Creating Scarcity, Part 1

In the podcast series, Seth Godin’s Startup School, Seth Godin gave a guided tour to a group of highly-motivated early-stage entrepreneurs on some of the questions they will have to dig deep and ask themselves while they build up their business. Here are my takeaways from various topics discussed in the podcast episodes.

  • When people choose to do business with someone or an organization, they are asking whether they are willing to hire the product or service to solve a problem they have. Often our problem is more of emotional by nature. We want to impress our boss. We want to impress or do good for our family. We want to connect with someone or something because we are lonely. We want something that can reassure us because we are afraid.
  • Differences between marketing and manipulation are… Manipulation is where we get people to buy something, and they regret after they bought it. Marketing is where we get people to buy something, and they are glad they did afterward. The difference is the “story” we tell our prospective customers, and the story must be ethical and resonate with the people who need to hear it.
  • If what you do is catching on, what is preventing someone else provide the same product/service at half of the price? The solutions are the lock-in and network effects.
  • The network effects form when something you built works better when more people are using Fax, email, are social media examples of something works much better with the network effect. When designing our products and services, we should consider how to build features that can encourage the network effect.
  • When thinking of pricing and value creation, it is useful to think of a leaky funnel with the paying customers coming out at the bottom. There are costs involved every step of the way from acquiring prospects and to turning them into paying customer.
  • “What problem is my customers waking up every morning with?” is a useful question to ask. It all comes down to… Do people know you? Do they trust you? Will they listen to your story? Does their story resonate enough with yours, so they are willing to give you a try?
  • Once we have accumulated a viable customer base, our job is not so much about finding more customers. Our job is to find more useful and interesting products for our customers. We want to leverage the connection economy to have our customers talk about us and market our products/services for us. Furthermore, we want to leverage the connection and move into the position of being the arbiter of the community standards, which is becoming a world of one.