Young and Profiting with Hala Taha - Seth Godin: How to Build a Business Strategy That Actually Works | Business | E313

Starting point is 00:00:00 People don't know what strategy is. They think it's a plan. They think it's an instruction manual. It's none of those things. It's a compass. What separates an entrepreneur who succeeds from one who struggles? It's not how many hours you put in. It's, do you see the current, the forces of the systems that are involved?

Starting point is 00:00:21 If you're not able to talk coherently about the risks you're taking, the changes you're making, the systems you see, you don't have a strategy. You're just doing your job. Don't play a game you can't win if your goal is to win. If you're not building something that people are talking about, build something better. Young Improfitors, welcome back to the show. And today we're going to be focused on strategy. Now, as entrepreneurs, we often think that we are really good at strategy, right?

Starting point is 00:01:03 It's a lot of what we do. We're creating plans of action. We have outcomes. We're aligning our plans to these outcomes. We're doing the tactics to make sure that it gets done. but are you stepping back and actually thinking about strategy? Are you being strategic about the way that you're doing strategy? Because there's a lot of philosophy behind strategy and the way that the world works in general. And joining us today is Seth Godin. He's been on the podcast twice before. He's always so valuable when he comes on the show. And today is not going to be any different. We're really going to go deep on strategy. That's all we're going to talk about today. And in particular, we're going to learn about systems. So what are the different systems? out there, why do we need to understand and be able to see systems in order to change them as entrepreneurs? We're going to talk about empathy and the desires that people have and how that

Starting point is 00:01:54 helps us motivate people with our strategy and motivate them to buy our products and services and align to what we're trying to do. We're going to talk about time and we're going to talk about the games that people play when it comes to strategy, the games we shouldn't play and the games that we should play. I can't wait for this conversation. I feel like it's going to really open our minds and think differently about strategy, which is, of course, Seth's point in writing this new book. So without further ado, here's my conversation with the amazing Seth Godin. Seth, welcome to Young and Profiting Podcast. Thank you. It's great to see you. I am definitely excited to talk to you for the third time.

Starting point is 00:02:32 So Young and Profiters, we talked to Seth. Episode 87, we talked about creativity. episode 225, we talked about productivity. And today, we're going to be talking about strategy. Strategy can mean a lot of things to a lot of different people, Seth. And so my first question to you to warm us up is, what do you exactly think strategy is? Well, this is why I needed to go through all the pain and suffering of writing a book,

Starting point is 00:02:58 because people don't know what strategy is. They think it's a plan. They think it's tactics. They think it's an instruction manual. It's none of those things. strategy is a philosophy of becoming. It is a way of looking at the world as it is and deciding how you want to change it.

Starting point is 00:03:16 It is not a guarantee. It's not a map. It's a compass. And we need to talk about it because if we don't talk about it, you can't make your strategy better. It doesn't matter how fast you're going if you're going in the wrong direction.

Starting point is 00:03:31 Now, this is a show for entrepreneurs, and I'm curious to understand why strategy is especially important for entrepreneurs. So what separates an entrepreneur who succeeds from one who struggles? It's not how many hours you put in. It has something to do with the people you surround yourself with. But mostly it's do you see the current, the forces of the systems that are involved? Is the world supporting you or are you fighting the world?

Starting point is 00:04:01 And these are decisions, decisions that you can make early on. and then decisions you have to make again when the world changes. So I don't care if you have a team of one or two people and you're mostly a freelancer like me, or you're trying to build an organization with 80,000 people in it. You still need to be very clear about what your strategy is. So a company like Amazon, they didn't succeed because they did everything right. They succeeded because Jeff had a very simple strategy and he stuck with it for a very long time. I feel like one of the ways that we can better on strategy is to understand what it's not.

Starting point is 00:04:39 So what is the opposite of strategy? Well, one of the things that's the opposite is strategic planning, which is a terrible name. Roger Martin has pointed out that you can't have a strategic plan because a plan means that if you follow it, you will succeed. That a plan for a house, if you follow it, you will have a house when you're done. That businesses like plans because they like power and authority and measuring. and delivery. But a strategy isn't that. A strategy is a point of view. It's assertions. It's what do you see. It's who are you here to serve and how are you hoping to change them? It is a question at least as much as it is an answer. So one of the things that you say in your book is that we're trained our whole life based on tactics.

Starting point is 00:05:27 So can you help us understand how in school and work, we're really trained for tactics and how that might make us overlook strategy? They only ask you questions they know the answer to in school. And they push you to get an A on the test. So you need tactics to do those things. Study this way, answer this way. You've been doing this podcast now for hundreds of episodes. When you started, it wasn't obvious that someone could professionally make a podcast.

Starting point is 00:05:57 You had a strategy for how to bring the podcast to the world. The tactics of let's make sure that the gains. level is set this way or that it's this many minutes per episode. These are important, but these wouldn't have worked if you would have been building a pottery studio instead of a podcast. Because it's almost impossible in today's world to build a pottery studio that would have the impact that your podcast has. You had a good strategy. And then you follow it with tactics that support the strategy. But if you're not able to talk coherently about the risks you're taking, the changes you're making, the systems you see, you don't have a strategy. You're just doing your job.

Starting point is 00:06:37 And what do you think a career or life looks like if you're just only focused on the tactics and you're never thinking about the strategy? For grandparents, ours, mine, yours, that was an entirely appropriate strategy. You got out of school, you got a job for a can company, and you made cans for 40 years working your way up because the can industry would be fine, right? when the world changes, that doesn't work so well. So let's say you've worked really hard to break into Hollywood when Hollywood was about movies. Now the world changes. And all of a sudden, you've been turning up your nose at things like YouTube or Netflix and no one's watching movies anymore. You're in trouble, right?

Starting point is 00:07:19 So we need the resilience to say, my job is to figure out what my job is, not to do my job. And when it comes to strategy and success, what do you say to the people who just say, try harder? You just got to work hard, try harder. Try harder at what? You know, almost all the jobs that entrepreneurs do, if you knew exactly what the job was, you could hire someone cheaper than you to do it. If someone writes a 300-page book, it might take them four years. Typing a 300-page book only takes three days.

Starting point is 00:07:56 So what was the rest of the time spent on? Because it wasn't the typing. When we say work harder, we're saying type faster. And typing matters. But first, you've got to know what to type. That isn't about how many hours you're spending in the office. It's about what you see and what are you up for in terms of the impact you want to make. Okay.

Starting point is 00:08:17 So in your book, which, by the way, is written really uniquely. It's called This is Strategy. And basically, Seth has these blurbs. It's not like chapters. It's just telling us stories. And it's up to you to decide how you want to interpret it. So one of the little blurbs that you had talked about four threads, timed, games, empathy, and systems. And to me, as I was reading the rest of it, I really kept going back to that blurb about that being the foundation of everything. So strategy is woven by four threads, time, games, empathy, and systems. Can you explain how these four pillars really underpin what strategy is? Sure. So let's talk about time first. Back to your podcast. The first episode, how many people listen to it? Probably 100. If you're lucky, maybe 10. Did you say my podcast is a failure? I hope not. Because what you did was say, I just planted some seeds. Now I need to nurture them. Now they're going to grow. And then what's going to happen? And then what's going to happen? Time is evenly distributed.

Starting point is 00:09:21 All of us get 24 more hours tomorrow. time unfolds whether we want it to or not. We are very conscious of where we are now. Yesterday feels like a memory. Tomorrow feels like a daydream. Now it feels like now. But tomorrow, that's not going to be true anymore. We have a different now. So when we think about our strategy, I don't care about what's going to happen tomorrow. I care about what are you planting and what's going to happen in three months and six months and two years. What unfold? So that's time. The second one is empathy. And empathy says, you don't have as much power as you want. Other people have a choice. Other people can choose to buy what you're selling. No one sees what you see, wants what you want,

Starting point is 00:10:06 believes what you believe. If you're a teacher, it's worth noting everything you're teaching, you already know. And everyone you're teaching you to doesn't know it yet. So if you don't have empathy for them, you can't teach. The third one are games, not board games, but the games of game theory, the games of players and choices and boundaries and outcomes. If I do this, they might do that, or they might do that. And calling it a game helps us take ourselves a little less seriously. We realize if we make a move that's not a good move, it's not because we're a bad person. It's because the move wasn't the right move. So we can address a changing world with a lighter stance. And the fourth one are systems. Systems are usually invisible, but when someone

Starting point is 00:10:52 points them out to you, then you notice them. So the wedding industrial complex is a system. The budget for a wedding is exactly what your best friend spent, but a little extra. And we know what you're supposed to wear. And we know what the mother-in-law is going to say. And we know all of this stuff is all made up. But it's part of a system. And everyone in the system isn't mean. They don't want to hurt anybody. they're all doing their best, but the system undermines and controls everything in equal measure. So you need to see the system if you're about to go to college and get a quarter million dollars in debt. You need to see the system if you're applying for a job. You need to see the system if you want to get funding for your tech company.

Starting point is 00:11:41 Because the system sees you, and if you don't match what the system is used to, it's going to chew you up and spit you out. So naming the system, seeing the system, and then using the system, even if you want to change it to make forward motion, has to be built into your strategy. I want to stick on systems for a while because I feel like there's so much to unpack with systems. Systems make the world go round, and you say that systems are everywhere that humans engage to fill a need. So can you help us understand why systems are essentially productivity, human productivity? Well, we're not capable. Imagine if every time you walked into a supermarket, each supermarket not only organized everything in a totally different way, but had a totally different way of putting this stuff in a different

Starting point is 00:12:26 kind of basket and charged different sorts of prices and other sorts of currencies and had different kinds of – you couldn't deal with that. We wouldn't know what to do if every time we wanted to visit a website, everything about every website was completely different. We have genre. We have expectations. We also have systems for who can we trust? What does a promise mean? What is a contract? That's part of a system. What happens if there's no system for driving and some people want to drive on the left side of the road and somebody want to drive on the right side of the road? You would never be able to get anywhere. These are all systems we built so that we wouldn't have to start from scratch every single time we interact. And that's one reason why travel is thrilling and scary, particularly if you

Starting point is 00:13:10 go someplace far, because they have a different system than you're used to. to. So if human beings are engaging over time to do anything productive, they're going to invent a system. The metric system, right? That's a system. Why? Because everyone wants the screw to fit into the bolt. If it says it's going to fit, it needs to fit. Can you talk about some of the tiny systems that exist within the world? Well, there's a whole branch of psychotherapy about family systems that if you go up in a house with an abusive parent, that system feels a lot different than your next-door neighbor's house. There are systems of misogyny and oppression and caste, and then there are also systems that are welcoming. There are the systems of how the four best friends all interact with each other. And we all feel the stress

Starting point is 00:14:03 if we get into a new friend group and they insist on texting and we hate texting. Well, all of a sudden, there's tension in the system. So learning to see these patterns helps us understand. And if you read about behavior change when it comes to things like diet, all you got to do is put a big bowl of carrots on the counter and throw the brownies in the garbage, and you will lose weight because you change the system of how you are triggered to eat things. So I know when it comes to strategy, a big part of it is actually being able to see these invisible systems, right? You've got to be able to see the system so you can either change it or work with it or start a new one. how can we get better at actually seeing these invisible systems?

Starting point is 00:14:46 So this is one of the things I've learned from blogging. If you see something and you can't explain it, it's probably because there's a system at work. Oh, why are all the women at this wedding wearing ill-fitting dresses that match? Because I would have assumed that they'd want to wear dresses that they own that look good. But no, they're all wearing this dark blue satin thing up there in the front. Why is that? Oh, because the wedding industrial complex decided 300 years ago that bridesmaids should dress the same because it raises the status of the bride, and the bride has her one and only chance to tell her friends what to do, and so that's been sticking around for a long time. Oh, I see it. But it wouldn't have made sense if I didn't understand the system. And we see them in so many places. So what shifted in the United States in the last 50 years? Many things, but one of them is organized

Starting point is 00:15:41 sports for kids. Why are parents of seven-year-olds spending hours and hours and hours every weekend driving kids around to these soccer matches? We don't have a trophy shortage. Why is the whole community organized around that? Well, I can show you systemically how it grew and how it stuck around. Now I understand something. And if I wanted to start a new thing, knowing that would help me. And so when it comes to actually changing these systems, you say our power lies somewhere between zero and infinity. So talk to us about the ways that we can get more power to actually change these systems. If you talk to a frustrated entrepreneur, they're frustrated because they want everyone to listen to them. They know they have the right answer, and they've discovered they don't have unlimited power.

Starting point is 00:16:32 And if you talk to a despondent cog in a factory job, they're despondent because they think they have no power. that no one will listen to them ever, and they should just give up. And the answer is in between. The answer is, with an elegant strategy, we can show up and discover what people actually want and work around the thing that the system might have chosen for them, because what they don't actually want is the ugly blue dresses. What they want is the feeling the bride gets. And so if you can show up and satisfy their needs, you can change the way the system expresses itself. And we see this, for example, when some institutions moved coursework online, right? What does MIT actually want? Does MIT actually want people to sit in a classroom? That's not their

Starting point is 00:17:24 mission. Their mission is to create culture and earn status by affiliating students with each other who have power in the world. And if they can do that at scale without bringing someone into the classroom, sure, why not? But we had to understand what it is they wanted as opposed to saying, this is what you have to do right now. Let's hold that thought and take a quick break with our sponsors. At YAP, we have a super unique company culture. We're all about obsessive excellence. We even call ourselves scrappy hustlers. And I'm really picky when it comes to my employees. My team is growing every day. We're 60 people all over the world. And when it comes to hiring, I no longer feel overwhelmed by finding that perfect candidate, even though I'm so picky, because when it comes to hiring,

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Starting point is 00:22:05 Can you first tell us what an agent of change is and maybe some of the big agents of change that we've had over the course of time? The Internet is one of the biggest agent of change of our lifetime. AI is an agent of change, but it can be something smaller than that. It could be that the government in your village bans leaf blowers. That's an agent of change.

Starting point is 00:22:25 Now, if you're a landscaper, a lot of the things you were building your systems on have to shift because you can't use this noisy, polluting thing anymore. So you have to do something else. And maybe another landscaper who takes advantage of it will get market share because you were slow, they were fast, and they captured new customers. So the agent of change is something that changes the system at scale. It is possible for you to be the agent of change. That's harder, unlikely, but possible. So if we think about the world of jazz, Miles Davis and Dave Brubbeck were agents of change. When they showed up with their music, it changed what it meant to make a jazz record.

Starting point is 00:23:08 Because the two of them sold so many copies of their records in the early 1960s, the record labels paid attention. So other musicians paid attention, so venues paid attention, and the system shifted. So that's doable, but we're way more likely to succeed when we see larger agents of change. that we didn't start. So you say agents of change often take forms in things like communication, competition, cultural shifts. How can we spot these agents of change?

Starting point is 00:23:36 What should we be looking for? If you see something that is stressing out dominant systems, you found an agent of change, right? So when e-books showed up, the people at bookstores and book publishers freaked out. So that must be an agent of change because they didn't invent e-books.

Starting point is 00:23:56 They're not happy with e-books, but here they are. So now what's going to happen? Now what's going to happen is they're going to have to shift, whether they want to or not. So a whole bunch of bookstores went out of business, and book publishers, whether they liked it or not, started selling a lot of e-books. And the one company that leaned hard into the shift ended up making millions and millions and millions of dollars because if Amazon hadn't made the Kindle, well, then the cobo would have worked or somebody else.

Starting point is 00:24:26 But once the technology was there and users were delighted by it, it wasn't going to go away. So basically you're saying, look for what's changing in the system and potentially create products and services that are aligned to this big change that happened. It might not be a big change. It's just a change that the existing players in the system don't like. If the players in the system like it, there's not much of an opportunity. So when food companies shifted to making smaller and more expensive packages of cookies and stuff, that's not really an opportunity because Nimbisco is in the same arc as you, right?

Starting point is 00:25:07 It's when a shift happens where the existing players are trying to fight it, big or small, that's when an opportunity opens up. That makes sense. Okay, so we talked about some of the benefits of systems, right? We talked about productivity and all these things, but there's also negative impacts of systems. Can you talk to us about that? Almost all the negative things in our world are negative because systems push them forward. So our climate problem is caused by the system of take cheap oil and burn it.

Starting point is 00:25:43 And it's struggling because of the system of eat meat. Meat is a system that profits everybody who touches it. And so capitalism plus meat equals climate change. What we see in issues of misogyny and caste is that for a long time, if companies are hiring someone, they're using a false proxy and judging them by what they appear to be. And it's easier to tell your boss, I hired someone who looks like us. That it is to say, your boss, I heard someone who doesn't look like us. So that's what happened. And when we see these problems, we work to change them. But you can see how painful it is, how many years it takes to undermine cultural systems that don't want to change. It's so interesting. These are all things that we know,

Starting point is 00:26:34 but you never really think about it. Correct. You never really think about all these systems, which is why your book was so eye-opening to me. So let's talk about some of the games. related to systems. You say sometimes the system will sell us a dream. It can't deliver, and these are games we should avoid. Can you give us an example of playing within a system that might actually not be in our best interest? So one of the maxims in the book is don't play a game you can't win if your goal is to win, right? If Gary Kasparov says you want to play chess, don't play chess because he's going to win. The promise that TikTok and YouTube make is please spend hundreds of hours making content for us for free,

Starting point is 00:27:17 and then there's a one in a million chance you will become famous. That is not a good game. You should not play that game. Someone is going to be famous, but it's not going to be you. And we already have a Kardashian, and the problem with that is it made other people think they could become a billionaire by posting selfies. You can't.

Starting point is 00:27:37 The people who are carrying your content are doing fine. You're unpaid labor. They're very happy. That's a game that was proposed to people that they signed up to play, but they probably can't win. And speaking of choosing where to play, you also say don't follow your passion, which is very different from a lot of other business coaches. So why shouldn't we follow our passion? That was an expression made up fairly recently by a few people who got very lucky. And the problem with it is it's brittle.

Starting point is 00:28:08 It's brittle because if the thing that you decided is your passion isn't working, now what you're going to do? What's resilient is to say, why don't you decide to be passionate about whatever you do? Because then, no matter what you do, you can be passionate about it. And I don't want to be a surgeon. I think it's pretty icky and scary. But if I had a choice between being a surgeon and working in a steel mill, I'd be a surgeon. And if I'm going to have to be a surgeon anyway, I'd figure out a way to find joy in what I was doing. Meanwhile, there are surgeons who desperately don't want to be me and back and forth. But if you insist that you were born to do this one and only thing, you're signing up to be unhappy. And the alternative is to say, I'm only going to get today

Starting point is 00:28:56 once. I'd rather spend it finding joy and connection and meaning. Here's my profession for now. I'm going to find it in this. So similarly, too good to be true strategies that we see all the time. somebody's saying you're going to be a millionaire with my real estate strategies, just take my hour long course and I'll show you the way, right? Why should we be weary of them? Well, as you just pointed out, if it's too good to be true, it probably is. And where does value come from? Value comes from scarcity. If everyone is doing something, it's probably not that valuable. So there was a meme that went around a few years ago about these people who were in the free hugs movement where they were just stand there with a sign that said free hugs and you can come

Starting point is 00:29:42 over and give them a hug. And then this other guy as a joke put up a sign that said hugs $5,000. Now, it's very hard to sell a hug for $5,000 because there are all these free hugs that are available. If someone says, here's my strategy to beat the stock market, or here's my strategy to win at real estate. And it only takes an hour, then I'll lot of people are going to do it. And if a lot of people are going to do it, you're back where you started. That we need to find where the scarcity is. Where are the constraints? Where are we worth picking? So there are two choices you have to make when you're going to do your work. Either you say, you can pick anyone and I'm anyone. I'm cheaper. I'm more convenient. Let's go. I'm going to

Starting point is 00:30:26 win the SEO search. Pick me, pick me. Or you can say, you'll pay a lot, but you get more than you pay for. That's the race to the top. That's very hard to pull off because you have to do hard work to be worth more than you pay for. That's the place to go. That is a resilient strategy that works in almost every industry to be the one that we would miss if you were gone because you bring emotional labor and insight and wisdom to the work you do and you're not looking for a shortcut. Let's talk about time. Time works together with systems. What are the things that we need to think about when it comes to time within our strategy building? Well, the first thing, which we haven't mentioned, is,

Starting point is 00:31:06 if you've ever built a campfire, I hope you learned that you shouldn't try to light a log that's too big for the amount of kindling you have. That if you've got six sticks, you can't light a birch tree on fire. It's just not going to work. Well, don't sign up for something that takes longer than you have time for.

Starting point is 00:31:25 That if you need to feed your family, don't go to medical school, because you're not going to make a living for six or nine or ten years. On the other hand, if you're adequately supported, you can sign up for things that take a longer time to grow. So this is what happened with the big podcast crash of a couple years ago, is podcasts started to succeed. So a whole bunch of people said, oh, all I have to do is talking to my phone and have a podcast. So they started a podcast. and they expected that they would make money from their podcast within four weeks.

Starting point is 00:32:00 And it doesn't take four weeks to make money from a podcast. It takes four years. So if you don't have four years, you probably shouldn't start a podcast if your goal is to make money. You need to look at the time horizon. The people who came before you, how long did it take them? What does it look like when you're four weeks or four years into this? Are you on a journey that's getting better and easier? or is time working against you, and you're losing money every day but trying to make it up in

Starting point is 00:32:27 value. So I think a good case study in your book, you talk about Airbnb, and I think it's a really good case study in terms of systems and then also good timing. Can you go over that case study of us? Okay, so let's talk about the smallest viable audience. It's tempting to say, I want everyone to be my customer, but everyone's not going to be your customer. Starbucks doesn't have everyone as their customer.

Starting point is 00:32:50 My books have been bestsellers. Not one of them has reached 1% of the population. So I have a 0% market share, right? You don't need everyone. You need someone. So Airbnb is a really cool idea. It's a two-sided marketplace. You need places to sleep and people who want to sleep there. If you don't have places to sleep, you're not going to get anyone who wants to sleep there. And if you don't have people who want to sleep there, you're not going to have places put up for sleeping. So they had this challenge. They didn't have a smallest viable audience, and they didn't have enough sleepers, and they didn't have enough beds. So if you're thinking about this over time, you could sit at the board meeting all you want and say, one day we're going to have 40 million customers. Okay, but how are we going to get to 40 million customers? Because right now we have none. And there's a whole other story about breakfast cereal that I'll leave out. But they were basically almost out of money, and they realized that the customers they wanted were the kinds of people who went to South

Starting point is 00:33:50 by Southwest in Austin, Texas. And the thing about that conference is the kind of people who go tend to be younger and more adventurous, they tend to have money, they talk a lot, they love to be online, and there aren't enough hotel rooms in Austin, Texas. So what they did was they went to Austin and they worked really hard to find a whole bunch of people who would put their listings up in anticipation of this one big week. And then they went to the people. And then they went to the people at this conference, just a couple thousand. And we're able to say, we have rooms because all the hotels are full. They got both pieces together at the right timing. And then all the people who were at Southby, who stayed at Airbnb, tweeted about it, told their friends about it, and spread

Starting point is 00:34:37 it across the world. That is what it looks like over time. I love that example. And to your point, it's a really good example of a minimum viable audience and a minimum viable product, right? They needed to make sure that it was functioning and it gave them an opportunity to test. Why is testing and iterating on our products a game that we should play? Testing is a funny word because testing reminds us of third grade and there's a right answer. I'm not sure I like that. I think it's evolving. There are no creatures on earth other than cockroaches that have not changed in millions of years. Human beings have only been like this for 10,000 years. The way evolution works is things that work get repeated and things that don't go extinct. And we don't know what the system is going to want to

Starting point is 00:35:25 embrace until we see it happening. So the test involves, and I actually tested the book in the following way, I didn't say, hey, Hala, do you think this is a good book? What I did was, I made 44 lessons on video, each corresponding to parts of the book. And then I went to purple. dot space, the community I run online, and I gave the course to anyone there who wanted to take it, 300 people, and I watched them interact with the videos. I didn't ask them for feedback. I watched them use it. And when they got confused, I rewrote parts of the book to make it more clear, because I saw what evolved and what did it. And it's that thing, not cooking it till it's perfect, but engaging with the system to find out what's going to fly.

Starting point is 00:36:13 We'll be right back after a quick break from our sponsors. What's up, young and profitors? I remember when I first started Yap, I used to dread missing important calls. I remember I lost a huge potential partnership because the follow-up thread got completely lost in my messy communication system. Well, this year, I'm focused on not missing any opportunities. And that starts with your business communications. A missed call is money and growth out the door.

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Starting point is 00:38:53 In those early days of setting it up, I feel like I was jumping on a cliff with no parachute. I'm not really good at that kind of stuff. I'm really good at marketing, sales, growing a business, offers. But I had so many questions and zero idea where to find the answers

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Starting point is 00:40:33 You can't have lunch four times. you can only have lunch once. After that, you're not hungry. So you're going to have to pick. Are you going to have the carrots or are you going to have the tofu, one or the other? So if I say yes to people because it's socially convenient or there's pressure because you're sitting here right in front of me, I've forced myself into a no down the road anyway. So a key part of our strategy is saying no to things that aren't part of our strategy. We can do it with respect. We can do it with kindness. But just because someone ask, they're not entitled to your agenda. It's your agenda. What about the opportunity cost? Can you tell us about opportunity costs when it comes to saying yes to things that we shouldn't say?

Starting point is 00:41:16 This is a version of opportunity cost. We're very familiar with cost cost, which is if you want to buy a bag of carrots, it costs $4. Okay. What is opportunity cost? Opportunity cost is I can't do that because I did this. All the things that I did kept me from doing these other things. And so we should get very clear with ourselves about how we're investing our time and how we're investing our money. It's not just one, it's both. And again, every yes requires nose to follow. So you should make your nose intentional. Okay, one last game and then we're going to talk about empathy. This is the game of early advantage. Why is this a game that we should potentially play? Some philosophers who are incorrect say luck evens out. That early luck is the same as late luck. It'll all work out. This is

Starting point is 00:42:10 nonsense. This is not true. If you are good at hockey when you're six years old, you get to play on the traveling team when you're seven, and then you get better coaching when you're eight, and then you get to play on the province team when you're nine. And the chances that you will be in the NHL, go way up compared to someone who gets a lucky break when they're 13. It's too late by that. The idea that late luck will make up for early luck just doesn't hold up. So what we want to do is find places where we can erect scaffolding to cause early luck to happen, where we can overinvest at the beginning so it will pay off in the long run, as opposed to just hoping for a good thing to happen. Compounding an early lead attracts people who are looking for an early leader,

Starting point is 00:43:02 and then we get to do it again. Can you give us an example in business where somebody has done that successfully? Google didn't have any revenue of any kind for two years. No ads, no nothing, for two years. And the purpose of the project for the first two years was to become the new second-generation search engine. After Yahoo and Lycos and Alta Vista, there was a gap. Who was going to be the new one? Every minute that Google spent,

Starting point is 00:43:31 trying to get strangers to use their service, trying to get revenue, was time they weren't spending, compounding their head start. Because once a brilliant engineer saw what Google was doing, it wasn't that hard to copy. They didn't have anything you couldn't copy,

Starting point is 00:43:46 except their head start. Because what happened soon after, they got going is a friend would say, what's the answer to this? And you would say, go Google it. And it didn't matter if there was another search engine like Bing that was indistinguishable in its results. Too late because Google invested in their head start. ChatGPT is doing the same thing right now. That makes a lot of sense. Okay, so moving on to empathy. Again, your book was really up to interpretation, and I interpreted empathy as basically marketing. It seems like you were suggesting that empathy is good marketing and you need empathy to motivate people to engage in your systems, to go align with you.

Starting point is 00:44:28 If you're trying to change a system, you also need to motivate people to buy whatever system you're putting out there, strategy that you're putting out there. And so can you tell us what you were meaning by empathy exactly? I love that question. I would say marketing is good empathy, not empathy is good marketing. Some people think marketing is hype and hustle. Some people think marketing is someone walks in by mistake to your Ferrari dealership and asks for a station wagon because they got four kids and you try to persuade them that they want a sports car. This is a waste of everyone's time, right? You should eagerly walk them down the street to the Volvo dealership, not try to change their mind. So empathy says, I can't change your mind. What I might be able to do is

Starting point is 00:45:10 find someone who wants to go where I'm going. So my main job as a marketer is not to persuade people, but to just find the people who say, wow, I've been waiting for this. And so can you talk about people's wants and desires? You say there's three things that everybody wants and desires. Why do we need to know those three things? And how does that help us create a better strategy? Yeah, so this is a little controversial, but I keep being surprised by that. Everyone I have met, if they have food and shelter, wants some combination of three things.

Starting point is 00:45:43 status, affiliation, and the freedom from fear. So what do I mean by that? Status is who eats lunch first. Status is who is respected. Affiliation is who am I next to? Who's to my left, who's to my right? Which circle am I in? Please don't kick me out of the village. And freedom from fear isn't freedom from danger. It's freedom from the feeling of fear. And so if we think about the things we buy, those are the only three reasons we buy anything. If we think about the clubs we join or the professions we pick or who our friends are, status, affiliation, freedom from fear. That's it. So if you offer that to people, it's way more likely that that's what they want. If on the other end you go to them and say, I have this new widget and it does this and this and this and this, now you're asking them to do

Starting point is 00:46:35 a lot of computation to decide if it's going to help them with any of their three goals. But we can save time by understanding that those are the three things people want. Status and affiliation make a lot of sense to me, and I feel like I've heard some variation of that. But freedom of fear is one that I feel like I haven't heard when it comes to persuasion and things like that. So what does freedom of fear mean exactly? So many examples. Taylor Swift has a concert coming up. There's only a few tickets left. You're going to miss it. Right? So you're afraid that you're going to be left out. Right? You want to be in the circle, but also you were activated by this feeling that fear is right around the corner.

Starting point is 00:47:16 There's very direct examples of people in perfectly safe neighborhoods, which is almost every neighborhood in the United States, spending an enormous amount of money on security. It's not real security, it's security theater, that after the terrorist attacks of 9-11, we installed this whole regime at airports that did absolutely nothing to increase safety. It did a lot to make people feel like they were doing something to increase safety because the government didn't understand how to say, we don't know what to do.

Starting point is 00:47:47 Everything's going to be fine. That's not what we voted for, right? We wanted freedom from the feeling of fear. But it's not just life and death fear. It's you go watch a bunch of eight-year-olds at the school bus when schools getting going again in the fall, looking at each other at their clothing. And what matters to many of these kids is not I want to be the best-looking kid. It's just I don't want someone to make fun of me.

Starting point is 00:48:16 And I don't want to be left behind. That's the freedom from fear. So then how do we use these wants and desires, knowing these wants and desires, to motivate people to help us or engage with our systems and strategy? What we're trying to do is help them. Facebook at the beginning said, Hey, Hala, there are people talking about you behind your back. You want to hear what they're saying?

Starting point is 00:48:40 And that's the reason that people joined it. Now, Mark wasn't doing it because he wanted to be a good person. He was doing it because he was trying to build a business. But he understood that on the Harvard campus, that one sentence was enough to trigger people into forward motion. And it then takes leadership to turn into something you can be proud of, but the fact still remains, that's the trigger.

Starting point is 00:49:03 Not, hey, this is fun. Fun is a fine thing, but fun isn't really what people sign up for. So in the same way, these human desires can be a way for people to reject our systems. Can you tell us about the case study of climax and their fraudulent cheese?

Starting point is 00:49:18 This one really got under my skin. This guy in California built a company that makes cheese out of beans, and it's spectacularly good. the blue cheese is, I haven't had dairy in 30 years, so I'm not a reliable judge of this. But you know who is a reliable judge of this? The good food awards. The good food awards, look at gourmet foods every year. And if you win one, you get all this great distribution. It's a big win. So he applied to be judged in the cheese category, not the vegan cheese category, but the cheese cheese category. And he won.

Starting point is 00:49:55 And they called them up and they said, you won, bring all your people. to our big gala event, everything's going to be great. And then they rescinded the award and they wouldn't give it to him because some cheese bullies in Vermont got together and pressured the group and said, this isn't real cheese, he shouldn't win. This really rubbed me the wrong way because there are cheese bullies everywhere we look. Cheese bullies are people who defend the status quo. Now, the thing about these cheese makers is they're not in the cow business. They're in the cheese business? What difference does it make whether you're making the cheese from white milk or white nuts or white beans? It's still the process of making cheese. But they were afraid that their

Starting point is 00:50:40 skill and competence wouldn't be valued as highly if cheese that wasn't made from milk started to be seen as real. So they acted like cheese bullies and the system defends itself. So one of the definitions of culture is what do systems build so they can stay in charge? It's so eye-opening. I want to talk about marketing a bit, and you are a marketing guru, of course, and you talk about the importance of using stories. You say that our product needs to tell a story. So talk to us about some of your favorite examples of a product that tells a story.

Starting point is 00:51:16 I have to take great pains to say a story does not have once upon a time at the beginning. If you go to an open house and it smells like apple pie when you get there, that's a story. The realtor put an apple pie in the oven to remind you of your mom. And the story has no words, but it's the story. If you think about how far away the seats are in one bar versus another bar, that's a story. Because a crowded bar that's really noisy tells a different story than one that's half empty. Because you didn't go there to have an alcoholic beverage. You could do that at home.

Starting point is 00:51:49 You went there for the way it felt to be in the room. The story of Patagonia clothing is very different than Columbia clothing, very different than Amazon cheap made in China clothing, even though all three will keep you from being naked. And so what we do when we build something of value is not check the commodity boxes. We are actually in the business of creating a story that people can tell themselves that helps them get to where they want to go. And you also say that we should create a story that other people, tell others. Can you talk about the importance of doing that? This book made a big difference in my career,

Starting point is 00:52:24 Purple Cow. And Purple Cow is about remarkable. Remarkable doesn't mean a gimmick. Remarkable means worth making a remark about. So again, back to your podcast, which has been listened to by millions of people. How many Super Bowl ads have you run? None. So how did they find out about it? Word of mouth. They told other people and that the word. spread. Why would someone tell a friend about this podcast? Not because they like you. They don't even know you. They would tell someone because it would raise their status. It would increase their affiliation. It was part of being in their culture, was to tell other people about what you built. If you're not building something that people are talking about, build something better.

Starting point is 00:53:12 Cess, this was amazing. Young and Profitors, the book is called This Is Strategy. It's out, when is it out, October 22nd as we speak. Amazing. October 22nd. I highly recommend it. Seth, before we go, I have two questions that I ask all my guests, but before we do that, what do you want entrepreneurs to know about this book and why they need to read it? I stopped trying to sell books a long time ago. What I want is people to talk about it. I want you to find a small group, two or three people, and talk to each other about strategy. And if my book helps you do that, that's great. But we have so much privilege and leverage, and we're wasting it because we're afraid to announce what we're up to. So find somebody and talk about it. Yeah, and I have to say, this was like a really easy read.

Starting point is 00:53:56 It was more just like help me think about things, and I thought it was really entertaining. So thanks for writing it. So I ask all my guests, two questions. The first one is, what is one actionable thing our young improfitors can do today to become more profitable tomorrow? It's pretty simple. Find a problem and solve it. And the problem that is most in need of being solved right now is people want to be seen and treated with dignity and respect. And what is your secret to profiting in life? Understanding what words mean and profit doesn't mean how much money you have in the bank. It means how much value did you create for other people.

Starting point is 00:54:33 Well, thank you so much, Seth. It's always a pleasure to have you on. Thank you so much. Keep making a ruckus. Well, I hope you guys enjoyed that as much as I did because there was so many pearls of wisdom from Seth Godin on strategy and entrepreneurship. For Seth, strategy is not a plan. It's not an instruction manual. It's not just tactics. It's a philosophy and a way of looking at the world and understanding how the world operates. And what separates a successful entrepreneur from the rest of the pack

Starting point is 00:55:07 is the ability to read the systems and forces you see around you and to anticipate change. And things change so fast. Engaging with systems you find around you requires you to constantly test your hypotheses, your products, your marketing angles, and being strategic also means recognizing bad systems. Don't play a game you can't win. Most of us, for example, are not going to be TikTok stars or NFL players, and we should think carefully before spending too much time and effort trying to become something that's totally unrealistic. We can all become, however, better students of human nature and what our potential customers and audience truly wants. Like Seth puts it, marketing is just good empathy. Your main job in marketing is not to

Starting point is 00:55:54 persuade people, but to find those who have been waiting for you to solve their problem. So go forth, Yaff Bam, and think strategically. Figure out the game you can win. Find that story that other people want to tell for you. And like Seth put it, if you're not building something that people are talking about, build something better. Thanks for listening to this episode of Young and Profiting Podcast. If you listen, learned, and profited from this conversation with the amazing Seth Godin, then please share this episode, spread the wealth, and let others benefit from the same wisdom. And if you did enjoy this show and you learned something and you really enjoy the content from the show,

Starting point is 00:56:32 then the only way you can really thank us is by dropping us a review on Apple, cast box, Spotify, or wherever you listen to your podcast, help me with the social proof. That's going to drive more listeners to the show. That's going to ensure that we can provide this amazing free content, to you guys day in and day out. And it's also a great way to let us know that you appreciate us, me and everybody who works hard on the show. If you prefer to watch your podcast as videos, you can find all of our episodes on YouTube. Just look up Young and Profiting and you'll find all of our episodes on there. You can also find me on Instagram or LinkedIn by searching my name.

Starting point is 00:57:09 It's Halitaha. And of course, I've got to give a big thanks to my Yap production team. You guys are absolutely fantastic. I'm so lucky to have you. I couldn't do this with about you all. This is your host, Halitaha, aka the podcast Princess, signing off.

Young and Profiting with Hala Taha - Seth Godin: How to Build a Business Strategy That Actually Works | Business | E313

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