Desperately Clinging To A Piece of Wreckage – And Missing The Lifeboat

When I was a manufacturer’s rep in Chicago I had an opportunity to eat a lot of humble pie. For a year and a half I pounded the phone relentlessly, faithfully, digging up big opportunities and bringing them to the companies I represented.

Any one of these deals would have added a bare minimum of a few hundred bucks a month to my commission checks, and back then, even that would’ve been a godsend. One by one, the companies I repped would systematically screw them up.

I became more stressed, more desperate, increasingly in denial about what was and was not a good opportunity. I developed tunnel vision, becoming oblivious to dangers around me.

One day I ran across a massive opportunity. US Steel in Hammond Indiana needed an optical sensing system that would optimally shape massive hunks of molten steel, minimizing the waste that had to be cut off when it was processed.

A slight improvement would save the company several million dollars a year. They had the budget for it, the only problem was finding a system integrator with the expertise to design and install it – it would be a custom piece of equipment.

I knew an integrator who could probably do it, they visited the customer and submitted a quote. $1.1 million, on which my rep firm would get 10% and I would get half. A $55,000 commission check was more than I made all year. I was counting those dollars. I was already bragging to my friends about this.

Not only was I salivating over the money (I was going deeper in debt every single month) but this project was so cool. It was hands down the coolest thing I’d ever encountered.

Wise Words For The Rank Beginner

Yeah, I know, I was supposed to tell you how easy and effortless it was gonna be. Well there’s plenty of other newsletters that will happily tell you that, I won’t bore you with a list of ‘em here. Personally I’d rather the guy tell me what it’s gonna take so I can get on with the real business of earning some dough. For those of you who are still with me, I have this advice:

Pick battles you can win. You need to find a Land Of The Blind where you can be King. The list of markets that have no more than 0 to 1 savvy marketer is looooong indeed. If we made a list of every niche market that exists, 80% of them would not require you to possess very much “Art Factor” at all. A good criteria for choosing a market, then, is little or no Art Factor required.

Now, in some sense every market, even mining for copper, involves an Art Factor somewhere. But it’s not necessarily in the marketing. If you’re mining copper in The Congo, the Art Factor may be all about hiring miners at 10 cents an hour when the guy down the river will pay them 25 cents an hour to run around with a machine gun and steal corn meal from starving villagers.

You get yourself a half-dozen issues of Copper Miner Monthly (actually you NEED to do this, not optional!) and curl up on the couch for some enjoyable reading. You make an astonishing discovery: There ain’t a soul in this industry who knows how to market anything.

These guys wouldn’t know a good headline if it sat down on my picnic blanket and belched.

Look, here’s a company that spends $200,000 a year on marketing and they only get one new customer a month. Hey, that means if I can get them a new customer for less than sixteen grand, they’re getting a good deal.

They don’t know how to generate leads, their sales people only know how to sell on price, they don’t know you can split test ads, every single website in the entire biz is brochureware and their sales people don’t answer the phone at lunch time.

Oh, and at the Copper Mining Trade Show their sales guy blabbers on and on for a half hour before he even asks you the first question.

Congratulations, sir, you have just found a market where you can cream the competition with textbook marketing techniques and no Art Factor. It’s the land of the blind, and you get to be king.

Be a Marketing Maniac. If you’re going to crawl inside this thing and live it and breathe it… if you’re going to have a feeling for it, then you need to be marketing obsessed. The marketing obsessed person looks for vital clues about human psychology everywhere. When you’re a marketing maniac you find stuff in today’s newspaper, in fundraising campaigns, in today’s mail… you go to the doctor and while he’s checking the lymph nodes under your groin, you’re asking yourself, “How did he manage to sell me on this idea of feeling me out down there in the first place?”

You know you’re a Marketing Maniac when: Your relatives and friends start giving you their junk mail because they “thought you might be interested.” And you find, oddly, that you are interested. “Thank you, Frank. I mean, really Frank. Thank you very much for thinking of me.”

Congratulations, sir, you have been inducted into the Marketing Maniac Hall of Fame.

Know Thyself and act accordingly. You absolutely need to make a list of microcosms you’ve belonged to in your life. Every club you’ve been a member of, write it down. Every political organization, write it down. Every job and career you’ve been in, write it down. Every subject you liked in school, every sport you played, every magazine you’ve ever subscribed to, every cause or religious organization, every hobby, it all goes on the list.

You now have a very large number of markets you can go investigate. So many that if you really followed my instructions and wrote all this down, you’ll have to narrow this down somehow. And that’s what I’m gonna talk about next.

Do They Spend Money? How Much? Going back through the list I just gave you… do people spend money in political organizations? Uh, yes, they most definitely do. Could be a place where you could be paid to generate results. Could also be a place where you test your marketing chops as a volunteer, for free. How about all those jobs you’ve had, do people spend money in any of those professions? Do they buy professional certifications? Do they spend money on advertising? Which ones spend the most?

The Five Power Disqualifiers. John Paul Mendocha has reduced the sales process to five essential requirements that are always present when a sale is made. I know of no one else who has distilled sales and marketing to such a small number of fundamentals:

1. Do they have the money? Some markets consist of people who have no money.

Sometimes the very market itself is defined as a herd of moneyless people. Doesn’t mean you can’t make a buck selling rent-to-own furniture, but know ahead of time there’s going to be an Art Factor in getting blood out of them stones.

2. Do they buy into your Big Benefit Statement? If you’re just going into a market, the question is, what kind of Big Benefit will they buy into? What kind of deal would they snatch up in a hot second? What Big Benefit are the other guys not promising?

3. Do they have a bleeding neck? If you wanna make the big bucks, your product has to deal with something that involves one or both of the following: (a) Pain and suffering, and / or (b) some craving that borders on the irrational. Intense pain, intense pleasure.

Stuff that hits really close to the jugular. Serious money is always found in those places.

And before you ease the pain, you must intensify it. The guy says to you, “It hurts really bad, right here.” You point to it and say “You mean here?” and you smash it with a hammer, real hard. He yelps and sees stars for a moment. He nods and takes a big gulp, choking back tears. Yup. Good market for you to go into. What’s the biggest, nastiest problem you’ve ever solved in your life? That’s a real good start, right there.

4. Can you affordably reach the decision maker? Many markets pass the other tests but fail #4. I’ve got a friend who lost a big bundle trying to sell a seminar to MD’s awhile back. They had the money, they bought into his Big Benefit Statement, they had a bleeding neck, but… it was almost impossible to get a piece of mail into their hands.

Once they get out of school, most MD’s stop reading. They have their staff sort all their mail, and what Helga thinks is a bleeding-neck issue and what makes the Doc’s neck bleed, two different things. If you’re a keyword jockey, Search Engine Marketing has its own set of limitations: You can only cater to a problem people know they have. If you’re trying to sell something that is somewhat generic but you want to specifically target doctors, buying clicks probably won’t work very well. Maybe you can commission a Pharmaceutical Rep to bird dog some leads for you.

5. Does what you sell fit in with their overall plans? If your service requires major brain surgery on the part of the customer, he ain’t gonna take your offer unless brain surgery is literally a lot less painful than the alternative. Whatever you sell needs to harmonize with natural, existing forces – both on the inside and outside of your prospect’s world. My dentist’s online Yellow Pages listing says, “Introducing the New MicroPrep Air Abrasion Cavity Preparation System with Gentle, Drill-Free Technology”. As an enticement for getting new patients, I think that sentence leaves a lot to be desired. But the Marketing Maniac notices something else: Dentists are “into” buying expensive pieces of equipment like this. Such purchases are considered vital to a practice’s business strategy, and believed to be effective for attracting customers. A good business for somebody to be in, maybe you.

The most important thing John Mendocha would tell you about the 5 Power Disqualifiers is you want to plow through them as fast as humanly possible. Sales is, first and foremost, a disqualification process, not a ‘convincing people’ process. John’s style: Shoot the sick and the lame early in the game, and only deal with the healthy ones left standing. Test fast. Fail fast.

Move on. Next, next, next.

I have a number of customers and coaching clients who spend $10,000 to $20,000 per day buying clicks. One of them only promotes affiliate products. That’s right, Google Cash to the tune of sixteen grand a day. The way they do it is they’ve written software that tracks ROI on various ad groups such that in 45 days or less they know whether the project is profitable or not. If it’s not, they cut it loose and move on to the next one. The #1 job of their software is disqualification.

Do You Have a Feeling For…

The title of her biography A Feeling For The Organism refers to her ability to seemingly crawl down through her microscope and get inside the cell – not just observing what was visible, but what was implied. Her intuition was so complete, she always seemed to know what lay around the next corner. She recognized the behavior of cells the same way you and I hear footsteps upstairs and recognize the sound of your spouse’s or kids footsteps.

Forty years later she claimed the Nobel prize for science.

OK, so what world are you able to crawl inside of, the way Barbara McClintock crawled inside of corn maize cells? Can you crawl inside your customers’ minds that way? Can you imagine you’re a web page, readers listening as you talk to them and you know how they’re answering back? Can you become so absorbed with your customers that you become one with them?

Whatever microscope is so fascinating to you that you can crawl down inside it and imagine yourself living down there – if it’s an audience that has money to give, that’s the way you’re gonna make a million dollars.

Will “absolutely anybody” be able to do what you do? Not on your life. You can’t buy marketing for your business on a showroom floor the same way you buy a car. USP’s just don’t roll off assembly lines every 45 seconds. There will be few who can rival you. And nobody will be able to sell somebody a road map to your pot of gold for $49.95 either.

Fact vs. Fiction in the Guru Biz

While I was reading Joe’s rant, my neurons dredged up an old Amway story. One time I was at this regional rally, there were maybe 300 people there. Somebody on the stage said, “I want everybody who showed the plan 15X or more last month and [I think there were a couple of other criteria, like listened to a tape every day and did their 100 points of volume that month] to stand up.

Out of 300 people, there were two people who stood up: me and one other guy. That’s it.

I knew him. He was a lot like me – an exemplary student, working real hard, following instructions to the letter, and so far as I could tell, not getting the kind of traction he really needed to get either. Clocking in the miles and not seeing results.

I was beginning to wonder if this thing worked at all, and I remember thinking, “Hmmm, even if this thing doesn’t really work like they say it does, there’s only two people in the room who actually know it: me and him. So long as everybody else thinks this works, they’ll just keep buying tapes and coming to all these rallies and never be the wiser.”

Which is exactly what Joe is talking about in his rant – people selling air instead of selling results.

See, if most people never do anything, then it’s much, much easier to sell pixie dust and unicorns and fairy tales than to sell things that actually work. All you have to do is issue a refund to the 5% who actually try it and determine it doesn’t work. You still get to keep the other 95%. There is an entire class of ‘mail order buyers’ who purchase information like this and never use it… who have been deliberately cultivated by their preferred gurus to behave that way.

If I were willing to do that, life would be a whole lot easier… for a little while. The problem with that is that eventually it does catch up to you. Eventually everybody does figure out it’s all smoke and mirrors and the whole thing comes crashing down. And in the long run, I would attract losers and wannabes to myself rather than peak performers. I wouldn’t have the privilege of working with the Roundtable members and cutting edge online marketers like Bullock and Ari and Glenn. (Oh, I forgot to mention – Joe did purchase Glenn’s system, thank you very much, and he’s going to have an intern implement it. Competent intern, no problem.)

I wouldn’t be on the leading edge, nor would I get emails like this one… let’s grab the most recent one in the folder. Came in on Wednesday:

Perry,

Just thought I’d take a moment to say thanks for the advice I’ve received from you this past year and a half. I had one VERY expensive adword campaign before I ran across your coaching information and put it into practice.

When I got started with your advice, we were launching a brand new church in Fort Wayne.

Most of the time, churches start with just 50-60 people. Sometimes, when a guy really has a grip on marketing (I have an MBA in it), a church might launch with 200 or so folks.

Last September 2005, with the coaching we received through your materials, like the Definitive Guide, not only did our costs drop dramatically so we could use the excess funds in other ways, but our church launched with 579 people on our first service. It has been soaring ever since.

In fact, since then, several businessmen in the community have approached me to help them launch adwords campaigns.

And, the success from those businesses actually led me a few months ago to start a company that specializes in putting adwords campaigns together for small to mid-size businesses (the ones that Marketing Sherpa reported are either being shrugged off like fleas on a dog or not even bothered with at all).

Anyhow, I’ve figured out a profitable way to set up campaigns and run them for guys who want to get started and find the success I’ve discovered. Of course, I am constantly refining the process, which is what led me to looking at your latest stuff… which I discovered I had bought twice!

Well, I thought I’d just take a moment to thank you. The church is soaring, my new adwords firm is taking off quickly, and life is good.

Thanks,

Ray R. Harris

Lead Pastor The Pointe Church and now CEO of SitePropeller, Inc.

http://www.SitePropeller.Com

Is marketing guru-dom all it’s cracked up to be? I for one am not complaining, but as I’ve said in other times and places, I’m definitely a cat on a hot tin roof. When your job is the dissemination of fresh ideas, then buddy you’d better be producing good stuff, consistently, month in and month out. I remember a conversation with Jonathan Mizel about some of his ‘side businesses’ and he said, “I finally got sick and tired of my students making more money than I was.” Which is why he doesn’t keep a high guru profile anymore. He makes a lot more money hiding in his cave and quietly, invisibly, selling non-info products to non-info marketers.

As a matter of fact I couldn’t tell you what his websites are even if I wanted to. He does it all under the radar. In the vastness of the Internet, there are a lot of places to hide. Let’s be frank: You generally make a lot more money keeping secrets than you make revealing them.

Doesn’t that kind of make sense?

Can you hire Mizel? Yes, I’m sure you can, if there’s enough money in the deal. But don’t show up with ten grand and expect him to play ball, ‘cuz he won’t. Can you hire me? Yes, I’m sure you can. But there’s better be a very realistic possibility of generating a half million dollars or more, and if the $363.00 half-hour consultation makes you blink, you’d better look elsewhere. Oh, and I have to like what you’re doing. If my gut doesn’t feel cozy about it, no dice. (More about that in a little while.)

The Art Factor. Joe’s right, a lot of people disguise the art factor as systematization.

But there is an art factor. Case in point: Can I hire somebody to write this newsletter I’m writing right now?

Absolutely not. I doubt it would ever sound like me, no matter what whiz-kid writers I hired to write it, and no matter how much money I paid them to write it. Some years ago a big publisher sold a bunch of subscriptions to a brand new newsletter, to be written by a very famous business guru, who in the 2nd or 3rd month of publication decided he didn’t really feel like writing a newsletter every month. They attempted to get the thing ghost written but the whole enterprise soon hit the skids. Their only recourse was to issue refunds to everybody.

Could I teach people how to write my newsletter? Well, I might be able to teach you how to write your newsletter but I could never teach you how to write mine. Why? Because my newsletter is me on a piece of a paper. Your newsletter is you on a piece of paper. That is not replicable, not duplicatable. Yes, there is definitely an Art factor in marketing, as I shall explain in a minute. BUT…. And this is a very big but – the Art Factor is NOT the thing that holds most people back.

What holds most people back is not the Art Factor, but the fact that they simply do not put one foot in front of the other and execute. If you’re going to be a marketing guru, yes, the Art Factor is probably crucial to your success. In the “Marketing Guru” market all your competition is absolutely razor sharp, they’re all in it because they’re obsessed and fascinated with the human psychology and with the game itself. If you don’t have a personality that stands out, you don’t stand a chance.

Who else in the marketing biz has a good print newsletter? Let’s see, there’s John Carlton… there’s Dan Kennedy and Bill Glazer… You wanna play in that sandbox, be my guest.

Meanwhile I might suggest that there’s less contested real estate to be had out there.

But most markets are not that way. Most markets have zero prime quality newsletters, not three. In most markets, it’s “In the land of the blind, the man with one eye gets to be king.”

Like where I came from, the industrial market – you only needed to have a little bit of personality to stand out.

The “Anybody Can Do It” Schtick

Any time someone says to you, “Absolutely anybody can do this, and become extraordinarily successful, and make millions of dollars, just by following these simple steps” you need to hang on to your pocketbook.

I do not believe that “anybody can do…” any specific thing. At least not to a level of proficiency that the world is going to richly reward. Can anybody build a Google AdWords campaign? Well certainly yes, anybody can sign up, write a few ads, insert a few keywords and set a bid price. Yes, any computer literate person can do that. And any reasonably intelligent person can be made reasonably competent at this, so long as they’ll sit down and pay attention.

But the extraordinarily successful people are the ones who, in their head, somehow ‘crawl inside’ of that ad campaign and feel what all those numbers and columns mean… who are able to sense what those visitors are clicking on and why they’re clicking. In their mind, the numbers come alive, they have meaning… there’s a mental and emotional connection to what goes on. They can look at somebody’s ad campaign and in 10 seconds know whether it’s put together right, or not. Those are the ones who manage $10,000 or $100,000 of clicks every month and make it profitable.

Now…. Who can do that? Can anybody do that? Well, I just don’t think that “anybody” can. A lot of people can. It helps an awful lot if they’re learning on their own dime. I sure have met a lot of people who can, who have a passion for it, who love to do it. It would be foolhardy of me to point to some specific person and say “That guy could never do this” – I don’t know that about him.

So, can “anybody” do AdWords? Yes and no. There’s the doing of the thing, and then there’s the Art Factor. The Art Factor comes into play when your heart and soul get connected to it, when you are able to crawl inside the thing and live in it and breathe it. It’s something that goes beyond systemization. If you have a passion for it, if you have the discipline for it, then yeah. You can pick up the art factor. Then you can do it.

I could say the same thing about…

Writing headlines

Developing a killer USP for your company

Crafting ultra-persuasive ad copy

Delivering a scintillating newsletter

Churning out a killer rant about something you’re mad about (I told Joe DiSorbo, maybe you never thought of yourself as a great copywriter, but that rant you just wrote sure was a great piece of copy! Anyone who knows how to write can write a great rant, when they get wound up. A copywriter writes a great rant on command.)

One of my favorite scientists is Barbara McClintock. McClintock was a biologist at Cornell who made startling discoveries that scientists are still ignoring today, 50 years later.

She was so far ahead of her time that for 20 years she hardly bothered to publish any of her work. She was tired of being ignored or belittled by her peers, who were stuck in rigid paradigms.

McClintock discovered that DNA is intelligent. It has the ability to re-engineer itself on the fly in hostile situations – in fact it’s literally pre-programmed to re-program itself. This discovery was so radical that they thought she was crazy at the time and her insights are mostly dismissed even now. Big Institutions funded by Big Pharma peddling materialistic philosophy would have us believe life itself is nothing more than a happy accident of dumb chemicals. But McClintock was perhaps the first to understand (even before Watson and Crick discovered DNA) that living things are organized by information.

The Marketing Guru Dog ‘n Pony Show: Rant From A Frustrated Estudiante

Got this rant from Joe DiSorbo, from Singapore:

From: Joe DiSorbo

To: Perry Marshall

Perry,

I find myself saying the same I was saying a year ago.

There are a bunch of tools and information out there and it looks like a jumbled mess. There is nobody actually selling results.

Let’s take your recent Renaissance Club news letter for instance. Let’s say I agree with you about Bullock and Livingston and I want to try their services. I can’t.

The best I can do is spend $1000 on more CDs and manuals so I can spend 41 hours trying to learn something Glenn is an expert at which I never will be. Let’s face it, Glenn is Glenn. It’s a waste of my time to try an recreate Glenn’s work (and time is the most important factor).

It is like trying to copy Michaelangelo. I will never be able to replicate his work no matter how detailed his explanations. Glenn’s systems works for Glenn because Glenn has a lifetime of education and experience behind it.

I t much more effective for me to hire Glenn to do it for me. However, this is not cost effective because Glenn is most likely making too much money as a marketer ($2000 an hour or something) because all the huddled masses are buying tape sets and getting no where. This puts the cost of hiring him out of reach.

Here is an example

******

New York to Los Angeles

*My need is to get from NY to LA.

I see an on line advertisement in this regard and that leads me to visit a Ford dealer. They tell me I can have this great car that will take me from NY to LA in 3 days or less, in style.

I say great, I’ll take one, how much are they?

Ford says “well, you can’t buy the car, but for $995 we will sell you this 41 hour CD set that teaches you everything you need to know to build your own car. If you need more guidance, then for $9,995 you can come to a seminar where a guy who actually built one will tell you exactly how he did it. At the seminar you will learn everything including where to mine the iron ore used for parts, how to build a headlight, and all the other thing you need to get from New York to Los Angeles.

I say, ” but I just want to buy the car. I really don’t want to learn how to make the car.”

And they say, “Oh, you’re one of those, you want to do it the easy way.

You’re one of those customer that wants US to do all the work. Isn’t it enough that we are telling you everything you absolutely need to know to build the car. You just don’t seem to get it. How ungrateful can you be?”

I say, “I just want to get from NY to LA. That is what I want to buy.

I don’t want to buy the plans to build a car. I have no interest in building cars. My interest is in getting to NY.”

They say “OK, we will sell you an actual car, but the price is $1,000,000″.

I say “$1,000,000!, why does one car cost so much. This is a nice car but that is way too much”.

They say “Because the ROI in selling the information on how to build the car is so lucrative, it doesn’t make any sense for us to waste time actually building cars for people unless they pay us $1,000,000 a car.

It is much easier to sell information because it doesn’t have any moving parts, it doesn’t break, has no warranty or guarantee, and customers keep buying it year after year.”

I say, “Oh, sounds like a good business. However, it looks like I’m taking the bus. By the way, I have some land off the coast of Florida I am trying to sell, are you interested?”

They say, “No, but we have a list of people that might be”.

*********

*I also want to talk about the “art” factor. The “art” factor is the one thing that is never mentioned in Internet marketing. Internet marketers disguise the art factor as systemization. Everybody acts like marketing is a system that can be replicated with the push of a button. The real truth is that the difference between the winners and losers is the art factor.

Internet marketers do not address the art factor for obvious reasons, because you cannot replicate it. It is personal.

You can give me a Picasso paint by numbers set and I can complete it, but it isn’t going to sell at Sotheby’s for $20 million. The same is true for Internet marketing. I can read every book or listen to every tape set on copy writing, web site design, Taguchi, or Guinea Pigs, copy it to the letter, but it still isn’t going to make me a million dollars.

The thing that is going to make me a million dollars are the intangibles, the art factor.

The art factor *IS* Internet Marketing.

If you don’t have the skills or time to become an artist then the next option is to hire the very best artists. That is what I am trying to do but even that is very difficult. Unfortunately, unlike in Michaelangelo’s day, the artists are now very expensive and practically out of reach.

Frankly, the Internet marketing community is selling air, nobody is selling results.

I think there is way more money to be made in providing actual results to business owners than just selling air.

My challenge to you is this.

Show me a way that actually delivers measurable results to business owners and I will show you 5 times more money in your pocket than your making selling info products.

See you in Chicago.

- Joe

To: Joe DiSorbo

From: Perry Marshall

Joe,

First, there’s much truth to the ‘art factor’ idea and that’s why I talk about giftedness and personality so much. Second, I would disagree with the perception that selling info products is more profitable than selling results. Actually Glenn is having the following problem with his survey product: It works, it’s color-by-numbers, there’s very little art in it, it’s step by step, systematic. If people use it, it works. You don’t have to be Glenn to make it work, you only have to be methodical and detailed about following his formula. You do have to follow the formula, and it’s involved.

The problem Glenn has is that it’s hard to sell. It’s NOT air. Air is easy to sell. Real work is hard to sell. He and I have discussed on a number of occasions the fact that he’s selling this *in spite* of the fact that he makes more money just sitting in his cave and using it than he makes by selling it. In other words he’s so hard to hire because he can make more money selling his own thing than selling someone else’s thing. The reason he wants to sell his research system is because he likes to teach, he feels he has something to offer, and it gives him some notoriety in a community where some notoriety can bring you more good things.

The reason Jonathan Mizel is not in the guru business these days is that when you’re a guru everyone rips off your ideas and sells them for cheap, and besides, he makes 5X as much money sitting in his cave selling non-info products to non-internet marketers. And that’s the God-honest truth. That’s what he’s doing now. And making a mint.

That said, you can realistically hire Glenn if there’s enough money in the deal for everyone involved. If I were you I would at least talk to him. And you can get the art you’re looking for just by hiring a top copywriter. Top copywriters (even non-guru ones) are expensive simply because the magic they create is so valuable. Yes, copywriting is art. I don’t think that’s very much of a secret.

A little paranoia, anyone?

Living in fear is always bad, but being oblivious may be worse.

As is my usual practice, the other day at the bookstore I was browsing magazines on topics I know notvery- much about, my own personal Foreign Culture Immersion at Barnes & Noble. I spied a brilliant editorial, reprinted for you on the next page, in Linux User Magazine.

Our conversation today isn’t really about Linux, but a preliminary word about Linux is in order. For those unfamiliar, Linux is the #3 operating system in the world. For desktop PC’s it’s a distant third behind Windows and Mac, but for web servers, it’s #1 by far. 60% market share, in fact. Google runs 450,000 servers on a modified version of Linux. My web server runs on Linux and there’s a good chance yours does too.

Linux is a programmer’s anti-establishment answer to corporate software. It’s his way to spit in Bill Gates’ eye, because it’s a free operating system built by untold thousands of developers who use, modify and freely share their code. It’s “the people’s operating system.” Linux guys hate Microsoft, and they love the fact that Linux is a headless monster that Microsoft is powerless to fight. Linux guys have been watching with glee as Google has risen to challenge Microsoft.

As you’ll see in this column by a Silicon Valley software developer, Microsoft has always had a healthy bit of paranoia about their place in the world, a caution that is strangely lacking at Google. Quotable quote: “I do worry about how things will be at Google when the money gets tight. And the money always gets tight. I’ve played the role of Banquo’s ghost at enough Silicon Valley startup feasts to know how these stories can end.”

I do believe in economic alchemy, and Google is as successful as they are precisely because they’ve created just that. Google is the fastest channel between buyers and sellers the world has ever seen. I also believe in abundance – not in some airy-fairy metaphysical sense, but in the sense that the true resources in the world are ideas and applications of ingenuity, not raw materials. We’re not running out of anything, we just lack wisdom.

Still our friend Mr. Allison here has a point: All free rides come to an end. What happens when Google’s stock tumbles and becomes the pariah of Wall Street? What happens when they hire a new CFO or COO or CEO who decides that ‘the beatings will continue until morale improves’? What happens when the think tank-time and corporate-funded brainstorms get shut down to make Googlers focus on their ‘core competency’? What happens when Microsoft engineers a way to put contextual advertising on the computer desktop and MSN AdCenter becomes a force to be reckoned with?

Aside from how this affects your experience as a Google advertiser (competition for Google will be mostly good for you of course) the larger question is: Do you have a healthy dose of Microsoft-style paranoia? Or are you blithely going along like Google assuming all will always be well? Is more than 25% of your business coming from one single place? Are you excessively dependent on a single source of traffic, a major joint venture partner, a major supplier, a single merchant account?

Your homework assignment for today: Make a pie chart of all those things for your business, then diversify to make sure you can’t be taken down by one well-aimed strike.

Oh, and a tip of my hat to Linux User magazine for letting me reprint this article. If you’re interested in any or all things Linux, subscribe at www.linuxuser.co.uk.

Stone For The Stone Soup: The Chasm Between Paid and Free

Since we’re talking about Linux, some words about the “free” and “open source” and “public domain” worlds will be helpful.

The concept of Open Source has been growing by leaps and bounds during the last 10 years. Linux is the most famous example – if you want a computer operating that’s entirely, completely free, complete with MP3 players and document editors and spreadsheets and web servers and everything else – you can download it all and install it on your computer. You could build computers, install Linux and sell them all day long, no strings attached.

If you can deal with the not-terribly-user-friendly nature of Linux (it’s not as easy to use as Mac or Windows programs) it’s generally fast and rock solid too.

The Open Source concept was extended to massive use by Wikipedia. Wikipedia is the world’s largest encyclopedia, it’s online at www.wikipedia.org. Anyone can contribute or edit articles, and the whole thing, like Linux, has been built by untold thousands of people contributing their expertise. You can re-purpose their content all you want, as long as you work within the GPL guidelines.

Both of these things are wonderful examples of people creating communities and creating huge public resources by sharing. (They’ve both also got the hairy downside of incomplete, fragmentary content and lack of supervision. There’s a lot of poor-quality articles on the fringes of Wikipedia, especially in controversial subjects.)

Linux and Wikipedia are governed by the GNU GPL (General Public License), which basically says: You can use it free, you can share it free, and you can change it all you want, as long as you make your modifications also available to the public for free, under the same public license.

So anything that gets mixed with GPL content becomes free, and anything copyrighted cannot be mixed with GPL content. There is a chasm between the two worlds. Copyrighted materials and programs can be used together but they must be kept distinct.

Now of course you can certainly sell GPL software or content if people are willing to buy it, but you can’t copyright it. The bottom line is: GPL content or software all by itself is not and cannot ever be the sole basis of a business. It is only something that you can build a business around. (And it may be an essential ingredient on which you build a business – the fact that it’s free allows you to invest your money in other things.) Wikipedia is still not a money-making venture, it’s supported by donations. In fact they hired lots of people through E-Lance and similar services to create the stone for the stone soup, so that it would gather enough momentum to be selfsustaining.

Public domain works from the U.S. Government are somewhat similar, except that you can edit or repurpose them and then copyright them. Because you can copyright public domain derivatives (but cannot copyright GPL derivatives) many people have created businesses from the public domain. For example, all the endless variations of Christmas song arrangements you hear have new copyrights by the arrangers.

Examples of Business Models With Significant GPL or Public Domain Foundation:

• Google: Eight years ago they were a teeny tiny startup company running on borrowed computers at Stanford.

There was no possibility of buying expensive servers or blue-chip software. It was built on a modified version of Linux instead. All 450,000 of those servers run on free software. And it runs on ordinary, plain-Jane, commodity computer hardware, not “professional” servers. (We discussed this in my interview with Stephen Arnold several months ago and Renaissance Club members got the CD.) This was an absolutely critical move on Google’s part; had they done things differently, history would likely have gone in a different direction.

• Infusion Software (www.ManageProSoftware.com) is the software that processes my orders and manages my customer database. I pay those guys $300 a month but they built the whole engine on Open Source software.

What I’m paying for is the combination of all those components and the service that comes with it. The fact that they don’t have to pay licenses to Microsoft or Oracle or anybody else is a big factor. (The flip side is, they have to have guys on staff who know how to put all the Linux pieces together.)

• There are many companies that sell legal or financial information built partly or entirely from publicly available government documents. Making otherwise obscure information readily available and easy to search or use is valuable in and of itself.

• The enormously successful TIVO digital video recorder is really just a modified Linux PC.

Creating a business out of any of these things is no less than the application of marketing alchemy. It’s all about the Value Add. What you add to the “free” thing needs to be a quantum leap, above and beyond the free thing itself, and it can’t be easily replicated. Is Google easily replicated? No. Infusion? No. Each of those companies has taken commodity hardware and software and built a giant Unique Selling Proposition with it.

One of the things you’ll always run up against when you spend any time in the “free” “let’s share everything” GPL world is people around you resenting you for building a proprietary business with their freely contributed content. The whole Linux world resents commercialism, which shouldn’t be much of a surprise; those guys really believe that software copyrights are evil and create a divisive world. Hard core business people (like Microsoft’s Steve Ballmer) think publicly created software is a communist threat. Well, if you’re going to get the best of both worlds you have to live with one foot in each.

Successful people of all stripes cultivate exactly that skill: Bridging dissimilar worlds. My life in MLM greatly contributed to my occupation as a sales manager, working with reps and distributors in the industrial, high-tech, B2B world. I’ve seldom even tried to explain to anyone how designing stereo speakers as a teenager taught me to juggle dozens of tradeoffs inside my head, all simultaneously, and now I use those same skills when I develop complex, multi-step marketing campaigns. My most successful students almost universally bring skills from an old profession and apply them in the online marketing world.

Long live the two-headed monster who spans the chasm between two worlds who don’t understand each other. By definition, that’s what innovation is. Those who can innovate, inevitably prosper.

About this month’s CD: This is an interview with Bill Hammond, a man who has mastered the art of bridging dissimilar worlds – selling marketing to attorneys, for example. Pay close attention to the piece about inferential thinking and the Cuban Missile Crisis – that story is worth the price of admission, all by itself.

Perry Marshall

Perry’s Bad-Boy Revue at the Board Of Directors Meeting

I’m on the board of directors of a startup company. This is no run-of-themill spare-bedroom online company, but a full blown corporate startup complete with bylaws, founding and first-round investors, a schedule for going public, the whole ball of wax.

A few weeks ago we had an official Board Of Directors meeting. After we got done talking about corporate and financial issues, the topic turned to the marketing strategy.

[Before I go into this I need to preface this by saying all of these people are razor sharp. The CEO has taken two companies from startup to public, various people around the table are bona fide experts in their chosen fields, specialists in this company’s particular market. All movers and shakers, many well-connected in the financial community – this is no bunch of slackers.

All of them are light years ahead of me on one topic or another, so before I tell you this story I must be clear, no disrespect intended.]

They know what they know… but they don’t know Internet marketing. Not like I do, being privy as I am to the inside details of literally hundreds of online operations.

So they’re talking and talking and talking. They’re talking about the website and the layout and the branding and the message and the features and the benefits… and I’m not saying a thing. And I’m a little miffed because a project I gave them to do got sidelined.

After about 20 minutes the other marketing guy at the table says, “Perry, you sure are quiet over there.

What do you think?”

Uh-oh. He asked, and I just couldn’t stop myself. Our happy little dinner meeting (complete with scalloped potatoes, chicken cacciatore and blueberry pie a la mode) suddenly experienced an abrupt change of direction.

“I think there’s some marketing intelligence we haven’t gathered yet, that’s gonna be a whole lot more expensive when we find out that what we thought was true about our customers, wasn’t true.”

“Uh, what do you mean, Perry?”

“Remember that survey I put together last month and gave to you to post on the site? For whatever reason that project got canned and at this point we’re throwing darts in a blizzard, as far as getting new customers is concerned.”

“Oh, well Perry I just wasn’t comfortable with one of the questions on that survey, and besides, I would never take a survey like that online anyway. That survey didn’t even have any information about our software.”

“Doesn’t matter whether you would take a survey like that or not. Five to fifteen percent of the visitors will, regardless of what any particular person likes or doesn’t like. Not only that, if we can’t get at least 5% of the visitors to take that survey, then it’s an indicator that this market has big problems. Better to find that out right now than to wait until we’ve spent another quarter million on product development and burnt another half million of our limited cash.”

Tension begins to rise in the room. Nobody was expecting our cordial board of directors dinner to turn into a confrontation.

“Perry, I guess I don’t understand how this survey process is going to help us sell this product better.

We’ve already got beta testers using the software, we’ve already got partner relationships with vendors who will give us access to tens of thousands of customers, we’re going to six conferences next spring, and the product is going to be really, really top notch when it’s done. So I don’t see what we’re going to learn that we don’t already know.”

“What you don’t know is, how much it costs you to acquire a customer. None of us have the slightest idea. Until you know that, we don’t have a business. We have a money-pit for venture capital.”

The questions and puzzled looks indicated that they didn’t have a framework. I elaborated: “The typical customer who buys my Google book is a guy who’s running a business out of his spare bedroom. He’s swatting away the toddler who’s pushing the reset button on the computer, and his wife is standing over him with her arms crossed. She’s saying, “OK honey, if you really MUST buy that ebook, then buy it. But don’t forget how we were going to get rich in Melaleuca, and surely you haven’t forgotten about that stupid college scholarship thing you were selling. We lost a bunch of money in both of those deals, and if you blow all our money on this deal too, bubba, you ain’t getting’ laid for six weeks.”

Three seconds of silence, followed by an eruption of nervous laughter. (The men thought this was a lot funnier than the women did.)

They’re paying attention now.

“That guy in the spare bedroom doesn’t have the luxury of angel investors. He can’t afford a year of product development. He’s gotta make this deal work right now.

“When you’re in that situation you cannot afford to guess. You have to know that every time you spend $1.00 on traffic you’ve got $1.50 coming back. And I can guarantee you, if you’re just guessing what John Q. Public wants instead of asking him, you’re going to launch the cool new product into a marketplace that you think you understand but don’t. One way or another, you’re going to pay for that knowledge. Better to pay for it up front.

“So here’s the deal. There are two kinds of places we can get traffic to sell this product. The first is “warm markets” where we can do Joint Ventures and promotions with 3rd parties, we can go to big conventions and pitch this thing, we can have our friends recommend it to their customers.

“The other kind of place we go to is the search engines. The traffic we get from the search engines is not NEARLY as good as what we get from those friends and associations. BUT…

“There’s a big, big ‘but.’ The big ‘but’ is, you only get to go to those friends and associations one time.

You only get to rub that genie once. If it doesn’t work – if it doesn’t make money – or if it rubs their customers the wrong way – you never get a 2nd chance. Your one chance is spent. Woe be unto you if you have not validated your sales process first.

“So the thing about search engine traffic is, even though the visitors are not warmed up to us and don’t know who we are, we can buy that traffic all day long. If we make a mistake we can fix it tomorrow and that traffic will still be there. So what we have to do is buy that traffic, run it through the sales funnel, and find out exactly how much it costs to acquire a customer. We need to iron out all the wrinkles and make it flow. THEN we go to our friends and JV partners and one-time opportunities. Then it’ll work the first time out and there’ll be a 2nd and 3rd chance from those people because they make money by promoting it too.”

People were starting to sit forward in their seats. “The reason I’m using this survey system is because this gives us a chance to validate our sales funnel before the software is done. We cannot afford to wait until after the product is ready to start getting the sales funnel right.”

Back in June I had been puzzling over what to do, given that this company’s product was not ready for show time. The answer came at a perfect time. I went to a private session at the home of Dr. Glenn Livingston in New Hampshire, where he explained his entire survey system.

He affectionately calls it “Do your friggin’ research” but what he really has is a nearly bulletproof system for validating any online project, before you even start to sell it. So far as I know it’s the least expensive way to validate a market before or while you go into it. As soon as I got home from New Hampshire, I started assembling a survey process for this startup company, based on Glenn’s instructions.

“So here’s the thing: We go to Google and Yahoo and we buy clicks. We divide the keywords into various groups and send people to survey pages. We ask very specific kinds of questions in a format that Dr. Livingston designed, based on his years of Psychology and corporate marketing research.

“You find out very interesting things you’d never otherwise know. For example you might find out that people who type in “guinea pigs” are just starting their search, not ready to buy one yet. And you might find that people who type in “guinea pig” are several steps past that, and ready to buy one. So you send those two different kinds of customers through different sales funnels.

“If you don’t have this information, you’re just going to waste money. Glenn’s method is 12 for 12 in successfully launching new online businesses. Nearly 100% accurate, not only in telling you that a market is viable, but what part of the market is going to spend money and what part is not. The time for us to get this information is now, not after the software is released.

“You know what? We don’t even know the right domain name to use for our product. We’ll never know without testing. And we won’t find out until we start this survey process. We have an obligation to ourselves and to our investors to get this thing right before it sees the light of day, not after. If you get this right first then you can have affiliates all over the Internet recommending your product, and they’ll find nooks and crannies that none of us even know exist.”

At this point it was necessary to invoke my credentials. Mark had a laptop computer on the table, so I said, “Mark, go to Google and type in perry marshall google adwords and tell me how many results come back.”

“One hundred forty-three thousand pages. Wow, that’s a lot.”

I said, “I didn’t make all those pages. My affiliates did. There’s 143,000 pages out there that reference my stuff and it’s mostly because affiliates make more money promoting my product than other Google related products. That didn’t happen by accident. It was engineered to happen. And when we get the message-tomarket- match right before we launch our software, when we validate the sales funnel from the start, then when this product launches it’s gonna go all over the place. Then the investors get paid. And we get paid. And then we sell this thing for millions of dollars.”

Room was quiet.

From that point we were not discussing whether or not we were going to use Glenn’s process, but how we were going to get it done and who was going to do it.

Another startup company, spared from the tunnel of chaos.

Sometimes you’ve gotta make people squirm to get them to think. I hope you’re squirming too, ‘cuz whether you’re a $100 million company or a guy who just wants to get laid every now and then, slinging mud against the wall isn’t the shortcut. This is the shortcut.

May your tribe increase.

Perry Marshall

Yet Another Kind of Psychic Vampire

Being a somewhat literary guy, I’ve subscribed to a variety of writing-related magazines in the last few years – Oxford American, Granta, and most recently, The Sun. Let me tell you about The Sun:

Captivating stories.

Penetrating interviews.

Melodious poetry, arresting photography.

Stimulating, thoughtful letters to the editor. A readers-write-in column that’s bound to have a few gems, every single issue.

But man, what a depressing magazine. (Whose idea was it to call this “The Sun”? They should call it “The Cloud.”)

The Sun is a magazine by and for smart, literate, articulate people who feel victimized and powerless.

Victimized because the Evil Capitalist Machine won’t pay them real money to create their art and express their opinions; powerless because they will not accept the reality that everyone has to earn their keep in the world. They’re too smart to allow for traditional conceptions of morality and now they’re wondering why their families are splintered and why all the moms are single and broke.

My favorite soundbyte was when they interviewed some famous activist, I think it might have been Noam Chomsky. They asked him, “What can we do to solve some of the most pressing problems in the world?” and he said, “The first thing we need to do is abolish all nation-states.”

Eliminate all the countries? (Wait, I thought you guys valued diversity.) This was my first clue that perhaps these people aren’t dealing with the “is” part of ‘how the world is.’

Why am I bringing this up? I mention this because there’s a very large number of people out there – most of whom directly or indirectly are fed and clothed by you and me – who believe that commentary is productivity, they believe that protest is a form of action, and that criticism equates to forward progress.

Commentary is not productivity. Protest is not action. Criticism is not progress. If the single moms aren’t eating, you don’t blame the current administration, you man the soup kitchens and offer them jobs to work in your company. If the environment is going down the toilet then you show people (by example) how to function without destroying it, in an everyday practical way. You develop alternative energy sources yourself, you don’t ask for more government money so somebody else can do it.

Ever notice that half the ads in National Geographic are for drugs and SUV’s? Here on the right you see a disclaimer from Mother Jones, a publication that embraces very specific views and versions of political correctness. The advertisements they run sometimes run contrary to their aims.

I think it’s just fine that Mother Jones takes a stand on certain issues and I think it’s just fine that they accept advertisers who don’t. Still, how many books and magazines about not killing trees are printed on paper made from trees?

Don’t let people who merely talk make you feel guilty because you’re one of the few who does. Somebody’s always going to show you their clean fingernails and try to make you feel inferior because yours are dirty. If you succumb to that, then you’ve just added to the list of confusing messages, impediments and Action Prevention Demons that stand in the way of progress.

Putting Yourself in the Pillory and Taking The Tomatoes

Like Bryan, you can take your entire life’s work and put it online, and a pack of mogrel dogs with no experience, no intelligence and no manners will happily rip it to pieces. Not only do you need to reject the rejection, you need to realize that the fact of others’ criticism is itself an indicator of its goodness.

No good deed goes unpunished, no great accomplishment uncriticized. The toughest thing you’ll deal with all your life is rejection, and a life lived for the purpose of avoiding rejection is gonna be a pretty mediocre life.

Actually that life is the life of the 24/7 discussion board guy. He won’t put himself in the pillory, he’ll only be the anonymous critic of somebody else.

To some extent you need to put safeguards in place. If you’re a writer and you take criticism personally then it’s probably a good idea to let someone else handle the refunds. To borrow a phrase from John Carlton, there are a lot of psychic vampires out there who will suck every ounce of self respect out of you and throw your tattered carcass to the dogs.

Don’t let ‘em.