Tag: podcast

The birthday cake’s JTBD

MIKELeave a comment

One question within jobs to be done is: Are the consumer and the customer different? 

A manager who buys software or uniforms or food for their staff is the customer whereas the staff is the consumer. And this happens a lot. 

Homeowners use thermostats but HVAC companies buy them. About one-fifth of books sold are gifts. Physicians choose the medicines that patients take. And then there is the birthday cake. 

“We aren’t making nearly as many of our decorated cakes as we used to. When we do, it’s a half sheet instead of a full sheet or even nine-inch cakes. In our Chicago industry, we’ve seen a drop in decorative cakes mostly from the people who are in their twenties and thirties who don’t want to buy the same things for their kids that they got when they were kids. They want ice cream cakes or experiential things instead of having a birthday cake at home.”  – Ken Jarosch, Odd Lots, December 2022

If the customer and consumer aren’t aligned then a business gets what Bob Moesta calls “zombie revenue”. 

Gyms run on zombie revenue because the customer, the current me, is different from the consumer, the future me. 

Products are not: build it and they will come. There’s much more why, how, and when – even at a kid’s birthday party. 

…

Birthdays are common posts around here: The Birthday Cake Diet and The Birthday Bet.

Should you build *magic*?

MIKELeave a comment

When talking about Jobs To Be Done, Bob Moesta notes that there are two ways to innovate. Supply-side innovation is internally driven. Organizations know their capabilities, limitations, and business model and build from that position. This type of innovation is more efficient, has limited scope (and costs!), and uses the language of the organization.

Alternatively, demand-side innovation is externally driven. Jobs theory is demand side as is the Mom Test and IDEO’s invention through iteration. This type of innovation includes prototypes and feedback, lots of questions, and uses the language of the customers and consumers. 

“Any sufficiently advanced technology,” Arthur C. Clarke wrote in 1962, “is indistinguishable from magic”. 

That quote highlights this aspect. Technology users want it to feel like magic. Builders use advanced technologies.

Face ID is magic. 

“What Apple did with Face ID was take a really hard computer science problem, and using a lot of complicated technology, create something with a simple name. I intuitively know what Face ID is just from the name. It’s also intuitive to use. I looked at it and was in. There’s an opportunity to do something like that (for crypto). Multiparty computation is not the right marketing term for what the average person might use.”

Brian Armstrong to Ben Horowitz. 

Uber is magic. 

“At first glance Uber might just look like a simple app—after all, the premise was always to hit a button and get a ride. But underneath its deceptively basic user interface was a complex, global operation required to sustain the business. The app sat on a vast worldwide network of smaller networks, each one representing cities and countries. Each of these networks had to be started, scaled, and defended against competitors, at all hours of the day.”

Andrew Chen, The Cold Start Problem.

–

The wrong lesson here is to think customers want magic. It’s situational! Shopping and buying are different. 

There is no best way to innovate, only trade offs. But Clarke gives us a nice framing for technology.

Alice and Bob own soccer teams…

MIKELeave a comment

Alice runs her team conservatively and finishes with 17 wins, 17 draws, and 4 losses. 

Bob runs his team with more variance and finishes with 19 wins, 11, draws, and 8 losses. 

Which is better? 

Let’s reframe, like the ball bet. Is it better to exchange 2 wins for 6 draws and 4 fewer losses? 

Haralabos ‘Bob’ Voulgaris bought a soccer team because he knows these answers because he’s seen these questions. 

After Moneyball but before Morey-ball, Haralabos discovered and gambled on basketball inefficiencies. The best known now is the three-point shot. Voulgaris thinks that soccer is similar. Teams earn three points for a win, one for a draw, and zero for a loss. Rather than three or two points in basketball, it’s three or one points in soccer standings.

Soccer’s business model is like the music business model. Artists lose money recording an album, break even touring, and profit from the merchandise. This had to be Pixar’s business too. Division three soccer teams lose money, division two teams break even, and La Liga or Premier League teams “print money”. 

Soccer teams can move up (promotion) or move down (relegation). Bob’s team, CD Castellón is in the third division and they need about sixty-eight points for a chance at promotion. 

Both Alice (17/17/4) and Bob (19/11/8) earned sixty-eight points – but they don’t seem equal. This is Bob’s point – it’s worth risking more for wins than less for draws.

The big question is: What are the right metrics for this system? 

  • Hurricane wind speeds are probably the wrong metric. Though easy to measure they don’t convey the potential storm damage which comes from the rain, surge, and flooding. Moneyball and Morey-ball are both descriptions of systems where the important metrics shifted.
  • ‘Draws’ is a wolf in sheep’s clothing. It seems fine – splitting the difference between a win and a loss – but the unique point system shifts the weight. 
  • Risking more – Bob’s approach – focuses on what matters. It’s the points stupid.

Humans are loss averse but the soccer standing scoring rewards bucking this trend. Alice and Bob own soccer teams, let’s see what happens.

Easy money

MIKELeave a comment

Q: How do you get people to pay more?

A: Don’t make them pay.

People and rivers both follow the path of least resistance. What is easy? That’s what people do.

But not junk food, binge-watching, and immediate gratification easy. It’s easy subject to our last choice. Switching jobs isn’t easy, but it is easy to show up at one. Ease has two challenges: the initial change and each small choice.

Jobs To Be Done addresses the first challenge. People change when the discomfort of the present and appeal of the new is greater than the anxieties of switching and habits of the present. JTBD interviews is the focus on the moment things flip. Free hotel breakfasts and donation alchemy are examples.

But I think it’s very interesting when you just think about what can be expensed on a corporate card and how that differs in terms of the pricing power that a business might have. And to me, if you can find a customer that’s going to be able to use their corporate card and you can give them a reason to use their corporate card, they are going to be much less likely to churn, willing to pay for more expenses because it’s always easier to use other people’s money than it is to use your money.

I think much of Manhattan between restaurants and sports teams is propped up on the corporate card dynamic there and a little different demand curve in terms of how that looks from a pricing perspective. So that is certainly the case here and what you have going on, and they’ve used it to their advantage historically.

Matt Reustle, Business Breakdowns

An HBR article’s contents aren’t clear, Matt remarked, there are no stars or reviews. It’s just the title and date. That’s the fear of the new – is this going to be good? But it’s Harvard, and the person buying isn’t the person paying. That’s great! That’s easy!

The challenge of ongoing action, is solved by design, crafting the path of least resistance. Want more vaccines? Schedule their application at each checkup. Want to eat less? Make it hard, or easy!, to count calories Want people to buy your Peloton? Don’t make them pay – let their future selves.

Organizations have many levers to pull to create behavioral change. Which ones are best depends on the context. For Harvard Business Review it’s branding and differentiating between the consumer and the customer.

Can someone be, like MKBHD?

MIKE

Can someone become like you now Guy Raz asked Marques Brownlee?

It’s different today. “I’ve noticed that in polls of younger people their dream jobs used to be firefighter or movie star, but they all say YouTuber now”, said Marques, “this is fascinating to me because when I started that did not exist.”

If something is legible it’s something to compete on. But illegible things – becoming a YouTuber before it was a thing – make the competition harder.

Legible means playing according to the rules of the game. Illegible means making up the rules as you go. “I just wanted to make the kind of videos I liked to watch,” Marques notes. Illegible also means there’s time to find your rules. Brownlee spent years making videos. He admits that the early ones are hard to watch because they’re so bad. That’s fine!

With value comes competition, and the market mechanism whirls to life. “Your margin,” Bezos believed, “is my opportunity”. Alpha erodes.

Except in some places like the new, the foreign, the unaccounted, the unfavorable, the silly, and so on. Not every new thing ‘works out’ but every new thing has less competition.

Cons & Contexts

MIKELeave a comment

Context matters. A person at a college football game is unlikely to rip off their clothes and go streaking across the field. It happens, sure, but not whimsically. Streaking is premeditated. How else do they write such witty comments on their bum? But that person might rage. They might tear down the goalposts. They might set a couch on fire. Mobs are infectious.

Music is too. Turn on some good music. The context has changed the person.  

In a Betwixt the Sheets episode, Maria Konnikova talks about her 2016 book, The Confidence Game (Konnikova is one of my favorite non-fiction authors). She notes that con observers typically don’t understand. Too often we say that would never happen to me. 

But a con artist changes the context. “What we don’t understand” (looking at cons from the outside), Maria says, “is that objectivity goes away when we are emotionally involved. The first thing a good con artist does is get you emotionally involved in the story so that your ‘red flag spotter’ turns off.”

My wife’s grandmother lived to ninety one. She was a collector – of junk. Marketed in small-ish magazines sent directly to her house, she bought statues with American flags and coins and bobbles. She bought “limited edition” coins. She musta had fifty porcelain elephants. Her purchases were emotional: sentimentality, patriotism, greed.

She was a shrewd woman. Sharp too. Her eighty-fifth birthday was an open house and we spent much of the day eating and laughing with her. I was amazed at her observations. She lived through the depression. She worked on a farm. She had nine kids. She outlived some. She was tough, not an easy mark. She was conned. 

Her chotskies were just the artifacts. Family used her too.  

In business there’s an expression: you set the price and I’ll set the terms. You can charge any price if I can pay it whenever, however, and with whatever. Cons are similar: you set the mindset and I’ll set the context. 

Eliud Kipchoge is the greatest marathoner ever – so far. In a New York Times piece, he is quoted “Only the disciplined ones in life are free. If you are undisciplined, you are a slave to your moods and your passions.”

Con artists change the context which changes the mood. Their victims are emotionally involved. My grandmother-in-law was emotionally involved. Discipline is a buffer. Contexts change, emotions rise, but  discipline remains. 

Russian Reading List

MIKE

There’s a financial advisor axiom that the best plan is the one you’ll stick with. For trainers, it is exercises done through a full range of motion. The best endocrinologists find an achievable plan, not an ideal one. There should be one for education too. With that in mind, here’s a list of Russian resources optimized for consumption rather than comprehensiveness.

We’ve done this before with books about China and related, history books that are business books.

The Rest is History (podcast). Some podcasts are better than books because the host(s) add context. Dan Carlin is great at this. Tom and Dominic do too, and their series on Vladimir Putin is excellent.

Red Notice. A finance thriller? Yep. Bill Browder spent decades opening, running, and closing a fund in Russia during the switch from communism to oligarchy.

Muppets in Moscow A 2022 book, h/t Marginal Revolution about Sesame Street in Russia.

Exporting Raymond. We love Phil Rosenthal’s Netflix travel/food show Somebody Feed Phil. This is the story of taking the show Everybody Loves Raymond to Russia.

Koylma Tales via Agustin Lebron called it “a collection of stories of people who lived in the Gulag, possibly the most revealing book on human nature I’ve ever read.” Takes place through the 1930s and 40s.

Sandworm: A New Era of Cyberwar and the Hunt for the Kremlin’s Most Dangerous Hackers. Forgot this source. “The true story of the most devastating cyberattack in history,” notes Amazon, “and the desperate hunt to identify and track the elite Russian agents behind it.” 2,000 reviews averaging 4.7.

It’s not the fall…

MIKELeave a comment

It’s not the fall that gets you, it’s the impact at the end. 

The best metrics describe a state of the world. Hotness has three audiences. “Fahrenheit is basically asking humans how hot it feels. Celsius is basically asking water how hot it feels. Kelvin is basically asking atoms how hot it feels.” (Reddit) 

Another is the contrast between American and Canadian avalanches. In the states, a medium avalanche is “relative to the path”. In Canada a medium avalanche “could bury a car, destroy a small building, or break a small tree.” The southern system expects the audience to be familiar with the area. 

A third is calorie counts. Sure, bananas have calories but they can also be zero-point foods. Counting calories isn’t the point. Weight loss is the point, so what’s the best way to communicate information that leads to those actions? 

About hurricanes: “The Saffir-Simpson Hurricane Wind Scale we use to rate hurricanes is based on only wind and doesn’t take into account the chief hazards which can be storm surge and flooding rains. It’s wholly inadequate. We need to go away from rating one through five based on winds. Hurricane Harvey stalled for days over Texas and caused a hundred billion dollar plus disaster (Harvey made landfall as a category four storm, but most of the rainfall and damages was as a tropical storm).” – Dr. Jeff Master 

Hurricanes need to be rated more like Canadian avalanches. If measuring wind speed rather than rainfall wasn’t enough, there’s another problem: the hundred-year storm. 

Everywhere I’ve lived has a hundred-year storm. In Ohio (Southeast and Northwest) it was floods. In Florida it is hurricanes. Imagine a category five hurricane that hits Beach City once every hundred years. What chance is there for a storm of that level in the next thirty years? 

Master walks through this math. A one-percent chance each year is a ninety-nine percent non-chance. Multiply a ninety-nine percent non-chance thirty times and the hundred-year storm has a 26% chance of occurring in a thirty-year window. 

It’s not the hurricane winds that get you, it’s the flooding afterward. Yet we measure the winds. 

White water white wash

MIKE2 Comments

We like things we are good at and we are good at things we intentionally practice.

We practice better numeracy through examples like A+ BS HSA rates. The point there was that organizations choose favorable framing in absolute or relative numbers.

Numbers are just characters in a story.

LoTR has Frodo. Stranger Things has Eleven. Batman has Batman. Tim Harford’s advice for better numeracy is to ask who is telling me this story and why are these the characters?

A clever example comes from the August 2022 episode of Acquisitions Anonymous where the hosts discuss a Vancouver white water rafting company. Business pitches use numbers to tell a story about why a business is worth a lot of money. Like a job interview or a date, it’s a polished version. 

This particular pitch used a blended SDE (seller’s discretionary earnings) multiple. Rather than value the business on elevated 2021 numbers, the seller’s broker included 2019 & 2018. That is a wolf in sheep’s clothing and co-host Bill D’Alessandro pulled away the mask. 

Yeah, Bill begins, blended earnings are often good but the 2021 Covid-19 bump is so large it pushes the weighted average higher than any other year. Pre-Covid-19 the SDE was around three-hundred-thousand-dollars but the weighted average is over five-hundred. 

Averages, weighted or otherwise, work best with distributions like number of autos owned, Wordle guesses, or years of school. 

Averages, weighted or otherwise, work terribly with distributions like financial wealth, number of testicles (an average of one), and movie revenue. 

Stories work best with coherent characters. Number stories work best with coherent calculations. We are experienced with stories about people. We stop books, leave theaters, or stream something else if we don’t like the way things fit together.

We’ve so much less experience with numbers. 

But now we have a little more. Thanks Bill.

How to write great copy

MIKELeave a comment

Neville Medhora writes great copy because Neville Medhora made copywriting easy. Let me give you his steps.

But first, a warning. Copywriting can work too well. There are many scammy producers who use copywriting to sell scammy products. Copywriting joins JTBD and negotiations and Alchemy as selling tools to be used ethically.

Copywriting has two huge benefits. First it filters your listeners. I never have hecklers at my comedy shows said John Cleese because the people who come are all people who know what I’m going to say! Copywriting influences the stakeholders, who allow a certain freedom of movement – or not.

The second power of good copywriting is the magic of customer-acquisition-cost. With the right CAC, all business models work. Pirate Booty has good copywriting, informing parents that it’s “great for lunches”.

Copywriting can seem difficult because we start at the BLANK PAGE. But Neville Medhora created a system that makes copywriting easy. Anyone can write like Neville if they just follow his steps.

  1. No blank pages. Medhora maintains SwipeFile.com for inspiration. He also keeps a list of posts he’d like to write. Medhora is curious and one of his inspirations, Joseph Sugarman, wrote that the best copywriters “hunger for experience and knowledge and find other people interesting.” Like a chef with a well stocked kitchen, Neville never starts with nothing.
  2. Start writing – with a framework. Medhora likes the AIDA framework: Attention, Interest, Desire, Action. He starts each piece with this outline and fills in each section. Remember, this is supposed to be easy.
  3. Find their thinking words. Amazon reviews are a “cheat sheet” for language. My research led to a book review which said this helped me have a healthy conversation with my spouse of 20+ years. Another review said it helped me maximize the time with my kids before they “flew the roost”. The book was about personal finance, but the language of the customer was “relationships”.
  4. Write the zero draft. It’ll be bad. It will look bad. Whatever.
  5. Let the draft marinate. Let your subconscious work. While you wait write 25 headlines – this is advice from Neville’s buddy Sam Parr.
  6. Edit your draft
    1. Does every line “earn it’s pixels”?
    2. Words or pictures? If your product/feature must be described, use words. If your product should be seen (like software), use gifs.
    3. Can you describe aspects the customer doesn’t appreciate but exist nonetheless? Our furniture is kiln dried for 72 hours…. a furniture website might say. Maybe everyone does this, or it’s not special within the industry but it’s not well known outside it.
    4. Do you need to punch it up? Add a cheat sheet, a rating system, embed a picture gallery, or make a cost breakdown.
    5. The more your reader knows the less you need to communicate. And vice versa.

That’s it!

If you want more from Neville check out his podcast episode with Sam Parr or use ListenNotes.com to search for other interviews.