesting about this market is the idea is simple. You can take a real-world asset and you can take the interests that are held in this asset, which now are typically on paper and you can digitize them. You can issue a token that represents LP interest in a fund. One person has successfully done that and it was Blockchain Capital. I flew out to San Francisco and met with Bart Stephens of Blockchain Capital to learn how they had done this. He was extremely helpful. He’s a very nice guy. From there, I started to go down this road of, “Can I build my own tokenized venture fund?” I started working with Jon. He’s a lawyer. In our business relationship, I’m the optimist and he’s the guy that says no all the time. We worked through this and spent a couple of months developing the legal framework necessary to build this.
Local Investing: The opportunity that exists today did not exist before cryptocurrency was created.
Along the way, we met our other co-founder, Max Goldstein. We said, “Max, we’re going to tokenize our own venture fund. Maybe we’ll build something bigger in the future.” What Max saw was the opportunity here is not just to issue our own venture fund, but to build a platform that allows us to issue venture funds all over the globe. What I mean is the opportunity that exists now that didn’t exist before was created because of cryptocurrency. We all remember AngelList. Their goal was to democratize venture investing. The thinking was, “This would be an amazing opportunity that people all over the globe can invest into startup companies.” From the standpoint of democratizing venture, they weren’t as successful as they would have liked to then. A lot of their investors are family offices. What they didn’t have that we have now that’s interesting are these pipes that were created by bitcoin, ethereum and other cryptocurrencies.
When you look at what has happened, it was hard for someone in Ukraine or in South Africa to conceive that they could invest in startup companies in the United States. What bitcoin and ethereum have done is it’s broken down these digital walls that existed. For the first time, people can comprehend that they can send money anywhere, seamlessly and effortlessly, using cryptocurrency. We’ve seen these pipes that have been created. Going back to talking to my co-founder, Max, he said, “These walls have been broken down. There’s an opportunity to globally source capital from anywhere in the world and then put that in the hands of someone that is an expert investor where they live.” Most venture funds invest about 80% of their capital within about 100 miles of where they’re based. The opportunity here was, “Let’s find a local manager starting in New York City who understands this market and who understands how to invest in this market. Give them capital to deploy.” What we’ve done is we’ve created a model at CityBlock Capital where we work with what we call investment partners in different cities, starting with New York City, who deploy the capital on behalf of the fund into an investment thesis that we’ve established.
[bctt tweet=”Wall Street meets Blockchain = picks and shovels.” username=”John_Livesay”]
For our New York City fund, we’re deploying capital into the intersection of Wall Street and blockchain. You may hear it called picks and shovels. There is this interesting theme that’s developed, an interesting opportunity which is there are lots of assets that are currently built on paper. Whether that’s venture funds, whether that’s real estate and there’s an opportunity to make those offerings digital. The opportunity to make those digital is a huge market. Something like $700 trillion of paper assets exists. You think of all the privately held companies across the US and around the world. What we saw were the opportunities, “Let’s digitize this venture fund. Create tokens so people can buy and sell them.” That’s the market that we see that that’s important. Our fund is investing in that infrastructure that’s been built to support that. Those are the technology platforms that help issuers, like CityBlock Capital issue their tokens. There are the exchanges that will support this new digital infrastructure.
The thing that’s interesting is this concept of curation and having local people in local cities that they are experts in making those decisions as opposed to trying to find one fund or one group of people that know everything about everything. You’re not only digitizing assets, which are allowing people to own fractions of those buildings.
That’s one use case. A great use case is fractional ownership of buildings. In our case, we had these traditional structures. We’re taking those same structures and creating them in a form that is digital, which allows them to be bought and sold online instead of a cumbersome method of trying to do it through a paper format.
You’re making the user experience more seamless and less paper trail is also an outcome of what you’re doing. Is this a security token that you’re offering?
Yes. When we look at the blockchain ecosystem, I think of it as a three-legged stool. The first part of that would be payment tokens, bitcoin, ethereum. The second would be utility tokens, EOS or Filecoin. The last is security tokens. That’s the area that we fit into, which is taking real-world assets, building them on the blockchain, updating an antiquated ownership structure.
That encapsulates what it is you’re doing. Do people need to buy a utility token from you to get access to your platform or they can use any utility token?
You don’t have to buy any utility token to have access to invest in our first fund, which is called NYCQ. People can invest using Fiat currency, which is US dollar or they can invest using bitcoin or ethereum. There’s no special token to have access to our network. It’s just like you would invest in a regular venture fund, but what we allow is instead of having to wire money to us and has to fill out a paper subscription agreement, scan it and send it back. It’s all done through our website in a digital interface.
Are you the first to do this, Rob?
A couple of other people have done this. Blockchain Capital is one. Science, run by Peter Pham in LA, is another. Internationally, we’ve seen SPiCE VC do this. They’re out at Tel Aviv. A couple of people have done this. What no one’s done is looked at it like we do, which is a platform. We’re not trying to issue one fund. We’re saying, “How do we find people with local expertise in each market? Tap that local expertise and use that to deploy capital more efficiently.”
As you all know from reading this blog, and Rob certainly has heard this since he’s an expert at fundraising, one of the questions you always get asked is, “What’s your secret sauce? What’s your unfair competitive advantage?” From what you said, it seems to me that your secret sauce is these customized, city-specific experts making those decisions. Would that be accurate?
Yes. The example is we’re working with CoVenture here in New York City. What’s interesting about CoVenture the firm is that they have three different main areas of business. One is lending, one is venture capital and the other is cryptocurrency. Who better to deploy capital in New York City, which is the intersection of Wall Street and blockchain, somebody that has experience in the venture, and that has experience in cryptocurrency? We worked hard to curate the right managers for this city that understand that theme. A lot of those companies will be here in New York City because it is the financial capital of the world.
After New York City, I know you’re going to be looking at Los Angeles and San Francisco, correct?
That’s correct. To give you an example, when we think about LA, it’s a great tech city. A lot of venture capitalists and a lot of startups are going there. We think of eSports. We think an interesting area perhaps for our LAQ fund would be someone that has expertise in eSports. We would go find an investment manager that has experience, that understands what we’re doing, the likes of what we’re building at CityBlock, and get them to join us as the local investment partner for LA.
[bctt tweet=”Get To Know vs Get To Yes.” username=”John_Livesay”]
When someone buys your token, are they buying each individual city or one token that represents all of the cities?
They’re buying each individual city. We’re only raising our first token, which is NYCQ. We’ll open the other tokens subsequently as we grow. That token represents an LP ownership in the fund here, just like a regular LP would. We have a two and twenty model, which is the standard 2% management fee, 20% of profits after investors have all of their money returned. What’s great is we look at this, let’s say, in three to four years the fund goes 4X. There may still be more to go but in an early stage, if an investor says, “That’s good enough for me,” they have the opportunity to then go sell that to somebody else and deploy their capital elsewhere.
This is where your secret sauce is. I’ve been watching your Telegram channel, which has such great interaction going on and you’re very involved when you’re talking about locking up your money, whether you’re a venture capital fund, even if you’re an investor. I myself have invested as a tenant in common in a shopping center. I had to wait for that to be sold, even though it’s gone up in value. What I’m hearing you say is if that shopping center had been digitized with your token, I said, “It’s been five years. I got 4X. Even if you’re not selling the shopping center yet, I’m going to sell my part of that.” It was difficult to sell your tenant in common, but this will be much easier. Am I on the right track here?
That’s the idea. The idea is that there’s liquidity. Instead of just sell that interest, you have to find somebody. You have to find somebody that wants it. There would be nowhere to list it for sale on an exchange that exists. That goes back to the infrastructure we’re investing in. Think about the exchanges that will be built to sell those interests. If all the real estate comes online, a lot of real estate switches from this traditional paper ownership to digital ownership. It’s a huge opportunity for exchanges to list that and someone to be able to buy it from you.
You love fundraising. A few guests or founders feel that way. What is it about fundraising that you love so much?
When I set out for my first venture fund, what I was most excited about was investing. What I found quickly is that while I liked investing, what I loved was raising the fund. When I think about fundraising, a lot of people you’ll hear things like, “I hate going out and shaking my tin cup. I hate going out and begging for money.” I look at it from a different frame of reference, which is there are people in the world that understand what you do, like what you do and want to be a part of it, whether you’re raising money for real estate, a venture fund or whatever it may be. I’m super fascinated by human behavior. I’m super fascinated by how people make decisions. I’ve spent a lot of time studying decision making, communication and language processing to understand how to get to know as quickly as possible.
When I look at a situation, you hear a lot of these books that are called Getting To Yes. What I learned quickly is that’s a pretty terrible tactic to sell. A much better tactic is to get to know as quickly as possible. In a strictly business sense, no is the start of a negotiation, not the end of it. I work to get to know because it allows people to feel empowered. If they truly don’t want to work with you, it allows you to move on. I use the example sometimes of going to a bar. Let’s say that someone sees an individual cross the bar they want to talk to. They sit there the whole night looking at that individual going, “Should I go talk to him? I don’t know.” They go up after hour three and that individual is not interested in talking to them anymore and walks away.
Local Investing: In a strictly business sense, “no” is the start of a negotiation.
If they had done that in the first two minutes of being in the bar, there were 30 other people they could have gone and talked to. That’s exactly how fundraising is. If I go into a meeting and someone’s not interested, I’ll leave five minutes into the meeting, but not in a rude way, “This is not a fit for us. This doesn’t work.” What’s important is finding a fit, and people are afraid to get that rejection. I try to get the rejection as quickly as possible if it’s there. If it’s not, if they do like what you’re doing, then it’s a matter of finding a fit. What are the sticking points and how to work through that? Human behavior fascinates me, but also it is being comfortable enough to get rejected as quickly as possible when you realize that something’s not a fit.
Get comfortable with being rejected as soon as possible, as opposed to taking it personally. I talk a lot about this when I get my keynote talks on how to become a storyteller. How to pull people in with the vision you want to have. I’ve had Robert Cialdini who’s written a whole book on Influence and Pre-Suasion. He’s all talking about how do people communicate? My observation is that people have to trust you, they have to like you and then they can get to know you. It’s a gut, heart and head thing. A lot of people start off at the head level and start throwing up a bunch of numbers to someone and they’re like, “I don’t even trust you, let alone like you. Even if this is a great idea, I don’t know if I’d want to work with you.”
I totally agree. 70% of communication is nonverbal, 20% is your tone of voice and 10% is what you say. What you say matters very little. The other thing people don’t realize is the part of the brain that makes decisions has no capacity for language. Going back to what you said, you can throw figures up on the board all day long. When you do that, it doesn’t matter. If people don’t trust you, if they’re not comfortable with you, the best numbers in the world aren’t going to make a sale on the end. Part of sales to me is building a relationship. It’s not coming in and asking for the order the first minute you meet somebody. I like to build a relationship with individuals that are going to last decades. The car salesman example, the car salesman doesn’t sell one car. He sells eight cars over a lifetime. That’s how I think about business. That’s how I think about communication.
I’m fascinated that the part of the brain that you said makes decisions has no capacity to process language and no capacity to process numbers. It’s not just language. Numbers are in that same bucket. It becomes an emotional part of our gut. That’s why stories work well, and then it translates from there.
That’s where gut feeling comes from. You say, “I’ve got a gut feeling. I can’t describe it.” It’s because that part of your brain has no capacity for language. You get a gut feeling and you feel good about it or you’re excited about it, but you can’t quantify it. There’s a particular reason for that.
[bctt tweet=”Get the no as soon as possible.” username=”John_Livesay”]
That’s what they talk about with chemistry with people in a dating situation. Even in business, your co-founders, “Do we have chemistry? Do we like? Do we trust? Is there energy there?” People are investing in all of that chemistry, that’s why people go to the movies if they see the chemistry. There’s no language for it. It’s either there or it’s not. You have a webinar coming up on September 6 that’s free for people if they want to learn more about this new way of investing in commercial property. Tell us about that.
We have a webinar on September 6th. That includes CoVenture, our investment partners here in New York City and Morgan Creek Digital Assets, which is one of the biggest digital asset funds out there. What we’re really talking about is for digital assets and that is who’s working in the digital asset space? By digital asset, I mean security token. What does it mean for investors? Then talking a little bit about how our venture fund, NYCQ, falls into that space. We’re taking a deep dive with some of the best people in the industry, Anthony Pompliano and Mark Yusko, into digital assets. We will be talking about what is being built now and how we’re supporting that digital asset infrastructure that’s being built.
What time is this webinar airing on September 6th?
It will start at 10:30 AM Eastern Standard Time.
How do people find it?
The link will be on our website, in our Telegram group and we’ll have it posted on Twitter as well.
Do you have any last thoughts for our audience on how they can become better at pitching and understanding what people want to hear before they open their purse strings?
I would say the key first is listening and consuming as much information as possible. Lots of people have opinions on what works and what doesn’t work. What you have to find is what works for you. What works for you may be different than what works for someone else. There are lots of great people out there that have great content. I would consume as much as possible. I love consuming audio content, so whether that’s podcast or audiobooks, I do that on the subway. I do that between meetings and at the gym. I would find some people you like that have techniques that you think will be effective, consume that and then practice that.
Local Investing: It’s not enough to take in the information. You have to use them. Every meeting and every interaction is an opportunity to test.
It’s not enough to take in the information. You have to use it, which is a key factor.
It’s beta testing. Every meeting you go into is an opportunity to test it. Every interaction is an opportunity to test it. Whether you’re talking to someone in an elevator or you’re meeting with a potential client, it’s an opportunity to try something that you’ve learned and see what works for you and what doesn’t work.
That also takes some of the fear of rejection away if you’re constantly testing it. It’s feedback and not just something you’re taking personally.
It’s like cold calling. If you’ve ever had a cold calling job in sales, the more calls you make, the easier it gets. If you make 100 calls a day, it’s hard. You make 200 calls or 300 calls a day, it gets a lot easier because you’re used to it. You have to practice over and over again.
What you, Max and Jon are doing at CityBlock is going to be hugely successful. I’m happy to be at the forefront of bringing that out to the world with my podcast. Thanks for being a guest.
Thank you for having me.
Links Mentioned:
- CityBlock Capital
- NYCQ
- Edgewater Equity
- Silvertech
- Jon Avidor
- Blockchain Capital
- Max Goldstein
- AngelList
- Science
- SPiCE VC
- CoVenture
- Getting To Yes
- Robert Cialdini – previous episode
- Influence
- Pre-Suasion
- Anthony Pompliano
- Mark Yusko
- CityBlock Capital group on Telegram
- CityBlock Capital on Twitter
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John Livesay, The Pitch Whisperer
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One Page Marketing Plan
Posted by John Livesay in podcast | 0 comments
Episode Summary:
Small businesses need a small business strategy that works, and that really comes down to direct response marketing. Allan Dib needed to come up with a plan that was fast, effective, and followed direct response marketing principles very closely that would move the needle for his clients. From that need was born the 1-Page Marketing Plan which is a process that’s easy for clients to fill in and literally a single page divided that into nine sections. Allan is a serial entrepreneur, marketer and technology expert. He has started, grown and successfully exited multiple businesses in various industries. He walks us through how to have a marketing plan with just one page. He said, well, your path to profit isn’t getting referrals and that the marketing doesn’t stop once you get a customer.
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Listen To The Episode Here
One Page Marketing Plan
The 1-Page Marketing Plan: Get New Customers, Make More Money, and Stand Out from the Crowd
Our guest is Allan Dib, who was a serial entrepreneur, a rebellious marketer, technology expert and the bestselling author of a book called The 1‑Page Marketing Plan. He started and grown multiple businesses in all kinds of industries around telecommunications and IT. One of his previous business where he faced competition from a big billion-dollar company and he was still able to grow this startup. He was later named by Business Review Weekly as one of Australia’s fastest growing companies and got on their Top Fast 100 list. He’s passionate about helping new businesses find new ways to leverage technology and he is a business coach and consultant and speaker and he is here with us. Allan, welcome to the show.
John, a pleasure to be on the show.
I love hearing people’s story of origin. If you wouldn’t mind taking us back to whatever you want, as far back as childhood, high school, college, university where you said, “There’s got to be a better way to market things and what’s going on.” How did you get interested in what you’re doing?
John, I’m not at all from a marketing background. I’ve got no education in business or training in marketing, whatsoever. It came about by necessity, as many good things do. I was a dead broke IT geek. I was good at what I did. I was running an IT business. I would always try and learn the new technology. Our clients loved what I did, they loved my service. They loved my products, they love our team and everything like that. For the life of me, I could not grow this business. It was stuck and any business that came our way was business that either came by referral or by chance or by some other similar means. It grew out of absolute frustration. That put me on a path to trying to learn marketing for the better part of a decade. Long story short, I learned all I could. I discovered direct response marketing and my life was never the same. It sounds like an overnight success story, but it’s certainly not it. It was probably a decade from start to end.
Let’s figure out if we could have the big takeaways from using The 1‑Page Marketing Plan. Usually marketing plans are known for being thousands of pages if not hundreds. There are three takeaways. You’re going to get new customers, which then you make more money. The big one that I want to jump into is how to stand out from the crowd. One of the things you talked about Allan is why getting your name out there is a losing strategy. That’s such a common thing as like, “We’re starting a company and we’re going to get our name out there and get all kinds of brand awareness and spend money on Facebook and social media. Then when we’re ready to open the floodgates, people will know who we are.” Why does that not work?
“Build it and they will come,” is a great movie plot. It’s not such a good marketing strategy. It comes about because people think that, “I can see Pepsi or Coca-Cola, Apple doing this brand awareness stuff. They’re super successful companies. That sounds like a great strategy for me.” If you’re working on property investment, there are property investors who build skyscrapers and they invest hundreds of millions of dollars in their investment. Then there are investors who buy a single small property somewhere out in the suburbs and rent it out. If the guy who’s trying to do the small investment strategy, who’s working on a small scale, if he tries to do the skyscraper strategy where he’s only got enough money to build one level of the skyscraper that’s not going to work. He needs a strategy that’s going to work on a small scale, not a strategy that works on a large scale.
One Page Marketing Plan: Small businesses need a small business strategy that works.
It comes about because of some of the different motivations behind marketing at a large scale and marketing in a small scale. At a small scale, the only thing that matters is can we get a profit? Can we get a client? At a large scale, large companies, they have completely different motivations. Making a profit is somewhere within there, but I would put to you that above that is things like placing the board of directors, satisfying superiors, biases, winning creative awards, things like that. Things that are completely useless for small businesses. Small businesses need a small business strategy that works and that comes down to direct response marketing.
Let’s walk people through each of your nine grids on The 1‑Page Marketing Plan.
It’s a single page. Where this came about early in my business career, I thought, “I need to hire a consultant to help me put together a business plan.” I did. I paid him thousands of dollars that I couldn’t afford at the time, but I thought, “This is important. All good businesses have a business plan and a marketing plan.” He did what most consultants do. He put together a beautiful looking plan. It was hundreds of pages. It had beautiful graphs and charts and projections and things like that. I took that plan, flick through it, put it in the top drawer of my desk and the next time that I saw it was when I was moving out of our office and we were taking all the things out of the drawers. I looked at it and throw it in the trash and thought, “What a waste of time and money that was.”
I did recall that there was one part of that process, the creating that plan that was very valuable to me. That was the part inside it called The Marketing Plan. It wasn’t the plan itself that was super valuable to me, but it was the process that me and the consultant went through to do that. Part of what we did was look at, “What’s the target market that we’re going after? What’s the message that we’re going to go to that target market? How are we going to reach them? How are we going to position ourselves? How are we going to price ourselves?” That was a super valuable process because it crystallized to me the things that we needed to do as a business and how we needed to present ourselves and how we needed to pitch out our product and our service to differentiate ourselves from some of the competitors that were in the marketplace. That was a super valuable process to me. That stuck in my mind for many years.
Then when I became a coach, one of the things that I started to do with my clients, I started to say, “Let’s do you a marketing plan.” That’s when clients would freeze up and they would procrastinate on that. It feels like something so overwhelming, such a big thing to do. It takes a lot of time, a lot of money. That’s where I needed to come up with a plan that was fast, that was effective and that followed direct response marketing principles very closely because that’s the marketing that would move the needle for my clients. Out of that, they say necessity is the mother invention and I certainly found that to be the case.
From that was born The 1‑Page Marketing Plan. I wanted a process that would be easy for my clients to fill in and literally a single page. I divided that into nine sections. The first three sections are called the before phase, the next three sections are called the during phase, and the last three sections of the after phase. What do we do before we were acquired a client, what do we do during the time that we’re trying to acquire a client, and what do we do after we try and acquire a client? Then within those three major sections, we’ve got three subsections.
You don’t have any revenue coming in and you’re trying to figure out what your prospects are. Then after you’ve got that, those three things done. Your next level is, “How do I capture these leads with my sales funnel?” Then the final one is, “Now, I’ve got a customer, how do I keep them and get referrals and all that good stuff?” I always love to give examples with content and structure because it brings this incredible tool to life.
[bctt tweet=”Path to profit is in referrals.” username=”John_Livesay”]
I am a Co-Founder and CMO of a startup myself and we’re using your tool. I’m a testimonial for you on this podcast. We are helping homeowners who have equity built up in their home and want some cash out, but do not want to take out a second loan and besides selling the house the only way they get access to that cash. That’s our target market. We know that there’s a huge amount of people that want this and either can’t qualify or can’t afford to have a second mortgage payment by taking some cash out to remodel or send their kid to college or whatever they want to do with it.
The message to the target market is we’ll give you the cash in exchange for owning 10% of your house and you can stay in the house as long as you want, and then when you sell the house, that’s when we get our money back based on the percent of the house that we own. Then the third part of this strategy is you talked about what kind of media are we going to use? This is where I want your expertise to come to life is we’re using Facebook ads.
We’ve got an explainer video that explains how to do that. We’re going to be running ads to promote that, to build up an email list of people that are interested. We’re obviously doing PR as part of our marketing with the CEO being interviewed on podcasts and that type of things. That’s our strategy. Is there anything within those three buckets under your before section that you could amplify and say, “You’re good here,” not quite defined enough?
I like to get as niche as possible and it seems counter-intuitive to a lot of people, especially when you’re starting out. Maybe you’ve got a startup, you think, “I’ll cast the widest net possible because I don’t want to miss anyone.” What ends up happening is people say, “Yes, of course I can help you. I can help anyone. My product is for anyone and everyone.” That feels logical, but when you say it’s for anyone, you’re saying it’s for no one. It’s funny, you see so many ads that are a laundry list of products and services. “We do this, we do ABC. We do so on and so forth.” They’re trying to cast the widest net possible. The human brain it has so many stimuli coming at it every day, each day, every minute of the day that it has a filter.
The filter is, “Is this relevant for me?” It tries to actively filter out things that are not relevant for it. If you’re coming at people with a very general message, people’s brains are automatically going to filter that out because your brain wants to find things, “That’s relevant for me,” and then hone in on that. That’s exactly what we want to do. I’ll give the example, if you’ve got a knee problem, do you want to go see a general doctor or do you want to see a knee specialist? Let’s say I’m driving and I see a sign, knee specialist, that’s going to catch my attention. Whereas I might drive past ten signs that tell me about a general practitioner or a general doctor. We want to get hyper specific because we want our message to be so specific that when people read it they say, “That’s for me.” It commands attention.
I’ve had that experience myself where even sometimes in an email marketing. I’ll get an email and it’ll be like, “Are you in my head? This is exactly what my problem is.” I like to tell people that the riches are in the niches, which is a summary of what you said. That’s our challenge sometimes actually is we have found our ideal target market, avatar, whatever you want to call them as a middle-class family who has some teenage kids about to go to college and have been in their homes five plus years or more.
The house has gone up in value 30%, 40% where they could take out $50,000 $100,000 and still have quite a bit of equity left. They don’t want to pay interest rates or have a second mortgage on top of their current mortgage to get that money out. The other target market we could help are senior citizens who have paid their house off, but need some cash but don’t want to reverse mortgage. I said from a marketing standpoint, “Let’s pick one niche and focus on them and not try to have multiple messages going out.” Do you agree with that strategy?
I agree with that. The other thing that you can do is when you do have two obvious markets is have a one-page marketing plan for each. Treat them as completely different segments because the people who are retired who have paid off their house have different worries, they have different things keeping them up at 3:00 AM than the young family who have got a little bit of equity. We want to speak to them very differently.
The big takeaway everybody is have a one-page marketing plan for each of your niche markets. That is gold right there. Let’s go to the second stage, which is, “We’ve focused on people. We’ve got people clicking on our ad. They’re opting in for more information.” You’ve got these great things of what is your lead gen capture system, how do you nurture it, and then how do you convert that to sales? Do you have any examples of how you’ve done that either for your own business or one of your clients?
It comes down very much to who your target market is. In your example, for the older people, I would say things like Snapchat and Instagram may not be the best choice. You’ve got to be thinking about the target market, but when it comes to messaging, you want to hit some of the emotional triggers that people have. Some of the major ones that are universal, things like fear, love, greed, guilt, pride. We want to touch people emotionally in our marketing message. What a lot of people do is they list features and benefits, “This is going to be a low interest rate and this and that.” People think that they make decisions intellectually, but that’s absolutely untrue. People make decisions emotionally.
One Page Marketing Plan: The path to profit is in the after-phase, in the repeat and the referrals.
Those are five emotions that your marketing should encompass, fear, love, greed, guilt and pride. Let’s give our audience an example because that’s going to bring it to life. Sometimes, the fear is, “I won’t be able to send my kid to college or if I take out a second loan, I’m afraid that I might lose my house because that’s too much debt.” Then the love is, “I love my kids so much, I want them to get a good education. I’ve got to figure out a way to do this.”
The greed would be, “This is my money and I’m angry that the bank is so greedy and won’t give it to me without charging me a high interest rate. That’s greedy on their part.” The pride would be, “This is part of a movement that I’m proud to be part of that’s helping people get access to their money that they’ve earned without having to pay a fortune to get it.” Then the guilt is, “If I don’t share this information with my friends who I know are in the same situation, I’m going to feel guilty about it.” Is that helping bring those emotions to life within that scenario?
We want to hit on the things that are keeping your prospects up at 3 AM. What are they sitting there wide-eyed in the middle of the night concerned about, thinking about? What are the thoughts that are racing in their mind when they can’t sleep? We want to hit on some of those emotions because as one of the great copywriters said, “We want to enter the mind of the prospect.”
We’ve got these happy customers and you talked about delivering a world-class experience and how you increase their lifetime value and that was fascinating to me. Finally, how do we get referrals? Let’s take each one of those buckets separately, if we could. A world-class experience, even if you’re not selling something hugely expensive, the example I think of is Banana Republic. They wanted to give a world-class experience to people who come to their big flagship stores by offering them the ability to charge their phones while they shop or remembering their birthdays to their top 20% of their clients. Usually somebody like a Neiman Marcus would do that, but they said, “We could do that for not all of our clients, but the top 20%.” Is that what you’re talking about with world-class experiences, even if it’s not a world class price?
Price has very little to do with it. So many people finish their marketing when they’ve acquired the customer. It’s crazy because all of the money is made in the after phase, after you’ve acquired the customer. Very often, to acquire a customer, your cost of customer acquisition will often not even be covered by your first transaction. It depends on what business you’re in, of course. The path to profit is in the after phase, in the repeat, in the referrals, in all of that phase. What you want to be doing is building a tribe of raving fans.
You don’t want to be transactional. You don’t want to be, “Here’s your product and here’s my money and end of story.” That’s where a lot of businesses and their relationship with their clients. Delivering a world-class experience is all about creating a tribe of raving fans. You want people to become fans and people become fans when you’re easy and fun to deal with. When you create relationships for life, when you create a sense of theater in your products and services. If we think of some of the companies that do that like Apple, you walk into the Apple store, it’s an experience. It’s not just a store.
[bctt tweet=”Build a tribe of raving fans.” username=”John_Livesay”]
It’s interesting because Microsoft has tried to copy that and it feels so sterile and not hip and cool like Apple. It’s a fascinating. It’s like, “You’ve got computers along a wall, but where’s the architecture? Where’s the design of the space to match the design of the product? It’s not even close.” It’s fascinating how that sense of theatrical experience you were talking about is not always easy to even duplicate even if you have money.
It comes down to the DNA of the business and making sure that your marketing is something that’s part of your product. I see this a lot. People will say, “I’ve got XYZ product or this widget. How do I add marketing to it?” At that point it’s pretty much too late. You want to be a thinking about marketing and delivering the world-class experience during the product development phase. You want to say, “This is how we want to end up with a tribe of raving fans rather than clients. How do we do that?” If Apple had already put the store together and then at the end thought, “How are we going to market this thing?” That’s way too late. We want to be delivering a world-class experience and we wanted to have that baked into the DNA of our product and service.
Do you have any tips on how to stimulate referrals? Whether you’re a real estate agent or a company that you know is going to help people get cash out of their home without taking on more debt? How do you encourage those people to refer to their friends? Do you have incentives? What do you think?
A lot of people feel like asking for referrals is like asking for a favor. We feel weird about asking for a favor or we feel like we’re begging for more business or things like that. Certainly, if you’re positioning yourself like that, then that’s going to be a major problem for you. The reason I tackled the last chapter in my book orchestrating and stimulating referrals because it implies something active. It’s not sit and wait for referrals. It’s not beg for referrals or hope that they come to you. We want to plan out how a referral is going to happen in our business. There are a few ways.
First of all, when you’re delivering your product or service you might say, “John, I’m here to deliver you a fantastic experience and part of our business is making sure that referrals are coming our way. I’m going to deliver you a super experienced, but at the end, I’m expecting that you might refer to me to a few friends or relatives or, or whatever.” Making that expectation made upfront and with that expectation upfront, you’ll probably going to be working harder to deliver that world-class experience to the client.
That’s one thing, asking for it. The second thing is, if you think about the last time that you referred one of your friends or family to a movie or to a restaurant that you liked or something like that, were you doing that as a favor to the movie chain or were you doing that as a favor to the restaurant? I highly doubt that. You were doing that because you want to look good. You had a great experience at that movie or that restaurant and you wanted your friend or family to have that same great experience.
Understanding that people are doing referrals for selfish reasons. You want to feed that. You want them to look good and you want their ego to be puffed up or fed. You do that by helping them to understand that they’re going to look good by referring you. There are a few ways you can do that and you don’t have to put a lot of pressure on people. You don’t have to be pushy or anything like that, but giving something of value that they can pass on. An example of that might be a book, it might be a report.
In your case, it could be a free report that tells them how to get cash out of their house without taking out a mortgage. If suddenly hear of a friend who’s saying, “I’m needing cash but I’m struggling to get a home loan or I don’t want to get a home loan because I don’t want to be in more debt.” Then suddenly that’s going to pick up in my mind, ” Hang on. John’s got a report that says how to pull cash out of your home without taking a home loan out.” If I give that to my friend, I’m now helping my friend and I’m looking good.
One Page Marketing Plan: The person with the best pitch, the person who’s the best marketer are the ones who always win.
In case, we’ve created a two-minute video which sometimes people even prefer better than reading a report. It’s like, “Two minutes and it’s a video and it’s animated, I’m in. I can send that link.”
Understanding the psychology behind referrals goes a long way for you to being able to start stimulating and orchestrating those situations that will result in a referral.
Was there any one big mistake that you see people making when they’re doing this one-page? Do you see people getting stuck in either of these quadrants?
Probably the biggest place people get stuck is selecting their target market. A lot of people say, “I’ve got this target market and I’ve got that one and I’ve got that one,” and that’s totally fine. If you’ve got a business that’s got quite a bit of traction and you’re maybe mid-phase in business, that’s totally fine. In that case I would say, “That’s fine. Do a one-page marketing plan for each of those segments, and then deploy campaigns to each of those.” However, when you’re starting out, if you spread yourself too thin, it’s hard enough if you’ve got a single target market, but if you’ve got two or three or four, you’re going to spread yourself too thin. What I say is concentrate on the target market that’s going to give you the most bang for buck and dominate that ad then let’s add another segment and then let’s add the second one, let’s add the third one. First, dominate that target market.
The book again is called The 1‑Page Marketing Plan. We’ve got some great tweets here and takeaways. The path to profit is in the referrals. If you can build a tribe of raving fans by being easy and fun to deal with, some great insights. I can’t thank you enough, Allan, for being on the show. Is there one final thought you want to leave us with?
The last final thought I’d leave you with is become a good marketer. The reason I say that because the best marketer always wins. Many times people think, “I’ve got a great product or I’ve got a great service, so naturally I’m going to make all the sales.” It’s the person with the best pitch, the person who’s the best marketer, they’re the ones who always win. Resolve to be a great marketer in your niche, in your industry rather than being a great technician or delivering the technical thing that you do. The best marketer always wins, so become the best marketer in your industry.
[bctt tweet=”Riches are in the niches” username=”John_Livesay”]
You can even see that sometimes in the entertainment business, “Why is that particular singer more popular than somebody else who’s got a better voice?” They reinvent themselves or they are in the press more or whatever it is. They market themselves better, especially when it comes to technology, you can build the best thing in the world, if nobody knows about it or has an emotional connection to it, Beta versus VHS is always we go back to. How can people follow you on social media, Allan?
I’m on Facebook, @Successwise, and also at my website, Successwise.com. If they want to continue the conversation, just join my mailing list there. You can also get a copy of my book.
Where do you live? Are you in Australia still?
I’m in Melbourne, Australia.
Thanks again, Allan, for being on the show.
It’s a pleasure, John.
Links Mentioned:
- Allan Dib
- The 1‑Page Marketing Plan
- @Successwise – Facebook
- Successwise.com
- book on Successwise website
- www.Quantmre.com
- https://www.YouTube.com/watch?v=rUQezlWp-l0&t=2s
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