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 we sell, we need to match the right thing to the right medium. Take Amazon as an example. In the early days, Jeff Bezos figured out what Amazon needed to sell to stand a chance of succeeding.
- First, selling something online means it needs to be something we do not have to touch it to know what we are getting. Second, Amazon needed to be able to carry many items. If it is going to be the best in the world of merchandising, it needs a huge variety to defeat any other store. Finally, Amazon needed to price it so that the customers know they are getting a discount. Amazon wanted to work with customers who are willing to trade the satisfaction of touching something and the gratification of getting it right away, in exchange for variety and discount. When we go down that list, books became an obvious choice for Amazon. When we think about what we want to sell, we need to keep in mind the medium that is going to be a natural fit.
- At the heart of all transactions, it is trust. We are more likely to trust a store if we can visit it, see the items, and take it with us when we leave. We are more likely to trust a website if we can try our free samples before we pay. The transactions on-line vs. off-line are fundamentally different because our trust varies fundamentally different depending on the medium. Again, this means that we need to make sure the merchandise or service matches up well with the medium or channel.
- Selling certain merchandises can require some “taxes” paid up front. For example, selling fashion to the major retail chains typically requires the designers/sellers to put on a fashion show. For the fashion industry, the shows are the medium that fits well with the goods. Without seeing the fashion on display at the fashion shows, the store buyers will not likely respond to the designers. This method of selling maybe absurd to some, but those are the “taxes” we need to pay to participate in that industry. These are all complicated pieces that fit into what story we are telling the current and prospective customers.
- Every organization needs someone who can run the operations, and that is the chief operating officer (COO). In the beginning, that person who runs the operations is the entrepreneur herself. Over time, the entrepreneur needs to let go of the operations so that the company can operate on its own without her intervention. The COO’s job is to do the operations stuff, so the entrepreneur does not have to do. As a result, the entrepreneur can add value elsewhere in the organization, such as marketing and innovation. The COO’s might not run operations the same way, but they will run an operation that is effective and more. The entrepreneur and the COO build trust with each other.
- A COO’s job is to use the money the organization has and the promises it is making to make the promises come true. With a COO, the entrepreneur’s role is to run marketing or innovation and leave the operations to the COO. The COO needs to be able to tell the entrepreneur if he/she is making a marketing promise that the organization cannot keep. The COO also must have the authority to take the resources from the organization, if those resources are needed to keep the promises made to the customers. If an entrepreneur is serious about getting rid of the day-to-day operations and focus on the higher value stuff, the entrepreneur must be able to work with a trusted COO.
- An advisory board is a different entity from the typical corporate board because it serves two functions. One function is to give us advice, and the other is to make us look good to other people. We need to be very clear with ourselves and with the board member about its purposes. If people say yes to be on our advisory board, we should give them the recognition by making a big deal out of our advisory board or else do not bother having one. The other alternative is to leverage this group of people who will tell us the truth. In that case, the question is should they meet as a group or should the entrepreneur engage the board members individually. We need to figure out what we want the relationship to be between these advisors and the work we are doing.