Anticipate Disruption: Become The Disruptors Of Today’s Age with Dan Burrus
Posted by John Livesay in podcast | 0 comments
Episode Summary:
It is no longer enough to just be reactive and agile in this fast-paced world of technology and disruption. More than agility, we need to learn how to anticipate disruption and become the disruptors of today’s age. Dan Burrus has been predicting technological change for 30 years and encourages people to start speaking in future facts so that you can solve the problems before they comes to you. If you think things can be done, then it can be done. The question is are you going to be the one doing it? Dan shares how you can become the disruptor and strategically position yourself when the disruption happens.
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Our guest on The Successful Pitch is Dan Burrus, the author of The Anticipatory Organization. Dan says, “It’s not enough to just be agile with disruption. You need to anticipate it so that you can be smart about it.” He said, “When you really look at life, there’s some real key things that if you think something can be done, it probably will be done and somebody else is going to do it if you don’t do it.” He said, “Stop giving opinions when you pitch and start speaking in future facts. Before you ask someone to say yes or no to something, tell them what the cost is of saying no.”
Listen To The Episode Here
Anticipate Disruption: Become The Disruptors Of Today’s Age with Dan Burrus
The Anticipatory Organization: Turn Disruption and Change into Opportunity and Advantage
Our guest is Dan Burrus. He’s considered as one of the world’s leading technology forecasters and innovation expert. He’s the CEO of Burrus Research, which is a research consulting firm that monitors global advances in technology driven trends to help clients profit from technology, social, and business forces. Over the past 30 years, he’s established a worldwide reputation for his exceptional record of predicting the future of technology change. He was talking to me about all the things he’s done around the world, including China. He’s a strategic advisor for many Fortune 500 companies ranging from GE, American Express, IBM, Honda, etc. He’s the author of six books, most recently Flash Foresight and The Anticipatory Organization: Turn Disruption and Change into Opportunity and Advantage. He’s also started six companies from scratch. Five were profitable within the first year. He’s a keynote speaker and has spoken to groups as large as 14,000 people. I am fortunate to have him one-on-one. Dan, welcome to the show.
It’s a pleasure to be with you.
I always like to ask my guests if you could tell us your story of origin. You can go back as far as you want to when you were a child or when you were in college. How did you decide this is the trajectory of my career?
The two most important times in a person’s life are the day you’re born and the day you find out why you were born. I’m very fortunate to have found out long ago why I’ve been put on the planet and that is to teach. As long as you understand, in my mind, that teaching and learning are connected in symbiotic and the same thing. Rather than tell audiences and clients, I teach audiences and clients, and that’s something that I’m passionate about. I want to create as much value for our audience as possible. I have started six companies over the years in a variety of areas. All of them were based on doing things that hadn’t been done before. Three of them were national leaders in the first year. Five were profitable in the first year. First one was in aviation. I had my own airplane design. I was a test pilot for my own design. Had 37 national locations in the first year with that company. One of the last companies I started was an experiment. When I was writing my book, Flash Foresight, which I’m happy to say was the New York Times and Wall Street Journal Bestseller, we were in a recession when I started. I thought, “Why not start a company based on the principles of the book? Let’s see how good the book is.”It took us seven months to generate $1.1 million a month in recurring revenue with no employees and no money invest, so obviously the book worked.
Before that, just to go a little farther back, I taught biology and physics before starting my first company. I’m a science guy and all of my methodologies on how to predict the future and separate the wheat from the chaff is based on scientific methodologies. I started Burrus Research 34 years ago, and that’s when I developed my principles on how to predict the future and separate the things that will happen from the things that might happen, and then started advising and consulting. My portfolio of what I do is I write articles. I had 113 articles published last year. I’ve been doing that for over 30 years. I write books; this is number seven. I give speeches; I’ve given many of those, but I also do strategic advising. I’m a Strategic Advisor to the Joint Chiefs and the Head of the DOD and the Head of Cyber Security for the US. I’m also a Strategic Advisor to the top people at GE, IBM and many others.
Anticipate Disruption: The two most important times in a person’s life are the day you’re born and the day you find out why you were born.
You have a science background. My memory of being in class in science was if you’re going to test something, don’t change more than one variable at a time. Isn’t that right, Dan?
Yes, otherwise you don’t know what is taking place.
One of the biggest mistakes I see people make in business is, “Let’s test, let’s change the headline and the image of an ad at the same time, and see if that helps.” I’m like, “How are you going to know which one it is?” The fact that you have a scientific approach to helping all of us deal with change, disruption and technology, is a key element of why you’re so successful.
Let me give everyone a tip for writing blogs, because I’m sure many people do that. Instead of just putting them out there one after the other, what I did is I started analyzing the number of readerships within the first two days and how many people were reading because you can get statistics like that. One blog, I might have 240,000 people read it in the first two days. Another one, I might have 2,000. That’s a big difference. The key is I thought, “They were both good. What was different?” By analyzing one thing at a time and starting to break it apart and then make changes along the way, for example on LinkedIn, I’ve got 975,000 followers. I’m in the top 35 in the world. The reason is whenever I write something, I had been upping my game and I got a couple million monthly blog readers. That’s because I had been taking one thing, separating it, changing it, finding out what works, what doesn’t work, instead of just pumping it out there. It’s a little food for thought for all those that are writing blogs and doing posts.
Let’s dive into this wonderful, Anticipatory Organization Model that you’ve created. One of the things you shared with me was unlike a lot of people who maybe started with a business that come up with this idea, they tried to take it out and see if anybody’s going to use it. You have developed these learning principles for years and the military is using your training. You know this works, so the book came out of proven ways to deal with how to deal with things. Some people say, “If I adapt or an agile to change,” and you say, “That’s not enough, you have to anticipate the change.”
Let’s take a second on that because there is a lot on agility now. Most companies think that agility is the best weapon against the accelerating pace of change. There are even programs in books called Agile Innovation, but if you think about it, agility is really reacting fast. Agility is still reactive. In other words, instead of saying, “Agile innovation,” you should say, “Reactive innovation,” which doesn’t sound as good. I would say, “Did the people that came up with a multi-billion-dollar idea of Uber or the multi-billion-dollar idea of Airbnb, did they use agility? Could that have helped them?”No, that didn’t help them at all. What helps companies like Amazon and others to be able to leap ahead with the confidence that will make them know they’re on the right path? You need to be able to react, but I want us to anticipate.
[Tweet “Agility is not enough you need to anticipate disruption.”]
A coin has two sides. You need to be good at agility because you can’t predict everything. You can’t predict that much. There are a lot of things you can’t predict, so you better be agile. The other side of the coin is the missing part that I’m filling with this book, and that is you’ll be amazed at how much you can predict, how many problems you can see ahead of time and pre-solve, how many disruptions you can see, but for the disrupt, giving you the option of making disruption an advantage to yourself so that you can be the disruptor, and how many game changing opportunities you can accurately predict ahead of time. What I’m doing is covering the other side of that two-sided coin that is needed to be able to turn all of the changes that we’re facing into opportunity.
I’m always trying to give people skills to tell a great story like you just did. To our audience, did you notice how Dan gave you a visual image and didn’t make one thing right and one thing wrong? He said, “There are two sides of the same coin,” so you could see the words on both sides of that coin and how one without the other is not enough. Leading right into that, we bought into your premise that we need to anticipate change, not just be agile with it. There’s a great takeaway in your book about hard trends versus soft trends. Can you give us an example of each?
There is no shortage of trends. Deloitte publishes on IBM that everybody’s got trends. The problem is which ones are going to happen and which ones aren’t? That’s what I can give you with this book and with this mindset that I’m trying to help you to create. This is based on over 30 years of research. There are two types of trends, hard trends and soft trends. Instead of me coming along and telling all of our audience, “I have the only good list of trends and everyone else’s trends are bad.” I’m saying, “No, what I did have is a methodology that I can teach you so that no matter whose trend you’re looking at, you can tell whether it’s going to happen for sure or whether it’s an if or a maybe.”That’s powerful because if you know it’s going to happen before it happens, you have an advantage.
Hard trends are based on what I call future facts. You can’t change them; you can’t stop them. I don’t care how much money you’ve got or what kind of political power you have. They’re going to happen anyway. The good news is you can see them happening. You can see them coming down the road. It’s like being in an ocean. If you’re looking down at the sand and the waves lapping at your feet, you don’t get a view out. If you look out, you can see the waves coming and you can say, “There’s a bigger wave, I’ve got to move back or I’m going to get wet.”You can pre-act, so that you don’t end up getting in trouble. It gives you the ability to see what’s up ahead.
Soft trends have, you might think, “Dan doesn’t care about soft trends. It’s only about the future of certainties that he’s concerned about,” and the answer is no. Soft trends have very big value. The reason why they might happen, some are negative, some are positive. I can shape them; I can influence that. If there is a positive hard or soft trend, I want to make sure it happens. I’ve got to do some things because there’s no guarantee this is not a future fact. It’s based on an assumption. Hard trends are based on future facts. Soft trends are based on assumptions. There are two types of assumptions: hard and soft assumptions. Soft assumption is an assumption that you’ve made in your mind. You’re thinking of it as a future fact, but it’s an assumption and it’s based on all of your years of experience, everything that you’ve experienced. It’s like looking at the future by looking up in a rear-view mirror rather than looking out through the windshield. Because of the transformational changes and exponential growth of technology, your old view of the future based on everything you’ve known and learned might be out the window. You just haven’t seen that yet. That’s a big risk.
A soft assumption isn’t research. It’s based on intuitive insight based on past history. It makes sense to you, but you didn’t do what would make it a hard assumption, and that is you didn’t do your homework. You didn’t do your research. When the Affordable Care Act, which is called Obamacare, was put into place, there was an assumption that enough young people would sign up to offset the old people that are more expensive that signed up. That was a soft assumption somebody made. They didn’t research it. Turned out it was an invalid assumption and it’s like, “Whoops, that didn’t work out the way we planned.”That’s because they didn’t research it, but it made sense to somebody. Soft trends have the value that you can change them if you don’t like them. There is a twenty-year growing trend in the United States that obesity is rising. More and more people are becoming obese and so are diseases like Alzheimer’s and diabetes. They’re going up, and they’re expensive. There was a big study that was done by the United States to look at the year 2025 to see where those trends would be on obesity and diabetes and to see how many people would be there. They came up with a number and it was a big number. The reason was because they got to figure out how to pay for it because the number of obese people is growing. Are those hard trends that are unstoppable or are those soft trends that you could influence? What do you think?
Anticipate Disruption: The technology is already there. Do it right now and somebody’s going to make a lot of money on that.
Having read your book, I know that it’s a soft trend. Although I thought it was a hard trend that was never going to stop, but there are things that with new technology and drugs, there are a lot of things that could influence and turn that trend around.
Let’s take obesity. Everybody’s getting fatter. Soon, it’d be going up. Not everyone, but the numbers. A company in Milwaukee, Wisconsin, they’re an international company called Manpower, decided to do something about it a couple of years ago. They realized they can’t change the world. They can’t change everybody in the United States, but they can change manpower. What can we do to influence that soft trend? What they did is they gave everybody Fitbits and have company and team competitions. My sister as an Executive at Manpower, and one of the things that her team is doing is climbing Mount Kilimanjaro in the number of steps they take and there are prizes. They’ve been doing it for several years and they have, as a company and they’re a good size company, have lowered cholesterol, gotten people off of medications, have lowered weight, have done amazing things. They’ve actually changed that obesity number for manpower. They couldn’t change the world, but we can change what we can change. That is a soft trend?
It goes back to when you’re running your own business. If you measure something, you can then start to increase your awareness of what’s working, not working. Then in the case of eating, maybe you go, “There’s a goal of how many steps I’m supposed to do every day. I didn’t even know that. The fact that I’m tracking it automatically changes my behavior and therefore, the outcome.”The same thing is true in your business that you’re running. That’s such a great example of looking for a problem and saying, “It’s too big to change,” and figuring out a way to slice it into something that can be changed.
Let’s go back to hard trends. The book is not complex. I would hope you would agree with that. The key is I’ve been taking complex things and making them simple. That’s the trick and I think I’m pretty good at that. Let’s talk about the hard trend certainties. There are only three categories. One is technology, one is demographics, and one is regulations. Let’s talk about demographics for a minute. In the United States, there are 78 million baby boomers. Hard trend. They’re going to get older. They’re not going to get younger, they’re going to continue to get older. We could predict very easily a lot of opportunities as well as a lot of challenges.
Could you and I create a smartwatch or a smart watch app that would have huge success right now, even though there’s a lot of competition for that? The answer is, “Sure. We just use the hard trend of demographics and the aging population.” I would create a smart watch, for example, that is for 80-year olds and older. Are they going to buy it? No, they’re not going to buy it. Who’s going to buy it? You’re going to buy it for them. Why do we do that? All of those smartwatches that exist today and the new ones have a little thing called an accelerometer in it that lets you know movement. If your old grandma, all of a sudden, her watch rapidly moves four feet, what happened to grandma? She fell. How does grandma need to know she fell? She’s on the floor. Who needs to know? You, if it’s your grandma. If grandpa gets a little lost when he’s driving because he gets forgetful. All he’s got to do is ask his watch, “How do I get home?” His watch can say, “Walk up and take a block or to the right.” Where is grandpa? Look at your smart phone, you can see.
I was visiting two women who are in their 80sthat don’t want to wear that necklace saying, “I’ve fallen and I can’t get up.”They live alone, and I thought, “The statistics show you’re likely to fall living alone and who knows how long until somebody finds you.” They would wear a watch but not that device because of their vanity. “I have to wear a watch anyway. If the watch happens to have that device that I could push and if the watch was waterproof, I could wear it in my shower where it’s slippery and I might fall.” You’re onto something there, Dan.
We could do more, and there’s only so much time. That kind of watch application for 80 years old and older and I even just began to tell you what. It could do two things but it could do a lot. That doesn’t exist. Do you think that that watch is going to exist or it isn’t going to happen?
I would like to think it’s going to exist because I see a need for it and the baby boomers is a hard trend. That’s not going away, so I’m going to say it’s going to eventually exist.
I’m going to teach all of you a guiding principle. If it can be done, it will be done. If you don’t do it, someone else will. In this case, the need is there. The technology is already there. Do it right now, and somebody’s going to make a lot of money on that. It’s going to get done. You’re going to be reading about that that’ll happen. What’ll happen is, “I’ll wait. Nobody does it. I’ll just do it myself.” You already want one, so we know it would work.
[Tweet “Stop giving opinions and speak in future facts.”]
Technology is a way that changes our world on us and it causes disruption. This is book number seven, I’ve written thousands of articles. If you track all of that, you would see I’ve got an amazing track record of being right about telling you the disruptions that will happen before they will happen. You can learn to do this, that’s what this book is about. You can’t see everything but you can see so much. Like in my 1993 book, Techno Trends, I was talking about the smartphones that we have today, like the Apple watch, iPhones. I was talking about social media. That was in ‘93 when that book came out, putting accurate time frames on it. It isn’t just about me doing it, I want you to learn how to do it, that’s why I wrote this book.
Speaking of being on top of things, you have this amazing interplay between something that’s possible, useful, and exceptional, and you talk about why Apple didn’t release the iPhone two years earlier and why didn’t Netflix start streaming video. I was really riveted by that.
You see the hard trends and soft trends will give you what will happen next. The other element that the book gives you is when will it happen? There are three digital accelerators that have been on a completely predictable path for over 30 years that I’ve been tracking, and they give you the wind. One is computing power. It’s based on Moore’s Law of processing power doubles every eighteen months as the price drops in half. I discovered that back in 1983. I can tell you not many people were looking at Moore’s law in ‘83, but I came and because I’m a science guy, I realized he nailed it. Just imagine for a second, here I am at 83. Pricing power doubles every eighteen months as the price drops in half, so in the year 2000, I would know exactly how powerful a computer it would be and how much it would cost. If I know that, I can tell you a lot about how we use it. I can do that today for the year 2025 and so can you, but you need more than processing power. I’m calling it computing power because now with our smart phones and devices, we’re tapping into the super computers in the cloud, not just the chips in our devices. Exponential Moore’s law is going to continue.
Secondly, it’s storage and bandwidth. My first computer didn’t even have a hard drive. Today, bandwidth has 3G wireless, 4G wireless. You’ve probably read a little bit about 5G. Is that it or can you predict what we’ll call the next one? Using these curves that I talk about in the book, you can know when six is coming out, when seven’s coming out, and how powerful it would be. When you know that, you can see how the drive timing. The iPhone didn’t come out a year earlier or two years earlier, even though they could miniaturize the parts and create it earlier. Here’s why they didn’t. The user experience would have sucked. Bandwidth wasn’t there. In other words, the video wouldn’t have worked that good. The storage wasn’t quite enough yet. It would have been a crummy experience, so they had to wait for those three digital accelerators to get to the spot where the user experience would be good enough to put it out there. It’s been getting better ever since in a predictable way.
That’s fantastic insights and realizing that timing is, in fact, everything. When someone’s giving a pitch to get a new client or to get hired or to get their startup funded, whatever it is, one of the key questions is, “Why now?” You’ve certainly been able to give us some great tools to predict when something’s going to happen. Let’s talk about this premise you have about the dangers of rear-view mirror thinking.
Can I give you one more tip on obese? I know that’s one of your big focus areas and I’m trying to help you create value for people. Think of it this way. I want all of you, when you’re giving a pitch, to stop giving your opinion. For example if I give you, “Here’s what Dan Burrus thinks the trends are,” what are you going to say? I’m now going to see what Deloitte’s going to say and what all the other guys are going to say, but if I start speaking in future facts, I have done the homework to look at my customers and the hard trends that are shaping their business and their future. I start going and talking in terms of, “These are the future facts that are going to be impacting you.”When you hear a future fact, you know it. You don’t need a white paper to prove you’re right, so when you start speaking in terms of the hard trends that will impact them and then tie your product or service through those things that are going to happen, all of a sudden, the risk is going down and they have high levels of certainty. The uncertainty opens the door to a sale. Nothing better than a confused customer. You know what the ultimate closing tool is? It’s certainty. When you are certain, you write a big check, you say yes. When you’re uncertain, you hold back. What I want us to do in our pitches is to talk about future facts and the certainty and not just the cost of the yes about your product or service you’re selling but based on the future and the hard trends shaping the future. Let me tell you the cost of the no. Make sure you share the cost of the no based on the future facts, not just the cost of the yes. When you really look at that, you’re going to find out the no is more expensive than the yes.
Anticipate Disruption: Legacy thinking is we’re looking into the future but we’re looking at a rear-view mirror mindset.
Two great takeaways: Stop giving opinions and speak in future facts. Finally, make sure you talk about the cost of not taking action now because everybody wants to think things over. The longer you wait, the bigger this problem is going to be or somebody else is going to do it.
I’m going to give my pitch to a competitor and they may say yes. How would you like that?
Let’s jump back to this rear-view mirror thinking. I love the imagery of it.
We’ve all heard of legacy technology and that’s the older systems. We have virtualization, the cloud, and the newer systems, but legacy technology doesn’t worry me as much as legacy thinking. Legacy thinking is we’re looking into the future, but we’re looking at a rear-view mirror mindset, meaning it’s based on our past perspective. It’s the things that we’ve known. The pace of change was fast but not exponential. New technology came out but came out kind of slow. I could take my time and next year will be pretty much like this year with a few variables. That’s all rear-view mirror thinking, when you start realizing that right now, a kid could come along and disrupt your business without even having to get a lot of funding. I did an experiment at the last company I started where I decided to create a business with no money and no employees and see if these hard trends, soft trends worked well. This was the end of 2009, beginning of 2010. What I did is I created the first national real estate apps because they didn’t exist and I knew that was a hard trend. They would exist because I know if it can be done, it will be done. If I don’t do it, someone else will. I skipped my problem.
I’m not a programmer, so how am I going to do it? What I did is I called a nearby university, asked for the Computer Department, talked to the Head of the department and I said, “I want the name of an undergraduate who’s getting a degree in software programming and design, who is smarter than all the teachers.” He said, “You mean Steve?” I said, “Yeah, Steve.” I called Steve and I asked what he was doing for money on the side. He was programming websites for companies and he was bored because he’s been doing it since junior high. I said, “How’d you like to develop a mobile app that no one’s ever seen before?” He said, “Yes, I’m in.” I said, “I can’t pay you money but I can give you 5% of the revenue of the profits of it after the first two years as long as you don’t drop out of school.” He said, “I’m in.” Now, I had my free developer. It took seven months to launch that. We were the 17th most downloaded app in the Apple store. In the first day, we were featured in the New York Times, Wall Street Journal because I was disrupting the entire world of real estate within the first week. I was on national television the next week.
I came up with a new way of making money on that, because at that time, the only way you can make money on an app was paying for the download, like¢99 and you download it. I like recurring revenue, so if I will do what everybody else did, that would’ve ended up with just a small amount of money. Instead, I made the apps free so that I had large people using them. What I did instead was I charged $24.95 for real estate agents for having an exclusive zip code within the app. That’s how I ended up with $1.1 million in recurring revenue in a few months. It’s about redefining and reinventing. It’s realizing that everything can be made different, that if you don’t do it, someone else will if it’s based on a hard trend certainty.
You showed us how to skip the problem. Let’s talk about the other thing that seems incongruous, taking big leaps. It can be a low risk.
That comes a little bit around to the whole idea of hard trends. Hard trends are going to happen anyway. You can’t stop them. If you want to innovate with low risk, what you need to do is ask yourself, “What am I certain about? What do I know what’ll happen?” I gave you the story of me launching that for the first real estate apps. I have since licensed to Zillow and companies like that but the foundational software is coming from that. The day that I decided to do mobile apps, there was a headline news on CNN that very day that said, “If you’re thinking of developing a mobile app, it’s too late. There are already 100,000 apps in the Apple store.” That was around the end of ‘09. A lot of people will listen to that and think, “There are already 100,000 apps. I guess it was too late.” I looked at the hard trends and I thought to myself, “Will there be mobile apps for purchasing logistics, supply chain management, customer support? Will there be apps for remote disease monitoring? Will there be apps for finding my lost dog where I can have it on a collar and I can see where the dog is on my phone?”
I knew this national real estate apps were going to happen, and if I didn’t do it, someone else would. If you learn how to separate the hard trends from the soft trends as I’m teaching you in this book, if you learn how to do that and then you innovate around those hard trend certainties, you will find yourself able to do those things with the low risk because you’ve got confidence. Certainty gives you the confidence to make bold moves.
[Tweet “Skip the problem.”]
Don’t listen to people saying, “You’re too late,” but also within this rear-view mirror thinking, you need to say, “If I see driverless cars are coming and I’m a truck driver, which I found out is one of the largest, if not the largest employer in every single state of first jobs, I might want to figure out what I’m going to do when the trucks are driving themselves as opposed to thinking, “That’s not going to happen during my lifetime. I don’t have to worry about it.” That’s what you talk about in the definition of rear-view mirror thinking.
There’s a little side note. I was meeting with the CEO of Daimler Trucks. They make the engine transmission and the body. The only thing they don’t make is the brand on the outside of the semi-trucks. I was in Iceland having a strategic meeting with him a number of years ago and I said, “There’s going to be a semi driverless, autonomous semi-truck. You ought to create it.” I said, “Is that a hard trend?” He agreed it was. It took him less than a year and Daimler was the first to do a driverless truck. It took them 12 months because he realized that it can be done. “It will be. If I don’t do it, a competitor will.” It gave him the confidence to do something that he had never considered when I met him in Iceland. Once he realized that was a hard trend, he knew he had to do it and he did.
The book is The Anticipatory Organization: Turned Disruption and Change into Opportunity and Advantage. I can personally tell you, I’ve underlined, and dog-eared so many pages. This is going to be my new Bible. I’m going to keep looking at it. I really love how you talk about, “It’s a choice that we make every day to be extraordinary.” You are someone who is extraordinary. Dan, how can people follow you? I know you have so many followers already, but how can we follow you on Twitter, et cetera?
You can go to Burrus.com. There are some great videos and resources that you can find like blogs. @DanielBurrus is my Twitter handle. @DanielBurrus is probably the handle for all of those things. The reason I have a lot of followers is I’m trying to create a lot of value for people. I’ve got the number one spot on Amazon in Hot New Books and so you can go on Amazon or any of those others to order The Anticipatory Organization.
It’s going to be another hit. That is a hard trend I would bet money on. Thanks, Dan.
Links Mentioned:
- Dan Burrus
- Burrus Research
- Flash Foresight
- The Anticipatory Organization: Turn Disruption and Change into Opportunity and Advantage
- Manpower
- Techno Trends
- @DanielBurrus Twitter
- Daniel Burrus Facebook
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The Skill Set Of The Ask Is The New Pitch with Tracy Chadwell
Posted by John Livesay in podcast | 0 comments
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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