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.
NOTE: This appeared to be a Q&A session. Although the questions did not come through on the recording, I speculated on what some of the questions might be based on Seth’s answers.
Q: What to do when the industry I am in is declining or failing?
A: Seth would argue that, in almost every failing industry, the people in the top get hurt last. If we are in a leadership position, it is possible to milk this cow for a long time by committing to marketing ourselves quite aggressively. We might also need to change certain parts of how we conduct our business to adapt to the changing market environment. It is still possible to continue to do things to increase our market share as the size of the market shrinks. That was the number one point.
Point number two is that the decision to quit an industry is a strategy decision, not a moral decision. If we decide to quit and to do something else, we should make that decision because we want the thrill of scaling and a growing market, not because we cannot think how to make our existing business sustainable going forward. If we love what we do, keep doing it and grow it differently because most industries do not disappear just overnight.
There is no question that, within a declining industry, more opportunities tend to tend to belong to the person with a track record. In those industries, people become more conservative, so they are more likely to give those opportunities to people who are perceived to be a safe choice. If we are in a declining industry (or a sinking Titanic), we do not need to quit it today. However, we need to see that it is in disarray and the deck chairs are up for grabs. If someone, who is calm, stands up straight, walks in, and starts collecting deckchairs, no one is going to question them.
Q: What does it mean that new venture or brands make no money?
A: No money means every time someone pays us, we put it back into growing our company. What market likes to buy is expensive stuff from cash cow brand leaders. Buying from the cash cow brands represent a safe choice, the one that will not get blamed. That is why the insurgent brands never spinoff cash. Insurgent brands always put the cash into becoming the cash cow brands. After they become the cash cow brand, most of them cease to become interesting. That is because their customers do not want them to do things that are new and risky. Those brands suck because their customers suck.
Rather than waiting for investors to fund our business, it is more productive to do our dog-and-pony show for customers. The dog-and-pony show is going to be very similar for both audiences, but the customers can give us money tomorrow. When customers give us money, we do not have to pay it back like with the investors.