Theft and Death are Not Sustainable, For Now

People will only give you their money in exchange for things they need or want. Full stop. That’s it.

As a business model, the only other way to separate people from their cash is either theft or death. Since I don’t recommend either of these as sustainable options, we’ll discount them until that changes.

So then, if you want to make a lot of money it would make sense to sell something that a lot of people want. (Shiny tracks)

Well. What do people want?

The quick and dirty way to figure that out is to collect 200-500 reviews for the product or service you’re selling. It’s ok if you don’t have your own reviews yet. Go to Amazon or Google and copy/paste reviews for products or services similar to yours.

Once you’ve got all your reviews collected, read each one carefully. Look for the themes that are true across many of the reviews. What are the five to ten good things people like? What are the things they hate?

This will take some hard analytical work. There’s a good chance it won’t be the obvious reasons. You might have to infer the underlying motivations for people’s love or hate. But trust me, it’ll be worth the effort.

From your own offering, cut out the bad things and build in the good ones. By the end of this process, you’ll have something you can be truly proud of. Now it’s time to go to market. You’ll have the answer to the question people really were asking.

Enjoy rolling around in your three-foot-tall piles of cash.

– Zac Smith, VC  

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How to Get Hit by The Money Train

Getting hit by a train is easy and it’s a lot like making money. For example:

Step one, find active train tracks. 

You can do this by checking to see how much rust is on top of the rail. If the rail has mixed rust spots on top and the bare metal is dull, then trains don’t use these tracks very often. (Low train volume.) Which means you could end up waiting awhile. For faster results find train tracks with bright shiny rails. 

Step two, resolutely stand in the middle of the tracks.

Obviously, there won’t be a train in sight at this point. (You couldn’t have done your due diligence inspecting the rails if there had been one.) But it won’t take long. You selected tracks with shiny rails. Now it’s just trusting your choice and waiting. 

If you don’t immediately see a train coming the greatest temptation will be to move in search of new tracks. Don’t do it. I know you heard about cousin Mike getting hit by a train right after he stepped on the tracks. That’s just called getting lucky. You can’t time that kind of thing.

Amateurs run alongside trains trying to edge ahead. Their plan is to hurl themselves in front of it at the last moment. That’s just sloppy. You can’t honestly expect to get nice centered track placement like that. 

Step three, embrace the train when it hits you.

Congratulations all your hard work paid off. When that big beautiful train finally comes barreling down on you don’t forget to spend just a moment celebrating. You did ask for this after all.

And that’s it.

Now that I think about it, though, getting hit by a train does take some effort. 

And to be honest, I can’t rightly recall what it has to do with making money.

Maybe I’ll remember by next week.

– Zac Smith, VC  

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Bake In Staying Power

Last week we talked about why always doing what’s in the best interest of your customer is always the right thing to do. Even when it costs you money in the short term.  

The most common objection to operating this way is that your company can’t afford it.

In my mind, there are only two reasons that could be true. Either you’re a greedy short-sighted weasel. (In which case I have nothing nice to say to you.) Or you legitimately can’t afford to take a loss on any sales without putting a financial hardship on your business because your margins are just that tight.

If the latter is true, I have bad news. There’s no magic marketing pill you can take to fix it. The solution will be found in your business plan.

You have to have a healthy enough profit margin that you can take individual losses without flinching.

There are a couple of two ways to do this.

1. Raise your prices. 
If you’re in a category that’s not been commoditized, you bake in enough profit that you can deliver such outstanding service or products that your customer base never questions the price.

2. Optimize your logistics.
If you’re in a category (like gasoline at a gas station) that is treated with commodity pricing, odds are it’s not realistic to raise your rates. Instead, you have to figure out how to offer the same thing as your competitors, but in a way that costs you less to deliver. Enter Walmart or Amazon.

Either way, if you do option one, two, or both, you’ll be increasing your profit margin. And a healthy profit margin is the first step to a healthy business with staying power.

– Zac Smith, VC  

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When to Correct Your Customers

Always doing what’s in the best interest of your customer is always the right thing to do. 

And I’m not talking about morally “the right thing.” I’m talking about it’s the right thing to do for your business.

For example, my wife and I were shopping at Costco this week. In the bakery we saw some bags of particularly good-looking bagels. It was slightly more than I wanted to pay, but the options were enticing. Cinnamon raisin or parmesan encrusted? Should we get sweet and traditional or savory and stylish?

I looked at my wife, and she looked at me. Tension thick in the air. I swallowed hard. Beads of perspiration formed on my brow. I had heard the woeful tales of bagel regret and now it was staring me in the face. Our bready enjoyment for at least the next five days hung in the balance. 

We played it safe and got cinnamon raisin.

Later at checkout, as the cashier was ringing up the bagels he said, “Did you know you get two bags of bagels for this price? And you can mix and match. Did you want a second bag?”

My wife and I shared a look of surprise and delight. Hallelujah! Costco snatched us from the jaws of bagel regret. Because there would have been that little voice whispering in the dead of night, “I bet the parmesan encrusted bagels were better.”

Question. Did the cashier have to inform us that we were about to overpay for our baked delights? No. He could have let us go on our way and Costco would have made a better profit than expected on that sale. But that’s not how Costco trains it’s employees. They have a culture of doing what’s in the best interest of the customer. Because ultimately, it’s also what’s in the best interest of Costco.

The tempting thing is to not correct a customer’s mistake when the mistake is more profitable for the business. The reasoning goes like this, “I didn’t trick my customer. I wasn’t trying to deceive them. They should have been paying better attention. My win.”

But it’s not a win. Not in the long term. Because the companies that always do what’s in the best interest of their customers are the ones that have real staying power.

Now, how do you make sure you can afford to always do right by your customers?

We’ll talk about that next week.

– Zac Smith, VC  

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How To Quickly Catch Logic Gap

Logic gap happens when you (the writer) are so close to the subject matter (what you’re writing) that your brain automatically fills in words or ideas that aren’t there. Logic gap smooths out the message. It makes one idea perfectly transition into another. Through your eyes, anyway.

In real life, logic gap can leave your reader or listener perplexed or pull them out of the message. Making them scratch their head or miss the point of what you wrote.

How do you combat it?

The usual solution is to read what you wrote to another person in order to get their outsider’s perspective. But there’s a danger even in this. Some logic gap is so bad that, without realizing it, you can add words as you read.

To quickly catch logic gap, have a second person read back to you what you wrote.

This works wonders because your test reader doesn’t have all your ideas and predilections swirling around in their head. They also don’t have the inflection or cadence you’ve been imagining for your words. All they’ve got is what’s on the page.

Happy logic gap hunting.

– Zac Smith, VC  

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Get Your Customers to Improve the Customer Experience

Southwest Airlines did the impossible with their customer experience. Just not in the way most people think.

Yes, they have impeccably trained staff. Yes, they get you to your destination on time and without losing your luggage. Yes, they have the best ticketing policies in the industry.

But that’s not what I believe is the real magic.

Look, every airline would agree, there’s one touch point they have no control over. And that’s how their customers treat each other.

Despite their best efforts at staff training and friendly policies, all it takes is one jerk on the flight to ruin the experience for everyone else.

An average airline says, “Nothing we can do about it. We’ll just keep doing our best and the customers will see that we didn’t do anything wrong.”

An exceptional airline like Southwest says, “Let’s get in front of this problem and stop it before it happens.” And so they did.

Like magic, all your fellow travelers become courteous and helpful. Instead of tapping their foot and huffing impatiently while you struggle to stuff your bag overhead, it’s likely the person behind or in front of you will offer to help. Same goes for exiting the plane. When the “fasten seatbelt” light dings off, instead of being the starting gun for a mad sprint to be first off the plane, everyone happily takes their turn.

Southwest took the two most stressful parts of flying, getting on and off the plane, and made them pleasant experiences that’ll restore your faith in humanity.

How’d they do it?

By harnessing the power of the Benjamin Franklin effect.* Which, in short, is a cognitive bias that causes people to like someone more after they do that person a favor.

Southwest starts before you even get on the plane with their boarding process.
Click here to watch a short video explaining how they board.

Here’s what’s important in that video. They only have one numerical marker for boarding positions every five numbers or so. (1-5 here, 6-10 here, and so on) Which means you have to interact with your fellow flyers by asking them what number they are to figure out exactly where you belong in line.

This accomplishes three important things:

  1. You have to acknowledge and speak to your fellow passengers. Looking someone in the eye and engaging them makes them human. And it’s much harder to be rude later.
  2. By asking a simple favor, “What number are you?” your flight mates are now more predisposed to like you.
  3. The person next to you in line will be the same person you’re in line with until one of you takes your seat. Which means all through the boarding shuffle this unspoken relationship takes root and waits to manifest through courteous actions.

So, what’s the take away?

This won’t replace good old fashioned customer service procedures. But if you’re looking for the advantage in your category, this is the kind of thing that’ll edge you ahead. 

If you can figure out even the smallest way for your customers to do a favor for one another, you’ll control the impossible. Your customer experience ratings will soar. And you’ll bring just a little bit more magic to the world.

– Zac Smith, VC 

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