This question comes in regarding my post yesterday:
(For) a software developer/consultant, do you have any thoughts about how I can get to "K" instead of "A" through "Z". My goal is to make software/apps that helps make my clients make money and not to lead them down the path of spending money on things that don't actually make them money (even if I advise them not to do so). I think this is "long term greedy" for me as the current internet bubble will burst soon (the damage is being done now according to my very limited understanding of Austrian economics) and those developers/consultants that aren't providing real value will be out of work. I advise my clients not to get patents, put they still spend $20,000 on patents, I advise them not to spend money on adwords but they still waste thousands and thousands on it.
Put another way, (say) I'm a construction manager in Las Vegas in 2006 helping developers build houses to flip. I have customers, but how do we find sustainable customers in such bubbles?
My answer:
I think the overwhelming problem is simple:
Listening. "K" is there in talking to the customer. They will tell you, clear as a bell. If so, how come we don't hear it?
1. Social conditioning. Everyone knows a business today needs social media, online advertising, flash websites, etc. There is no dispute, except at places like amazon.com, which knows better, and google.com, which is an intelligence arm of the USGovt.
So if the customer says "My website is not paying off" (the K) everyone replies "O, you need better SEO or SER of flash animation" or some such. K = a desire for more effective marketing. The word website is in the conversation because of social conditioning. Take out the social conditioning, and you get closer to K. (My marketing is not paying off.)
OK, so what constitutes good marketing? A website has replaced, at best, a yellow pages listing and a catalog, two things that could be found in any library 25 years ago. Sure, it is lowered the cost (in time) and widened access to the information, but websites have not contributed anything new in marketing. In fact, internet-based marketing seems to be a net-deficit, since the cost of attracting a customer is higher than any profit possible. Again, for the 387,922,848th time, show me examples of cost effective online marketing.
2. Labor theory of value. I know all about websites, and to make my $10,000 fee, I need to spend a week building a website. Therefore, I deserve $10,000 for making the website, because I spend a week. (This may seem absurd, but it is the most common view.)
3. Overhead-driven pricing. The flip side of #2, "I've got X expenses, so I have to charge Y."
The reason the MOQFOB tactic is getting such good play is it listens and responds with what works. It is nothing new, it is ancient and in practice today, but there are 2 generations of entrepreneurs we lost to the S&L, dotcom and real estate booms. Two generations see every problem as "what new dotcom solution will raise enough to live on while we accomplish nothing?" At least in services.
So the real estate flipping is a better example, except I have no experience with that. I do recall reading about a London real estate player saying in an interview the best return was turning 2 bedroom, one bath flats into 2 bed 2 bath flats. So many strangers were sharing flats and wanted private bath that for return on investment, that was the best move.
I know someone who did very well flipping houses in the 70/80s in LA, it was just the closets. When houses were built in the 1920s, people had one nice suit and a couple of shirts. By the 70s they could fill a truck with just their clothes. Old houses with big walk-in closets flipped fast at highest prices.
I am not sure how they spotted that, probably just listening to the wives (the decision maker) when showing houses.
So in explanation 1, 2, and three, in both goods and services, the price is in the perceived value. The charge is for "K solved" not labor theory, cost accounting or "should."
Also, once you arrive at a specific instance of K, it is important for you to announce this and give it away for free. In this way, if we are lucky, there will be thousands to whom we deliver the tool for free and those get no results. Those are the people who download our instructions for free and DIY. And they fail, so it proves companies need us, like there is only one Lowell Thomas. Of course since the white paper is complete and accurate and constantly updated with best practices, some people will be very successful with out us. This is good because it also proves we are right. In this way we get all of the business we can stand, at top rates. Let me summarize, once you discover an instance of K, you sell it but you also give it away for free:
1. There is the market that buys from you at top dollar.
2. There are those who do not buy, yet download your plans.
Of the non-customers who download, some will succeed, proving your plan is right. Also, many will fail, proving they need you to execute it properly.
Of all of this, social conditioning is the biggest problem. Even if someone figures out K, give it a week or two, they will be back to adding in "blast emails" as part of the solution.
The key to getting to K is to shake social conditioning.
Feel free to forward this by email to three of your friends.
(For) a software developer/consultant, do you have any thoughts about how I can get to "K" instead of "A" through "Z". My goal is to make software/apps that helps make my clients make money and not to lead them down the path of spending money on things that don't actually make them money (even if I advise them not to do so). I think this is "long term greedy" for me as the current internet bubble will burst soon (the damage is being done now according to my very limited understanding of Austrian economics) and those developers/consultants that aren't providing real value will be out of work. I advise my clients not to get patents, put they still spend $20,000 on patents, I advise them not to spend money on adwords but they still waste thousands and thousands on it.
Put another way, (say) I'm a construction manager in Las Vegas in 2006 helping developers build houses to flip. I have customers, but how do we find sustainable customers in such bubbles?
My answer:
I think the overwhelming problem is simple:
Listening. "K" is there in talking to the customer. They will tell you, clear as a bell. If so, how come we don't hear it?
1. Social conditioning. Everyone knows a business today needs social media, online advertising, flash websites, etc. There is no dispute, except at places like amazon.com, which knows better, and google.com, which is an intelligence arm of the USGovt.
So if the customer says "My website is not paying off" (the K) everyone replies "O, you need better SEO or SER of flash animation" or some such. K = a desire for more effective marketing. The word website is in the conversation because of social conditioning. Take out the social conditioning, and you get closer to K. (My marketing is not paying off.)
OK, so what constitutes good marketing? A website has replaced, at best, a yellow pages listing and a catalog, two things that could be found in any library 25 years ago. Sure, it is lowered the cost (in time) and widened access to the information, but websites have not contributed anything new in marketing. In fact, internet-based marketing seems to be a net-deficit, since the cost of attracting a customer is higher than any profit possible. Again, for the 387,922,848th time, show me examples of cost effective online marketing.
2. Labor theory of value. I know all about websites, and to make my $10,000 fee, I need to spend a week building a website. Therefore, I deserve $10,000 for making the website, because I spend a week. (This may seem absurd, but it is the most common view.)
3. Overhead-driven pricing. The flip side of #2, "I've got X expenses, so I have to charge Y."
The reason the MOQFOB tactic is getting such good play is it listens and responds with what works. It is nothing new, it is ancient and in practice today, but there are 2 generations of entrepreneurs we lost to the S&L, dotcom and real estate booms. Two generations see every problem as "what new dotcom solution will raise enough to live on while we accomplish nothing?" At least in services.
So the real estate flipping is a better example, except I have no experience with that. I do recall reading about a London real estate player saying in an interview the best return was turning 2 bedroom, one bath flats into 2 bed 2 bath flats. So many strangers were sharing flats and wanted private bath that for return on investment, that was the best move.
I know someone who did very well flipping houses in the 70/80s in LA, it was just the closets. When houses were built in the 1920s, people had one nice suit and a couple of shirts. By the 70s they could fill a truck with just their clothes. Old houses with big walk-in closets flipped fast at highest prices.
I am not sure how they spotted that, probably just listening to the wives (the decision maker) when showing houses.
So in explanation 1, 2, and three, in both goods and services, the price is in the perceived value. The charge is for "K solved" not labor theory, cost accounting or "should."
Also, once you arrive at a specific instance of K, it is important for you to announce this and give it away for free. In this way, if we are lucky, there will be thousands to whom we deliver the tool for free and those get no results. Those are the people who download our instructions for free and DIY. And they fail, so it proves companies need us, like there is only one Lowell Thomas. Of course since the white paper is complete and accurate and constantly updated with best practices, some people will be very successful with out us. This is good because it also proves we are right. In this way we get all of the business we can stand, at top rates. Let me summarize, once you discover an instance of K, you sell it but you also give it away for free:
1. There is the market that buys from you at top dollar.
2. There are those who do not buy, yet download your plans.
Of the non-customers who download, some will succeed, proving your plan is right. Also, many will fail, proving they need you to execute it properly.
Of all of this, social conditioning is the biggest problem. Even if someone figures out K, give it a week or two, they will be back to adding in "blast emails" as part of the solution.
The key to getting to K is to shake social conditioning.
Feel free to forward this by email to three of your friends.
6 comments:
Not really related, but a realization based on this - most people that try to start import businesses will fail but a few will succeed. Some of those that fail will become customers and start paying someone - John Spiers or someone else, perhaps through working as an employee to learn the trade, to get that knowledge and experience. And the rest will read the book and dream of owning their own business but not go any further.
So, say I'm writing legal software for lawyers (or doctors, construction managers, bankers). I would ask different lawyers, "what are you 2 or 3 biggest/hardest/costliest problems you face"?
If I think I could solve one of those problems with my expertise software development, I write a guide on how to do it and post it online. I also give all or part of the software away for free (or plans on how to build the software) that solves that problem. The software will be bare bones and only solve that one issue or will be simple instructions on how to build the software. Would that be a plan you would recommend?
thank you for your patience and help in answering these question
Yes, a few years back I tried to find out why more people, given the resources available, do not start businesses. The main reasons seem to be along the lines of in some why trapped by circumstances, they cannot leave the known for the unknown. And to be sure, starting up a business is a great unknown.
Your wistful summary ignores the very active dimension of thesis, antithesis, synthesis. My offerings are one tiny contribution to the lifelong collection of any given person who encounters my works. Just as there is no telling what kind of business a person will start, there is no telling what use they will make of information.
Business is one thing that IS for everyone, one way or another, and as long as people keep affirming what I present (largely learned from others) I'll keep throwing it into the mix.
As to the service to the lawyers, the plan I would recommend is get customers. If and when you get customers, and you figure something out that is as Steve Jobs said "insanely great" then share it with the world. In your summary it sounds backwards to what I recommend.
Until you have people paying you money you do not have a product or service. You have "samples" or "ideas." All of the other parts of the above post are AFTER you have proven the concept by paying customers.
IBM open-sourced its patents so it could get more business. Patents tell the world how to do something then forbid you to do it. Kinda crazy. IBM has learned to tell the world how to do something, and by open sourcing picks up business from those it can spot the K in regards to the patent.
This is another element of "free" in the free market.
More people don't start businesses because they think it is "risky." Just pick up any book on business in the book store - what does it almost always say?: "Entrepreneurs must be risk takers." Which we know is false, but is a terribly persistent notion. Public schools do not teach anything dealing with entrepreneurship as well. Also, the "sure" option in making a living is to go to law or medical school, or some other professional school. Why take the risk?, when you can go into a vocation that has more of a "guaranteed" high return - so they think. People also think that they need to come up with a earth-shaking great idea for a product to start a business, which isn't really true either.
Great! Awesome feedback. So, in my situation I have clients paying for services (software development). I'm just trying to get to the next level (finding that 'K' product/service that is most desperately needed, instead of charging the hourly market rate for A-Z). I guess the simple answer is just asking current paying customers what their 'K' product/service might be and perhaps writing a guide if I'm able to solve that problem.
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