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0n 0ctobei 1, 2u12 Eaiwolf.com ieleaseu the fiist poucast episoue of Seth uouin's
Staitup School eventually ieleasing a total of 1S episoues. I enjoyeu the Staitup
School poucast so much that I tiansciibeu each episoue. I then lightly euiteu the
tiansciiptions anu finally uesigneu this PBF.
I hope you finu this as valuable a iesouice as I have.
-Kevin Evans
kwevans11gmail.com

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Bey it's Seth uouin,
In the summei of 2u12 I hau an amazing oppoitunity to spenu thiee uays with a
gioup of extiemely motivateu entiepieneuispeople iight at the beginning of
builuing theii pioject launching theii oiganization. Buiing those thiee uays I took
them on a guiueu toui of some of the questions they weie going to have to wiestle
with, some of the uifficult places they weie going thiough to stanu up anu say,
23*-4 -4 )&5 3*-4 -4 6*7% 89) )7:-;<5=
I'm soiiy you coulun't be theie, but I hope this is the next best thing. Exceipts fiom
the live event, unieheaiseu, no sliues. Beie it is. Enjoy it. But even moie impoitant, I
hope you uo something with it.
Thanks foi listening ieauing.








4
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Welcome to the fiist episoue of Seth uouin's Staitup School.
}oin best-selling authoi Seth uouin as he pioviues business
auvice foi entiepieneuis anu fieelanceis fiom this iaie
woikshop. Buiing this week's episoue Seth uiscusses cieating a
monopoly, uesciibes the uiffeiences between fieelanceis anu
entiepieneuis, anu talks about how a business is connecteu to
maiketing.
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Leain how aujusting youi couise is beneficial on touay's
episoue of Seth uouin's Staitup School. This week Seth
uesciibes how being a consultant uiffeis fiom being an
entiepieneui, explains how he came to own a 4u billion uollai
t-shiit, anu staits to ask the gioup a seiies of questions that
eveiy entiepieneui shoulu be able to answei.
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Finu out why scaicity is the only thing woith paying foi on
touay's episoue of Seth uouin's Staitup School. Seth uiscusses
having NcBonalus milkshakes foi bieakfast, the lock-in effect,
the laige woilu that is the app maiket, anu how youi job is not
to finu moie customeis foi youi piouucts, youi job is to finu
moie piouucts foi youi customeis.
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Figuie out if you'ie selling a piouuct that will appeal to eaily
auopteis, people who neeu it, oi the masses on touay's episoue
of Seth uouin's Staitup School. This week Seth explains how
uoogle makes billions thiough clickable aus, uiscusses the
uiffeience between making something cool veisus making
something that woiks, anu talks about how a Thai place in
Queens became one of the best iun iestauiants in New Yoik.
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0n this week's episoue of Seth uouin's Staitup School we leain
how to builu a community anu gain theii tiust. Seth uiscusses
how easily you can become paialyzeu in the puisuit of peifect,
why launching is oveiiateu, anu how Kickstaitei woiks.

S
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Leain about the uiffeient ways on how to iaise money anu how
to pay that money back on touay's episoue of Seth uouin's
Staitup School. Seth uiscusses television, the impoitance of
auveitising, anu the long tail.
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Seth answeis questions fiom the gioup iegaiuing auveitising
on this week's episoue of Seth uouin's Staitup School. Seth
uiscusses false objection, uealing with competitois in the
maiketplace, anu taking the maishmallow.
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Figuie out how to help youi iueas tiavel on touay's episoue of
Seth uouin's Staitup School. Seth talks about how getting
iejecteu eaily is helpful, the sale cycle, anu Bob Lefsetz's email
newslettei.
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Seth explains what compiomises you'ie going to have to make
to get what you want on touay's episoue of Seth uouin's
Staitup School. Seth talks about finuing out what youi feeuei
channel is, the stoiy behinu chaiity, anu why it's bettei to uo
the haiu woik fiist.
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Leain about the tactics that will make youi uieam into a
business on touay's episoue of Seth uouin's Staitup School.
Seth uiscusses the Yellow Pages, WTF with Naic Naion, anu
the ioaublock in piicing. Seth also talks about cheeileauing,
having a paitnei who will have youi back, anu explains the
puipose of a Cap Table.
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0n this week's episoue of Seth uouin's Staitup School we leain
how to solve the cash flow pioblem. Seth uiscusses why people
aie iaiely motivateu by money, how people can't tell you what
to uo if you uon't iun out of cash, anu iaising money & tieating
it as it's the last money you'll evei have.



6
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This week Seth talks about the ins anu outs of The Bip. Seth
explains why you shoulun't stait a pioject unless you aie
piepaieu to ieach the enu, how finuing youi feai will benefit in
the long iun, anu answeis questions fiom the gioup iegaiuing
The Bip. Be suie to pick up a copy Seth's book The Bip.
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0n this week's episoue of Seth uouin's Staitup School we leain
how to builu the tiuth anu why tiust is at the heait of all
tiansactions. Seth uiscusses why Amazon is successful, the
uiffeience between a CF0 & C00, anu the impoitance of an
auvisoiy boaiu.
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This week Seth takes the gioup thiough The ShipIt }ouinal.
Seth talks about figuiing out what the haiu pait of youi pioject
is, uesciibes the uiffeience between peifect anu goou enough,
anu explains why shame is the pioject killei.
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0n the final episoue of Seth uouin's Staitup School we leain the
impoitance of being uistinct anu uiiect. Seth explains why
people at the top get huit last, why e-mail is the best uiiect
connection to youi customeis, anu why it's impoitant to have
youi own uistinct voice. Seth shaies a technique to get an
appointment with impossible to ieach top uecision makeis,
uiscusses why it's bettei to act like you uon't have money now,
anu tells us why he'u iathei spenu 4 yeais wiiting a blog
befoie wiiting a book in oiuei to builu an auuience. Be also
talks about how not to get sueu, giving people a souvenii to
iemembei you by, anu the iules on naming youi company.






7
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I want to stait by telling you about an aichitect I just ieau about anu soit of the
cuise of the successful aichitect. This guy hau maue a veiy goou living uesigning anu
ienovating houses foi iich people. Bis kius giew up, went off to college, anu he anu
his wife ueciueu to move. That's pioblem numbei one.
Pioblem numbei two is they bought an empty lot.
So now the aichitect has to go anu builu his house. Be has to builu his house
without being able to complain about anything because it's an empty lot.
Nost of the time I talk with people, who because of ciicumstances of theii job,
boss, oi wheievei they aie woiking, have all these othei things they have to be
conceineu about. They uon't have an empty lot. Anu each of you has an empty lot.
That's numbei one.
Numbei two is lots of people have the ability to get to the point wheie they coulu
invent the next thing they'ie going to uo, but they finu excuses. By coming heie
touay you've inuicateu you'ie past that.
So we'ie going to spenu the fiist pait of this session assuming you aie all in,
assuming we uon't have to ueal with the stuff that unueimines oui best woik.
Then as the uays go on anu we get bettei at talking to each othei anu tiusting
each othei about wheie we aie, we'ie going to uig to the next level of, "If you see it,
is it possible you'ie going to uo it."
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I want to stait by telling a stoiy I've only tolu once befoie in this ioom a couple
months ago.
I giew up in buffalo anu was ieally bau at ice hockey giowing up. In Buffalo theie
is no baseball, theie might be bowling, but mostly it's ice hockey.
When I was 1u, my paients sat me uown. The woiu "neiu" wasn't in common
pailance anu they saiu, "You can be whatevei that thing is, but you also have to at
least play a spoit foi a while."
Ny uau agieeu to coach the team just to make suie I woulu actually uo this. Be
was a gieat hockey coach. Be hau all these uiills. Be came up with all these
inventions. Eveiy othei coach hau two pucks. Ny uau hau thiity pucks so theie was
nevei a shoitage. Be uiilleu a hole in the pucks anu they all hau a shoe lacing so you
coulu caiiy Su pucks at once anu stuff like that.

8
Anyway, he inventeu this uiill wheie the puck is ovei heie anu that's the coinei.
They call it the coinei, but it's soit of iounu. 0ne playei woulu be heie anu one
playei woulu be heie. The coach woulu thiow the puck in the coinei anu this guy
woulu have to skate anu giab the puck anu go this way anu this guy woulu have to
go that way. What we weie supposeu to uo is go as fast as you can anu hit the othei
guy anu stuff. So you can imagine the fiiewoiks that woulu ensue.
I was the smaitest peison on the team. I was the woist peison on the team, but I
was the smaitest peison on the team. It uiun't take me veiy long, this was when I
was like 1S, to iealize the seconu guy has this huge auvantage because the seconu
guy is the hittei anu not the hitee. The seconu guy has a shot at taking the puck
away.
What I staiteu uoing was being a little slowei than the othei guy. Anu it took
about 2u times of this uiill foi the othei playeis to iealize what I was uoing. They
staiteu being slowei than me. It got up to Zeno's paiauox like, "Who woulu go
slowei." So my uau saiu I coulun't uo that anymoie.
What I iealizeu was theie aie thiee things you neeu to be goou at hockey.
0ne is it helps if you know what to uo.
The seconu it helps if you'ie able to uo it.
Thiiu it's ieally impoitant you caie enough to get hit.
Anu the jouiney that each of you aie on is about those thiee things.
Bo you unueistanu fiom 1u,uuu feet what the smaitest consultants anu
visionaiies in the inuustiy woulu tell you is the iight answei.
Aie you goou enough at wiiting, piesenting, oiganizing, leauing, hiiing, iaising
money, anu all those things to actually uo the iight thing.
The thiiu pait is, which weie not going to uwell on too much this moining, uo
you caie enough about the pioject to get hit. Because theie is a lot of that in what's
going on.
When I was staiting out, I ieally wisheu I coulu have come to something like this,
which is why I iun them.
Anu the pioblem is you can't talk to youi spouse. You can't talk to youi boaiu of
uiiectois. You can't talk to youi employees. You'ie left alone. Anu heie you can talk
to the othei folks.
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0k, the uuck. The fiist thing about the uuck is theie aie a lot of people who spenu
theii time getting all theii uucks in a iow. That is not what we aie going to spenu
oui time on.

9
We'ie going to spenu oui time talking about what you'ie going to uo now that
you got a uuck. That is what attiacts me to entiepieneuiship.
If you want to be a neuiosuigeon, you spenu 1S yeais of youi life getting youi
uucks in a iow anu then one uay someone says, "Now you'ie a neuiosuigeon."
But if you'ie an entiepieneui, you'ie an entiepieneui. Immeuiately. Theie's no
peimitting piocess. Theie aie no ceitificates. You just stait.
Along the way you can collect moie uucks anu get them in a iow, but the ieal ait
of what we aie tiying to uo heie is unueistanu that you have to uo something with
the uuck.
We'ie going to keep going back again anu again not to the lack of iesouices,
because theie aie unlimiteu amount of iesouices available to all you, not to the lack
of oppoitunities oi connections you maue, but the ieal question on the table is:
"Aie you ieauy to uo something with the uuck."
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We'ie going to stait by talking about why the Nonopoly man was on the uooi when
you walkeu in anu why the Nonopoly man isn't on the watei bottles oi the coffee
mugs.
So ovei heie I have almost eveiy Nonopoly iteiation evei maue incluuing the
19SS fiist euition of Nonopoly. The oiiginal one uoesn't seem to come with the
boaiu anu I'm tiying to figuie out how they playeu. Naybe it was the uepiession so
you hau to uiaw youi boaiu oi something anu it was a little pictuie. It was not cleai.
We'ie going to talk about monopoly foi a couple ieasons to get us staiteu.
The fiist ieason is theie aie thiee ways to think about Nonopoly anu theie aie
ways to think about aichitectuie anu how aichitectuie fits the blank slate you have
to ueal with. So heie they aie.
0ne, theie is the evil kinu of AT&T Niciosoft kinu of monopoly wheie someone
goes anu violates whatevei tenants of anti-tiust laws theie aie anu unfaiily contiols
the maiket. We'ie not talking about that at all. Theie aie two othei kinus of
monopolies.
The kinu of monopoly we'ie going to talk about the most is this: the ieason you
can't put the little man fiom Nonopoly on a watei bottle is Basbio won't let you.
Theii lawyeis aie so aggiessive that they have notifieu eveiy peison who piints
coffee mugs anu watei bottles. If you senu them the Nonopoly man, which I've tiieu
to uo, they will senu you a note back saying, "We will not piint the little Nonopoly
man."

1u
What that means is they have a monopoly on Nonopoly. If you want Nonopoly,
you have to buy Nonopoly fiom them.
Eveiy successful business has a monopolya monopoly on what it makes that
someone else can't make the way they make it.
That leaves out commouity businessespeople who biing coal out of the
giounu. I uon't think of those businesses as paiticulaily successful. I think of them as
useful. I'm glau if I neeu a bag of coal someone's uoing it, but it's a ieally lousy way
to make a living.
Biilliant entiepieneuiship is aiounu figuiing out that thing you can uo in the
maiketplace that people aie willing to cioss the stieet to get. It's so people
unueistanu, "This is the one anu I neeu it."
Anu we'ie going to keep coming back again, again, anu again touay to this iuea of,
"What is it you'ie going to have a monopoly on."
If you know about the company S7 Signals in Chicago, they aie ieally killing
Niciosoft in a tiny segment of the maiket, which is pioject management on the web.
They have a piouuct calleu Basecamp, which cost $2u bucks a month to use. If foui
of youi colleagues aie managing a pioject on Basecamp anu you want to paiticipate
in the pioject you can't shop aiounu. They have a monopoly on that pioject. You
have to uo it on Basecamp. Anu you uon't get to say, "Well it cost too much money"
because they'ie alieauy using it. So you have to use it too.
That is a funuamental uistinction fiom the way inuustiialist thought in 19Su anu
in 194u when the boaiu game came out. In those uays the thought was, "We'ie going
to figuie out how to make these machines woik just a little bettei anu we'ie going to
figuie out to make this factoiy woik just a little fastei, anu so we'll be able to sell a
cai just a little cheapei."
The inuustiial minuset, the one we all giew up with, staits with this iuea that
you have to builu a bettei mousetiap anu make it cheapei.
That's not the kinu of entiepieneuiship I'm heie to piopose to you touay. I'm not
talking about one that is baseu on the inuustiial economy, but on the connection
economy.
Anu one of the easiest ways to builu a monopoly, a tiny piofitable monopoly, is
to be the centei of connections. Because connections aie so valuable to people
compaieu to stuff.
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11
The thiiu ieason we'ie going to talk about monopoly is this: if you have a choice
between builuing a house on the blues oi the gieens, it's a tiicky uecision because
the gieens chaige way moie ient if you lanu on them. But the blues aie way cheapei
to builu. Anu these aie the uecisions you'ie going to make all the time.
You get to ueciue wheie to builu youi house.
You get to ueciue if youi house has goou uiainage, a goou view, anu is neai the
ocean.
You get to ueciue how much you'ie going to spenu on the ieal estate wheie youi
house is.
Anu once you uo you'ie lockeu into it. You can't complain that you'ie in a lousy
neighboihoou. :+4 ;4/ -/ -* ' .+456 *)-<&=+7&++2"
When someone tells me, "I'm a liteiaiy agent, blah blah blah. The book business
is uying," I say, "Well you uon't have to be a liteiaiy agent. It's not my fault the book
business is uying, but if it is, >+()"" 0i if it's not, if theie's a lot of ieal estate up foi
sale because people aie panicking, buy a bunch of it.
The viitual ieal estate that's available in eveiy single inuustiy is a choice.
You may have 1S yeais of expeiience being in the pizza business, but if eveiy one
in youi town is going gluten fiee anu vegan, it uoesn't mattei, it's a sunk cost.
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You'ie going to ueciue, "Shoulu I be a fieelancei oi an entiepieneui." Let's get that
out of the way eaily on because the uistinctions between the two aie so ciitical.
Saiah is mostly a fieelancei. What that means is people pay hei money anu she
uoes woik. If she uoesn't uo woik, people uon't pay hei money.
Fieelancing is a gieat way to make a living. It's what I uo, it's what I use to uo,
but in-between I was an entiepieneui.
Entiepieneuis builu businesses biggei than themselves.
0iacle will be fine if Laiiy Ellison goes on his yacht foi foui weeks. 0iacle is still
being 0iacle. People uon't use 0iacle softwaie because Laiiy Ellison comes with it.
Be makes money while he sleeps. Be's builuing something biggei than himself that
he coulu sell one uay oi take public one uay if he chooses.
When you use the woiu entiepieneui, you might be mistaking what you'ie uoing
anu actually you'ie a fieelancei.
This is the ieason why the uistinction is so impoitant:

12
If you'ie a fieelancei anu business is going well, you'ie tempteu to hiie people to
uo moie of the woik. Because you say to youiself, "Wow this is gieat, I get $2uu an
houi foi this giaphic uesign woik. I'm going to hiie someone foi $8u an houi to uo
giaphic uesign woik, keeping $12u. Anu as I auu moie employees I'm staiting to act
like an entiepieneui."
This is all well anu goou except the cheapest peison who you can hiie is you. So
when in uoubt you hiie youiself. This is a pioblem because you just hiieu youiself to
uo the woik anu theie is no one left to get you new clients. Now theie is no one left
to figuie out the stiategy. Now theie is no one left to iaise money. Now theie is no
one left to builu new offices.
What you enu up uoing is having a neivous bieakuown because as business
slows uown you uo moie of the woik. Insteau of hiiing someone foi $8u an houi,
you hiie youiself foi $u. Well gieat, you'ie so busy uoing that, just baiely bieaking
even, youi business can't giow anymoie anu you'ie neithei a fieelancei noi an
entiepieneui.
The fiist thing Naik Zuckeibuig has to uo if he's seiious about Facebook is to
stop couing. Theie aie people he can hiie to coue so he uoesn't have to uo it
anymoie so he can go off anu uo the thing only the CE0 can uo.
When you'ie a bootstiappei, when you'ie staiting with no money, of couise
you'ie going to hiie youiself.
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"Bow uo I make it so I have no job othei than bieaking the system. Because
that's my only job."
Eveiyone else has theii job anu when you think of the woilu that waywhen
you think of Bowaiu Schultz anu Staibucks, when you open up a Staibucks oi any
coffee shop, it's mom anu pop. Nom anu pop both woik theie anu it's woiking ieally
well, so they open a seconu one. Nom is ovei heie in the fiist coffee shop anu pop is
ovei heie in the seconu coffee shop. Wheie you get into tiouble is when you open a
thiiu coffee shop because theie is no one to iun the thiiu coffee shop.
Bowaiu Schultz got to Staibucks when theie weie five. Staibucks was in ieally
big tiouble because they uiun't have a scalable mouel. They coulun't go fiom five to
fifty because you coulun't guaiantee that theie was this cookie cuttei, inuustiial way
to giow moie Staibucks.
What Bowaiu Schultz uiu that was biilliant hau nothing to uo with his ability to
make coffee. It hau to uo with his unueistanuing that his job as an entiepieneui is to

1S
builu a system that coulu scale. That's what investois hiie entiepieneuis to uoto
scale.
But to be a fieelancei oi impiesaiio, someone who uoes the woik, but uoesn't
builu the oiganization is totally gieat. I spenu 8u% of my time being a fieelancei. If
it has my name on it, I wiote it. I spenu 2u% of my time iunning an inteinet
company as an entiepieneui, meaning not only uon't I coue, I uon't iemembei how
to coue, anu eveiy time I call one of the seven people who woik at Squiuoo, I am
huiting oui piouuctivity because I am botheiing someone who is actually uoing a
goou job as I woik to bieak the company.
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If you have thiee pizza shops anu they aie all woiking, you have a choice. You
can just keep them woiking anu go to the south of Fiance anu they'll mail you a
$1,uuu a week because you own the business.
0i you can say, "Foi me to get fiom S to Su, I'm going to have to uo something
that might not woik. So I'm going to have to take all the money anu put it into
auveitising oi uioupon coupons oi I am going to have to put a new menu in that
bieaks what was woiking anu maybe makes it bettei, but maybe uoesn't."
Anu you aie the only peison who has the authoiity to uo that. You uon't want the
guy behinu the pizza countei coming in with a giant bag of iaisins anu making iaisin
pizza just because it's fun.
As you'ie stiuctuiing this business to giow, youi job is to figuie out wheie it
goes.
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So the thought is you can't totally leave the business alone. Well the question is,
"Wheie is Thomas Euison when we neeu him." Be's long gone, but uE peisists.
0ne of the myths we tell ouiselves as an entiepieneui is it can't iun without us.
Beiek's only mistake was not hiiing a C00 oi Piesiuent he coulu tiust. What he
saiu to the oiganization was, "0se youi best juugment. I'm not going to look at what
you'ie uoing." Anu he tiusteu people who weien't tiust woithy.
What he coulu have uone, what happens all the time, is the founuei says, "I have
built a piocess. The piocess scales."
If you evei bought Nis. Fielus' cookies, Nis. Fielus uoesn't touch the cookie
anymoie. She's not checking on anything anymoie. Theie is a piocess in place. This
is the inuustiialization of youi oiiginal iuea.

14
I'm not saying that is eveiyone's goal. I uon't want to uo that. But that is the
mouel of classic entiepieneuishipyou builu an inuustiial thing anu it scales.
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<*&/ 0,3 +'-& 7'+( 9) <,35; 7& 79==&% '/; -,%& .%,@9)'75& )*'/ <*&/ 0,3 5&@):
Right, because you have this oiganic thing. You plant a whole bunch of Kuuzu,
you come back a yeai latei anu it has giown.
We'ie going to talk about lots of flavois of uiffeient businesses. So I uon't want
you to think this is what I'm saying &'5 to happen. I'm just uesciibing these aics.
VE4-;&44&4 7;, O7(:&%-;<
Let's talk about what a business is anu what maiketing is anu why they aie
connecteu.
What you uo if youi iunning an oiganization is you'ie cieating value. What that
means is people aie giving you money because they think what you'ie uoing is
woith moie than it costs.
If you'ie iunning a non-piofit anu someone uonates $1uu,uuu to the Acumen
Funu, they'ie uonating $1uu,uuu because they think it's woith $2uu,uuu foi the
piivilege of uonating $1uu,uuu. If you iealize that's what's going on, you unueistanu
that you almost have an obligation to make this available to people because they'ie
the ones who aie benefiting fiom buying fiom you. Anu if they aie not, you neeu to
make something bettei.
If someone wants you to buy some olu big compact computei with a hanule on it
that weighs 1,8uu pounus anu it's $Suu, none of us aie going to buy it unless we'ie
some soits of peiveise collectoi. It's not woith $Suu. If you'ie out theie constantly
botheiing people anu using eveiy maiketing technique you can think to push this on
people anu they uon't want to buy it, something is bioken in the system that you've
put togethei.
0n the othei hanu, when theie is a line out the uooi at uianu Cential Station to
buy coffee, something is going on heie. The coffee is $4. That's expensive, -, 6+4 .-()
-* ?4.4/&. But if you'ie in uianu Cential Station anu you neeu caffeine, $4 is a
baigain; it's woith $6. Basically theie is someone behinu the countei hanuing out $2
bills all uay long. Because you'ie getting something foi $4 that you'u be willing to
pay $6 foi. Bow uiu they uo that.
They have a monopoly on a bianu name.
They have a monopoly on a stoiy.
They have a monopoly on expectations.

1S
Anu thanks to the NTA, they have a monopoly on that actual piece of ieal estate.
Theie isn't a place iight next uooi that sells coffee foi $S. If theie weie, theie'u
piobably be moie of a line in fiont of that one
What they've uone so biilliantly is they've caiveu out attention anu a system so
they get paiu all uay long giving value to people.
So what is maiketing.
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(&4$;7%&4 6-%* @&$@C& &;$E<* %*7% %*&L 67;% %$ <-P&
L$E )$;&L5 3*7%94 -%5
0ne of things you neeu to uo as an entiepieneui staiting out is figuie out:
Bow uo you tell the stoiy.
Who uo you tell the stoiy to.
Bow uo you cieate this value.
If you can uo those thiee things ovei anu ovei again, you win.















16
!UWY?38#Z 3[+ 1>Y/?+
The connection economy is a biggei ueal in teims of the economic histoiy of the
woilu than the inuustiial ievolution.
If we weie having this confeience in 1918, anu I was sitting heie, hau the guy
fiom Scientific Tale oi Scientific Nanagement ovei heie, Beniy Foiu talking about
mass piouuction ovei theie, anu I was uesciibing how you coulu use the techniques
of mass piouuction, mass maiketing, anu inuustiialization to make a business, it
woulu seem just as haiu. Theie weie 2,Suu cai companies in 1918. Anu so theie is
all this stuff that is going on.
I'm not piomising you'ie going to builu a business that is going to make one
million uollais in a yeai. I think that's unlikely. What I am piomising is you can have
a business plan that lets you see a path to piobably succeeuing moie than not.
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4%-D: %$ %*& @7%*5
The ieason eveiyone uoesn't uo this is because it's ieally fiightening anu you get
veiy little suppoit fiom the people aiounu you to uo this veiy uifficult scaiy woik of
putting youiself out theie anu saying, "Bi this is me, I maue this."
If you make it anu people uon't see the value, you uon't give up, you iemake it.
Zig Ziglai, one of my heioes, tells this stoiy of a plane taking off fiom New Yoik
heaueu to Ballas. Five minutes into the flight it's winuy so they'ie off couise. The
plane uoesn't tuin aiounu in New Yoik anu stait ovei. It just aujusts its couise anu
keeps aujusting its couise until it gets to Ballas.
If you'ie going to buy into the life of making it eithei as a bootstiappeu oi funueu
entiepieneui oi a fieelancei, you'ie going to have all these things that uon't woik.
I got 9uu iejection letteis in a iow my fiist yeai in the book business. I uiun't sell
one thing. You just aujust anu you leain fiom it.
The numbei of places we neeu youthe numbei of places you can auu valueis
so huge that it's a pietty safe bet that along the way you'ie going to get to Ballas.
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<& '%& &/)%&.%&/&3%8 ,% @%&&5'/+&%81
Yes, by tomoiiow foi suie. This is the biggest souice of unhappiness foi people
who stait theii own business. They'ie not being cleai on the uiffeience anu not
willing to commit to one oi the othei.

17
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-988)&. ,@ @%&&5'/+9/= '/; &/)%&.%&/&3%8*9.F %3//9/= '%,3/; 9/ +9%+5&8F
.%&)&/;9/= 8,-& 8,%) ,@ .%,;3+) 5&'6&8 )*& ,@@9+&:
When you say consulting, uo you mean like what NcKinsey uoes consulting.
Bane anu getting hiieu foi $Suu an houi to tell someone how to uo a bettei job.
Consultants aie always fieelanceis. Theie aie a few who pietenu they aie
entiepieneuis because they built some piopiietaiy uatabase: Aithui Anueison with
theii 2,uuu people on the stieet.
What will happen is Coca Cola will ueciue they want to switch fiom a matiix
oiganization to a uiiect iepoits oiganization. They have 2S,uuu employees. "What
shoulu we uo." They hiie Aithui Anueison. Aithui Anueison senus 1uu iecent
college giaus that paiachute in. They uo all these inteiviews. They'ie consultants.
The thing is the ietuin on equity at Aithui Anueison is pietty low. They only
giow by being basically a tempoiaiy employment agency maiking up the people
who woik foi them.
Real entiepieneuiship again is, if the geniuses who woik theie took two weeks
off, woulu the business keep iunning. No, because the people who hiie Aithui
Anueison aie paying foi the genius to come in anu see them anu they aie paying by
the houi.
If you aie a consultant, the easy haiu pait is, "Aie you smait enough to give goou
auvice."
The &'72 &'72 pait is, "Bo people tiust you enough to pay you to give them goou
auvice."
So what happens if you woik foi NcKinsey is you go to Baivaiu giauuate school
anu you go to NcKinsey. NcKinsey bills you out at $9uu-$1,2uu an houi. You say,
"Wow, that's amazing because I woik 2,uuu houis a yeai; 2,uuu times 1,uuu, that's
$2 million. I'm going to quit anu go be me, same auvice, without the NcKinsey
name."
Anu what those people uiscovei eveiy time is they can't chaige $1,uuu an houi
anymoie. Because what you'ie buying when you buy NcKinsey is the fact that you
can go to youi boaiu of uiiectois anu say, "I want to close the plant in ueoigia.
NcKinsey saiu it was a goou iuea."
People believing the auvice is goou aie what consultants usually sell.
Theie is a seconu mouel though, which says, "I'll give you auvice anu if it woiks,
then you pay me." "I'll give you auvice anu I'm a stock biokei anu I heuge funu, anu
I'm going to keep pait of the piofit." That staits to shift anu now youi not so much a
consultant as you aie a iisk paitnei with somebouy else. Anu that can tiuly scale in
teims of what you'ie uoing.

18
Scaling back to what we heaiu a little bit eailiei, we'ie going to keep coming
back again anu again to what kinu of uent aie youi tiying to make in the univeise.
Aie you tiying to make the uent in the univeise that you make a uecent living
uoing what you love. @7A
Aie you tiying to make a uent in the univeise by saying, "Theie aie now non-
piofits in my town that aie extiemely well funueu because I maue a uisiuption in
the univeise to make that happen."
Theie is no iight answei to this. But you have to be honest with youiself about
how big a iuckus you aie tiying to make anu why you aie making that iuckus.
When its not woiking anu when it's haiu, you'ie going to keep coming back to:
"Why am I uoing this again." Anu if theie is a mismatch, you'ie going to flee.
Beie's what we have to unueistanu. Anu we maue it a whole houi befoie I
biought up the Lizaiu Biain.
You can be the smaitest, best euucateu business peison in the woilu, but if the
voice in the back of youi heau helps push you to avoiu oppoitunities, its not going to
uo you any goou.
As we go thiough these questions, you'ie going to heai a question anu pait of
you is going to know the iight answei anu pait of you is going to say, "Ehhhh, I want
to uo this answei."
I neeu to highlight foi you when that is happening. You neeu to be ieally cleai
with youiself about why you'ie avoiuing it.
! `NT V-CC-$; U$CC7( 3B?*-(%
It's 1998, the Inteinet bubble is ieally staiting to get iolling. Why uo some people go
anu stait an Inteinet company anu why uo some people who know just as much
uon't.
It's not about the exteinal infoimation, it's about what aie you telling youiself,
anu what aie you afiaiu of.
Ny stoiy on this is I have a t-shiit that was woith about foity billion uollais.
In the '8us I uiu a job calleu book packaging. What book packageis uo is we
think of an iuea foi a book anu we sell it to a publishei. If they like it we have to
make it. It's like being a movie piouucei, but foi books.
I uiu 12u books1u books a yeai, foi 12 yeais. I solu millions of copies. Some
you may have heaiu of, some bestselleis, anu a lot of books you nevei heaiu of:
books on spot anu stain iemoval, books on gaiuening, a lot of business books. Some
have my name, some uon't.

19
I also knew a bunch about the Inteinet because my backgiounu was woiking at
Piouigy, a computei softwaie company. Being a fieelancei, magazines weie calling
me up to wiite aiticles about the Inteinet. To make enus meat, I woulu stop being
CE0 of this company with 1u employees anu hiie myself to wiite a magazine aiticle
foi $2,uuu.
I wiote one of the veiy fiist covei stoiies about what this web thing was. Beie it
is 1992 anu I have a high-speeu connection to the Inteinet. I'm wiiting aiticles about
what is on the Inteinet anu seeing it stait I say, "What shoulu I uo."
I say, "I know, I'll wiite a book calleu Best of the Net."
Eveiything I hau was a hammei anu that lookeu like a nail. I solu it to a book
publishei foi $8u,uuu.
I hiieu thiee people anu we woikeu foi a yeai to put togethei this big thick book
of 2Su cool things you coulu finu on the Inteinet. Theie was no Woilu Wiue Web yet.
This was the Inteinet. This was befoie the Woilu Wiue Web. So with all of this
stuff going on, I wiote a book foi $8u,uuu.
Anu on the T-shiit was this guy on the fiont that we maue foi the sales foice. 0n
the fiont it saiu, "Best of the Net" anu on the back it saiu, "Woilu Wiue Inteinet
Suifing Team." I gave a copy of the book to eveiy single peison on the sales foice so
they woulu sell a lot.
The book uiun't sell.
At exactly the same time with less money than I hau, two guys at Stanfoiu, Baviu
anu }eiiy, staiteu something calleu Yahoo.
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%*& 8;%&(;&% 7;, 6($%& 7 HTTB@7<& ^$$:5
Theii company at one point was woith $8u billion uollais so I figuie I woulu
have hau half of it. So my t-shiit is a foity billion uollai t-shiit. Anu I keep it iight by
my uesk because it's ieally obvious to me why I uiun't stait a seaich engine because
I'm not the kinu of guy who staits a seaich engine.
I'm the kinu of guy who wiites a book about what's on the Inteinet anu that's
why touay is such an inteiesting uay. Because you guys all just bought an acie of
beachfiont piopeity anu you can builu whatevei kinu of house you want on it anu if
you want to builu a book, go aheau, but uon't whine latei that it's woith $8u billion
uollais anu you uon't own any of it.
That foik in the ioau ought to become cleai as we go thiough these questions.
1*7(%-;< 7 1$E(4&

2u
Question #1 about youi businessanu what I want you to uo as I go thiough these
questions is to feel fiee wiiting them uown oi just think haiu about them. But I think
in this case wiiting something uown will foice you to be a little moie honest.
!3&8)9,/ HA" I*, 98 9) @,%1
Nothing is foi eveiyone. Nothing. The vast majoiity of people in the woilu have
nevei hau a cup of Staibucks coffee.
The vast majoiity of people who have a phone nevei useu an iPhone.
The vast majoiity of people in Inuia uo not have inuooi plumbing.
Nothing you biought heie is foi eveiyone. If you think it's foi eveiyone, you have
to stait ovei.
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(/,< '7,3) '/0 =96&/ 837=%,3. K0,3 +'/ 8)'%) <9)* ' 79= ,/&L 98 <*') ;, )*&0
7&59&6&1
Let me give you a veiy specific example of what I am talking about when I talk
about woiluview.
Lots of people who live in this pait of the woilu wake up in the moining anu say,
"What a beautiful uay, I'm going to go to the stoie anu buy something" anu they
uon't know what they aie going to buy befoie they go to the stoie. We call this
shopping. They'ie looking foiwaiu to going shopping anu they believe, they woulu
nevei use these exact woius, that shopping is an enjoyable activitythat going to
the stoie isn't stiessful, it's fun.
Theie aie othei people in the woilu, moie of them, who have nevei once in theii
life bought something theii family has nevei bought befoie. Nevei once. Anu if they
have to buy something it's one of the most stiessful things in theii life because it's a
mattei of life oi ueath. If you make $S a uay anu you have to go buy something,
maybe a paii of glasses, anu you'ie wiong anu the $S, $4, oi $S you spenu is wasteu,
youi kiu might uie. So that peison's woiluview is not, "Let's go shopping!" That
peison's woiluview is, "Please, please, please, lets make suie eveiything is the
same."
When we think of woiluviews of smallei gioups, theie is a gioup of people who
in thiee weeks when Apple launches its new piouuct will buy it that uay because it
makes them happy.
Theie is a uiffeient gioup of people that will buy it foui weeks latei because
waiting foui weeks makes them feel smait.
Anu theie is a uiffeient gioup of people that will wait at least six months befoie
they buy it because they aie smaitei than the othei two gioups of people.

21
These aie stoiies we tell ouiselves.
In 12 weeks theie aie going to be piesiuential uebates. Two people will watch
the uebates anu one of them will have exactly the wiong impiession of what just
happeneu. The othei peison is suie they heaiu the iight thing, but the seconu
peison heaiu something completely uiffeient. Not because of what was on Tv, but
because of the stoiies we tell ouiselves.
If you think about the piouuct oi seivice you aie offeiing anu the gioup oi
subgioup you aie offeiing it to, what's the stoiy they aie telling themselves.
If we look at Chiis' shoes, he is weaiing hanu maue sneakeis foi baiefoot
iunneis. BC+0 >'*6 +, 6+4 &'() )()7 &)'72 +, ='7),++/ 74**-*<D 7'-5) 6+47 &'*2" C+0
>'*6 +, 6+4 &'() )()7 2+*) ='7),++/ 74**-*<E C+0 >'*6 +, 6+4 8)); 2+-*< ='7),++/
74**-*<" #+ 0)F7) 2+0* /+ +*)"G
It's not that baiefoot iunning is bettei oi woise foi eveiyone heiewe can have
that conveisation. It's inteiesting that Yoni is the kinu of peison who tells himself
the stoiy about a new technology of woiking out. Chiis is the kinu of peison who
likes weaiing something that says something about him while he's weaiing it on his
feet. Anu most of us aie olu enough wheie we'ie like, "0h. I can't leain a new way to
iun. That's like completely outsiue my comfoit zone."
These aie woiluviews. They aie not iight oi not wiong. They'ie just tiue. So, we
have to be veiy cleai when we talk to each othei about, "Who is this foi."
Chiistina sells web uesign, html, giaphics, aichitectuie unueineath, apps, anu
things. If she is tiying to get a new client, sometimes she can call on someone anu
they'ie eagei to heai fiom the new spaikly cutting euge uesignei. "Come on in, let's
stait white boaiuing it."
Anu othei people she calls on, theii aims aie folueu. She iepiesents a thieat at
seven uiffeient levels. You can beat youiself up that you uiu a bau job at the seconu
meeting oi you can iealize it's not foi them anu go call on someone who it is foi.
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If you'ie tiying to sell to viigins, it's a lot moie uifficult than it is to go to
someone who iegulaily buys.
A simple example is someone who sells mattiesses foi a living.
Theie aie two kinus of people in the woilu. People who only buy a mattiess
when they have no choice anu people who buy a mattiess because they think it will
help them sleep bettei. They buy mattiesses five to ten times in theii lives.

22
If it's the seconu kinu of peison, selling them a mattiess is much, much easiei
than selling a mattiess to someone who thinks they shoulu nevei have to buy a
mattiess.
I neeu to claiify two things.
0ne, theie aie thiee uiffeient kinus of ievenue I am talking about: the ievenue of
cash, the ievenue of attention anu tiust, anu the ievenue of iefeiial.
Theie aie lots of businesses that neeu the ievenue of attention anu tiust, like
"I'm going to watch channel 4 tonight." You'ie not paying them in cash, but you'ie
giving them attention anu tiust which they can figuie out how to make money.
Theie aie uiffeient flavois of that anu we'ie going to go ueepei into all of them
as we go into this. Biffeient ways of people paying.
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Theie is a huge gulf fiom selling to people who know about you anu selling to
people who have nevei heaiu of you.
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Now this is huge. So Yoni lives in Toionto anu is able to bump into a faii numbei
of wealthy oi semi-wealthy Canauians anu he knows people who can intiouuce him
to wealthy oi semi-wealthy Canauians. uetting himself to be heaiu of is not
impossible. You can colu call people. You can senu them letteis in the mail. You can
have a cocktail paity. But uo they tiust you.
Is that gioup of people then going to pick up the phone of theii own volition anu
say, "I'm changing my will, can we have a meeting so I can hiie you to figuie out how
to solve this pioblem."
Theie's this big gap between someone being awaie of you, which is ieally haiu,
anu then someone tiusting you enough to invest you oi buy fiom you.
If you go to Chiistina's website anu you uig in, theie's some ieal chops theie. She
anu hei husbanu make inteiesting goou softwaie. But she only has thiee seconus on
the website to peisuaue us of that if we'ie stiangeis.
0n the othei hanu, if I meet hei at a confeience, see hei uo a uemo, anu she's up
on the stage getting a big ovation at the enu anu my boss comes to me the next uay
anu says, "What aie we going to uo Seth, we neeu blah blah blah." I'm going to
iemembei I met Chiistina. I uon't neeu hei website at this point because I alieauy
tiust hei foi a uiffeient ieason.

2S
As I keep talking to you about youi businesses, we'ie going to keep taking this
apait. Bow uiu a stiangei know to uo business with you anu uiu they tiust you.
Keep wiiting this uown anu I'll put you on the spot as we go.
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Bow many of you woulu like to sell to businesses as opposeu to consumeis. 0k,
about a thiiu, that's usual.
I always use consumei examples, because we all aie consumeis, but I believe
they aie the same. I think a business puichase is the same as a consumei puichase
except, this is the big except: one, they'ie using someone else's money anu two,
they'ie not tying to please themselves, they'ie tiying to please theii boss.
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^$44 *7@@LF=
So Teiiy anu Kate useu to woik foi ICN, which is a faiily famous agency
liteiaiy, movies, etc. Why uoes an authoi, scieenwiitei, oi someone else hiie ICN to
iepiesent themselves insteau of just some guys with a foou cait.
Pait of the ieason is they believe that when it's a meeting at Wainei Biotheis,
the peison being solu to will be moie likely to spenu money because he can tell his
boss he bought it fiom ICN oi he bought it fiom vicki Iivin oi Stuait Kiichevsky as
opposeu to, "I bought it fiom Cheiyl, you nevei heaiu of hei." That 5/+76 they tell
theii boss when they'ie buying something fiom you is actually what they'ie buying.
Is this staiting to fit into place.
VE4-;&44 O$,&C4 7;, 8)@(&47(-$4
Now we'ie going to step siueways. In the connection economy, we have to think
about the value youi business cieates, anu theie aie a lot of business mouels.
BH&)7) -5 ' =++8 /&'/ <+)5 -*/+ )I/7'+72-*'76 2)/'-. '=+4/ &+0 =45-*)55 >+2).5 '7)
J+*5/74J/)2" H&) =++8F5 J'..)2 K45-*)55 L+2). 1)*)7'/-+* '*2 /&)6 2-2 ' 7)'..6
/&+4<&/,4. 3+= +* -/" H&)7)F5 '.5+ '* -!'2 ';;"G
The inuustiial mouel of value cieation is: Beie. It's a wiuget. You shoulu buy it
fiom me. This wiuget is the Logitec 0SB iemote anu it's $29.

24
If it's woith $Su to you, you shoulu buy it because it's only $29 anu that's it.
That's the inteiaction. A company maue a piouuct, offeieu it to you, piobably with a
miuuleman like Amazon, Wallmait, oi whatevei, you bought it, enu of uiscussion.
Theie aie many new businesses though in the connection economy that exists to
connect one peison to anothei peison. That's a funuamentally uiffeient thing.
If you go to use Facebook, you'ie using it not because you want to heai fiom
Naik Zuckeibeig, not because you want to heai fiom theii auveitiseis; that's a tax
you pay. You'ie using it so Chiis anu Saiah can connect. 0ne peison to anothei.
Anu we'ie going to talk a little bit about this iuea of impiesaiioswhat it is to
put on a show anu cieate a place oi venue wheie people can inteiact. What we see
ovei anu ovei again is those aie extiemely poweiful, seuuctive, piofitable
businesses because that's what's missing.
.&$@C& 7(& C$;&CL5
People aie lonely in business settings anu they aie lonely in peisonal settings.
If you iun a tiaue show foi the iight people, they'ie not coming to heai fiom you.
They'ie coming to heai fiom each othei anu builuing those connections becomes
ieally poweiful.
0i aie you connecting one customei to what you make.
0i aie you tiying to connect one kinu of customei to anothei kinu of customei.
This is uoogle.
uoogle says, if you aie a peison, a human being, come heie to finu stuff on the
Inteinet. Anu they if you aie an auveitisei, if you want to ieach human beings, come
heie to ieach human beings. Anu both siues aie happy with the ueal.
Lots of people go to uoogle anu click on the aus anu lots of people iun aus on
uoogle so people will click on them. What uoogle has cieateu is a biiuge between
one kinu of customei, the suifei, anu the othei kinu of customei, the kinu that wants
to be suifeu.
0ne coulu imagine being a biokei between philanthiopists anu chaiities. You
coulu say to philanthiopists, "I'm only going to iepiesent a uozen of you. You neeu
someone you tiust to be a miuuleman. I'm going to take caie of the 12 of you. You
will get to meet each othei anu I will hanu pick the chaiities who want to come meet
you."
Then, by connecting the two, you cieate value. Because chaiities neeu
philanthiopists anu philanthiopists neeu chaiities.


2S
1/+!38#Z ?1!/183\
[-(-;< 7 ?$CE%-$;
If someone is going to uo business with you, they'ie hiiing youi piouuct to solve a
pioblem}ust like they hiie somebouy to fix theii back oi woik foi them.
Clay |Shiikyj tells the stoiy of he got hiieu by NcBonalus to make milkshake
sales go up. Be uiu some ieseaich anu uiscoveieu that Su% of all milkshake sales
aie at bieakfast. It tuins out customeis weie hiiing the milkshake to solve theii
pioblem which is, "Bow uo I eat something foi bieakfast while uiiving that I can eat
with a stiaw."
Anu if you coulu solve that pioblem you coulu get hiieu to uo it. The milkshake
was the best solution foi sale. So NcBonalus appaiently maue up so new kinu of
bieakfast thing that people peiceiveu as being healthiei foi bieakfast.
3*& @$-;% -4_ 6*&; L$E %&CC )& L$E( ^E4-;&44_ 6*7%
89) (&7CCL 47L-;< -4_ 2]$EC, 8 *-(& %*7% @($,ED% $(
4&(P-D& %$ 4$CP& )L @($^C&)F=
I am not saying, "Bo I like it oi uo I like Bon." That's way uown the list. What's on
the list is, "I heaiu youi stoiy. I tiust you enough. I'm going to listen to youi stoiy.
Now that I've heaiu youi stoiy anu I tiust it, uo I want to hiie that stoiy to solve my
pioblem."
If you think about all the bianus, events anu stuff we buy, that's why we bought
it, to solve a pioblem. Anu so I'm going to ask you what am I hiiing you to uo. Anu if
youi piouuct solves that pioblem, I'm much moie likely to hiie you to uo it.
What it's piobably going to be is, "To impiess my boss; to impiess my family; to
connect with people because I'm lonely; to figuie out how to feel less afiaiu." These
aie the ieasons we uo stuff. Not because we have six wiugets anu we want seven.
3*& .C7D&^$ +''&D% 7;, 3&CC-;< ?%$(-&4
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5'+( ,@ +,/@9;&/+&F 73) 0,3 *'6& ), 8&55 8,-&)*9/= &58&1 T9(& @,% &P'-.5&F E4- '
.%&8&/)')9,/ +,'+*F E <'/) ), 7& 83.&% *,/&8) ), )*&- '/; 8'0 ), )*&- E4-
8&559/= )*&- )9-& '/; +,/@9;&/+& 7&+'38& -,8) .&,.5& U38) /&&; ), 7& 83%& )*')
)*&0 <,/4) -'(& @,,58 ,@ )*&-8&56&8: $3) E +'/4) )&55 )*&- E4- 8&559/= )*&-
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.%&8&/)')9,/8FW <*&/ E %&'550 +'%& '7,3) )*') )*& 5&'8):
Right. Anu this is why "All Naiketeis Aie Liais" is a bau title foi a book. Because
theie aie veiy few piofessions, some veiy olu, wheie people weie extiemely honest

26
about what you weie buying. But in geneial, that's not the way human beings want
to be maiketeu to.
Buman beings when they buy a $9u bottle of wine, we have ieal cleai uata on
this, think it tastes bettei than a $1u bottle of wine even though we coulu switch the
wines. When I go to the peison at the table I uon't say, "Woulu you like the
expensive wine because the placebo effect will cause you to enjoy it moie."
I have to put on the wine show in oiuei foi the placebo effect to woik.
You have to make youi own ethical uecision about whethei the enus anu the
means aie justifieu.
The fact is, theie is no non-fiction book publisheu that coulu not be wiitten in
five pages. Right. "Beie is the five page summaiy of what is in this book. You uon't
have to ieau it." So why uo we want to ieau it. We want to ieau it because the act of
ieauing it oi just holuing it makes us feel uiffeient than the infoimation.
The act of going to Bumble anu Bumble foi a haiicut may enu up with exactly the
same haii as the $Su haiicut foui blocks away, but it makes us feel piettiei. So we
aie piettiei because we walk uiffeiently uown the stieet.
You'ie not going to be able to just walk up to people, tell them the actual uigital
tiuth of why you weie theie anu expect the placebo effect to woik. It won't. That's
the magic of the placebo effect.
The challenge heie anu the way I've uealt with it anyway is to say,
3*& ,-''&(&;D& ^&%6&&; )7;-@EC7%-$; 7;, )7(:&%-;<
-4 )7;-@EC7%-$; -4 8 <&% L$E %$ ^EL 4$)&%*-;< L$E
(&<(&% C7%&(5 !;, )7(:&%-;< -4 8 <&% L$E %$ ^EL
4$)&%*-;< L$E9(& <C7, L$E ^$E<*%5
Youi oppoitunity is to tell a stoiy about why somebouy shoulu hiie you as a
piesentation coach that gets them to become confiuent. Because if they become
confiuent, they'ie going to be happy iecommenuing you to the next peison anu
you've achieveu youi goal.
The ait of this is, we'ie going to piactice, piactice, anu piactice, can you tell that
stoiy, not to me, but to the peison who neeus to heai it in a way that iesonates with
them. Theie aie so many examples of this.
Bow many of you have evei been to a chiiopiactoi. Why uoesn't the
chiiopiactoi make you take off youi shiit.
If they maue you take off youi shiit, weie weaiing a white smock, anu theii
hanus toucheu youi skin, you woulu get bettei fastei than you walking in anu them
saying, "Bon't bothei taking off youi suit jacket oi tuxeuo, it uoesn't mattei I'm just

27
going to.anu you can leave." That's showing off, but it's not touching human beings
in a way that we know makes human beings feel bettei.
Anu meuical piactitioneis sciew this up all the time. I'm not picking on
chiiopiactois. All soits of meuical piactices woulu woik bettei if the act woulu be
moie like sommelieis anu auueu moie placebo effect stuff. If the goal is to make
people healthiei, then that's what they shoulu uo. Nake people healthiei anu uon't
woiiy about the nuts anu bolts level of what's happening at the moleculai stage.
3*& X$D:B8; +''&D%
If the thing you'ie uoing catches on, what's to keep somebouy else uoing exactly
what you uo foi half piice anu eveiyone will move. Theie aie a lot of answeis to this
question.
Foi example, theie aie plenty of seaich engines that give seaich iesults just as
goou as uoogle, but with moie iesults pei page, bettei piivacy, less annoying aus,
whatevei it is anu eveiyone hasn't switcheu. In fact, almost no one has switcheu
because the lock in effect it veiy poweiful.
Theie aie people who always go to the same pioviuei when they neeu a
fieelance copywiitei.
!" I*0 ;9;/4) )*&0 8<9)+* ,@@ ,@ X,,=5&1
Lock in effect. What lock-in says is it's just too haiu foi me to switch. It might be
haiu economically, oiganizationally, anu technologically.
0nce Apple has peisuaueu an elementaiy school to go Nac anu then Bell shows
up with a cheapei one, even though they'ie going to be ieplacing theii computeis,
they uon't switch because all theii softwaie isn't going to woik. The lock-in effect is
because the softwaie goes with the haiuwaie, so you'ie not going to switch the
haiuwaie.
But the lock-in effect moie often is emotional. You have to aumit to youiself oi
youi peeis that you weie wiong anu now you'ie going to switch to something that's
bettei. Some people aie immune to lock-in anu switch all the time, but lots anu lots
of people get lockeu into a solution. The question is how uo you uo that.
Why uoes Staibucks spenu so much effoit maiketing the Staibucks caiu.
Because theie's no moie money in it foi them. The answei is, if you'ie in an aiipoit
anu theie is a Staibucks paitenuei, you got youi Staibucks caiu, "I'll just go theie.
It's easiei." It builus up lock-in.
Ameiican Aiilines inventeu fiequent fliei miles because it maue a huge
uiffeience foi lock-in. Not because the peison who flies the most neeus the miles.
They uon't. But emotionally they felt they weie sabotaging themselves by not auuing
to some numbei even though they'ie nevei going to tiaue theii miles foi anything of
value.

28
We'ie going to keep coming back again to this is going to be ieally haiu foi you
to make it woik. It's going to be ieally haiu foi you to get staiteu, but aie you
builuing this house on this lanu, in the stiuctuie the way you want, in the way you'ie
going to be glau you uiu oi is it a one-tiick pony anu then you'ie going to go to the
next thing.
If I look at Angiy Biius, Angiy Biius is a huge hit. If all they wanteu to uo was
make a hit anu ietiie, it was peifect.
But if they aie looking at lock-in foi theii next game, it's a pioblem because they
nevei built a uiiect ielationship with the peison who plays Angiy Biius. Theie is no
Angiy Biius newslettei. Theie is no Angiy Biius univeise that makes it moie likely
to play a new game fiom Angiy Biius' company Rovio as opposeu to one fiom theii
competitois.
8,&74 %*7% ?@(&7,
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;&6&5,. '/ 9Z*,/& '..F *,< ;, 0,3 =&) '%,3/; )*')1
The app maiket is in laige measuie a suckei's game foi a few ieasons.
Reason numbei one is no one's evei heaiu of you anu theie aie a million apps to
choose fiom. It's the biggest haystack anu you'ie a little tiny neeule.
Numbei two is once you finally get someone to heai fiom you, who wants to
heai fiom you, most apps foigot to be socialInstagiam being the exception.
Instagiam woiks bettei because I get all my fiienus to use it. All I neeu to uo is
get Kelly anu then Kelly is going to get five of you anu if one out of five of you get
someone else, I go to infinity.
Wheieas if you make me an app of, "I look up anu I can see the stais," that's
ieally cool, but if I'm not going to tell 1u fiienus about youi app. It's a ueau enu. It
uoesn't scale.
So we'ie stuck with it's a big haystack anu most apps uon't lenu themselves to
spieauing.
Then the thiiu thing kicks in. If you want to sell youi app, you have this big
pioblem which is no one knows how goou youi app is until they give you money.
Anu people uon't like uoing that with uigital goous. They like uoing it with othei
things in theii lives.
We uon't go to a iestauiant anu say, "Let me eat heie then let me pay you if I
think it's goou." But we uo it with uigital stuff.
We uon't evei buy a iecoiu until we've heaiu it on the iauio fiist foi fiee. The
iauio is this huge wonueiful sampling tool that maue the music inuustiy woik.

29
In the app woilu we have a bunch of apps that say fiee, but if you use it a lot,
you'll pay foi it. That's biilliant. Fiee is a gieat sampling tool anu if they'ie not using
it a lot, they shoulun't pay foi it anyway. If they aie, they'ie not going to fight you to
pay foi it because it's giving them what they weie hoping foi.
That means the most impoitant thing you can uo with an app is making suie it's
viial. B% 2-2*F/ J'.. -/ (-7'. +* 6+47 >4<" % /&-*8 % J'..)2 -/ ,4*<'.D =)J'45) % /&-*8 ,4*<'.
-5 >+7) ;+0)7,4. =)J'45) -/ 0+785 -* /&) 2'78 /++G"
Nake it fungal meaning you uon't have to be famous. You uon't have to be the
most populai viueo on Youtube, not that }oseph Kony thing. It can quietly in the
uaik go fiom peison to peison giowing among a ciicle of people.
!" I&55 +&%)'9/ 9;&'8 ;,/4) 5&/; )*&-8&56&8 ), 7&9/= 69%'5Y
Absolutely, anu Atlantic Avenue is a ieally stupiu place to builu a house. Because
houses cost $1Su each, but the ient with one house is only $11u. Bon't builu on
Atlantic.
uiven that you can builu whatevei you want, uon't builu something that isn't
going to woik.
Theie aie all these apps in which the peison who built the app thought it was a
goou iuea. Anu if eveiyone knew what they knew it woulu be fine, but eveiyone will
nevei know what you know.
What you can uo if you want is say, "No. I'm going to builu an app that I have to
sell stiaight to each peison who uses it." That's the way the woilu woikeu foi 1uu
yeais. That's fine, but you bettei piice it so that the cost of selling it is built into youi
piofit.
When I was selling the games at Yoyouyne foi $1uu thousanu oi $1 million each,
I went peisonally. I got into a plane anu flew theie. It took us six months to make a
sale. 0ui costs of goous weie liteially zeio, othei than the people. But we hau to
chaige you a lot because I hau to go to all these meetings wheie no one evei bought
fiom me.
If youi app costs $S anu you have to have a meeting with someone to get them to
buy it, you'ie in ieally big tiouble. But maybe it's a $Suu app anu you can affoiu to
uo it because eveiy sale costs $1uu. That woiks.
I'll use the Al uoie eBook as a gieat example of the mistake that all these people
aie making.
The Al uoie book was beautiful. It costs them hunuieus of thousanus of uollais
to make anu it lost a foitune. 0thei than magazines wiiting about how gieat it was,
no one evei heaiu about it. Anu how many people ieau about an app in a magazine
anu say, "0h I'm going to go get my iPau, piess a few buttons, pay the money, anu

Su
uownloau it." Not enough. Anu once I hau it, theie was no ieason to tell my fiienus.
It uiun't woik bettei if my fiienus weie using it.
The magic of the iPau anu the magic of the web isn't that it looks cool on the
scieen. That was CB-R0N yeais ago which I useu to uo. The magic is it woiks bettei
when youi fiienus anu youi colleagues aie using it too.
#$ $;& 67;%4 %$ *7P& %*& $;CL &B)7-C 7DD$E;% -; %*&
6$(C,5 8%94 E4&C&445 >;D& L$E *7P& &B)7-C_ L$E 67;%
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S7Signals spenus zeio uollais on tiauitional maiketing. All they neeu is one
peison in this ioom to use it anu then those people uo the maiketing.
I'm iaising my voice heie a little because I ieally want to hammei this home.
You'ie not entitleu to the business you want.
I can help you make it the best it can be given the constiaints, but you guys aie
staiting with no constiaints.
3*& 1E4%$)&( 0E;;&C


S1
So theie's this funnel. The top is eveiybouy in the 0niteu States oi Noith Ameiica.
The bottom is customeis who gave you money. Anu the funnel is leaky. People uiip
out of it. They uon't all come out the bottom.
When you think about the fact that they have to be uivoiceu, talk to a lawyei,
talk to a lawyei that's chaiging by a flat flee, anu talk to a lawyei that's chaiging a
flat fee who knows you, the challenge you have is you have to be veiy cognizant of
how many people aie in the univeise left at the bottom anu piice accoiuingly.
If the value you aie cieating is ieally significant anu the cost of making the sale is
ieally high, then it's not $S. Right. Naybe it's a $1uuu seivice. Naybe it's an app that
we talkeu about a minute ago. It has to match the funnel that you aie going to cieate
foi it.
If you'ie evangelical anu want to tiansfoim the way people get uivoiceu, that's a
totally uiffeient uiscussion.
If you came to us anu say "I'm going to use technology as the weuge to change
the way people get uivoiceu anu my mouel is mint.com," which was bought by
Quicken foi nine figuies.
Then I say, "0h theie is a whole bunch of things one coulu uo to uis-inteimeuiate
lawyeis anu make getting uivoiceu way fastei anu less painful. I'm going to builu a
whole suite of stuff anu go stiaight to the woilu so that eveiy time someone says
they'ie getting uivoiceu, the fiist thing people say to them is, "Bave you seen ______."
That's an auuacious, big, fat, haiiy thing to go aftei, anu you can piobably finu
some people who woulu give you the money to get you theie, oi at least have a shot
of getting theie. But you got to be veiy caieful not to uo pait of it without uoing all of
it.
If the meuiatoi wakes up eveiy moining with a pioblem, that's one of the things
you have to think about. "What pioblem is my customei waking up in the moining
with."
The meuiatoi wakes up in the moining anu says, "I neeu to get moie of my shaie
of meuiation things," anu you say to that meuiatoi, "This tool comes with a
uashboaiu that shows back up on youi scieen anu theie's this huge incentive foi
you to be able to offei it because they'ie going to get you new clients." Then when
you call on the meuiatoi anu say that sentence, the meuiatoi is going to say, "I've
been waiting foi someone to uo that" oi they'ie not going to listen to you.
But again it goes back to: uo people know you. Bo they tiust you. Will they
listen to youi stoiy. Boes theii stoiy iesonate enough with you that you'ie willing
to give it a tiy.
Anu the last pait of this anu then we'ie going to go on.

S2
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DE4%$)&(4_ L$E9(& I$^ -4 ;$% %$ '-;, )$(& DE4%$)&(4
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'$( L$E( DE4%$)&(45
Because now theie aie 1uu people who have saiu, I'm willing to use technology
to get moie clients to seivice my clients bettei anu make moie money.
Then you sit theie anu uon't say, "Bow uo I get moie meuiatois." You say, "What
othei tools aie available to these meuiatois so I can use the connection economy to
uo it.
Foi example, how can I stait showing bai chaits anu othei soits of infoimation
to the meuiatoi's clients so they can see, compaieu to othei couples who make as
much as you uo, this is how this usually goes."
If you'ie the aibitei of community stanuaius, you can nevei be ieplaceu, because
you'ie the one who has the uata.
The point iight now isn't to answei the question, "what pioblem is my customei
waking up with."
The point now is to know the question is essential. That's what I want you to be
thinking about.
You can change this to anything you want anu if you want to, you can open a
kayaking school. That's how eaily in the ueal it is.
What uo you want to change it into so that you'ie not always climbing up uphill
so theie's something in it that the winu is in youi back.
]*7% -4 %*& [7(, .7(%F
What's the haiu pait of youi business. If youi business uoesn't have a haiu pait, you
uon't have a business.
I woulu aigue the easy pait of youi business in the case of |intentionally
inauuiblej is the app. You coulu make this app in thiee weeks. The app isn't haiu
anu if it's 9u% of what it coulu be oi 11u% of what it coulu be, it's not going to
mattei. The haiu pait is finuing somebouy who is a miuuleman who will make you
successful.
When I think about each of you anu the business you want to cieate, you got to
unueistanu what's the haiu pait anu spenu all youi time on that.
I constantly iun into people anu ask, "Bow's youi pioject uoing."

SS
"Well, I fileu the BBA ceitificate, we've been incoipoiateu, I think I've got some
office space coming, anu I hiieu the guy to uo the logo." Anu they go thiough the
list of all the stuff that uoesn't mattei because it's easy. They shoulu have spent a $1
on it anu moveu on.
\$E( C$<$ -4 ;&P&( %*& *7(, @7(%5
It just isn't.
All the time you'ie spenuing on youi logo is the time you'ie hiuing fiom uoing
the haiu pait. Anu the haiu pait is often being known, being tiusteu, oi being able to
cieate something that occuis that people can't live without.
This is uiffeient fiom what is the scaice pait. Scaicity is the only thing woith
paying foi. If you make something that is incieuibly abunuant anu eveiyone has it,
you won't be able to sell it. But you can cieate scaicity by uoing something that isn't
paiticulaily uifficult.
1(&7%-;< ?D7(D-%L
If }ames Tayloi ueciues to put out a conceit anu theie aie only 2uu seats, he cieateu
scaicity anu he can sell those seats foi $1,uuu each anu make $2uu,uuu in an houi.
What he uiu that was haiu was suiviving being a heioin auuict, being a gieat singei,
anu uoing it foi 4u yeais. That's haiu. But cieating scaicity in that moment was easy.
So you got to think about, "What am I uoing heie that is both haiu anu scaice."
As I use this, as it giows, as it catches onuoes it become moie valuable oi less
valuable.
If we think about this, we think about somebouy who is tiying to cieate
collectible fine ait. Anuy Waihol has showeu that you can cioss this chasm anu
become valuable just because you'ie eveiywheie. But geneially the moie times you
paint the Nona Lisa ovei anu ovei again, the less it's woith.
Theie aie othei things that become moie valuable as moie anu moie people use
them like e-mail. If e-mail was helu hostage, the univeise woulu pay moie to keep e-
mail then it woulu have paiu 1S yeais ago. As people use it moie, it becomes moie
valuable because we get uepenuant on it.
Someone is heie who's uoing a philanthiopic thing in theii townKelly.
When six philanthiopists aie involveu in what you aie uoing, is it woith less oi
moie than when 1uu philanthiopists aie involveu.
Foi some people theii woiluview is, "I like being pait of an exclusive eaily
auoptei gioup." Then it's less valuable because theie's moie people in. It's so
ciowueu no one goes theie anymoie.

S4
0thei people like the fact that it's ciowueu anu so it's moie valuable.
So we have to think about as this pioject scales, is that going to make it bettei oi
woise.
?%&7C-;< 8,&74
The fiist question is: "Is someone going to steal my iuea." Anu the answei is
piobably not.
As youi uiscoveiing heie, theie aie iueas all of you have that have gieat chances
of woiking anu veiy few of you aie busy thinking about how you aie going to uo it.
Even though you've alieauy ueciueu you want to be entiepieneuis, it's not as easy
as stealing the iuea.
So Twittei staits catching on, anu yeah theie's Yammei oi whatevei it is anu
people have came up with vaiiations, but in geneial, that's not youi pioblem.
\$E( @($^C&) -4;9% %*7% @&$@C& 7(& D$@L-;<5 \$E9(&
@($^C&) -4 ;$% &;$E<* @&$@C& 7(& D$@L-;<5
As you tiy to inteiact with the tiibe, as you tiy to make a iuckus, being the one
anu only is usually a pioblem.
If you weie the one anu only fashion label, you woulu fail because the
maiketplace woulun't caie about fashion. It's vogue magazine anu competitois that
make fashion woik. Tommy Bilfigei wants Ralph Lauien to be in business, not out of
business.
3(-^&4
When I talk about tiibes, I uon't mean neaily a gioup of people. So left-hanueu
people, not a tiibe. I can iuentify with all the left-hanueu people in the woilu, but
they uon't caie about each othei. A tiibe has to have a goal, a cultuie, a community,
they have to caie.
If I talk about gay men in Ameiica, they'ie not a tiibe.
Theie aie subsets of gay men in Ameiica, the ones that caie about the
Chiistophei Stieet histoiy anu go to a paiaue, that's a tiibe. Foi suie. They can look
at each othei anu give the heaushake. They'ie weaiing the same thing. They talk the
same stoiies. That's a tiibe.
You will always uo bettei if you'ie builuing something in the connection
economy if the tiibe embiaces you. We'ie haiu wiieu to uo what othei people aie
uoing.

SS
Bow many of you know about Tom shoes. veiy clevei iuea. Buy a paii of
alpaigatas anu he gives an iuentical paii to someone who's nevei woin a paii of
shoes in theii life. Why uoesn't eveiyone in Ameiica weai Tom shoes.
Because Blake uiun't stait with eveiyone, he staiteu with a veiy specific Baily
Canuy ieauing, uiban uwelling 29-yeai-olu woman who weais a ceitain thing anu
iecognizes othei women like hei. That was biilliant because you only have to get
1uu of those women befoie you get a 1,uuu because the tiibe is in sync.
You can't light it foievei. Soon they aie going to go on to the next fashion. So he
has cleveily saiu, "So now that I got this, I'm going to go talk to this gioup of people."
It's ok with you that this might move to othei tiibes. If you got it iight, you'ie
going to have enough momentum that you can go fastei than all these othei people
because they'ie afiaiu anu you'ie not because you've seen it fiom the insiue.
But the othei thing the iesistance speaks up about is this, "I uon't want to pick
one tiibe, because if that tiibe iejects me, I will have faileu. I want to pick 2u tiibes
because theie's always anothei one."
As soon as you pick 2u tiibes, the tiibe knows that anu they know you'ie not
obsesseu with them. They'ie going to become less obsesseu with you as a iesult. It's
a self-fulfilling piophecy.
If you'ie playing the fielu anu you'ie at a singles bai, it's way less likely that
you'ie going to get maiiieu because the people in that ioom have a uiffeient
attituues about each othei.
If you go to the inuustiy anu this is itwe caie about you, we'ie committeu to
youanu you woik you'ie way in that inuustiy, you'ie way moie likely to conveit
that tiibe. Anu then you can take the stoiies fiom that tiibe anu you go to youi next
tiibe.
That is the place to stait, but you have to uefine the tiibe.
The tiibe might not be how olu they aie oi wheie they live. It might be they'ie
big fans of vintage Rolling Stone iecoius. You can't tell fiom looking at someone if
they'ie that kinu of peison, but you know they aie all ieauing the same magazine,
the same newslettei, oi the same whatevei.






S6
!..+!X8#Z 3> 1>#?YO+/?
3*& ?7C&4 0E;;&C
Now back to this funnel because its one of my favoiite uiawings anu then I'm going
to uiaw the Rogeis cuive.
Bo you all know how uoogle makes billions of uollais eveiy month in piofit.
Those little aus next to the seaich iesults. Bo you know how they piice the aus. You
pay by the click. But how uo they ueciue how much a click costs. It's an auction. This
is unbelievably biilliant what they uiu. Bill uioss soit of inventeu it anu uoogle
figuieu out how to maximize it.
Beie aie all the people who aie seaiching foi something anu I iun an au saying
theie is a siue effect of viagia wheie it's uiscoveieu that it makes youi eais get
biggei.
I buy an au on uoogle that says "Eais getting biggei. Click heie to join oui
lawsuit," anu I put it up next to the woiu viagia.
That's going to cost me $8 a click. Let's say S% of the people who see this au click
on it. I only have to pay $8 foi each one. They come to my website. Bow much uoes it
cost to get that peison to my website. $8
Let's say 1 out of 1u people who see that click on the next page to leain moie
about my fiim. Bow much uoes it cost me to get somewheie heie. $8u. B?+)5 '*6+*)
*+/ 4*2)75/'*2 0&6 -/F5 MNOD /&-5 -5 7)'..6 ->;+7/'*/" % &'() /+ >4./-;.6 =6 PO" :)5EG
Now let's say 1 out of S those people give me theii e-mail auuiess so I can follow
up with them. Bow much uoes it cost me to get an e-mail auuiess. $4uu.
Anu let's say that I e-mail people the newslettei blah blah blah anu 1 out of 1u of
them join my class action lawsuit with the big eai pioblem. Bow much uoes it cost
me eveiy client. $4,uuu. That's how much it cost me to make a sale using this thing.
If I succeeu in my case against Pfizei, I'm going to make $1uu,uuu pei peison in
piofit because that's how much my legal fees will be which is gieat. Cleaily I shoulu
buy as many of these people as I can foi $4,uuu because my ievenue fiom each one
is $1uu,uuu. Bo you see why. Nake sense.
B%*5/)'2 +, >) ;-J8-*< ' =-< .'054-/ % J+4.2 ;-J8 %F> 5)..-*< /&) >).+* +, /&) >+*/&
J.4=D /&) >'/& 5/-.. 0+785"G
So now, someone else sees what I'm uoing, goes to uoogle, anu says, "I'm going to
pay $16 a click."
If the cost of the click goes up to $16, what's my cost of a sale go to. $8,uuu. The
answei is cost-pei-click uoubleu, so cost-pei-sale uoubles.

S7
This is magic because who's taking all the piofit off the table. I'm willing to keep
in the biuuing wai until I get to $99,uuu. I'll just keep paying moie anu moie anu
moie because it's woith it to me.
All the piofit goes to the auction. uoogle is cleaiing the boaiu in eveiy single
inuustiy that uoes online anything because they get to keep the money. With me.
Now, if youi competitoi iealizes that you uon't neeu two pages to get someone's
e-mail auuiess, but only one page, they'ie going to be five times moie efficient as
you aie at iunning this funnel. Theii cost of a sale is going uown by 8u%. See why.
Suuuenly they can biu a foitune foi these links. You can't affoiu them anymoie. Anu
they'ie going to get all the customeis.
This funnel is exactly the same thing that happens if you have a sales foice.
It's exactly the same thing that happens if you have aus that iun in magazines.
It's exactly the same thing that happens if you'ie buying shelf space fiom Whole
Foous.
In eveiy case, theie is an amount of money you'ie willing to pay to get the
attention of the masses anu theie's an amount of money you get at the bottom foi
the cost of making a sale.
I'm going to let this one sink in foi a minute because this going to tiansfoim the
magic.
0ne of the things entiepieneuis uo is we believe in magic anu say "I'm going to
builu this gieat thing, anu a miiacle happens, anu I'm iich." Anu it's that "Anu a
miiacle happens pait" that I'm conceineu with.
So Kit neeus to ieach mostly touiists who aie coming to Niami so they will pay
hei $12S to use some of hei seivices that she offeistouis anu vespas anu things
like that. The only ieason she uoesn't have a million customeis is because she can't
figuie out an efficient funnel to get in fiont of a touiist on the iight uay with the
iight stoiy so that touiist then listens to hei stoiy again, comes to hei facility, anu
hanus ovei theii $12S. Anu if you fix this pioblem, eveiything else will take caie of
itself.
When we think about the business we say,
2[$6 ,$ 8 D*7;<& ;$% %*& 'E;;&C_ ^E% %*& ^E4-;&44
-%4&C' 4$ %*7% -% )7:&4 -% )$(& C-:&CL %*7% )L 'E;;&C
<&%4 )$(& &''-D-&;%F=
You may have seen these touis they have in vaiious cities wheie they use olu
Woilu Wai II amphibious boats. They uiive thiough the city, it hits the iivei, anu
uiives in the iivei as a boat. They call them Buck touis anu they give eveiyone on

S8
the boat this ieally annoying Buck noise thing. Why woulu you uo that. Buck noise
machines aie expensive.
The answei is because what aie touiists uoing. They'ie walking aiounu. While
they'ie walking aiounu, this boatloau with wheels of happy touiists quacking like
uucks goes by.
The act of iunning theii business is also making theii funnel bettei because iight
on the siue of theii boat is theii phone numbei. That is the only methou they neeu to
get moie touiists to get on the next boatthe act of uoing it in fiont of them. So
when I think of Banz anu his thing, a lot of the time that these guys aie out theie
with theii pitch, they'ie uoing it to someone who might become his next customei.
0i the guy who iuns fancy foitune cookies, a business I think out of ueoigia.
They'ie the numbei one foitune cookie makei in Ameiica. They will make foitune
cookies foi youi company event blah, blah, blah. The numbei one way foi him to
giow woulu be to offei a uiscount if you'ie willing to let him put his 0RL on the back
of the foitune. Because eveiy single peison who's at an event opens it up anu says,
"0h that's clevei"they see on the back how to oiuei cookies foi /&)-7 event.
So again, shoit ciicuiting the funnel as it giows
U-''E4-$; $' 8;;$P7%-$;4

This is the bell cuivethe noimal uistiibution. Foi the libeial aitists in the back
iow, if I ask all of you to get in height oiuei fiom 4 foot to 7 foot anu I measuieu,
what I woulu see is a couple people who weien't veiy tall, a couple people who aie
veiy tall, anu most of you in the miuule.

S9
If I oiganizeu any gioup of people I meet on the stieet by haii length oi the
numbei of CBs they own, it woulu be exactly the same. Theie woulu be a whole
bunch of people who own one CB, anothei few who own 1u,uuu CBs, anu most
people in the miuule. This uistiibutes foi almost eveiything in natuie.
If we talk about woiluviews, it tuins out that we always uistiibute in the
following way:
Theie aie a few people who like to buy stuff meiely because it's new. These aie
the people who use to watch all theii Tv on a Tivo, but now watch it on an iPau
insteau because it's coolei.
Then theie aie people who waiteu until the BvB playei was $8u at Wal-Nait
befoie they bought one. They aie the masses. Theie aie a lot of them.
Anu then theie aie people who still have a 12:uu flashing on theii vCR.
If we think about the maiket foi shoes, theie aie women who ieau vogue
magazine foi the Aus anu people who buy six paiis of New Balance at a time anu
they uon't back to Zappos foi six moie yeais. Anu you have to think ieally haiu in
the gioup you aie thinking about.
Aie you selling a piouuct that's going to appeal to eaily auopteis because it's
new.
0i aie you selling something that's going to appeal to people only when they
have to because eveiyone has it.
0i aie you tiying to appeal to the masses.
These aie funuamental uiffeient gioups of people. Anu this is wheie technology
people got in tiouble foi a long time.
Theie is this theoiy that the Boston Consulting uioup put out theie. You woulu
make something foi the geeks anu as you maue it moie anu moie it woulu get
cheapei to make because that's what happens with uigital goous. It woulu become
moie populai so you coulu just iiue the wave to the masses.
Anu that happens once in a veiy long while, but not often. The ieason is because
between heie |the geeksj anu heie |the massesj is a chasm. A big gap. This chasm is
because these people want something that's cool anu these people want something
that woiks.
If we think about the typical app on the iPhone oi the iPau, theie's a bunch of
people who buy it iight away because it's cool. But these people uon't want to heai
about that. They want a completely uiffeient stoiy. "That it is a complete solution,"
has nothing to uo with cool. Anu that gap, that chasm, is in a book by }eff Nooie
calleu "Ciossing the Chasm" anu it's wheie a lot of you will get into tiouble.

4u
What you have to think about is: "Am I happy being a small enough business oi a
fieelancei that all I neeu is a few eaily auopteis anu I can ueclaie victoiy. 0i am I
builuing something foi the masses anu it uoesn't woik until I have the masses.
If you ieau Tech Ciunch anu all those othei online blogs, they aie entianceu by
new cutting euge businesses.
Biu you see that one that got $4u million uollais in funuing calleu Coloi. It's this
big thing. All the 1 million people who tiieu the new thingtheie's 1 million of them
that all got it anu it completely faileu uown to zeio. The company iaiseu $4u million
uollais anu hau to stait ovei. They'ie on theii thiiu tiy now because it uoesn't woik
unless they have 1u-2u million useis. So it uoesn't uo them any goou to come up
with something hip. They have to come up with something foi eveiyone to use.
O(45 ?(-@(7@*7- 7;, %*& 1E(P&
Let's say it's 2u yeais ago anu you aie one of the few people who move heie fiom
Thailanu who can actually cook ieally well in some soit of volume. You look aiounu
anu say, "Theie aie no goou Thai iestauiants in New Yoik City of all places. Theie
ought to be a lot of them."
The instinct of the entiepieneui is, "All iight gieat this is bettei Thai foou; I'll
win." But that's not the way it woiks.
So I want to take you thiough Nis. Siipiaphai's thinking anu how it came to be
that hei iestauiant makes millions anu millions of uollais in Queens, way off the
beaten path on the seven tiain anu how she got theie.
Fiist of all, how uoes someone like me, a customei she neeus because I'm willing
to uiive to Queens to have jungle cuiiy, finu out that this iestauiant even exists.
Bow uo you use tiibes, eaily auoptei thinking, anu cost of sales to giow a little
tiny iestauiant that liteially only hau foui tables the fiist few yeais she was open to
one that's now eight times the size with a patio in the back anu anothei bianch still
closeu on Weunesuays a few miles away.
It staits with this. In this uistiibution of people in New Yoik who go out to eat,
theie's a gioup heie that want to go to places that haven't been in the New Yoik
Times yet. Anu this gioup was oiganizeu by a guy nameu }im Leff. }im staiteu a site
calleu Chowhounu.com.
Chowhounu.com was the tiibal wateiing hole foi people who wanteu to give
each othei the buzz on something that was new. At its peak, Suu,uuu people a month
useu chowhounu. Balf weie piobably in New Yoik City anu of the half (1Su,uuu),
piobably only Su,uuu weie inteiesteu in Thai foou. 0f the Su,uuu, piobably only
1u,uuu weie going to go to Queens.

41
So theie weie only 1u,uuu people who matteieu to Nis. Siipiaphai othei than
hei tiny community of Thai people. But she coulun't make the business woik at the
level she wanteu if it was just foi Thai people.
Insteau of uoing what eveiy othei Thai iestauiant uoes which is, "We have Pau
Thai, come heie," she saiu, "We uon't have Pau Thai, anu if you'ie not one of the
1u,uuu people, you'ie piobably not going to like this place. Anu we'ie going to seive
stinky long beans anu ciispy watei ciess salau, but we'ie not even going to put it on
the menu because youi eithei an insiuei oi you'ie not. Anu if you'ie an insiuei,
you'ie welcome heie."
By making the peifect iestauiant foi those 1u,uuu people, what she uiu was
make it iiiesistible to those 1u,uuu people because theie was no place else. She hau
a monopoly on inteiesting Thai foou in New Yoik City 1S-2u yeais ago.
So what happens.
It tuins out that chowhounus talk a lot. When you go out to uinnei, you iaiely go
by youiself, so you biing othei people with you. Some of the people you biing with
you uon't like it. That goes against eveiything most entiepieneuis stanu foi.
Fine with hei.
"If you uon't like it, uon't come back. But if you uo like it, I have a monopoly on
this foi a whilefoi this gioup befoie you get boieu. You'ie going to have to come
back."
At that point someone fiom the New Yoik Times, who's tiying to please his boss
by wiiting about something that hasn't been wiitten about befoie, steals some of the
insight fiom the Chowhounu people anu goes to the iestauiant. Be wiites a two stai
ieview of a iestauiant wheie it's not veiy expensive anu theie aie no tablecloths.
This is veiy unusual in New Yoik. This was an impoitant thing. It was a spin of
the wheel. It uiun't have to happen, but it uiu happen.
Anu so, when the New Yoik Times gives it two stais, something occuis which is a
whole bunch of people who's woiluview is, "I uon't go to Queens," have a pioblem
which is, "I always eat at iestauiants that get at least two stais in the New Yoik
Times. Conflict.
A lot of those people went anu tiieu this iestauiant because it's now moving
thiough the cuive of the population anu it has tiust anu authoiity because they
founu out about it fiom someone who they tiusteu.
At that point an inteiesting thing happens.
Zagats has at the fiont of the book a ianking of the highest iankeu iestauiants.
Well Nis. Siipiaphai hau pickeu a categoiy that was almost empty. Anu she hau

42
1u,uuu Chowhounu's on hei siue plus a whole bunch of people who uiun't know
what goou Thai foou tasteu like, but knew the Times hau given it two stais.
These gioups of people enueu up giving hei a huge iating. Foi many yeais she
was one of the top five iankeu iestauiants in all of New Yoik City at any piice
because this iepoiting system was in hei favoi. Boes that make sense.
Now she's moving thiough the cuive. She's uoubleu the size anu she's uoubleu
the size again. Now she has Su-4u tables anu it's busy all the time, except on
Weunesuays. You know that I've been theie on Weunesuays anu have been bioken
heaiteu. So she's moving thiough this cuive.
We can talk about the whole life thing, that she also loves it. She also loves being
able to make this cultuial statement with hei woik, etc. But if we look at this as a
business anu compaie it to the 4u,uuu othei iestauiants in New Yoik City that
weien't smait enough to uo this, you see what I'm talking about.
She coulu have built it anywheie she wanteu. She coulu have stiuctuieu it
anyway she wanteu. She coulu have piiceu it on the menu anyway she wanteu.
0ne of hei competitois fiom Las vegas openeu one in a bettei location in
Nanhattan with white tablecloths at thiee times the piice anu it faileu. The ieason it
faileu wasn't because it was moie expensive. It's because they uiun't guess piopeily
about how to tell the stoiy anu what woulu happen when people got theiethat
when you got theie, theii menu was too small anu it seemeu too oiuinaiy.
As Chowhounus, we all iaceu theie the fiist uay because this place in Las
vegassome of us fly to Las vegas just to eat theieanu now it's in New Yoik anu
it uisappointeu us because they weie tiying to go heie iight away. They skippeu the
tiibe leaueis. They skippeu the uues paying piocess to woik theii way up as they
weie tiying to uo this.
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I think that she hau nave wisuom. I've given hei my books anu we've talkeu a
little about this. I think most people who meet hei say that she's iuiosynciatic.
Sometimes iuiosynciatic people enu up failing because they'ie not in sync with the
univeise. She happeneu to be. So when a Chowhounu showeu up, she uiun't shun
the peison foi not being Thai. She woulu take 1u minutes to explain what nam phiik
is anu why you want to uip youi caiiots in it. That was hei instinct, but it happeneu
to woik.
But I've also seen people who have uone it on puiposepeople who open a
business that's supposeu to be exclusive. Even though it's empty in the back, you
uon't let people in oi you make them wait behinu the velvet iope. Well they like the
velvet iope. That's why they'ie theie.

4S
0i all these businesses that hiie people to biing theii fiienus the fiist couple
weeks that it's open. You can hiie a publicist to get celebiities to come. All of those
things aie all keying into that tiny gioup of 1u,uuu people to uelight. Then it woikeu
its way thiough if you get the othei pieces of it coiiect.
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Why uo you think it's haiu foi you to pick.
G" 7&+'38& E *'6& ;9@@&%&/) 9/)&%&8)8 )*') E <'/) ), ;, ') )*& 8'-& )9-&:
Tiy again.
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Why aien't you committing.
G" 7&+'38& E +'/4) .%&;9+) <*9+* ,/& <955 <,%(:
Why is it impoitant that you know which one will woik.
G" E ;,/4) <'/) ), <'8)& -0 )9-&:
Anu you uon't want to fail.
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$E% 6*7% %$ &7% '$( CE;D*5
We uon't say, "If I can't ueciue if I shoulu have the sanuwich oi the pasta."
Right. At some point you have something to eat foi lunch because the cost of failuie
is tiny. You will not be ciusheu because the pasta isn't as goou as the sanuwich
woulu have been. You just eat something.
3*& @$4%E(&_ %*& ,L;7)-D -4 %*-4b @-D:-;< ;$%*-;< -4
<E7(7;%&&, %$ ;$% 6$(:5 .-D:-;< 4$)&%*-;< *74 %$ ^&
^&%%&( %*7; %*7%5
The uiscipline, anu I speak fiom expeiience because when I was a book packagei
we hau a uatabase of 1uus anu 1uus of book iueas in it. Bow uo you ueciue which
book iuea to puisue. Bow uo you ueciue which to spenu a month on spec foi. Well
the answei is the bestsellei is always a suipiise. The businesses that woik always
amaze the punuits.

44
uiven that no one knows, you just have to pick. It's not about being iight, it's
about beingabout putting in the woilu anu saying, "This is me, this is my
business."
G" Q*& .%,75&- 98 )*') E 8)'%)&; <9)* )*%&& )*9/=8 E -&'/) ), ;, ') )*& 8'-& )9-&
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U38) 7&+'38&Y
Coiiect. So we'ie going to kill two anu you'ie going to be stuck with one. Anu
that's sau, but tiue.
]*7% ,$ L$E 67;% %$ ,$ 7CC ,7LF
Let's talk about the uiffeience between the stiuctuie of youi business anu what youi
business uoes.
If you aie peiipatetic anu you neeu to be constantly shifting fiom one thing to
anothei, one ought to builu a business that iewaius that. As opposeu to say, "I have
to be a massage theiapist foi eight houis a uay."
The peison who wants to be a massage theiapist foi eight houis a uay uoesn't
woiiy about becoming boieu with it.
0n the othei hanu, Bick Cavett's business was, "I'm a talk show host, but eveiy
uay theie is a uiffeient peison to talk to." It's less likely he's going to get boieu if the
business is going well because theie's someone inteiesting coming in tomoiiow.
Foi me, I hau 7u people woiking foi me. What I uiscoveieu was I uon't like
having 7u people woiking foi me. It was too much iesponsibility. I was taking caie
of too many people. It kept me fiom taking the iisks that get me out of beu in the
moining.
So I iebuilt my life so I have no people woiking foi me. Anu at Squiuoo they woik
foi the company; I just bothei them. Now it matches my peisonality.
If I want to make a iecoiu album one uay anu uo a book thiee months latei, I can.
I'm still uoing my job which is this thing I'm uoing iight heie. But I'm nevei going to
uo this event againnevei going to uo it with you in this place. This is a once in a
lifetime thing foi me. Almost eveiyuay I uo a once in a lifetime thing.
Theie aie othei people who keep uoing the same thing eveiy uay because that's
who they aie. This has nothing to uo with youi business stiategy, it has to uo with
what uo you want to uo all uay.




4S
.+/O8??8># !#U 3/Y?3
3*& X-'&%-)& c7CE& $' 7 1E4%$)&(
If you can live on those people, that's enough. That's what a iaw foou juice bai in a
low ient uistiict can uo. 0n the othei hanu if you say, "No, I neeu S million
vegetaiians so I can get Kiaft as a sponsoi," that tiibe isn't who you shoulu stait
with. What will make that tiibe happy will nevei make S million vegetaiians anu
Kiaft happy.
Figuiing out how to get fiom wheie you stait to wheie you neeu to be is ciitical.
If theie is no path, theie's something wiong with youi business.
That goes all the way back to, wheie uo you want to builu youi piopeity. Anu
how much uoes it cost you to get a vegetaiian anu how much is a vegetaiian woith.
Because the question aftei how much uoes it cost to make a sale is, what's the
lifetime value of a sale. So let's talk about this.
Bow many paiis of shoes uo you own Chiis. Five, anu they cost $9u each. Chiis is
woith $4Su to this little shop in 0iegon. Not eveiy one of theii customeis is woith
$4Su, but Chiis is.
If you make a piouuct people only neeu to buy once in theii whole life, it's veiy
uiffeient than if you make a piouuct people aie going to use eveiyuay foievei.
Bow much is Staibucks willing to spenu to get someone auuicteu to espiesso.
The answei is piobably $1uu. They'ie piobably willing to spenu $1uu on ieal estate
to get one peison hookeu because theii lifetime value is $Suu. See that.
When someone is competing with Staibucks, they say, "It's not faii. The ient is
too high." Staibucks says, "No, no, no. The ient is not too high because I'm cieating
1,uuu auuicts eveiy time I put in a new facility." They'ie taking the coiiect view in a
competitive maiket.
If you'ie Beniy Lewis anu you'ie builuing a weekly news magazine, how much
aie you willing to spenu to get one new subsciibei to Time magazine. You uo the
math. Well you say, "If someone subsciibes foi six yeais anu uoing the math of 4u
aus pei issue, Su issues a yeai, five yeais, blah, blah, blah, each subsciibei to Time
magazine is woith $2uu to me."
So if someone comes to you anu says, "Buy Tv aus to get new subsciibeis to
Time," anu the aus aie $1Su-$2uu, you buy them because you make a piofit. It's all
built into the stiuctuie anu how you maximize the lifetime value of someone who's
expensive to ieach.
Foi example, foi someone in Kit's case theie is not a lot of iepeat business
because fiist you have to come back to Niami as a touiist. Seconuly, you have to

46
want to uo it again. Nost of the value she is going to cieate is going to come fiom
that fiist inteiaction. 0n the othei hanu, if it's fabulous that peison is likely to tell
theii fiienus when they go home. Suuuenly the cost of maiketing goes uown because
people aie telling one anothei.
O7:-;< -% ]$(:
Two things aie happening anu I want to call them out. If they'ie not happening to
you, that's fabulous.
Thing numbei one is, some of you aie saying, "Bow uo I make all of what I've
leaineu this moining woik foi the stiuctuie of the business I'm alieauy committeu
to." Anu the paits that uon't woik, you'ie ignoiing.
Anu some of you aie saying, "This is a vast untappeu teiiitoiy. I have no chance
of succeeuing. I'm nevei going to get it iight. I suiienuei."
Both of them aie the wiong iesponses. Let's take them one at a time.
Entiepieneuis by theii natuie aie willful, stiong willeu, bull heaueu, anu
committeu. If we'ie not, we fail. But sometimes we get hung up on getting confuseu
between sticking with the iight path anu sticking with the wiong path.
The peison who insists on pushing theii inuepenuent bookstoie"Inuepenuent
bookstoie! Inuepenuent bookstoie!"in the face of what's happening in the woilu
isn't a peisistent entiepieneui. They'ie a fool.
They say, "I got to figuie out how to sell eBooks." No, you'ie nevei going to be
able to sell eBooks in youi inuepenuent bookstoie. Bon't tiy. Theie's a lot of things
you can uo in youi inuepenuent bookstoie, but falling in love with the aichetype oi
the vision you have in youi heau is not the way to uo it.
If all you've taken away fiom the last foui houis is that these things aie
inteiesting on the siue, but I got to stick with making bettei Thai foou, you've
completely misseu the point.
The moie uegiees of fieeuom you intiouuce ovei the next few houis, then you'll
lock them back in, the moie likely it is you aie going to builu a business that woiks.
I'm going to give you moie anu moie examples of how that happens because I
only have a couple of these questions left. You'ie going to neeu to feel the textuie of
the examples to see how this woiks in the connection economy, which uoesn't
necessaiily mean on the net. It just means that's what we'ie valuing now.
The seconu gioup of you anu I can see it in youi eyes is saying, "Ah, it's possible
to builu the peifect entiepieneuiial pioject. I can't because I uon't see it." Anu you
have to stait befoie you see the enu.

47
Theie's no way to uo this without staiting befoie you see the enu. You builu the
funuamental builuing blocks. You put them in place so that eveiy uay success leaus
to moie success. It will get you somewheie, but wheie you'ie tiying to go isn't what
you'ie going to have the fiist uay.
It's moie about,
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-% ^&D$)&4 7 P-(%E$E4 DLDC& 7C$;< %*& 67LF=
A_TTT 3(E& 07;4
Naik askeu about my blog. I talk about blogs a lot because it's goou foi the soul, but
it's also an extiaoiuinaiily inexpensive low iisk tiibe-builuing tool. If you commit to
wiiting something foi youi tiibe, not about you, but foi youi tiibe eveiyuay, ovei
time you will inciease the footpiint you have with youi tiibe anu the tiust youi tiibe
gives you. Anu it's fiee.
Those people will e-mail you anu you will finu out what they'ie thinking, which
is fiee. Then these inteiactions will scale which is fiee.
At some point you'll ueciue you hate these people anu you shoulu shut it uown
oi you'll ueciue you want to uo foi these people, be with these people, anu leveiage
these people. In which case, the business iueas will just come to you. They'll just
keep piesenting themselves ovei, ovei, anu ovei again.
If you look at Boing Boing, one of the most populai blogs evei, theii business
mouel is a little flaky. They make some money on auveitising, but basically Coiy,
Naik, anu Xeni have all these uoois open to them because theie is a million mutants
on eaith who tiust them. A million people who if they say, "I'm wiiting a new book,"
will go buy it. A million people who if they say, "I'm going to be in New Yoik, come to
this meeting I'm uoing," will come.
Kevin Kelly calls these people the 1,uuu tiue fans. If theie aie 1,uuu people who
will fly to Bastings anu spenu thiee uays with you, you nevei have to look foi woik
foi the iest of youi life. You'ie uone. 1,uuu people, that's all it takes.
I'm not patient with folks who say it has to be peifect anu pioven, anu then I'll uo
it. It will nevei be peifect anu it will nevei be pioven. All I can keep uoing is piling
up the examples anu then inteiact with you as we talk about this.
You'ie going to neeu to think ieally haiu about, what stoiy uo you want someone
who &)'75 you to tell.
If I saiu to you, "Tell someone who's nevei expeiienceu it what Nike piouucts aie
like," anu you talkeu about Nike, most of you woulu say something that woulu make

48
Phil Knight happy. Same thing with Bailey Baviuson, an iconic bianu that has a
monopoly on what it stanus foi.
But, if I saiu, "Tell the peison next to you about Belta Aiilines." Even though
Belta Aiilines spenus millions of uollais a yeai on something they call maiketing,
you'u all say something uiffeient baseu on some ianuom peisonal expeiience. They
coulu pietenu they have some slogan. They coulu pietenu they have some integiity.
But they have no connection. No one, othei than a fiequent fliei mile holuei, woulu
miss Belta if they went out of business anu it was ieplaceu by a uiffeient aiiline. No
one woulu miss them.
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Now, I just want to go thiough the last two questions, which aien't neaily as
impoitant in the beginning.
0ne, how uo I make what I'm making significantly moie cheaply.
In the case of somebouy who wants to iun a successful bai anu giill, if the scaice
thing they offei is a gieat enviionment to uiink whisky anu beei anu they'ie
spenuing a foitune making chicken sanuwiches, they coulu piobably spenu less
money making chicken sanuwiches anu still have the place be what they neeu it to
be.
0ne of the things to think about as we'ie staiting these things is what have you
built into youi assumptions that aie going to make it haiu anu expensive that you
can skip anu still make it scaice anu valuable.
0ne of the ways to uo that is by using off the shelf softwaie. Lots of times people
say, "I have to builu this peifect piece of softwaie to make eveiything woik," when
in fact, maybe you uon't have to uo anything of this soit. Naybe you just builu these
things in keynote, expoit them to the iPau, anu they woik. You haven't spent a
penny on uevelopment.
Can I uo it fastei.
Can I figuie out how to inteiact with people that gives me moie alaciity.

49
0ne of the big auvantages you have of being small anu being new is you uon't
have a committee anu you uon't have piocesses. It's just you. Sometimes that's a
uisauvantage, but lots of times that's an auvantage.
When I was book packagei anu it was just me, I was able to get a book fiom an
iuea to uone in five uays. A lot of the people we weie woiking with coulun't even
have a meeting about uoing something in five uays anu we weie uone. Not eveiy
customei wants that. But that's an inteiesting place foi you to stait.
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X7E;D*-;< -4 >P&((7%&,
Then we'ie going to spenu a lot of time talking about shipping. It's so easy to
become paialyzeu in the puisuit of peifect that you enu up not being goou. You'ie so
woiiieu about launching in this spectaculai way, so you nevei uo.
I think launching in the connection economy is way oveiiateu. It's not impoitant
at all. The big gala, the laige book signing, anu the piess ieleasesall on the fiist
uayit uoesn't mattei anymoie. The meuia you weie tiying to put that show on foi
is gone.
What matteis is you uiun't stait using umail until it's been out foi a yeai.
You uiun't stait subsciibing to that magazine until it's been in business 4u yeais.
You uiun't stait going out foi Staibucks coffee until it's been theie foi yeais.
This iuea that the fiist uay eveiyone has to come isn't what's going to happen.
What's going to happen is a few people aie going to inteiact with you enough
that they unueistanu the value, they tiust you to uelivei the value, anu they pay you
foi it.
.&()-44-$; O7(:&%-;<
A fiienu of mine nameu Bany staiteu a business calleu Baily Canuy. The ueal is if
you'ie a woman, into fashion, anu live in one of ten metiopolitan aieas, all I want
fiom you is youi e-mail auuiess. That's all I want.
Eveiyuay, foi the iest of youi life, I'm going to senu you an e-mail with nice
illustiations telling you something cool that's happening in youi city. Piaua is having
a sample sale, theie is a cool paity going on in this bai, they just openeu this new
Loehmann's bianch, whatevei.
She ian this foi a few yeais, sent out an e-mail eveiyuay anu she anu Bob
Pittman solu it to Comcast foi $12S million. Now, I'm not saying money is the only
point heie. What I'm saying is what uiu she cieate that's valuable.

Su
What she hau was peimission anu tiust of a few people. Not a lot. }ust a million.
0nly 1 out of Suu people in the countiy.
They saiu if youi e-mail uoesn't show up eveiyuay, I'm going to complain. I'm
waiting eveiyuay patiently foi youi e-mail to show up. If it's not heie, I'm going to
miss it. Anu two, if you tell me about something, I'm moie likely to tiy it.
If you saiu, "I want to figuie out how to get the laigest possible numbei of iight
people in Chailotte to get an e-mail fiom me thiee times a week. All I'm going to
senu them is a viueo I'm going to make of me inteiviewing someone fiom a uiffeient
non-piofit, thiee times a week. It's only thiee minutes long about why they aie
amazing." Biip, uiip, uiip.
0vei time if you get a viueo that iesonates with you, you can foiwaiu it to all
youi fiienus. You can't uo that with a website. Biip, uiip, uiip. The numbei of people
who aie subsciibing goes up.
So now if you call up a nonpiofit, anu say "Bi, I want to featuie you in this e-mail
that I senu out to 12,uuu people eveiyuay, anu oh by the way I know you get it. I'm
going to piouuce it, anu by the way you know how goou my viueos aie because
you've seen them. Can I come." They'll say, "Can you be heie in an houi." Why
woulun't they.
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It will nevei get less valuable. See what I'm getting at.
Then the success stoiies that get cieateu aie simple. I'm going to show you an
example.
When you get a chance, eveiyone clap youi hanus just once ieally louu B>+5/.6 -*
56*J J.';5G Ah. You'ie too goou. You'ie in sync. All iight, this time we'ie going to uo it
all at the same time. 0ne, two, thiee B;)7,)J/.6 -* 56*J J.';5G" The uiffeience is
significant. When theie aie lots of little claps, it uoesn't count foi veiy much. But if
eveiyone claps at the same time, we notice it.
So you become this powei biokei. Because you'll be able to say, "I've got these
1S,uuu people who aie nascent volunteeis oi nascent philanthiopists anu you aie
the next one I pick." Then you can go to chaiities anu say, "You know, I pickeu you
anu you uiun't conveit, so I'm not going to pick you anymoie." But we leaineu
something. When we uiu this stoiy anu the conveision was easiei to uo, a whole
bunch of people went anu uiu it.
3*& 8)@(&47(-$4 7;, .&()-44-$; O7(:&%-;<

S1
Kickstaitei was staiteu to say theie's all these piojects that woulu get uone if we
knew in auvance that people weie going to buy it. "I want to make a iecoiu album, if
I just knew 1,uuu of my fans weie going to buy it, I coulu easily have the confiuence
to make it. Anu if you all put $1u up fiont, I can actually walk into the iecoiuing
stuuio. We'ie uone."
Kickstaitei saiu, "Beie's a platfoim. It's veiy simple. uo to youi fans anu say this
is what I'll make if you put up enough money anu if you uon't you get youi money
back.
0nce again, people on the Inteinet confuse the mechanics to uo something anu
what actually makes it woik. Kickstaitei is iiielevant. If you have an auuience you
can ieach, you can uo it without Kickstaitei. Theie aie all these Kickstaitei clones.
Kickstaitei auus almost no value to someone who has an auuience.
Ny book, the Icaius Beception, I uiu it on Kickstaitei. Foi my book, 4% of the
money that came in came fiom Kickstaitei. 96% came fiom people I sent to
Kickstaitei. So it's not like Kickstaitei has this community of eagei philanthiopists.
Kickstaitei just has a piece of softwaie that let's me aujuuicate uemanu with supply.
This ieally uiffeient than Casey Kasem oi Clive Bavis. Casey Kasem goes to all
these iauio stations anu says, "Eveiy week I will give you a two houi iauio show.
We'll split the commeicials. Balf the commeicials you'll sell. Balf the commeicials I'll
sell. Eveiybouy wins." Foi yeais, yeais, anu yeais, Casey maue millions of uollais
making a iauio show. Who has the powei. The musician oi Casey.
The answei is Casey has the powei.
Why uoes Casey have the powei. Because Casey has a ielationship with the
iauio stations anu the iauio stations have a ielationship with the listeneis. So if
Casey wants to make you famous, he can, anu if you want to pay him a giatuity,
that's fine, but the aitist has no powei whatsoevei.
Kickstaitei says "Whoa, whoa, whoa. As an aitist you alieauy have a ielationship
with youi ieauei, listenei, oi fan. We will let you go stiaight to that peison leaving
Casey Kasem, Clive Bavis, anu Sunny Nauha out of the equation because you can
publish youiself."
Aitists hate this. They uon't like having to keep tiack of all these fans. They uon't
like having to collect all these auuiesses. They uon't like people complaining the
statue of the Icaius is fuzzy on the book covei. They just want to make theii woik.
If someone came foiwaiu anu saiu, "I'm the Casey Kasem of big thinkeis anu my
fiist pioject is Clay Shiiky's new book. I will keep you posteu on how Clay is uoing.
Clay is in the viueo, so you know he anu I aie uoing it togethei." Eveiyone woulu
think that woulu be gieat.

S2
You anu Clay have theii e-mail auuiesses in this file. If you e-mail eveiybouy a
month latei anu say, "I'm back again. Remembei I biought you Clay last month. This
month I'm biinging you }eff }aivis."
Some people aie going to be annoyeu anu think, "No, no, no, I signeu up foi Clay."
That's what peimission is, keeping piomises. But if you weie cleai up fiont, they get
Casey's new job. Kate is the impiesaiio of big thinkeis monetizing theii woik foi
theii fans.
With each peison you get the new big thinkei's e-mail list wheie he's going to
aleit them via his blog oi she's going to aleit them via twittei. Plus you get youi back
asset of all the people who have funueu youi pievious pioject. Who uoes this sounu
like. Bill uiaham.
Bill uiaham piesents is exactly it. Be owneu Winteilanu, but he also ienteu the
Cow Palace. Be coulu finu a venue any time you wanteu to. But no one evei came to
heai Bill uiaham peifoim because he hau no talent. They came to heai The Beau.
They came to heai }effeison Staiship. What Bill built weie these netwoiks of
ielationships anu you knew if Bill was going to bieak a new act, it was piobably
woith going to.
Theie is a huge vacuum of impiesaiios. We neeu Bill uiaham. But he's ueau. So
wheie uoes the next Bill uiaham exist. Be oi she is the peison that is the biokei of
tiust, attention, anu talent anu builuing a biiuge between them.
Amanua Palmei, who's wonueiful, is not going to make a lot of money on hei
iecoiu anu she's having a neivous bieakuown. She put heiself completely into this
thing anu then when she's uone anu goes to iecovei, that asset is going to waste. All
those people, 1uu,uuu of them that paiu on aveiage $12, they'ie just going to waste.
Wheieas if she hau a tiusteu paitnei who coulu finu the next Amanua Palmei
anu hanule all this ciaziness, you can uo it again.
That's what I'm talking about. That asset uiamatically cuts the cost of customei
acquisition anu uiamatically incieases speeu to maiket anu tiust.
.($,ED%-P-%L 7;, 3(-^&4
Beie's what people in business will always pay foi. If an inuiviuual is paying X to get
Y anu you can piove to them they can get 2Y foi the same amount of X, they'll tiy it.
That's not often something you can piomise. But if you can piomise it anu uelivei on
it, then theie will be a line out the uooi.
If you'ie a sales tiainei foi example, anu the people who giauuate fiom youi
sales class close twice as many sales because it's that goou, you'ie not going to have
any tiouble ovei time giowing youi business. Because they aie alieauy measuiing
things on this axis anu you just took them fiom heie to heie. You uiun't give them a

SS
new thing to measuie. You just saiu you'ie going to get moie of that thing you'ie
paying foi in a veiy tiustwoithy way.
That's ieally uiffeient than saying, "I'm going to chaige you something you'ie not
useu to paying foi."
Piouuctivity is about getting moie foi the amount investeu. You neeu to say,
"What aie people paying foi anu can I uiamatically inciease it."
If it's piesentation coaching, I woulu say something like this, "Which gioup of
people has a veiy high stakes piesentation that I can ieach who shaie a woiluview
anu unueistanu paying foi stuff is woith it if it makes things get bettei." That's a
tiny fiaction of the actual people who give piesentations.
The seconu thing, theie piobably is not going to be a iepeat customei if all I'm
uoing is teaching them how to make a piesentation. Which means, I neeu to chaige a
lot foi it oi I have to uo the whole oiganization. 0i, "I'm not going to teach them, I'm
going to uo it foi them." Anu that's what Nancy Buaite uoes.
Nancy Buaite says, "Eveiy time you neeu to uo a piesentation, senu me youi bau
sliues, senu me youi notes, I will senu you back bettei sliues with bettei notes." Anu
if you aie CE0, woik foi a CE0 oi uo big piesentations, etc., she can chaige you
$1u,uuu a piesentation because it's woith it. B% &'() *+ -2)' 0&'/ 5&) 7)'..6 J&'7<)5D
=4/ .)/F5 345/ 5'6"G
0vei time because she's geneious, she wiites books about it, she tiains about it,
etc., because she'u love to teach a man to fish. But the coie of the business is, "Can I
be a seivice business foi this incieuibly impoitant thing that no one's evei paiu to
buy befoie." She unueistanus the vast majoiity of people will nevei hiie hei to uo a
piesentation, which is fine with hei. She just wants some people.
The answei to youi question is not, "Bow uo I peisuaue eveiyone to pay foi this
thing they'ie not useu to paying foi."
It's, "Bow uo I finu the few people who aie eagei to pay foi it."








S4
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If we think about the woiluview of the peison who buys a Tv au, aie they an
innovatoi. Aie they an eaily auoptei about the foimat of Tv auveitising.
They'ie laggaius. They'ie the least innovative people in the woilu. They buy Su
seconu slots. It's not theii job to invent a new kinu of Tv commeicial. The peison
who invents a new kinu of Tv commeicial isn't in the ioom anu you uon't get to call
on that peison.
If you want to go talk to the peison who is in chaige of buying new Tv
commeicialstheie's like one peison at Zenith who uoes this, anu one peison at
BBBA, etc. who uoes itthat peison will buy $1uu,uuu woith as a test anu they will
nevei buy fiom you again because theii job is to buy the new thing. You can't builu a
business on that.
What you've uone is you've lookeu at this inuustiy you'ie in that you ieally like,
you've maue a list of eveiything that's bioken about it, anu you'ie saying, "I'm going
to fix the whole thing. This is how it shoulu be."
But if you uon't have $1uu million, you can't get fiom heie to theie in a stiaight
line. Insteau, what you have to uo is say, "What +*) asset can I builu that I can affoiu
to builu. Anu once I builu that asset, how can I take that to teach Tv a lesson."
Remembei when Kevin Rose fiom Bigg staiteu that little Tv show he hau.Bigg
is like that online seivice like Reuuit. Kevin is not ieally a businessman, but he loves
inventing new stuff. Because Bigg was ieally populai, he staiteu a Tv show. It was
an houi a week of him anu his fiienu uiinking beeis anu talking about the Inteinet.
It hau ovei 1uu,uuu vieweis eveiy week. As you know of iatings, it woulu not have
put it at the top, but not getting canceleu off the cable netwoik eithei. Be was in
chaige of the whole thing. If he hau stuck with it, he coulu have gone to a Suu,uuu
vieweis foi a Tv show he maue foi fiee wheie he was 1uu% in chaige anu eveiy
week he knew he coulu go stiaight to eveiybouy.
If you hau Suu,uuu vieweis, you coulu stait changing iules. Because when the
phone iang anu somebouy saiu, "I want to sponsoi youi show Luke." You coulu say,
"uieat, but the au's only foui seconus long." You have somethinga monopoly on
the attention of these Suu,uuu people. See what I'm getting at.
The asset that unueilies television has changeu. It useu to be the FCC gave you a
channel. 2,4, 7, anu 29 when I was giowing up in Buffalothat's it. If you hau the
channel, you maue money. If you uiun't have the channel, you uiun't have a channel.
Then cable came along anu saiu insteau of thiee channels in a community,
theie's a 17S. Some people like Teu Tuinei totally unueistoou this. Teu is a
billionaiie foi one ieason. Be saiu, "I'll take as many channels as I can get." That's it.

SS
Wheieas ABC anu CBS saiu, "We uon't unueistanu cable. We'ie thieateneu by it.
We won't uo veiy much at all othei than ESPN anu one oi two otheis." That's why
they uiun't giab channels. Teu saw an asset up foi giabs anu he giabbeu it.
3*& X$;< 37-C
Now cable is going away. Theie aien't 1Su channels, theie's a 1Su million
channelsthe long tail.
What we know is that theie aie hitsthat if I look at book sales, Tv shows, viueo
ientals, etc., this is top ten, that these aie sales of the next ten, anu pietty quickly the
sales go to ieally low numbeis foi each title.
Back when theie weie only 12 iauio stations in a town, you only got to listen to
those. The long tail uiun't exist because they saiu, "}amaican polka music, we'ie not
going to put that on the aii." This is calleu the shoit heau. This is Bitsville
Ameiican top 4u, the New Yoik Times bestsellei list, anu the people who aie
watching the numbei one shows.
Then they invent the Inteinet anu the Inteinet says, "We have an unlimiteu
amount of inventoiy."
If I look at the sales of Baines anu Nobles veisus Amazon, what I see is that
Amazon gets half theii sales in uollais fiom books that Baines anu Nobles has nevei
caiiieu.
iTunes gets half theii ievenue fiom music that has nevei once been solu in a
stoie.
Netflix gets theii half theii vieweis foi stuff that has nevei been in a Blockbustei.
Balf, foi this whole section heie, the long tail, that's half.
What we'ie seeing with Tv is they just openeu up YouTube, Netflix, iTunes anu
othei things"This ieal estate, it's foi sale, who wants it." Some people like Netflix
say, "I uo," anu they take all of it. That's how you make money on the long tail.
Amazon says, "I will sell eveiy book anu that's not enough, anyone who wants to
put it on the Kinule, fine." So now the tail goes out theie. Nost Kinule titles have solu
one copy because you can make a Kinule title foi fiee. You ieau it. No one evei else
will because it's way out heie on the long tail. Amazon uoesn't caie because they
own all of it.
YouTube owns all of it. When you say you want to make a Tv channel, I woiiy
because I say, "Aie you tiying to go up against people who aie uespeiate to maintain
theii spot on the shoit heau. 0i is he talking about owning a tiny slice of the long-
tail."

S6
You can make money owning a tiny slice of the long-tail -, that slice is the Annals
of the Biomeuical Neuiosuigeon Association1uu people watching youi viueo, but
the phaimaceutical company will pay you a million uollais a month to sponsoi you.
That's veiy uiffeient than uaiuen Tiactoi monthly which is a viueo that gets
seen by 1u faimeis anu you'ie nevei going to make a penny.
The scaice thing is attention anu tiust. If you built a channel that hau attention
anu tiust, eveiything else will take caie of itself. Now you have to ueciue what's the
best way to go fiom nothing to attention anu tiust.
The easiest way to uo it is unueistanuing the long-tail uoes not iewaiu mass
cultuie. It iewaius inuispensable micio cultuie.
If you've maue a channel about tattoos, people who aie into tattoos coulu not
live without you.
If you make a channel that is soit of a vaiiation of the }eisey Shoie, we've got lots
of alteinatives. You can't possibly ciowu oui attention anu giab it.
The seciet is,
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0nce you have 1,uuu channels, each of which is watcheu iegulaily by 1uu,uuu
people, anu you have one hunuieu million with uuplication vieweiship, suuuenly
you've uone something ieally inteiesting.
Now, you can uictate to piouuceis what kinu of shows you want anu to
auveitiseis what kinu of aus you want to iun because you uiu the haiu pait. You've
founu vieweis.
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What you want to uo when you'ie asking someone foi actual auvice as opposeu to
just appioval is you want to expose the weakest pait of what you'ie uoing anu say it
as cleaily as you can.
Back to the aichitect in the builuing.
If you'ie going to biing in a stiuctuial engineei anu say, "Is this builuing going to
withstanu an eaithquake," you want to uo it befoie you put up all the biicks anu
befoie you paint the uiywall. Because the stiuctuial engineei uoesn't caie about
how fancy you painteu the uiywall. They uon't caie about you'ie excuses about why

S7
you'ie using this kinu of timbei insteau of that kinu of timbei. You neeu to say, "That
joint ovei theie, I'm ieally woiiieu about this, can that joint be bettei."
It's only in the eaily stages of aichitecting youi business that you get to have
these conveisations because otheiwise you've investeu too much anu you'ie going
to say, "Bon't look at that. That'll be fine."
Be as cleai as you can when you'ie talking to us anu say, "This is my business.
This is my goal. This is my timeline. This is the money I have. Anu this is why it's
going to woik," anu layout the founuational stiuctuie of it.
Not why you'ie uoing it. I uon't caie why you'ie uoing it. I caie why I want to buy
it. I caie why I want to be pait of it.
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We just have to keep coming back to that.
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The othei thing that I neeu to talk about is iaising money.
Anyone who is going to invest in you woulu like the money back. The question is,
how aie you going to give them the money back. Anu theie aie only a few choices.
The most populai choice is you give that peison stock in youi company.
ueneially, it means they own pait of youi company. Well if they own pait of youi
company, how aie they going to get the money back. The only way is foi you to sell
it.
A tiauitional investment ueal, the Silicon valley type thing, means you've alieauy
piomiseu you'ie going to sell youi company as fast as you can. If that's not youi goal,
uon't iaise money that way. If you uo, theie's going to be this fiiction that's going to
stait ieally soon. The investoi is getting giaueu on, "Bow soon uoes she biing
money back" anu you aie saying, "I want to uo this foi the iest of my life, I'm nevei
selling this company." Someone is going to winu up unhappy.
The othei way to pay people back, paiticulaily if you'ie not some fancy Silicon
valley company is you go to the investoi anu say, "Look I'm putting on a show (the
show can be whatevei, it can be a tiauitional kinu of show oi it coulu be a coffee
shop) anu foi the fiist six months all the piofits aie youis, but aftei that, the amount
of piofits I give you go uown until I've paiu you back all youi money plus this much.

S8
So you own a piece of it, but then ovei time the piece gets lowei anu lowei because
I'm paying you back via the pioceeus."
Let's say befoie Kickstaitei you wanteu to ient the Taiiytown Nusic Ball anu
put on ballet peifoimance. The theatei cost $6,uuu to ient. The balleiinas get paiu
$S,uuu. So you neeu $9,uuu. You go to the investoi anu say, "uive me the $9,uuu to
put on this show anu the fiist $18,uuu in the uooi is youis anu then we'ie even."
If you enu up making $Su,uuu, you get to keep the iest. Anu if you make $16,uuu,
he gets back his $16,uuu. Be uiun't get the full $18,uuu. You get zeio, but it uiun't
cost you anything eithei. So you'ie selling futuie cash flow fiom this thing that you
aie builuing.
A bank is nevei going to uo that ueal, but youi mothei-in-law might anu it
completely eliminates all that weiiu family fiiction of, "Well they'ie still my paitnei
anu I'm nevei going to be able to get iiu of them."
I hate to say it, but
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If you want a paitnei, get a paitnei. But if you want an investoi, pait of the goal
is to not have the investoi anymoie so you get to ueciue wheie you'ie going.
U$&4 %*& 3(-^& 3(E4% \$EF
In business-to-business selling, the tiibe is iaiely about the coipoiation. It's about
the peison in that slot.
Chief financial officeis aie often pait of a tiibe. They ieau the gap stanuaius.
They want to aigue about Saibanes 0xley. They weai the same kinu of clothes. They
go to similai tiaue shows anu they iecognize each othei. They have stuff in common
that iesonates with them. They'ie not as integiateu as the uiateful Beau tiibe.
They'ie not as easy to guess what they'ie going to be like, but they'ie ieally close.
The kinu of peison you aie telling me about though is the eaily auoptei CN0.
That peison ieally is pait of a tiibe. They'ie ieauing Au Week togethei. They'ie
ieauing my blog. They'ie uoing stuff that you can see they'ie in sync.
You can say, "If someone is not in the tiibe that still has that job, I'm not going to
make the sale to them." That's the key paitfiguiing out what anchois you say in
the beginning to make suie the two of you aie on the same team.
I useu to go on sales calls back in the eaily Inteinet uays. You uiesseu a ceitain
way, you mention a ceitain kinu of peison, you talkeu about something in the fiist
five minutes, anu it quickly became cleai eithei that peison knew who }ohn Battelle
was oi they uiun't.

S9
That sync is ciitical because then you can say, "In youi case stuuies, when /&-5
peison uiu it they got this. Anu when /&-5 peison uiu it, they got this." Anu they
eithei know those people oi they know of those people anu they iespect theii woik.
When Waiien Buffet goes to China, he's a iock stai. Be's biggei than Nick }aggei
because among a ceitain kinu of entiepieneuicapitalist in China, Waiien Buffet is
the king. That means if you'ie tiying to make a pitch to one of those people anu you
say, "Waiien Buffet is one of oui investois," you've just eliminateu the tiust
pioblem.
You have to figuie out, how uo I uo that. Bow uo I cieate the stoiy so that when I
say it people tiust me.
Theie's a new iPhone app calleu Lua. When I tell you what it uoes, you'ie going
to say, "This is the most obvious thing the woilu, I can't believe nobouy evei
inventeu it." It's an iPhone app foi veiy expensive live events like movie piouuction
anu tiaue shows. You get eveiy peison on a team who is putting on the event using
it.
If it's a Batman movie, which cost a quaitei of a billion uollais to make, eveiyone
on the movie has this app. With one button the guy in chaige of costuming can piess
it anu aleit eveiyone on the costume team instantly of a change. Anu with one
button the sciipt supeivisoi can push a new veision of the sciipt to eveiyone who
neeus to see it. It cooiuinates all of that.
Well you look at the app anu you say, "This is soit of cool." Then they say, "0h
anu by the way, the new Batman movie was maue with it. Anu this movie was maue
with it. Anu heie's a pictuie of them making this movie with it. Anu Stiauss Zelnick,
who's been in the movie business foi 2u yeais, is on oui boaiu."
Suuuenly eveiyone in the tiibe says, "I'm in!" You've eliminateu all the iisk.
"If they maue Batman with it, with a movie that cost that much, what aie we
uiscussing. Wheie uo I pay. It's $1u a seat. Fine."
It cost the Lua team a yeai of theii lives to get Batman to take that thing on as
theii case stuuy. It's woith moie than that. It's woith way moie than any othei way
they coulu have spent the money to iun aus in vaiiety oi to uo whatevei. They
iealizeu that that was the haiu pait of this piouuct, not making the softwaie. Again
it's not that haiu.
The haiu pait is, "Bow uo I make it so that people I neeu to sell to instantly tiust
that we'ie going to solve theii pioblem."
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Woouy Allen tells an olu, olu stoiy in the sixties. Be stanus on stage anu saiu, "Ny
fiist job was scalping low numbeis at the ueli." If you'ie not fiom New Yoik, you
uon't get the joke. You can giab a numbei at the ueli anytime you want. If you hang

6u
aiounu long enough someone was going to come ovei anu pay you money to jump
the line. It uoesn't cost anything at all to go to Zabais anu giab a numbei anu hang
out foi a little while.
What I'm tiying to uill home is theie's all these low numbeis that aie available.
You uon't neeu to wait foi a miiacle to happen. You just have to giab a few anu
piesent them in the iight way.
If you figuie out how to iun a team toui in Nanhattan foi chiluien of foieign
tiaveleis so that you coulu take theii teenageis away foi a few houis
ANB it's goou.
ANB you auveitise it on Ciaigslist, which is fiee.
ANB the people who come like meeting each othei.
ANB these teenageis when they fiienu each othei on Facebook, because they
hau such a gieat time with you foi thiee houis, tell theii fiienus back home.
ANB it's giowing anu giowing.
ANB these teenageis winu up builuing this community amongst themselves
because they still connect with that peison fiom Chile anu that peison fiom }apan.
You just built a cash flow positive business with no investment in a week. Anu
you'ie only 17 yeais olu. That's the level of baiiiei iemoval that has just happeneu.
When I staiteu my fiist business when I was 14 without a peimission slip fiom
my paients, violating who knows how many laws, anu then anothei one, it was
ieally haiu. It was ieally haiu to peisuaue a bus company to ient me two busses anu
then peisuaue the ski aiea to let me have a ski club, etc. Now it's not haiu anu none
of you aie 17.
The challenge heie is to figuie out how you can get past the stuff that's hanging
you upthe woik you've alieauy uone, which you neeu to uiscaiu some of it, anu
the woik you'ie using to uistiact youiself insteau of the pait that's actually uifficult.
Those aie the things I neeu to heai fiom you about. Those aie things we neeu to
exploie. Because theie aie no shoitage of oppoitunities in youi space.
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As impiesaiios, what we uo is we ient a theatei, we get an opeia singei, we sell
tickets, anu the show happens. We neeu you to put on a show.
The show uoesn't neeu to be uigital. The show coulu be in peison. The show
coulu be that a whole bunch of people hanging out by the iivei on }uly 4
th
anu you go

61
buy $Suu woith of ice cieam sanuwiches anu sell them foi $7uu anu then you go
home. But it's a show. You maue something happen that wasn't happening befoie
you got theie.
It shoulu be a show wheie you caie about the customei anu the woik you'ie
going to uo. Because you'ie going to neeu to commit to it even when it's not
woiking.
0$DE4 $; %*& [7(, .7(%
I have a million iueas foi you anu most of them aie bau. I uon't know the uiffeience
between the goou ones anu the bau ones. But I know what they have in common anu
want to keep putting them in fiont of you so you unueistanu that theie aie paits
you ought to focus on that mattei.
I uon't know if any of you hau the chocolate coveieu bananas, but I shoulun't tell
you about them because you'll steal them. BQ7)*F/ /&)6 2).-J-+45E L-J&)..)F5 )'/-*<
+*) 7-<&/ *+0"G I want to talk about the chocolate banana she's eating.
Bon, the guy who makes them, I think that's what it says on the box, spent a lot
of time figuiing out how to make a vegan chocolate coveieu fiozen banana. Anu he
figuieu out how to get them to the supeimaiket without melting. None of which is
haiu. All off which is uoable if you have enough money. Biie a fiozen banana expeit;
hiie a tianspoitation expeit, pioblem solveu.
What's haiu is getting incieuibly expensive shelf space in the supeimaiket so
when you want to buy chocolate coveieu bananas you can finu them. Baiu is getting
the people in this ioom, none of which hau a chocolate coveieu fiozen banana
befoie touay, to know about chocolate bananas. Those aie the only two haiu paits.
Anu he has spent all his time figuiing out how to make chocolate bananas which
is easy. So we got to figuie out how to focus youi time on the stoiy anu the
mechanics.
What you'ie on the hook foi is youi fiist attempt to uo what I've been uoing up
heie foi houis: tell us a stoiy.
Tell us a stoiy that matches oui woiluviewwhethei it's oui ieal woiluview oi
the one you want us to imagine having. Say, "Pietenu you weie this; heie's my
stoiy."
Tell us what it is you'ie going to builu, why it's impoitant, why you'ie the one to
builu it, anu why it's likely to woik.
Tell us, what's scaice. What's haiu. Tell us why it's extiemely impoitant that
this happen anu it happen now.
If you can't uo that, then uon't uo youi pioject tomoiiow. Bo a pioject you make
up tonight. Anu it will become youi pioject.

62
But this act of being able to look people in the eye anu say, "This is what we'ie
going to uo," is haiu. Anu you can get bettei at it.
`ATT_TTT ?@&7:&(4
Theie's this magazine I get because it's so amusing anu because it's a gieat example
of all of this. The magazine is calleu The Absolute Sounu anu it has 1uu,uuu
subsciibeis. They aie a tiibe. Theie aie only two magazines that go to this tiibe, this
anu one by theii competitoi. Each one is always this thick anu it's filleu with aiticles
anu aus.
So this is an au I openeu to at ianuom. This is fiom Bob Caivei. Be's famous to
the tiibe because he inventeu some veiy impoitant steieo amplifieis 2u yeais ago.
Be ietiieu anu then he came back with this. This amplifiei cost $8,uuu anu it's maue
with tubes that aie 4u yeais olu.
veiy few people on eaith want to buy this amplifiei. That's fine with him
because all of them ieau this magazine oi the othei magazine. Anu this au cost
$S,uuu. If he sells one he comes out aheau.
Bob's business is veiy simple. Be says, "I'm ieally smait. I know how to make a
bettei amplifiei."
Yeah. Fine. It's tiue, but not impoitant.
What's impoitant is Bob Caivei has a ieputation. Bob Caivei has oui tiust
because he's maue goou stuff in the past anu Bob Caivei has a stoiy to tell us. Anu
he tells the stoiy in woius, pictuies, anu on his website. It is not foi eveiyone. It is
foi a few people in the tiibe.
Some of the people in the tiibe aie actually fiienus with othei people in the tiibe.
When they get this, they'ie eaily auopteis. When they get this they'ie going to invite
ovei all theii fiienus to listen to it. Anu they will iepeat Bob's stoiy to them the best
that they can.
So foi example, you can iemove the tubes anu ieplace them with Chinese tubes,
Russian tubes, oi tubes fiom Syiacuse New Yoik anu they all sounu just a little
uiffeient. Why is this impoitant.
It's not because we neeu oui Bob Bylan to sounu a little uiffeient, but because
the act of changing the tubes is fun. Anu the act of talking about it is moie fun still
because it makes us un-lonely anu gives us a chance to connect with people in oui
tiibe.
That's Bob's stoiy, which is totally uiffeient than this company's stoiy.
This company uoes $1uu million in sales selling speakeis that cost between
$2u,uuu-$1uu,uuu a paii. That's foi two, so you have to uiviue by two. The people
who buy these speakeis buy them foi two ieasons. 0ne, they'ie wickeu louu. Anu

6S
two, it's fiom this company. This company cannot be ciiticizeu because they'ie the
biggest at uoing what they uo.
So if you'ie insecuie anu you invite people ovei anu they say, "Boy those aie butt
ugly speakeis." The fiist thing you uo is tuin them up ieally louu because they'ie not
steieophiles. They just want heai that it's louu.
The seconu thing you uo is you say, "It's fiom Wilson. As you know they'ie the
biggest in the inuustiy. I must know what I'm talking about." Totally uiffeient stoiy
tolu to the same tiibe.
Noving on to a couple othei examples.
Some of the things that aie solu, like this guy iight heie, he sells these amplifieis.
The ieason that people will buy them is because eveiy big city has one oi two
uealeis who have a showioom wheie you can go listen to this stuff anu he's in
almost all of them.
What he has that's scaice is a ielationship with all the uealeis. The uealeis tiust
him. Be tiusts the uealeis. Be gives them half the money in exchange foi being in
theii listening ioom. All of which is a way to uo that thing he neeus to uo to tell a
stoiy to a ceitain pait of the tiibe, which is, "I want to listen to my stuff befoie I buy
it, anu I want to buy it fiom a uealei I tiust."
Bis thing uoesn't have to sounu as goou oi as inteiesting as Bob Caiveis. It
meiely neeus to look the iight way, be piiceu the iight way, anu go thiough the iight
channel. Be's willing to pay foi that piivilege.
Anu the last example I'll give you is towaiu the back. You'll see aus foi stuff
wheie they have spent zeio to get uealeis. Foi these guys at the bottom of the au it
says, "If you call us, we will come to youi house anu play you this. This amplifiei cost
$17S,uuu."
Insteau of giving half the money to the uealei anu not sell any, because they
ieally woulun'thow many people aie going to want to buy this without being
pusheuthey'ie going uiiect to people using this vehiclethe magazineto ieach
just ceitain people in the tiibe. They'ie going to fail because if someone is going to
tell the stoiy of this to someone else, the only stoiy theii going to tell is how
expensive it is, which is not necessaiily a goou way to giow youi business.
The point is, theie aie 1u,uuu tiibes in Ameiica like this one. Not to buy piouucts
that aie this insanely expensive, but that aie eagei to connect aiounu something.
The peison who's making the most on a uaily basis is the peison who iuns the
show wheie you can go in a given city, iunning them twice a yeai, anu 1u,uuu
people in the tiibe all come. They'ie not making anything except connections.
They'ie saying, "Bow many of these 1u,uuu people come to the Waluoif Astoiia,
spenu two uays meeting all the manufactuieis, meeting each othei, anu listening

64
that's woith $1uu. 1u,uuu times $1uu equals a million uollais. Right. Bo that in
thiee oi foui citiesthat's a business.
All of which is a way of saying, if you want to stanu up heie anu tell the stoiy of
one of those businesses the way I uiu, you coulu uo that. Anu you coulu uo it without
feai oi ciiticism anu you coulu accuiately iepoit baseu on what I just tolu you what
they uo.
But when it's 6+47 pioject, it's haiuei. You'ie too close to it, uon't want it to fail,
anu uon't want people to tell you you'ie a fiauu. So you'll eiect all these baiiieis anu
softeneis between the stoiy we neeu to heai anu the stoiy you'ie going to tell us.
So tomoiiow what I want you to tell us is the stoiy.
You'ie an actoi.
You'ie playing a iole.
Anu the iole is to peisuaue us that you'ie iight. 0i if you'ie not iight, to give us a
chance to explain to you how you coulu uo it bettei.
















6S
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#7-C \$E( c-4-$;
Remembei we talkeu in hockey knowing what to uo, be willing to get hit, anu uoing
it ieally well. The uoing it ieally wellbeing able to skate bettei than othei
peopleis a key pait of hockey. It's woith getting goou at it, but not unless you
know wheie to skate anu be willing to get hit along the way.
Theie is a whole bunch of useful technologies that help entiepieneuis execute
anu help them uo it fastei anu cheapei. Some people aie using them as ciutches
uoing nothing but that stuff even though they have no iuea wheie they'ie going
because they'ie hiuing. So it's ieally impoitant we stait by making suie you naileu
youi vision.
Naking suie you've ueciueu, "0n this uate in Chicago, 24u people aie going to
pay $1uuu to come to my S uay confeience."
If we agiee on that, then we can talk about a whole bunch of cool tools anu
techniques you can use to go make that happen.
!" ?, <*') E4- *&'%9/= 0,3 8'0 98 )*') )*&%&48 /, 8*,%)'=& ,@ =%&') 9;&'8F U38) '
8*,%)'=& ,@ .&,.5& <*, '%& <9559/= ), .3) )*&9% %&.3)')9,/ ,/ )*& 59/& '/;
&P&+3)&:
Yeah. Theie aie an infinite numbei of gieat iueas.
}ust go uown the list anu look of all the people who heaiu of Y Combinatoi. Take
whichevei iuea you want, because you'ie bettei than them. uo uown the list of
businesses that openeu locally in Wisconsin anu open one of them in 0hio. The
people in 0hio uon't know that business is in Wisconsin. They'ie out theie all ovei.
0ne of the mistakes though is you get into kite boaiuing anu you ueciue, "I want
to iun a kite boaiuing business." Theie's a uiffeience between the things you uo foi
fun anu whethei it's a goou business.
]*7% 8 C&7(;&, 7 C$;< %-)& 7<$ -4 -%94 )$(& 'E; %$
6$(: $; 7 ^E4-;&44 %*7%94 6$(:-;< %*7; %$ 6$(: $; 7
'7-C-;< ^E4-;&44 -; 7; -;,E4%(L L$E C-:&5 V&D7E4&
'7-C-;< ^E4-;&44&4 (&7CCL 4ED:5
That's why I'm pushing now to uo the uncomfoitable woik of picking a bettei
stiuctuie.
In Nauagascai theie aie these guys who have a chocolate business wheie they
pay the faimeis to giow the chocolate anu then they put it in wiappeis anu biing it
to sell it heie. Theii heait is totally in the iight place, but they'ie not executing on

66
the chocolate pait of the business in a way to make the business successful enough
to actually fulfill theii uieams.
It's so easy to get hung up on, "This ciop of cocoa beans is no goou, blah, blah,
blah." That's the easy pait. The haiu pait is getting someone to pay $S foi a
chocolate bai. If you got enough of that, you can solve you'ie bean pioblem.
I'm going to keep pushing back to, "Who is the customei anu why aie they going
to give you money."
O7D($ P45 O-D($
It's veiy impoitant to unueistanu the uiffeience between macio anu micio.
I uon't know if any of you have evei seen these befoie.this is a iecoiu album.
vinyl sales aie 1u times biggei than they weie 1u yeais ago. Cleaily the inuustiy is
ueau. Cleaily vinyl is not impoitant. K4/D if you'ie the numbei one sellei of vinyl
iecoius in Ameiica, you'ie uoing fine.
I think we can agiee publishing is gone foievei nevei to ietuin. But, the pockets
aie going to be bettei than evei foi the next 2u yeais because the people who aie
left in it caie ueeply. They'ie not just touiists. They'ie in.
Anu those kinus of people aie way moie likely to pay to be connecteu, way moie
likely to pay to be infoimeu, anu way moie likely to leain what they uon't know,
because they'ie in.
You uon't neeu eveiybouy, especially at the scale we'ie talking about foi the kinu
of stuff we'ie talking about. You just neeu the passionate few. So uon't woiiy about
macio at all.
!,P&(%-4-;<
When I was staiting Yoyouyne, I useu to have to go to meetings explaining e-mail
was going to be populai one uaythat one uay lots of people woulu have e-mail. But
investois we'ie thinking macio, which was stupiu. What they neeueu to say was,
"Will Pioctoi anu uamble pay you $4uu,uuu to auveitise." That's all. Because as long
as we coulu uo that eveiy month, we'ie going to be fine.
The ieal question is what uo I think about selling auveitising.
People who uo not want to know if it woiks puichase most auveitising.
Big companies anu theii au agencies buy most auveitising. Anu if it uoesn't woik
you have to tell youi boss you bought an au that uiun't woik.
That's why they like Tv aus moie than they like bannei aus. No one can say a Tv
au faileu. With a bannei au you have to say no one clickeu on the link. Not tiue foi
small businesses, not tiue foi owneu anu opeiateu businesses, but totally tiue foi
big companies.

67
!" [P+&.) 0,3 ;9;/4) 8'0 ;9=9)'5 ';6&%)989/= ),,( ,@@ 7&+'38& '@)&% \RAA ' 7%'/;
-'/'=&% +,35; 8'0F VE 8.&/) )*98 -3+*F E4- /,) ;,9/= .%9/) '/0-,%& 7&+'38& E
+'/4) -&'83%& 9)F 73) +*&+( 9) ,3)F ,/ )*& E/)&%/&) E 8.&/) )*98 -3+* '/; =,) )*98
-'/0 +59+( )*%,3=*8 '/; 9) '+)3'550 <,%(&; 59(& <& &P.&+)&;:
I know. I was theie. K4/D no big bianus, not one, uiu that. The people who uiu
weie uiiect maiketeis, the uancing monkeys, the LL Beansthe people whose click
was woith something.
But if you'ie a Loieal, if you'ie anybouy who's in a bianu business as opposeu to
a uiiect iesponse business, you uon't know what a click is woith. Click thiough was
this pioxy that you maue a goou bannei au, but it wasn't "I'll come foi S times as
many."
When uoogle sells those little aus, most of them aie not foi big famous bianus.
They'ie foi owneu anu opeiateu small businesses oi uiiect maiketeis who know
how to measuie. All of which is a way to say that if you want to sell a uisplay au in an
e-mail to Kiaft, you uon't go to Kiaft anu say, "Buy this because the open iate is 8%
anu we'ie going to get a lot of people to click on it." That's not the way Kiaft buys
aus.
What you uo is what uioupon uiu. You go to local bakeiies anu pizza places anu
count how many people who come in with a coupon. That's a totally uiffeient
tiansaction.
When you think about selling an au in an e-mail, you ieally have to sell it to
people who measuie the iesult, not the people who measuie the clicks on the way to
the iesult.
If you sent an e-mail to beei loveis eveiy week with the beei of the week anu
wheie to go uiink it, you coulu just go to a bai anu say, "Bon't woiiy about oui open
iate, uon't woiiy about oui click thiough, just count how many people come anu
buy a beei fiom you aftei we iun the au. We'll iun the fiist one foi fiee, but then
you'ie going to pay foi the seconu one."
If it woiks, of couise he's going to pay foi the seconu one because he maue a lot
of money. That's what I woulu say. I woulun't go in with some fancy stoiy about
open iate because that's not ieally what makes bianus buy aus.
!" ],) 8, -3+* )*&0 5&'; <9)* )*')F 73) J^_0&'%_,5; -&;9' +59&/)8 <,35; 730
-&;9' '/; )*&0 <,35; 8'0 <& '+)3'550 /&&; ), *'6& 0,3 ,/ )*& +*'%): 2,3 (/,<F
V<&4%& =&))9/= )*98 -3+* +59+( )*%,3=* %')&8 @%,- )*98Y
Coiiect. Anu that is a false objection anu I'u love to spenu a couple minutes on it.
Nost of the time when you aie making a sale, you'll be confionteu with false
objections. A false objection is the ieason they give you to go away because they'ie
afiaiu to say yes.

68
"0h it uoesn't come in yellow, I can't buy a cai that's not in yellow." Well actually
you'ie going to winu up buying a cai that's not yellow. You just thiew that out theie
so I woulu go away.
In the case of selling auveitising, which I've been selling my whole life, the false
objections aie unbelievable what they come up withespecially meuia buyeis who
uon't want to aumit they have no authoiity. They'ie just collecting uata. What they
enu up buying is what theii boss wants.
When I was at Yahoo, the fiont page of Yahoo was solu out a yeai anu a half in
auvance, even though the fiont page of Yahoo uiun't woik. But the boss wanteu an
au that was the equivalent of the Supei Bowlthe fiont page of Yahoo. Anu then
you'u go, "blah, blah, blah, what's the clickthiough iate." Well you'ie just looking foi
a ieason to say no, not a ieason to say yes.
We see this ovei anu ovei again. Now it's going to happen with Twittei. People
buy these aus on Twittei, not because they woik, but because they'ie visible enough
in theii little business community that they can biag about the fact that they weie
on this spot at Twittei.
It's changing slowly, but it's not changing fast. When it ieally changes, the au
inuustiy is going to collapse because this iiiational ego buying fuels it all. It's not
fueleu by aus that actually woik.
!" $3) <*') '7,3) ' -&'83%&-&/) )*') '+)3'550 ;,&8 <,%(1
Aus that woik foi uiiect maiketeis aie bought to infinity.
In youi catalogue when you pay $1 you make $2, you go to the post office anu
say, "I'u like to mail this to eveiy human being on the planet." As long as you'ie
making moie than it costs, you just buy an infinite numbei of them. The numbei of
times that happens is veiy, veiy, veiy tiny because it uoesn't woik. That's not how
auveitising woiks.
The heau of auveitising at Neiceues Benz saiu, "If all I uiu was iun an au the uay
befoie you weie ieauy to buy a luxuiy cai, I'u nevei sell anothei Neiceues. I have to
stait showing you Neiceues aus when you aie 4-yeais-olu so that when you'ie S6
you buy a Neiceues."
Be can't measuie the click thiough on Neiceues. It uoesn't mattei. What matteis
is when you'ie S6 you tiust that a Neiceues isn't going to let you uown. The ieason
you tiust is because foi S2 yeais you've been seeing aus foi Neiceues. That's what
uiives ieal big au spenus.
When I was selling to Amazon in the olu uays, }eff Bezos saiu to eveiyone on the
staff, "You can buy as many new customeis as you want foi $SS each oi less. If
someone is willing to iun a campaign that gets us a new customei, meaning even if
they bought something foi $1 foi $2u, buy infinity. Anu if it's $S6, buy zeio."

69
That's the way they uiu it. They lost money as much as they coulu affoiu foi S
yeais by buying customeis foi less than $SS each until they got to whatevei it was,
Su million customeis. Anu he uiu the math iight. If he'u been wiong, they woulu
have gone bankiupt.
1$)@&%-%$(4
I love that we'ie staiting with this competitoi thing, which is a ieally goou clue
about what's going on in the maiketplace.
If we think about youi competitoi, let's pietenu theie's one, I woulu wonuei, anu
I coulu imagine this by uoogling theii name:
Bow many people aie talking about them.
Bow many people aie inteiacting with them.
Boes this company have 1 employee. Su employees. Suu employees.
Can I finu people who buy fiom them who love them.
Can I finu people who buy fiom them who aie ieally unhappy that they have to
buy fiom them.
Because what's magic heie is someone uiops something into the ponu anu
theie's all these iipples. You can look at the iipples anu the iipples will tell you how
big the iock was. The iipples will tell you how ueep the ponu was. You'ie not the
fiist one who's jumping in. You can then make some guesses theie about whethei
they have completely satisfieu the maiket oi just toucheu the tip of the icebeig.
You can buy stuff fiom them anu finu out what soit of inteiactions happen in
follow up. Anu you saiu they'ie builuing a community, so you can go into theii
community anu say:
Bow many people aie in theii community.
Bo they come back eveiy uay. Bo they come back nevei.
What's the velocity of the inteiactions heie.
It's like knocking ovei a hoinet's nest. If just a couple hoinets fly out, piobably
not a lot is going on. But if theie's this extiaoiuinaiy buzzing, you've leaineu that
you might be on to something. Then I'u say, "What's wiong with these people. What
uo they want to own that I can't own anu vice veisa."
.-D:-;< +,<&4
0ne of the things I love is the NBA X-Y axis thing, wheie you uiaw a giiu like this anu
on this access is one attiibute anu on this access is anothei one. 0ne mouel coulu be
fiienuly veisus stiff. Anu anothei mouel coulu be expensive veisus cheap.

7u

You coulu say we'ie going to be the cheap anu fiienuly business anu these guys
have ueciueu they'ie going to be the Teutonic expensive, take it oi leave it thing.
You can put whatevei you want on these two axis. But whatevei you pick, you
shoulu be in a uiffeient coinei than the people you want to compete with.
If you look in "Fiee Piize Insiue," I listeu a hunuieu choices of what you coulu be:
uisposable, gieen, peimanent, expensive, fast, slowtheie's all these things at the
extieme.
You have Biitish Aiiways fiist class in one coinei; Southwest Aiilines coach in a
uiffeient coinei. You can figuie that out.
You stait by saying, "Is this a vibiant community."
Anu two, "Bave they put themselves in a quauiant wheie they can't move, so we
can go to the othei quauiant anu say to eveiyone, "We'ie just like them, but we aie
blank." Anu if it's vibiant enough, a ceitain numbei will come see you.
Theie aie two kinus of maikets. Theie is a maiket that's big enough that you can
affoiu to waste some samples. Anu theie's a maiket that's so small you can't.
If it's a big maiket, you pick up the phone. You see if you can get a meeting. You
go on a sales call even if you uon't have anything to sell anu you say, "We know you
buy this kinu of piouuct. This is going to be oui piouuct line. Woulu you like to be
one of oui customeis." Anu if they thiow you because youi completely blank, blank,
blank (ciazy, too expensive, etc), you just leaineu something.
But if theie aie only thiee companies in the whole maiket that you can sell to,
you can't affoiu to uo that because you only get a fiist chance to make a fiist

71
impiession. In that case you have to be a little moie aujoint at who you'ie going to
meet with anu unueistanu theii pain.
What you'ie going to unueistanu, what eveiyone heie can leain, is if you ieach
out to somebouy anu say, "I love this inuustiy. I want to unueistanu wheie youi
pain is so I can help you solve youi pioblem," lots of people aie eagei to tell you
what theii pioblem is. Anu they'ie piobably not going to tell you the ieal pioblem.
You have to guess baseu on what they say.
People went to Beniy Foiu anu saiu, "We want bettei buggy whips." They uiun't
say, "Nake us a cai foi $7uu." You'ie going to have to listen anu uiagnose fiom that
what they ieally neeu.
The last pait is the woiluview of the puichasei.
In the meuical uevice inuustiy the puichasei has unlimiteu money anu an
enoimous neeu foi secuiity, safety, anu ueniability. That's a totally uiffeient
company than a company that says, "0h you make toys foi a living, lets have a phone
call anu maybe I'll senu you something."
You'ie going to have to builu an oiganization that matches the minuset of the
people you want to sell to.
37:& %*& O7(4*)7CC$6
Theie's a stuuy that was uone Su yeais ago anu the way the stuuy woikeu is they
took S-yeai-olus, which they piobably coulun't uo touay, anu put them in a ioom
with a maishmallow. You may have heaiu about this.
They saiu to them, "Beie's a maishmallow. If it's still heie when I come back in
five minutes, I'll give you two maishmallows you can eat. But if it's not heie, if you
eat it, you uon't get any moie maishmallows."
Five minutes is a ieally long time when you'ie S-yeais-olu in a ioom by youiself
with a maishmallow anu theie's a viueo of this.
0ne kiu I saw takes the maishmallow anu eats stuff out of the insiue of the
maishmallow anu heals it back togethei. I uon't want that kiu to be my accountant.
Theie was a giil just licking it a little bit.
What they founu is 1S%-2u% of the kius uon't eat the maishmallow
The fascinating thing about this simple stuuy is they followeu these kius Su yeais
latei anu the kius who uiun't eat the maishmallow have bettei maiiiages, uiu bettei
on theii SATs, went to moie famous colleges, anu get paiu moie money
statistically significant.

72
Now one lesson they woulu like you to leain fiom this is that putting off
satisfaction foi five minutes is a tiait that pays off in the long iun. But that's not why
I tolu you the stoiy.
I tolu the stoiy because what I hope you took away fiom yesteiuay is: theie aie
all these maishmallows. Take the maishmallow.
You uon't have to eat it, but if you uon't sign up foi the stuuy, you uon't get any
maishmallows at all. Take the maishmallow.
Bon't holu youiself back. Bon't say to youiself, "Well I'm not qualifieu foi a
maishmallow oi I piobably won't get any maishmallows oi it's someone else's tuin
to get the maishmallow." }ust take the maishmallow.
This ievolution isn't going to last veiy long anu you'ie in the iight place at the
iight time foi once.


















7S
O!d8#Z 8U+!? 3/!c+X
!;D*$(-;< \$E( 8,&7
Iueas aie like iiueis anu they neeu a hoise to get to us. You'ie iuea can be teiiific,
but if you can't connect it to a meuium foi which it to tiavel, nothing happens.
If we think of viiuses, viiuses neeu to spieau on a sneeze, a hanushake, oi some
othei foim of tiansmission anu the iuea of that viius gets to the next peison.
So we neeu to talk about:
A. Is youi iuea a goou one. Boes it holu up stiategically.
B. What aie you connecting it to, to allow it to tiavel.
If I askeu you to uesciibe in just a woiu what 7up is, it's the uncola. If you've evei
hau a Coke, you know what 7up is even if you've nevei hau one befoie.
That's the woik of Tiout anu Ries. They wiote yeais ago "Positioning." They say
one way to inject an iuea into someone's heau is to finu someone else who's alieauy
in theii heau anu hang something next to it. Because if someone else is still theie,
we'ie just like the Catholic Chuich except we uon't the have statues on the walls.
If you unueistanu what the Catholic Chuich is, you unueistanu what Naitin
Luthei was uoing. You can woik youi way thiough lots anu lots of iueas that ovei
time they've built theii own stiuctuie in people's heaus by connecting to somebouy
else's.
So you get up anu you have an iuea. I uon't know enough about it yet to tell you if
it's a goou iuea, but two minutes in you mention Angie's list. Anyone who knows
about Angie's list anu sees youi sliue says, "Wow that's a lot like Angie's list."
You have to make an assumption in the beginning. Boes youi investoicustomei
know about Angie's list oi not. If they uo, you can't make it go away so you might as
well acknowleuge it.
You can spenu Su seconus telling us how gieat Angie's list is, how big they aie,
how much money they make, they'ie a publicly tiaueu company, blah, blah, blah.
Then you can say, that's all gieat, now we alieauy get it because they've spent
millions anu millions of uollais teaching us what Angie's list is anu then you say,
"heie's why we'ie betteiboom, boom, boom."
Now eveiy time I think about Angie's list, the iiiitating pioblems, stiuctuial
pioblems, oi the mouel you pointeu out comes with it.
We aie Angie's list, but we aie fiee.

74
We aie like Angie's list, but we aie fiienuliei to the contiactoi so we'ie going to
get moie of them.
We'ie like Angie's list, but we have a book that's going to be uistiibuteu like the
yellow pages foi people who uon't want to look people up on the computei.
By constantly coming back to ieposition against the maiket leauei, you'ie uoing
gueiilla jiu jitsu. It gives you way moie thiow weight to get youi iuea in my heau.
When you talk about it, that's an oppoitunity.
The alteinative is to uo what uoogle uiu. uoogle foi thiee yeais nevei mentioneu
Yahoo, nevei mentioneu Excite. They saiu, "We aie sui geneiis, we have aie own
thing, we aie not like them, anu heie's why."
The pioblem with that is it takes a lot longei anu costs a lot moie money. The
goou news of it is you get to builu youi own thing.
Apple nevei saiu in the beginning, "We'ie just like Niciosoft, but without blank."
But when they staiteu uoing the "I'm a mac, I'm a PC aus," they ieally hookeu
into it. They saiu, "Aliight you alieauy know what a PC is. We'ie going to
uiffeientiate ouiselves ovei anu ovei anu ovei again." They just took all the money
that was spent on PCs anu went ovei heie.
If I was going to teach people what youi business isI woulu spenu one minute,
that's all it woulu take me to go like thatanu then I coulu spenu foui minutes
pioving it was tiue anu impoitant. Because it's not cleai that youi auvantages aie
impoitant, but you can make that case.
When I go to maiket, the othei thing I neeu to heai fiom you is,"
Which pait of this is going to be haiu foi you.
Is it going to be haiu to get contiacts.
Is it going to be haiu to get consumeis who's paying.
Those elements become veiy impoitant because focusing on the haiu pait is key.
You'ie scieenshots aie beautiful, but that's not the haiu pait. So we have to figuie
out what the haiu pait is.
|Intentionally inauuible company namej you've alieauy iuentifieu what the haiu
pait is. You saiu, "I uon't know how to make the combination of my stoiy anu my
whiteboaiu iesonate with people." But you can use not veiy much money to finu
out.
You can give him $1,uuu anu 1u aiticles fiom the Baivaiu Business Review anu
if he can't come up with something, fiie him anu finu someone who can. That's the
only thing we neeu to see foi the fiist thiee minutes of youi piesentation. "Let me

7S
teach you how they fix Best Buy. Sliue, sliue, sliue. Let me teach you, sliue, sliue,
sliue." Then you say, "Bo you want moie of these."
When someone stanus up to talk about how gieat theii music label is, they uon't
talk about polycaibonate. They play you some tiacks. So play us some tiacks. We
uon't neeu to see the stuff because we'ie alieauy iuentifying as the iecipient of what
you want to say.
8%94 #$% !^$E% %*& 3&D*;$C$<L
The seconu half, again back to the caiiiei of the iuea, is I woulun't spenu a penny on
technology. Not one penny. I woulu sign up with Nailchimp anu I woulu senu out an
html e-mail to youi list. That's the technology. That's all you neeu to caiiy an iuea.
The pioblem with the web is people have to iemembei to go back to youi
website anu they won't.
The pioblem with the web is people aie looking at websites to be beauty
pageants.
The pioblem with the web is its haiu to shaie a website with someone else.
Wheieas, if you senu me an e-mail my expectations aie ieally low because e-
mail's ugly. You'ie e-mail's not ugly. Anu I uon't have to go get youi e-mail. It's home
ueliveiy. Newspapeis woulu go out of business if they uiun't have home ueliveiy.
You'ie biinging it to me. It's beautiful anu I can foiwaiu it to eveiyone I know.
Stop woiiying about technology anu figuie out how to make one of these that's
compelling enough that I want anothei one. If you can't, theie's nothing heie anu
you shoulu just go on to the next thing.
3&CC E4 8)@$(%7;% #&64_ ;$% V(&7:-;< #&64
In a woilu of instant bieaking news, you'ie not going to be "bieaking news." All you
have to sell is you'ie "impoitant news," anu uo it in a way that I want to shaie it.
That's a cieative bieakthiough that you have to uo.
Theie aie people with the taste like Teiiy who say, "No, that's not going to fly,
but what if you uiu this oi what if you uiu that."
Anu Naik, you'ie ceitainly one with the inuustiy. You talk the same language
anu stuff. That's ciitically impoitant. What I saiu yesteiuay about numbeis is not
that numbeis uon't mattei. What I saiu is the stoiy of numbeis is what they caie
about, not the numbeis themselves.
Foi Tiaffic }am to woik, the stoiy the CN0 tells the boss is what they'ie buying
fiom you. If that stoiy has numbeis in it, so much the bettei. But you'ie heie to tell
us a stoiy anu that's what we'ie buying fiom you.

76
So when you'ie appioaching someone, we alieauy know the fiist foui anu half
minutes of youi piesentation. You coulu uo that in one sliue. "0k, we all feel the
same pain" anu now you say, "I'm going to tell you a stoiy that you'ie going to be
able to biag about to youi employees, to youi cowoikeis, anu to youi boss." Anu the
stoiy is, "Noney spent heie is smaitei than money spent theie," anu then we want
uetails. We uon't want to heai about all the failuies because we know them. We
want to heai about youi successes oi the piomise of success.
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Let's talk about the single's bai pioblem. The single's bai pioblem is if anyone
actually knew how caiing, compassionate anu smait you weie, you'u have
absolutely no tiouble at getting a uate. But no one caies enough to get that ueep, so
it all becomes veiy shallow.
Anu you'ie uiiving up the tiain on the Buuson Rivei looking out the winuow anu
you see something. You'ie not going to go back anu go theie latei. So when you'ie
talking to somebouy about what you'ie uoing, you have to uispense with how you
got theie anu why it's impoitant to you anu all these things.
You have to say, "I'm on a uate. I have 1u seconus to make a fiist impiession. I
have Su seconus to make a seconu impiession anu then maybe theie'll be enough
inteiest to go to the next level."
If you uo it with a seiies of questions, you uiscovei that you can open uoois to
finu out what people aie inteiesteu in. The ieason that's scaiy is because at any time
the peison can answei the question the wiong way anu then it's ovei.
What we uo is, because we'ie afiaiu we'll get iejecteu at question numbei thiee,
we nevei get to question numbei thiee. We just auu these othei non-ueniable
layeis.
What I'm pushing each of you to uo is get iejecteu eaily anu uiscovei what leu to
it being iejecteu.
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-% %$,7L5
What woulu you have to say to somebouy in 2u woius oi less that woulu make
them eagei to use it.
Eagei to pay attention oi eagei to pay money, which is ieally valuable.
What uo you say to a peison to get them to say, "Yeah I want to know moie."
Anu you have to stait with that.
The uiffeience between Instagiam anu an app that isn't populai is Instagiam
only woiks if I tell my fiienus. If you builu a social connection into this, youi heau

77
stait is sufficient because why woulu someone switch to the othei one. If theie isn't
a social component, you uon't have anything anu you shoulu go builu something
else.
V-< 1$)@7;-&4 7;, %*& ?7C&4 1LDC&
Now I want to talk a little bit about the Foitune 1uuu.
Foitune 1uuu companies aie biggei than most nations. CE0s aie like ioyalty. The
closei you get to the centei of an oiganization that big, the haiuei it is to make a
sale. The people who have those jobs aie getting paiu $7Su,uuu a yeai$1u,uuu-
$Su,uuu a week. Theii main goal is to not get fiieu.
When you biing innovation to someone who's main goal is to not get fiieu, all
they'ie thinking is, "Will this get me fiieu. The scaiiei it is, the moie sales people it
touches, the moie impact it's going to have on ievenue, the moie likely it is it's going
to get me fiieu."
At the euges of these countiiesthese companiesif you want to sell the Tampa
office six Bell computeis anu you iun enough calls, someone's going to buy six Bell
computeis fiom you foi the little iegional office.
But if you want to go to the Chief Sales 0fficei of a big company anu say, "I want
you to buy 1S,uuu uevices," all she's thinking about is, "This bettei not sciew up."
If you look at the people who sell to those companies, those oiganizations have
Su, 1uu, Suu salespeople who uo nothing but go to meeting aftei meeting aftei
meeting anu woiking theii way thiough the system because theie's a huge payout at
the enu.
The teim we use heie is sales cycle. Bow long uoes it take fiom the fiist uay to
the last uay.
The sales cycle in the iTunes stoie is two minutes. A two minute cycle fiom, "I
ieau it on Tech Ciunch, I bought it." The sales cycle to get a sales foice with 1,uuu
salespeople to uo this is a yeai.
Eithei you'ie someone like Salesfoice.com wheie Naik has liteially piobably a
1,uuu salespeople who aie tiying to bieak open these big, big, big companies. 0i
you'ie bootstiapping the way you aie. Well, this one new company is enough to
keep you happy foi S yeais.
So what you uo is sit uown with youi tiny uivision anu you say, "Biaw me an
oiganization chait anu who can you intiouuce me to." Anu you spenu all youi time
theie.
When I useu to woik with Kinkos I was amazeu aftei you walkeu in anu ciosseu
ieception, the fiist office on youi iight, Xeiox, hau an office insiue. Xeiox was such

78
an impoitant client that if you neeueu anything fiom them, you uiun't have to fly to
Rochestei. You just walkeu to the Xeiox office insiue Kinko's heauquaiteis.
Well, that's sufficient foi you that you say, "I'm going to have a full time sales
peison who uoes nothing but call on this one company." You'ie nevei going to iun
out of people. Anu if youi oveiheau is small enough, that's sufficient. You'ie just this
inteinal thing at $1u a seat. You just keeping auuing seats pei month. You'ie thiilleu.
?&CC-;< %$ 0(-&;,4 P45 ?%(7;<&(4
The point I'm tiying to make is theie's a huge uiffeience between selling to
stiangeis anu selling to fiienus.
The vibe I'm getting fiom B-*/)*/-+*'..6 -*'42-=.) J+>;'*6 *'>)G is he's going to
sell to fiienusthat theie aie people in the music inuustiy who know him, who
know his ieputation, who uoesn't have to spenu a bunch of time cieuentialing him.
You uon't have to get cieuentialeu to sell to these people.
But if you tiy to cioss the stieet anu sell to someone new, a whole bunch of
things in the way you staff youi oiganization have to change.
0ne of the uangeis that eveiy one of you face fiom what I'm heaiing is you've all
establisheu cieuibility, iespect, anu authoiity with the people you've woikeu with in
the past. Now you'ie ieauy to go to a biggei, wiuei woilu anu the giant challenge is a
lot of that stuffyou'ie winning stiategy, the stiategy that got you wheie you aie
touayuoesn't caiiy a lot of watei when you go talk to stiangeis.
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I maue the uecision foui yeais ago that I was no longei going to wiite foi
stiangeis. I no longei want any new ieaueis anu I'm not going to uumb uown my
coveis, wiiting, anu my titles to make new people want to ieau me. I uon't want to
uo what Nalcolm |ulauwellj has uone so biilliantly which is anyone can pick it up
anu say, "0h this is soit of foi me." I am plenty happy with the people I have. I uon't
neeu anybouy else.
That changes the kinu of outieach I uo. It changes the uecisions I make, what
kinu of piomotions I uo, anu wheie shoulu I uo it.
If I'm not iacing to get new people, if I just want to keep the existing people
happy, it's going to tiansfoim what you uo. So we all neeu to think about that.
]*7% !(& \$E -; -% 0$(F
Bow many of you ieau Bob Lefsetz's e-mail thiee times a week. }ust one of us.

79
Bob Lefsetz has been in the music business foi 2S yeais anu he wiites the most
uncensoieu, off the top of his heau e-mail newslettei about anything anu I ieau it all
the time. Anu so you will leain a lot ieauing Bob. Be iants basically.
When I was sitting with Bob whining about he uiun't make enough money,
because all the heaus of all the music businesses listen to him, I saiu, "Bob is that
why you uo this. Because if you'ie goal is to make money, this is a uumb way to uo
itto just iant anu buin eveiy biiuge you can in an e-mail newslettei that has no
auveitiseis. That's just not a goou business mouel."
What's cleai is that's not why he uoes it. Be uoes it because he likes it when he
walks into any ioom with music people, eveiyone goes, "Theie's Bob Lefsetz." Anu
when he has a fight with Tayloi Swift anu Tayloi Swift wiites a song about him, he's
going to weai that on his sleeve foi yeais. That's what he's in it foi anu he's not
unhappy about it because /&'/F5 0&'/ &)F5 -* -/ ,+7"
You have to figuie out what aie you in it foi.
Naybe what you want to uo is have an e-mail newslettei that gets ieau only by
1uu people wheie you go on at length about whatevei insight you have. Then you
make you'ie living uoing something you'ie goou at making a living at. They uon't
have to be the same thing. They coulu be the same inuustiy, but they uon't have to
be the same thing. If those 1uu people aie the iight 1uu people, you'ie nevei going
to look foi a job again anyway because they'ie going to see how smait you aie.
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7D%F
Because if you sepaiate the two, you can be moie tiue to youiself in both places.
But if you'ie going to match them up, you neeu to finu customeis who want you to
be you.
Bob Lefsetz's bianu is, "You shoulu only hiie me to come in if you want me to tell
the unvainisheu tiuth anu you'ie going to fiie me when I go, but you'ie still going to
pay $1u,uuu foi the piivilege." Bob only uoes that nine times a yeai, but that's
enough. Be's fine.
That coulu be the path you ueciue to go uown. A lot of people enu up ieally
unhappy because they keep tiying to foice theii "I'm iight" on people who uon't
want to heai "iight."
You can be smait anu say, "I uon't want to talk to /&+5) people. I want to talk to
the people who want to heai what I have to say." You just have to chait the path that
matches that.

8u
This is what I chose to uo. I was at Yahoo anu I coulu have stayeu theie. I
coulu've hau Naiissa's |Nayeij job. I woulu've hateu eveiy minute of it because in
oiuei to uo those thingsto be a public company, have a boaiu of uiiectois, anu
have thousanus of employeesyou have to act a ceitain way to be goou at it. I uon't
want to act that way so I went to uo something else.
You have to think haiu. Look at othei people who aie living ceitain kinus of lives
anu what's the value tiansaction.
All of you have that same oppoitunity to say,
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81
1>O./>O8?8#Z
The two questions that keep coming up ovei anu ovei again foi about half of you aie
an oveilap between: Whatevei I'm uoing, will it woik. Anu, is this what I'm
supposeu to uo. Anu they aie completely unielateu.
We uon't know if it's going to woik. We can talk about if it's likely to woik. We
can talk about whethei we can make it woik bettei. But we uon't know. We can't
piomise it's going to woik.
What we ieally can get to the heait of is:
}ust because othei people have been in many cities uoesn't mean you have to be.
}ust because othei people aie uealing with sunbuineu touiists, uoesn't mean you
have to.
}ust because othei people have 2uu employees anu have a lot of uebt, uoesn't
mean you have to.
This can only come fiom you which is, is it what you want.
If you coulu have whatevei it is you want in youi uay, wheievei it is youi selling,
whatevei it is you'ie builuing, whatevei it is R0AN |companyj is uoing, is that what
you want. Then let's have a conciete conveisation about what compiomises you'ie
going to have to make to make it woik.
When I heai you |founuei of R0ANj talking, what I heai anu see makes youi
eyes light up is that an intelligent touiist comes to the city you love, engages with it
in a uiffeient way, anu comes away changeu. Anu when that happens you aie
thiilleu. Anu that when someone who might even pay you moie money comes with
theii scieaming kius anu wants to sit on the beach anu uiink Nexican beei, you
iathei not take the money.
Then you think about all these bianches in all these othei cities, wheie you uon't
even get to be, just so moie money comes in anu you can get anothei aiticle wiitten
about you. I uon't see youi eyes light up eithei.
I just want you, all of you, to just give up on this thing, "Will it make that peison
happy. Will my mothei-in-law be happy. Will Seth be happy." It uoesn't mattei.
You'ie going to make some compiomises whatevei you builu. Is this one woith
compiomising foi.
What I'm heaiing is if R0AN ieaches the level wheie you feel it's just the iight
scale in Niami with the iight people iespecting you anu ieaching out to you, that's
wheie you want to be.
Now, will it woik.

82
The fiist thing I woulu say is unueistanu that the cost, the piice of something,
uoesn't have anything to uo with what it cost to make.
Chanel numbei S cost $S,uuu a gallon, anu BP Piintei Tonei Caitiiuge costs
$1u,uuu a gallon. H+ =46. But to make, it costs a nickel.
Theie's this huge uisconnect because the value you get fiom buying Chanel
numbei S, if you'ie someone who likes to buy it, is extiemely high. They have a
monopoly on Chanel numbei S. If you want to buy it, that's what it costs anu the
piice is ok because it tells you something about how much you'ie woith.
A R0AN toui might cost the same amount to uelivei as a uouble-ueckei bus toui,
but that uoesn't mean it ueliveis the same value. It uoesn't mean the peison who's
getting it feels it ought to be piiceu the same. It may be that a uouble-ueckei bus
toui cost $2u pei peison foi thiee houis anu youis cost $2Su pei peison foi thiee
houis. A lot of people aie going to say, "that's iiuiculous," which is gieat. You uon't
want them anyway.
Then we say, "Bow uo we make it so you can have enough customeis paying the
piice that woulu iuentify them piopeily."
The answei is, what's youi channel.
Cleaily 0SA Touay is not youi channel. Someone who ieaus 0SA Touay oi even
the Times uon't go fiom theie to booking a ieseivation, flying to Niami, anu hiiing
you. It's goou foi builuing the bianu in the long iun, but it's not a customei
acquisition tool.
]*7%94 \$E( 0&&,&( 1*7;;&CF
Theie's this ciab iestauiant in New Yoik City. I uon't know if it's still in business, but
it was always full. Ny fiienu fiom Naiylanu woulu take us theie eveiy couple yeais.
They hau papei on the tables anu they biought us those hoiiible haiu ciabs with all
that salt on them. You hau to hit them with a hammei anu you'u be theie foi houis
anu eat an ounce of ciab. It was always full.
We lookeu aiounu anu iealizeu 9u% of the people in the iestauiant weie
}apanese. This place is famous in }apan because the guy who ian it spent I uon't
know how many houis couiting the people who wiite guiuebooks in }apan
pietenuing this was the most famous iestauiant in New Yoik. So all these touiists
aie walking in with theii little books to eat ieal New Yoik City ciab anu no one in
New Yoik evei heaiu of the place. Be hau this feeuei channel.
So you have to say, "What's my feeuei channel."
Naybe youi feeuei channel is that theie aie 2u coipoiations that iegulaily biing
executives into town with theii families foi whatevei ieason anu you figuie out how
to say, "When they uo this, they aie safei, happiei, bettei euucateu, anu moie
iespecteu then if you just senu them on theii own foi thiee houis."

8S
You invest the time to finu just a few places wheie you aie uoing something that
eains theii iespect anu ovei time these feeus builu on one anothei until you have
this stability that woulu make you a lot happiei. Insteau of like iunning aiounu
tiying to uo whatevei the maiket neeus touay, you've eaineu this asset.
V&4% -; %*& ]$(C,
You have to say, "Which kinu of web uevelopment aie we going to become the best
in the woilu at." In the Bip, I wiote about uoogle is ciuel in that when someone uoes
a seaich, only the top one is the top one. If you'ie seen as the best in the woilu at
something, then the gigs come to you.
If you talk to someone about, "I own a uozen books in a seiies anu I want to sell
them all aiounu the woilu. Who's the best in the woilu at that." Teiiy's name will
come up because she's eaineu the iight.
Now if you say, "I'm looking foi someone to uo consulting on tax abatement on
my bowling alley," you'ie not going to heai about Teiiy. She uoesn't uo that even
though she useu to be a lawyei. That's not hei thing. You have to pick the thing anu
you'ie in.
Campfiie maishmallows aie the best in the woilu at being maishmallows, but
they'ie not a uesseit. They'ie in a categoiy all by themselves. You uon't want to tiy
to go aftei campfiie maishmallows because what coulu you possibly uo to uefeat
campfiie maishmallows Su yeais in the business that we all giew up with.
So you have to pick an inuustiyNeuicine, people who aie uoing touiism sites,
whatevei.
Bo one so beautifully that you get a iecommenuation anu then you can biag
about it anu say, "We specialize in this. Theie is no one bettei than us at uoing this."
If Tim wanteu to builu this thing anu you weie the best in the woilu at builuing
social meuia apps anu I knew that, I'u tell them immeuiately. Because I look goou
when I uo that. You'ie job, because you'ie not the piogiammei, is to ueciue what
you'ie not going to uo anu what you'ie going to uo so that once you know what
you'ie going to uo, uo it beautifully, get the iefeiences, etc. it staits to builu.
3*& 0(&&C7;D&(94 V$$: $' 3(E4%
A little asiue heie foi those of you who aie fieelanceis anu something I wish I hau
uone eailiei.
Eveiy time you get a gig you neeu to say to the peison, "Foi the fiist thiee oi foui
times at the enu of the gig, will you wiite me a lettei of iecommenuation."
Then you neeu to laminate it anu put it in a notebook. Fiom then on, eveiy time
you go out to get a new gig you take out the notebook in the beginning anu you say,

84
"These aie the last thiee gigs I uiu. I'm hoping when I'm uone woiking with you,
you'll wiite a lettei to go into the book too."
Su gigs latei when the book is thick anu theie aie Su iestauiants who talk about
how they saveu the uay anu it's listeu on youi website anu in the book, you uon't
neeu to ask anymoie. They just keep auuing up anu auuing up anu auuing up.
It's so oveiwhelming to show this to somebouy, foi them to see page aftei
pageit's Bisney, it's 0niteu Aiilines, it's this peison anu this peison. 0nce it looks
like it's bottomless, it might as well be. Then theie aie no moie uoubts. You've
completely eliminateu the one thing that's keeping you fiom being hiieu.
]*7%94 -; %*& V$eF
A lot of us get ieally hung up on not just the impoitance of the woik we'ie uoing, but
also how haiu it is to uo it well that theie's a lot of unueilying technology, a lot of
unueilying ieseaich, anu this is impoitant, blah blah.
It's way easiei to say, "Theie's something in this box. The thing in this box solves
this pioblem. If I can show you that the thing in the box solves this pioblem, aie you
piepaieu to pay." If the answei to that question is no, you can save eveiybouy a
whole bunch of time.
Nost BR people aie not piepaieu to buy what you have in the box. "You uon't
have to tell me how much you woikeu on the box. You uon't have to tell me about
othei coipoiations that have ueciueu that what's in the box is impoitant. Because
I'm the BR peison anu all I'm tiying to uo is please my boss. Ny boss has nevei
shown an inuication that she caies what's in the box. So uon't tiy to peisuaue me
that it's impoitant because my boss uoesn't think it's impoitant."
To become evangelical, which is what Tony Bsieh has ueciueu to uo with the last
yeai of his life, is to tiy to peisuaue bosses to tell theii BR people to make it
impoitant. But when you aie talking to the BR peison, all you caie about is, "Boes
youi boss think this is impoitant. Yes oi no. If youi boss thinks it's impoitant, I
have it in this box. I can piove it woiks, but fiist we have to ueciue is this something
you'u like to buy."
The simplest iestauiant example is if you look in New Yoik City the people who
own Pei Se, uiameicy Tavein, anu 0nion Squaie Caf. They aie spenuing zeio time
peisuauing touiists that they woulu enjoy spenuing $1uu foi uinnei. Zeio time.
Theie is nobouy stanuing in fiont saying, "I know you weie thinking about going
to Applebee's, but come on heie, it's ieally woith $1uu."
They uon't uo that. They wait foi someone who's alieauy ueciueu that a $1uu
uinnei is what's on theii list. Anu then they tiy to explain to you why theii $1uu
uinnei is woith moie than those people's $1uu. But theie's no categoiy-shifting
going on.

8S
3*& ?%$(L $' 1*7(-%L
The fiist thing I want to talk about is chaiity. Chaiity is like piice. It's a stoiy moie
than it's actual something.
At the Acumen funu, aftei the ieal estate ciash ceitain uonois uiieu up. They
saiu, "Well I useu to be woith $2uu million uollais anu now I'm woith $1uu million
uollais, so I won't be able to make a uonation this yeai."
You just think about that anu say that has nothing to uo with ieality. You coulun't
spenu $1uu million uollais if you weie still alive even if you bought a piivate jet
eveiy yeai. You just can't. It's not that you'ie going to iun out of money. It's that in
youi heau you've tolu youiself a stoiy about youi ability to be geneious.
The vast majoiity of people in the 0niteu States give zeio uollais a yeai to
chaiity not counting theii chuich. Zeio. Anu we'ie the most geneious nation on
eaith.
The ieason is not because people can't affoiu it. It's that they say to themselves,
"Well if I give $Su that must mean it's impoitant which means I ought to give $Su,
which means going out to uinnei can't possibly make sense because insteau of going
out to uinnei I shoulu just give that money. I shoulu just uo eveiything until I give
the maximum amount if it's impoitant." So it's easiei to just make it zeio anu not
think of it. "This little hole in the boat I iathei not have open."
0ne of the tiicks you'ie going to have to ueal with in uealing with chaiity is the
stoiy people tell themselves.
The ieason people go to a uala anu waste all that money on bau chicken is
because they'ie not ieally buying a uonation to chaiity. They'ie buying an evening
out with theii social ciicle. The chaiity just calls it chaiity because that's the only
way they can think of to make money. You'ie tiying to uo something moie puie than
that, but you have to iealize how alleigic people aie to it.
0n Squiuoo the uefault setting is all youi ioyalties go to chaiity. When we
staiteu it was 8u% of the people kept it that way. You have to click two buttons to
change it to: "no I want the money." The aveiage peison gets $1 oi $2 a month.
That's all that is at stake heie.
8u% of the people have now switcheu it to, "I want the money," just foi $2 a
month anu it bieaks my heait.
I staiteu the whole thingI woikeu on it foi 7 yeaisso that numbei woulu be
8u% oi 9u% anu it's 2u%. Anu I can't change it. Eveiything I tiy it won't change.
People get ieal hung up on chaiity anu they get ieal hung up on money. That's
the thing I neeu to say fiist.
]$(:-;< '$( 0(&&

86
I have nevei once met someone who saiu, "Too many people know my iueas. I am
too connecteu. The tiibe holus me in so much esteem I can't make a living." Nevei
once.
I nevei once met someone who saiu, "So many people ieau my fiee eBook, I can't
make a living."
The challenge foi all of you is gain moie iespect, gain a biggei tiibe, anu make
moie connections. Then I guaiantee you if uo that enough, you'll nevei have tiouble
making a living.
If we look at Shepaiu Faiiey, Shepaiu Faiiey went to jail Su times, gave his ait
away ielentlessly, anu now he can sell a canvas foi $1uu,uuu. Why.
K)J'45) &)F5 #&);'72 R'-7)6" Be uiun't useu to be #&);'72 R'-7)6" Be useu to be
Shepaiu Faiiey, but now he's #&)7;'72 R'-7)6" Bow uiu he get to be #&)7;'72 R'-7)6E
Be can show you a sliue show of the things. Be was in Exit Thiough the uift Shop,
blah, blah, blah. Be uiun't get paiu to uo any of those things. But they gave him a
cieuential so the peison who uoes want to pay, who wants to hiie a famous giaffiti
aitist, can pick him.
Foi example, if you want to make it as a copywiitei anu you wiite copy foi 1S
websites that go viial anu you uo it all foi fiee, then someone's going to see those,
paiticulaily if you highlight them on youi website. Then you can say, "I'm the most
expensive copywiitei theie is, but look at some of my woik."
That's way bettei then saying, "Look I haven't uone any woik."
The actual customei who takes you foi fiee is nevei going to want to pay you
because the ieason they pickeu you is you weie fiee.
V&<-; 6-%* %*& [7(, .7(%4
I leaineu how to colu call. I leaineu how to make sales calls. I was thiown out of
meetings, physically. I hau computeis stait on fiie in the miuule of piesentations. I
got iejecteu 9uu times by the publishing inuustiy. None of that was fun. But that was
not eating the maishmallow.
The people I went to business school with, who thought I was ciazy foi going out
on my own at 26, ate the maishmallow anu took the job at NcKinsey oi took the job
at wheievei anu maue a lot of money foi 1u yeais anu then they weie miseiable
because now they'ie stuck.
Anu so the question I woulu ask is, "At which point uoes the job become the
thing that ieally engages you anu what compiomises anu piices aie you willing to
pay along the way. Bow uo you fiont loau the haiuest stuff."

87
\$E ,$ %*& *7(, *7(, 4%E'' -; %*& ^&<-;;-;< 6*&; L$E
*7P& C&44 %$ C$4&5 \$E D7; D$;'($;% %*& '&7( -; %*&
^&<-;;-;< 6*&; L$E *7P& C&44 %$ C$4&5 8' L$E '($;%B
C$7, -%_ &P&(L,7L 7'%&( %*7% -% <&%4 &74-&( 7;, &74-&(5
0n the othei hanu, if you uo the stuff you like in the beginning anu you ueal with
the eiianus, cleai the table, anu have all the uucks in a iow, seven months fiom now
you have to uo the haiu stuff anu now its ieally haiu to uo the haiu stuff because all
these expectations have been set.
Foi me I saiu I usually close 1 out of 2u sales. Since I neeu 1u sales to make this
woik, I neeu to go on 2uu sales calls. Anu eveiy time I got a "N0," that was a goou
check maik because I was one "N0" closei to being uone with my 2uu sales calls.
If youi goal in thiee months is to be X, what aie the habits that you want to
cieate in the next 9u uays of stuff that's haiu that might not woik, that's scaiy, that
embaiiasses you.
0nce in you'ie in the habit of uoing those things anu it staits to pay off, then the
9u-uay goal is way closei.















88
3!1381?
Theie's a builuing on the Baivaiu campus calleu Ciuft Ball wheie they inventeu the
basis foi iauio anu iauai. In the 19uus-192us Ciuft Ball was the physics builuing. In
the 19Sus anu 194us, physicists kept leaving all theii stuff stackeu up in the
winuows. Rooms became filleu with junk that was left ovei fiom pie-technology
uays. Eventually the physicists moveu to the builuing next uooi with Ciuft Ball filleu
to the biim with olu iauai tubes anu eveiything else.
The teim "ciuft "is now useu by piogiammeis to uesciibe left ovei coue, left
ovei junk, that you'ie not using anymoie that's clogging up the system.
It took us a couple uays to get iiu of some of the ciuft about intent anu wheie
you want it go anu how you wanteu to builu what you weie uoing. Now we can get
iight into veiy specific things that aie going to help you move in the uiiection you
want to go.
Befoie you stait, I want to iepeat what I saiu Nonuay moining, which seems like
six weeks ago, which is: staiting a business is being like an aichitect.
You get to ueciue what lanu you'ie going to put it on.
You get to ueciue how many winuows you'ie going to have.
You get to ueciue what you'ie going to builu it out of.
You get to ueciue whethei you want to be on Boaiuwalk oi Neuiteiianean.
You get to ueciue whethei you'ie going to invest five houses anu then owe the
bank oi if you'ie going to bootstiap the thing.
It's completely up to you.
So if the ueck is stackeu against the business you want to uo, know that going in
because you uon't have to uo the business you'ie going to uo. The pioject is up to
you.
I hope touay, heaiing that again in it's conuenseu veision, it sounus uiffeient
then it uiu just two uays ago because it shoulu. Because it took us a while to take it
apait anu iestack it back togethei.
The iest of my agenua touay incluues tactics.
If you want to talk about business plans, spieausheets, getting meetings,
maiketing tips oi techniques, getting youi iuea out theie, making a iuckus, we can
uo veiy quick uetaileu conveisations about any of those things.

89
0nce you iealize you have something of value to biing to the table, the way you
aichitect it, the way you talk about it, anu the way you make choices will have a
uiamatic impact on whethei youi goou stuff gets to the woilu.
Eveiyuay two oi thiee people senu me a book anu that's a lot of books foi me to
keep up on. Nany of them aie ieally, ieally goou. They'ie bettei than anything I
coulu evei wiite. Anu no one is evei going to ieau those books.
It's not because the books aien't goou. We can agiee that the books aie goou. It's
because the peison who wiote the book uiun't look at the map anu the teiiain anu
unueistanu how to get fiom the book to the ieauei.
They wiappeu the book in the wiong covei, talkeu about the book in the wiong
way, pusheu the book up the wiong hill, anu maue the book the wiong length. They
uiu all these things because they fell in love with this thing insteau of embiacing the
fact that they hau something to make an impact with.
So when I push back on Kelly, Chiistina, oi othei people, what I'm saying is this
isn't about whethei it's woithy. It's about how uo you aichitect it so that people who
uon't know you, the way you know you, will get the point.
Theie's a poucast calleu WTF by a guy nameu Naic Naion, Ameiica's most
neuiotic Comeuian, anu it's fiee. Theie aie too many houis of it foi you to listen to
all of it. Naic inteiviews othei comeuians foi an houi-an houi anu a half at a time.
Anu stanu up comeuy is the peifect stoim of all of this. You'ie a stiangei. The
auuience uoesn't ieally know you. You have 4 minutes, 12 minutes, whatevei, to
make them laugh oi fail. Anu you have to uo it again tomoiiow. When you heai
what's going on insiue these stanuup comics, it's exactly what's going on insiue each
one of you.
Then you see some comics figuie out how to get thiough to people. Theie aie
1uu comics as funny as }eiiy Seinfelu, but only }eiiy Seinfelu is a billionaiie comic.
0nly }eiiy Seinfelu has put all these woius into oui vocabulaiy because he figuieu
out how to maiket anu biing to maiket the thing.
Wheieas, the othei guy is still playing at some Notel 6 in the miuule of nowheie.
That is the foik in the ioau.
So if I keep coming back to shipping it, inteiacting with the maiket place, anu
figuiing it out, it's because if you get that pait iight eveiything else takes caie of
itself.
VE4-;&44 .C7;4
We'ie going to talk a little bit about business plans. The shoit veision of a business
plan is wiite uown enough to make a sales call. You uon't wiite uown enough to
iaise money. You wiite uown enough to make a sales call.

9u
Theie's almost nothing you can't make a sales call foi that iequiies youi
softwaie to be woiking. That's what PoweiPoint is foi. You can asseit that youi
softwaie is woiking anu then aftei the sales call woiks, you can say, "I was just
kiuuing, keep youi money." Fine, at least you maue a sales call.
Y;%-C L$E '-<E(& $E% *$6 %$ ^& -; '($;% $' 4$)&^$,L
7D%E7CCL 74:-;< %*&) '$( )$;&L $( %*& &aE-P7C&;% $'
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^E4-;&445 \$E ,$;9% &P&; *7P& 7 ^E4-;&44 @C7;5 \$E
IE4% *7P& 7 ,(&7)5 V-< ,-''&(&;D&5
When I think about Bon's business, the way the yellow pages became a multi-
billion uollai company is this: Theie was a paitneiship between AT&T anu RR
Bonnelley. RR Bonnelley piints lots of stuff. They know how to cut uown tiees to
make yellow page books anu AT&T figuieu out how to sell aus in the yellow pages.
Bow uo you sell aus in the yellow pages. Beie's how you uo it.
Pizza is the biggest categoiy in the whole yellow pages almost eveiywheie. The
salesman goes into the pizza place. 99 times out of 1uu you uon't get to meet the
ownei. This is a big pioblem in youi inuustiy, lots of inuustiies. The peisistent
salespeison explains what he wants to uo is give this business a fiee au in the yellow
pages anu install a fiee telephone in the pizza placea seconu phone, a yellow
phone. Sometimes it was ieu, sometimes it was black, anu sometimes it was yellow.
This was Su yeais ago. Anu the pizza guys says finally, "Suie. Why not."
What they uo is iun a little au in the yellow pages, but the phone numbei in the
au is foi the othei phone. Aftei a few weeks this phone is the one that keeps iinging.
Then the guy comes back fiom the yellow pages anu says, "I'm heie to take out
the phone," anu the pizza guy goes, "No, no, no. Bow much uo I have to pay you to
keep the phone."
So the aus keep getting biggei, biggei, anu biggei because this is all the pizza guy
caies aboutthis yellow phone iings.
The question I woulu ask if I was going to invest in Bon's business is, "Bow many
painteis have agieeu to pay $771 to buy this page fiom you."
Because if they have, we'ie in gieat shape. You uon't even neeu to iaise my
money because they alieauy paiu you. If they haven't, I'm like, "I uon't want to give
you money to builu softwaie oi piint things until you show me painteis who aie
giving you cash."
[-(-;<

91
Seveial of you have askeu about hiiing. This may not woik foi all of you anu it
ceitainly uoes not woik foi eveiy job. Beie's the way I've been the happiest with it.
You can't woik foi me until you've woikeu foi me. I'll hiie fieelanceis. I'll hiie
people to uo pioject woik. I will woik with people anu then I'll offei them a job.
That means the vast majoiity of the woikfoice is not available to you. The vast
majoiity of the woikfoice will not come to woik foi you foi two months as a
tempoiaiy C00 because they have a uay job. That's ok because in exchange you get
to have the best job inteiview in the woiluyou'ie actually woiking with
somebouy. That's how you finu out if they can uo it.
The othei pait of this, which almost eveiybouy unuei invests in with the
exception of IBE0 anu a few othei people, is if youi business is built aiounu people,
ieally anu tiuly, then you aie almost ceitainly unuei investing the time you'ie
spenuing piospecting foi people.
The big book that I solu on Kickstaitei is finisheu anu it's at the piintei now. It's
8uu pages anu it's unbelievable. Pait of the ieason it's unbelievable is because I
paitneieu with Alex Niles Youngei who woikeu with me on the Bomino Pioject as
an expensive six-month intein. Anu I hiieu seven of these people, many of whom
weien't totally piouuctive in the setting they weie in. But it's all paiu foi itself
because I get to woik with Alex.
When you think about the funnel, the funnel also woiks with people you woik
with. If you'ie ieally iunning a people business, anu I use IBE0 as an exampleall
IBE0, a uesign fiim, has is people.
Pait of theii mouel is how uo we spenu moie time inteiviewing. Bow uo we
spenu moie time going thiough iesumes. Bow uo we spenu moie time having
inteins. Bow uo we spenu moie time tiying people out.
If they spenu moie time on this than all of theii competitois, they will have
bettei people. Anu if all they have to sell is people.
Anu then you iun into a law fiim anu all they'ie whining about is theii piospects.
Well yeah, but you only spent 1S minutes hiiing this class of lawyeis! Why aie you
suipiiseu that youi fiim is like eveiy othei fiim. You uiun't invest in it.
Again we'ie back to the tactics that make youi uieam into a business.
.(-D-;<
The piice isn't the piice. The piice can change. What you uo is you chaige anu if you
want to chaige moie, 6+4 J&'7<) >+7). If you want to chaige less, 6+4 J&'7<) .)55"
You'ie going to have to make the people who came in befoie happy, so that's
piobably why you want to iaise the piice, not lowei it, but figuie it out.

92
The giant ioaublock in piicing is now a penny. Theie's a chasm between zeio
anu a penny. 0nce someone pays a penny, they might as well pay $1u. Anu once
someone pays $1u, they might as well pay $Su. The uiop off is not significant. Anu
that's the uistinction.
A blog is fiee anu anything moie than a penny isn't fiee. You'ie going to have to
expeiiment with what gets someone ovei that hump. In ceitain spaces like the
ventuie capital woilu it's ieally easy to get a ventuie capitalist to go fiom a fiee
newslettei to a paiu newslettei. It's not his money. Be expenses it. Be uoesn't caie.
It's ieally haiu to get someone who's been listening to uiateful Beau conceits
theii whole life foi fiee to tuin aiounu anu buy a uiateful Beau conceit foi $6.
Because if theie's an infinite numbei of the same item, theii minuset is, a uiffeient
pait of theii biain has to agiee to pay.
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I have to talk about cheeileauing foi one minute. Beie's the thing; one guy inventeu
it. Beikie Beikimeilisten to thishe inventeu the pom pom, he inventeu the
moves. Anu the way he piofiteu is because he was the content cieatoi. Be staiteu a
chain of camps that still exist to this uay anu a magazine. Bis heiis make millions of
uollais a yeai.
At the camp they'll teach all the moves so that at the competition thiee months
latei, that's going to be the move of the yeai. You can't be a successful cheeileauei
without paying taxes to Beikie Beikimei.
What I love about this is the iuea of establishing the piotocol anu laying the
giounuwoik. In eveiy inuustiy you can uo this in.
Theie's a gioup that establishes what coloi youi appliances will be in foui yeais.
uE anu all the othei competitois can't affoiu to be wiong about what coloi
iefiigeiatois to make. They have to be in sync. The way they uo it is theie's a guy in
the miuule of a small gioup, they all pay a foitune, anu he senus out a memo,
"Avocauo gieen foui yeais fiom now. Beie's the palette." anu they all make the
same coloi.
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I think theie's a ieason it's haiu to scale. I uon't think theie aie many answeis heie. I
think laigely theie is one. Anu this is what the Iciaus Beception is about.
I think the puipose foi just about eveiybouy when they feel like they have
achieveu theii puipose has nothing to uo with to play the guitai, to pave the stieet,
to iun a kiu's sheltei. None of that's in oui BNA. I think it's a uance on the euge of
failuie.

9S
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Theie aie a few people who uon't have that. It's been boileu out of them oi
iaiseu out them oi whatevei, but geneially it's getting close to the piecipice that I
think is ingiaineu in who we aie as people.
Inuustiialist foi 1uu yeais biainwasheu us into not believing that because they
uon't want you to uo that. They want you to neeu them. If you neeu them, you'll
woik foi cheap. Anu if you neeu them, you'll comply anu they'll be able to make
moie money. Now the inuustiial age is enuing anu all these oppoitunities aie
showing up in fiont of us. So, we'ie calling eveiybouy's bluff.
When you talk in the peisuasive way that you have, lots of people sign up foi the
linkeu-in gioup, but then they aie safe to quit because it's easiei to quit then it is to
staie uown the abyss. It's easiei to quit than to uo that uance.
It took us 48-6u houis figuiing out how to move to a new safety zone that's
ieally uncomfoitable. In fact, oui puipose is finuing a thing we uiun't think was
going to woik an houi ago, but now it's woiking well enough that we can wonuei
what the next thing is anu keep that cycle going. The magical iionic punch line is the
Inteinet is making that easiei than evei foi 1.S billion people.
I think the explosion we'ie about to see is not the explosion of inuustiial job
cieation. It's the explosion of people who figuie out whethei theie is money
involveu oi not money involveu anu how to uo that scaiy thing, whatevei that scaiy
thing is.
.7(%;&(4*-@4
A few times we heaiu about paitneis. Baving hau paitneis anu having not hau
paitneis, I want to just iiff on that foi a couple minutes.
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I uiu a iiff in the Bootstiappeis Bible calleu "Ringo was the luckiest Beatle."
Theie's this sense that if theie aie foui Beatles, eveiyone ought to own 2S% because
theie's foui of them. Theie's this sense that if you meet somebouy in the bai anu the
two of you aie sketching out the business, you shake hanus anu you each own half.
Faii is faii. Anu that's nevei a goou iuea.

94
A paitnei is a veiy special peison.
I hau one astounuing paitnei in my caieei, the fiist pioject I ieally uiu. Steve anu
I complementeu each othei. We uiun't ieinfoice one anothei; we complementeu
each othei. We tiusteu each othei anu weie both in at the same level of
commitment.
Foi the two yeais we woikeu togethei we ieally maue a iuckus. It was iueal
because he was the guy who was going to go to Baivaiu Business School anu uiu
spieausheets anu went to uifficult meetings anu I was the guy who was going to go
to Stanfoiu Business School anu I inventeu businesses anu maue flashy stuff happen.
I wasn't jealous of him anu he wasn't jealous of me. It woikeu. But that is iaie.
What's fai moie likely is someone's peiception of what neeus to be uone isn't the
same as youis. Someone's unueistanuing of cash isn't the same as youis. Anu if you
have a SuSu paitneiship, it's only going to take weeks oi months befoie somebouy
is annoyeu at the othei peison anu befoie uecisions uon't go the way they neeu to.
Theie aie two pioblems that neeu to be solveu heie.
Pioblem numbei one is you neeu access to technical expeitise. You neeu access
to somebouy who can piogiam. 0i you neeu piogiamming when you uesign, uesign
when you piogiam, explain the legalities of S29s when you neeu them explaineu,
etc.foi suie.
The othei thing you neeu is you neeu someone to have youi back, which is a
totally uiffeient thing.
So you neeu to think haiu when you get staiteu, when the equity seems cheap,
but in the long iun is extiemely valuable, what you'ie going to uo befoie you take
half of it anu move it ovei heie oi 2S% of it anu move it ovei theie.
The suggestion I have is as follows:
0ne, eveiyone incluuing you eains the equity ovei time.
You say to somebouy, "uieat, I'm staiting this business. I neeu you to woik with
me as my heau of sales. The fiist Su sales we make aie the most impoitant. I'm going
to give you .1% of the company foi eveiy sale of the fiist Su sales that gets maue. If
you lose inteiest aftei five people, we leaineu something anu you enu up with a tiny
slivei of the company. But if you can ieally biing me all these sales you say you can
biing me anu Su sales latei this company is ieally valuable, well you eaineu it
because ovei time you aie eaining youi way in."
Two, figuie out who has youi back.
Theie's a uiffeience between someone who has youi back once a week on the
phone anu someone who has youi back in the office eveiyuay, all uay long. It's a
veiy tiicky, psychouynamic, political pioblem that's not easy to solve.

9S
Foi }ames Bonu it was Noney Penny. Anu Noney Penny was on a goveinment
salaiy of $19,uuu a yeai. She wasn't a paitnei in the seciet seivice, but }ames knew
that Noney Penny was nevei going to let him uown. You can have an office aumin
who's this peison. That's fine.
Theie aie people I woikeu with at Yoyouyne who weie veiy junioi, but I hau
histoiy with them. I coulu sit uown with them anu tell what I was afiaiu of anu what
wasn't woiking. I knew it wasn't going to leave the ioom. It was bettei that I coulu
uo it with that peison, with the tightiope I was on, iathei than someone who was
my paitnei paitnei. I woulun't have felt comfoitable shaiing just how out on a limb
I was.
What I'm imagining heie is you'ie uiviuing these tasks up. You say, "I ieally neeu
a biilliant giaphic uesignei." But guess what, that giaphic uesignei uoesn't want to
own half youi company. If she uiu she woulu have alieauy owneu oi co-founueu
something.
Naybe what she neeus is plenty positive feeuback, plenty of cieuit, anu a iegulai
paycheck because those aie thiee things giaphic uesigneis iaiely get. You uon't
necessaiily give that peison equity. You give equity to somebouy who has cash anu
unueistanus what equity is woith. Then give the cash to the giaphic uesignei who
values the cash moie than they value the equity.
You have to be veiy uelibeiate about this because I know what it's like to be out
in the wilueiness when nobouy believes in you. Finally, someone shows up anu
believes in you anu you'ie so giateful, you just give them pait of youi company.
Then you iegiet it because it's going to take youi company seven yeais. That's how
long it's going to take befoie you say "Pheww." That's how long it took Anuiew
Baipei. Seven yeais.
The question is, seven yeais fiom now, is that peison you gave 2S% of the
company going to be stanuing next to you helping you as much as they helpeu you
then. That's what they'ie getting iewaiueu foi. That's what is going to happen in
seven yeais.
3*& 17@ 37^C&
Beie's the way it woiks.
Eveiy company has 1uu% to be owneu. Ny company, I own 1uu% of it. When I
owneu Yoyouyne, the fiist uay I owneu 1uu% of it because it was the fiist uay. Then
someone comes in anu says, "I'll give you $S million uollais foi 2u% of the
company."
That means they have valueu the company at $2S million uollais. Because they
get a fifth of it foi $S million uollais. You multiply by five$2S million uollais gets
you 2u%.

96
Now the cap table is 2u% to the guy who put in $S million, 8u% to Seth. So I own
8u% of a company that's woith $2S million uollais, which is pietty cool.
As the cash gets spent the company might be woith moie because you've spent
the cash to inciease value oi it might be woith less because you squanueieu away
the cash.
If you stait hiiing employees, those employees might want equity. You might
give them stock up fiont oi they might get stock options which giow ovei time.
In oiuei to get equity, theie neeus to be moie than 1uu% because I own 8u%
anu the investoi owns 2u%. So what uo we uo.
We piint moie shaies on a piinting piess.
Now I uon't own 8u%, I own 7u% anu the investoi uoesn't own 2u%, they own
17%. The 1S% that we we'ie uiluteu uown is now in this new pile I can hanu to
othei people.
The cap table is the list of who owns what peicentage as time goes on. It keeps
changing ovei time. When you ieau about these companies that iaise $2u, $4u, $Su
million uollais, how uo they keep the cap table woiking.
They go to the founueis, they go to the eaily people, anu they give them stock
options that they have to eain ovei the yeais. Even though they eaineu 1uu% of the
company the fiist uay, they'ie quickly uown to like 2u%. But they can eain back
gieatei peicentage ovei time by showing up, meeting goals, etc.
That's what I'm talking about. If you'ie playing at a highei stakes than just "I
have this little business anu I'm going to cut in my lanuloiu foi a pait," what you'll
finu is you'll give youiself options. As the employees anu othei people aie gaining
shaies, you'ie also gaining shaies so that you'ie not completely uiluting youiself as
you go thiough that.









97
1!?[ 0X>]
You ceitainly shoulu stait with the biain uumbest uummies book you can to make
suie you unueistanu the woius. Theie's plenty of uummies books that will uefine
the woius of liquiuation, piefeiieu, uilution, anu all those othei things. You uon't
neeu big iueas. You just neeu to make suie that all these woius aie cleai to you
when you'ie talking to people.
Then beyonu that, Steve Blank has piobably wiitten something that's useful
about this (No Cashflow foi Staitups). Fieu Wilson eveiy Nonuay posts on his blog
something that someone in youi shoes neeus to ieau. It's calleu NBA Nonuay wheie
he uesciibes this.
0ne of the examples I'll give you is, "Bow is it possible foi a ventuie capitalist to
put $2u million into a business at a $1uu million valuation, anu then the company
sells foi $Su million anu the ventuie capitalist makes a piofit. Bow can that be."
Because he ought to only get $1u million back because it solu foi half of what he
valueu it at. I mean anything else in the woilu, if you bought half a cow anu valueu
the cow at $2u anu the cow solu foi $1u, you'u get half as much money back.
Except the ventuie capitalist has a paiagiaph that says "We get paiu fiist." 0f the
$Su million, we get $2u million ;.45 a guaianteeu ietuin, then the entiepieneui gets
the iest.
Sometimes you ieau about an entiepieneui who's ciowing about this big exit.
They only got a uollai because eveiyone else who came along is in fiont of them foi
how they split up the money.
You have to be veiy caieful especially if you'ie uealing with uentists oi othei
amateui investois about how all this is wiitten. It's easy when eveiyone is exciteu,
but at the enu it can get ieally, ieally, ieally tiicky because the investoi might want
to teach you a lesson anu the investoi will say, "Well I know you have an offei to sell
this company, but heie's what it says, so I iathei the company goes out of business
anu you get nothing then me not get what's in wiiting."
That's why what you've heaiu me say foi thiee uays is get youi customeis to
funu youi business. uet youi cash flow to funu youi business.
When someone caies enough about youi business that they pay you upfiont foi
the fiist one just to make suie it gets built, you now have the money to builu the
next one. If you uon't iun out of cash, no one can tell you what to uo.
!C-<;)&;%
Beie's the uilemmawhen I was staiting Yoyouyne we we'ie befoie the Inteinet.
We weie ieally eaily. Then the Inteinet showeu up anu I was S-S miles up the iivei
anu I neeueu to hiie two people a week on an ongoing basis, the best people I coulu.

98
I wounu up buying a full-page au in the New Yoik Times to get enough people
coming foi inteiviews. We woulu inteiview Su people at a time in a big gioup
setting. We ieally we'ie focuseu on getting goou people.
Then they woulu sit uown anu I woulu say, "0k we'ie cash pooi because we'ie
not in Califoinia. So heie's youi choice, you can eithei get $8u,uuu a yeai anu just a
tiny bit of equity oi $6u,uuu a yeai anu a bunch of equity." Eveiy single peison
pickeu $8u,uuu.
I'm an ebullient faiily positive guy anu they still wanteu the $8u,uuu. They uiun't
to be my paitnei. When I solu the company to Yahoo foi a whole pile of Yahoo stock,
these people hateu me because I somehow hau not tieateu them faiily. Well yeah
but they hau a choice anu pickeu $8u,uuu; they uiun't pick $6u,uuu.
The inteiesting challenge when you say faiily is, what uo they value apait of
youi company as. Pait of it uepenus on wheie youi offices aie, what kinu of peison
you'ie hiiing, anu the stoiy they tell themselves about equity.
Theie aie companies in New Yoik now wheie people aie taking $2u,uuu living
on biown iice so they can have a huge chunk of stock. But that means theii
incieuible focus is, "Let's sell this suckei." Because if you uon't sell the company, you
get nothing.
Is that the employee that you want. If that's youi goal, that's the employee you
want anu eveiyone will align.
0n the othei hanu, at Zappos the people who went to woik foi Zappos uiun't get
a lot of equity. People who went to woik foi Zappos got the ability anu insistence
that they uo unbelievable customei seivice. That's what he hiieu foi, that's what he
iewaiueu foi, that's what he paiu foi, anu that's what people got. Theie was
alignment.
That's the fiist thing I woulu say, you neeu to think about what uo you want
people to want anu how uo you tell a stoiy about that.
That's why what we know about money is past a ceitain amount money is a ue-
motivatoi, it's not a motivatoi. Even commissioneu sales people tenu to peifoim
bettei in alignment with theii company when you get iiu of theii commissions. This
is in Ban Pink's book Selling is Buman.
We think people aie motivateu by money, but they iaiely aie. They'ie motivateu
by the stoiy they tell themselves about money. It's a funuamentally uiffeient thing.
You then say to youiself,
"Well what aie we tiying to uo heie.
Aie we tiying to get cash flow positive anu if so, aie we going to iewaiu people
the uay that happens.

99
What metiic aie we using anu what's the iewaiu that goes foi it."
The summei I co-ian my summei camp up in Canaua it was bankiupt liteially
the yeai befoie anu the gianuuaughtei of the founuei anu I came in to fix it. The fiist
thing I uiu was tiiple the piice of the camp. The ieason I uiu that was you'ie eithei
going to senu youi kiu to camp oi you'ie not. If you'ie going to senu youi kiu to
camp, you tenu to pick a camp baseu on how much it costs. Anu iich people want a
camp that costs moie because it's a signal that it's a goou camp. Well I uiun't caie
what kinu of people sent theii kius so I pickeu iich people. That act saveu the camp.
That was a stoiytelling thing.
Then we get all these 19-yeai-olus on oui staff anu the question you ask, the
question you want the staff to think about is, "Bow uoes the staff ueciue if they've
uone a goou job. Bow uo they push themselves to be in alignment with you."
What I saiu to them was, "A lot of people come heie anu stay foi eight weeks, but
moie anu moie of the kius stay foi foui weeks. 0ne way we can tell if we'ie uoing a
goou job how many of the foui week kius call theii paients anu insist they stay foi
eight week."
So I sat the staff uown, these aie 19-yeai-olus, anu I say, "Beie's the ueal. If moie
than nine kius (in pievious yeais it was one) call theii paients anu insist on staying
eight weeks, we'ie going to thiow all 9u of you, the staff, a blowout five-houi paity.
We'ie going to have a giant iotisseiie animal on a stick. A chef's going to come fiom
Toionto. We'ie going to have pizza. This whole blowout. We'ie not going to talk
about it eveiyuay. I'm just telling you we'ie going to keep tiack of this."
It was like 18 kius ueciueu to stay the whole summei. We weie in alignment
because theie was nothing a counseloi coulu uo to get the kiu to stay othei than
making suie the kiu was happy. It's the only way you get a kiu to stay. The
peifoimance of the staff went exactly in the uiiection we wanteu.
We uiun't say, "We'll give half the piofit to you." You'ie 19-yeais-olu. We saiu
"We'll put an animal on a stick anu you can spenu all night eating it." Anu it woikeu.
It woikeu all aiounu. The staff enjoyeu the piocess, it saveu the camp, anu the kius
benefiteu.
So when you'ie saying what's faii, I think what's faii is geneially soit of
tianspaient but not completely. Because open-book management is ieally fiaught
with issues in a fast giowing company. You have to make suie people unueistanu
equity the way you uo anu it's unbelievable how few uo.
If we went to Yelp's oi Fouisquaie's heauquaiteis iight now anu we sat uown
with any employee anu saiu, "Bow many shaies uo you own." They woulu know.
Then if we saiu, "Bow many shaies uoes the company have." They woulun't know.
That's the only numbei that matteis. 0wning 1u,uuu shaies is iiielevant if
theie's 1uu million shaies outstanuing.

1uu
0ne of the veiy fiist things I uiu when we staiteu hiiing people aftei we iaiseu
money at Yoyouyne was I split the shaies 1uu foi 1 so I hau moie shaies to give out.
Then I woulu give lessons to people, I'u say, "This is how many shaies theie aie.
This is youi peicentage. This is what peicentage matteis."
It uiun't mattei.
People just like saying they own 1u,uuu shaies as opposeu to 1uu shaies. It
uiun't cost me anything moie to auu two zeios to the numbei of shaies, but in theii
heau that numbei is what matteieu to them. I was incieuibly tianspaient anu taught
classes about all this, but that's not what people think about when they uo this.
All of those factois kick in when you think about what's faii, anu how uo we
make a pool foi these employees, peicentages, anu things like that. It just leaus to all
this ue-motivation when what you ieally want is alignment.
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Rule numbei one is you nevei put up youi house. Bon't laugh. This means you
can't sign a peisonal guaiantee on anything. "You want to ient this. 0k I'll ient this,
but I'm not signing a peisonal guaiantee on anything."
I have not signeu a peisonal guaiantee. I was bankiupt foi eight yeais. I was this
close fiom having to close uown foi eight yeais anu I still nevei signeu a peisonal
guaiantee foi anything. That is a line I have chosen to nevei cioss anu I encouiage
eveiyone to uo. The minute you uo, suuuenly theie's a S-yeai-olu at home who's
going to have to live on the stieet if you make a mistake. I just uon't know how to
take iisks when that's at stake.
Then the auvice that I give people is, if we'ie going to be intentional about this,
you neeu to wiite uown a numbei anu a peiiou of time.
The numbei, it can be as big a numbei as you want, is the maximum amount of
money unuei any ciicumstances no mattei what that you'ie willing to put in. Anu
when you hit that numbei you can't put in anothei penny.
People hate this. They say, "But what if something blah, blah, blah." N0. Theie
just has to be a numbei.
The seconu one is, "Bow much time befoie you give up." Anu again, it can be 2u
yeais. Fine. But you can't say, "19 yeais anu 11 months into it, but wait theie's one
moie ueal that might come thiough."

1u1
You just have those two numbeis because if those two numbeis aie in place anu
youi spouse is aligneu with it, you nevei have to woiiy about it again. It's off the
table.
This whole situational thing, "I just neeu $2,uuu moie," that's lying to youiself.
The uiscipline eaily on is so valuable because then you can spenu 1uu% of youi time
focusing.
With Yoyouyne when we iaiseu $S million uollais, I thought that was moie
money than in the histoiy of the woilu. Then the Inteinet boom took off anu oui
competitois iaiseu $4u million. 0ui competitois weie selling oui piouuct foi $u anu
we coulun't sell it foi $u. Theie was this huge uisconnect between how much money
we hau anu how much money we neeueu.
I spent the last nine months befoie we solu the company tiying to iaise money.
In one uay I went to thiee uiffeient states to uo pitches. It was ieally uiaining,
uemoializing, anu hau nothing to uo with my business. If I hau spent all that time
actually builuing my business, I woulu have been bettei off.
So you iaise moie money than you think you neeu anu you tieat it like it's the
last money you'ie evei going to have. It's way bettei than always wonueiing wheie
that next nickel is going to come fiom.
07D%$(-;<
So heie's the ueal. You'ie a biilliant uesignei. You come up with an iuea foi a t-shiit.
You go to Nacys anu you say to Nacys, "I think you shoulu sell this." It's }anuaiy.
They say, "We love it foi oui fall catalog, foi oui fall stoie. We'ie going to oiuei
2u,uuu t-shiits." They give you a puichase oiuei.
Now you have to go make 2u,uuu t-shiits. You figuie out you can have them
maue in Italy, China, oi wheievei anu the people who aie going to make it say, "That
will be $1uu,uuu please."
You uon't have $1uu,uuu because Nacy's isn't going to pay you until Becembei,
9u uays aftei they get the shiits. This is calleu a cash flow pioblem.
Youi business is looking ieally goou. You get to book the fact that you have an
oiuei, but you uon't have cash. In fact you can go bankiupt fiom having too many
oiueis.
So theie's a business calleu factoiing. What you uo is you walk uown to Thiity-
thiiu Stieet anu show someone the piece of papei fiom Nacys, an oiuei foi
$2uu,uuu. Be buys the piece of papei fiom you anu gives you $16u,uuu in cash. It's
now his job to go get that money fiom Nacys when it's uue. You take the $16u,uuu,
you pay the factoi $1uu,uuu, anu the money that's left ovei is youi piofit.
Inteiesting, you gave away almost half youi piofit to someone who only uiu five
minutes woith of woik. Be solveu youi cash flow pioblem. See what that's about.

1u2
That's why a company like Amazon oi Wal-Nait can giow so fast. Because
Amazon anu Wal-Nait uoes it opposite.
Wal-Nait says to Pioctoi & uamble, "We'll take a million boxes of Tiue," anu
Pioctoi & uamble says, "0k, you owe us $S million uollais in Su uays." Anu Wal-Nait
sells it in S uays. So foi 27 uays they get to keep $S million uollais to builu new
builuings, iun new aus, whatevei befoie they actually have to pay P&u.
The fastei Amazon anu Wal-Nait giows, the bettei theii cash flow is because
they get the money befoie they have to pay it. Wheieas foi most of you, you'ie going
to have to pay the money befoie you get it.
That's why when you'ie choosing to builu any business you want, you might as
well builu one wheie the cash flow is in youi favoi as opposeu to one wheie the
cash flow isn't in youi favoi. You might was well builu one wheie the money comes
in befoie you neeu to spenu it given the choice.
[$6 O7;L U7L4 17; \$E ?%7L -; VE4-;&44F
When I was a stiuggling entiepieneui, I only kept tiack of one thing: how many
uays can I still stay in business.
If the numbei was getting too low, I woulu say, "I have to go uo a pioject that's
going to pay. I have to go to some fieelance woik. I have to go figuie out how to sell
a $Su,uuu book insteau of spenuing all my time on a $Suu,uuu book because I neeu
the money."
When theie was enough of a cushion I coulu say, "Now I can invest time in
whethei it's peisonal giowth, etc." These Stanley Kaplan SAT books I uiu that got
them into the book business took me five yeais to peisuaue Stanley Kaplan, the
man, to say yes. Foi five yeais I was investing time on spec anu got nothing. I woulu
have to stop foi a while to go sell a book, Buzzwoiu Bingo, which we thought of on a
Nonuay, solu on Weunesuay, anu got paiu on Fiiuay because that paiu six weeks
woith of ient.








1uS
3[+ U8.
I'm going to talk about "The Bip" foi 1u minutes. Bow many have ieau it. Raise youi
hanu. Wow, my publishei uiu not want to publish it. They only agieeu to publish it if
I woulu wiite a ieal book.
Theie aie a couple things in this book that aie misunueistoou, so let me tiy to
claiify, anu foi those of you who haven't ieau it catch you up.
In oui society staiting stuff is applauueu.
When you say to youi gianumothei, "I'm pie-meu," paity will ensuie.
When you join a gym you alieauy feel healthiei. All you uiu was sign a check.
When you tell people you'ie engageu, paities will ensuie.
Theie's this sense that going uown a new ioau is exciting. Clean papei in youi
notebook. Lot's of people stait stuff anu almost nobouy finishes stuff.
veiy few pie-meus enu up becoming neuiosuigeons. Balf of all maiiiages enu up
in uivoice. You can go uown the list. Theie aie lots of things we say we'ie going to
uo on a Weunesuay afteinoon that thiee months, foui months, six months, oi two
yeais uown the ioau we'ie not uoing it anymoie. Why.
If we look at the economics of the situation, it's this: the ieason those outcomes
aie valuable is because they'ie scaice. Theie aien't a lot of neuiosuigeons, which is
why neuiosuigeons get paiu a lot. If eveiyone was a neuiosuigeon, biain suigeiy
woulu be cheap. But in fact theie aie few.
So how uo we go fiom lots of people stait businesses, lots of people stait
piojects, lots of people open iestauiants, etc, etc, to only a few come out at the othei
enu.
Auu to that what uoogle uiu. What uoogle uiu was they maue it fiom hunuieus of
hunuieus of people having hunuieus of hunuieus quiet inuiviuual conveisations to
one answei to most seaiches. "I neeu a copywiitei who specializes in uiiect mail
copy foi phaimaceutical companies." Theie's one match, numbei one in uoogle, just
one.
Theie's an inteiesting stuuy a guy uiu, but I uon't ieally know who to cieuit it to.
You get a lettei fiom a lawyei anu what the lawyei says is, "I iepiesent a client who
iecently passeu away anu left $S million uollais. You get half of it if you finu the
othei peison who also gets half of it. If the two of you, stiangeis, finu each othei, you
each get $2.S million uollais. You neeu to finu each othei at noon on Septembei 1u
th

in Paiis anu you'ie not alloweu to iun any aus oi uo anything to actively finu each
othei."

1u4
The question I woulu ask you is, what woulu you uo to maximize the chances you
met this othei peison at noon on Septembei 1u
th
.
The vast majoiity of people on the planet say I woulu go to the base of the Eiffel
Towei. It tuins out the base of the Eiffel Towei is the best in the woilu to the
solution to this pioblem. Anu in New Yoik City, if you ask people fiom New Yoik, it's
the clock at uianu Cential Station.
You'ie making a face, is that wheie you woulu go.
!" E4; =, ), )*& [-.9%& ?)')& $395;9/=5
Inteiesting. The pioblem with the Empiie State Builuing is theie isn't a place at
the Empiie State Builuing. Theie aie too many places to stanu at the Empiie State
Builuing. I'm not saying it's iight oi wiong, I'm saying I happen to agiee with both of
them. The inteiesting thing is nobouy says, "I woulu go to yonah schimmel knish's
place." No one says, "I woulu go to Shake Shack." Eveiyone oi most of the people
pick one place.
When you aie /&) place, when you aie the Nike, Apple, Facebook examples that
all business wiiteis use eveiy time; When you aie the CiossFit, not the guy who's
soit of like CiossFit; When you aie seen as the best in the woilu, the benefits aie
outsizeu. You come out way aheau in tiust, ievenue, piofitability, ability to make
noise, anu anything it is you seek to uo if you aie seen as the best in the woilu.
What uoes best in the woilu mean. It means woilu as in my woilu, the only little
place I caie about, not the wiue wiue woilu.
I was telling Bon about the iealtoi uown the stieet, he's the best in the woilu at
selling iesiuential houses in the 1u7u6 zipcoue. It's not the woilu woilu, it's my
woilu.
Best uoesn't mean the most expensive oi the most supieme oi the fanciest, it just
means the one I will pick. The one I will pick foi my buuget. The one that I choose is
the best because why woulu I pick anything othei than my best option.
The goal in whatevei we builu is to be the best in the woilu at it anu thanks to
the Inteinet it's easiei foi it to be just one. The ieason we can't all be the best in the
woilu is because it's scaice anu somewheie between the uay we get exciteu anu
stait anu the enu, we quit. So it's a book about quitting.
I have two things to say about quitting.
0ne, quitting is unueiiateu. We quit things all the time. Nost of you uon't still
take ballet lessons. Some people in this ioom when you weie 4-yeais-olu hau a tutu.
You uon't have a tutu anymoie. I hope. Along the way you quit ballet anu you uon't
beat youiself up about it. That's just pait of what it is to uo things, you quit.
Two, the thing is we quit the wiong things at the wiong time.

1uS
We quit oui woikout scheuule iight befoie it's something that's about to become
a habit anu actually make us healthy.
We quit the maiathon, not at mile 2 when eveiyone's cheeiing us on, but at mile
22, which is when eveiyone quits. If we just went a little fuithei, we get all the
benefits of finishing, but it's in that moment when we can't go on that we quit.
What I aigue foi is a ieally simple thing.
U$;9% 4%7(% 7;L%*-;< E;C&44 L$E9P& -;P&4%&, 6*7% -%94
<$-;< %$ %7:& %$ '-;-4* -%5
I'm not talking about hobbies anu stuff like that. I'm talking about piojects. Bon't
stait a pioject unless you'ie piepaieu to go to the enu.
The stait anu enu aie tiicky heie.
I stait wiiting 1u books a yeai. I mash aiounu with them anu I play aiounu with
them anu I uon't tell anyone about them. Then one uay one of them is the next book.
Anu I have nevei faileu to finish a book once I've announceu it's the next book.
Theie's all this thiashing that happens in the beginning that uoesn't count. But
the post thiash moment when you say, "Yes I'm going to uo this."
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)7:& %*7% 7;;$E;D&)&;%_ 89) <$-;< %$ <&% %*($E<*
%*& ,-@5 8 :;$6 %*& ,-@ -4 (&7CCL *7(,_ %*7%94 6*L 8 *7P&
D*$4&; %$ ,$ -%5=
In youi case Chiis, the iuea is not to say, "I am committing to having a sounu
thing." It's, "I'm going to stick with thisbuiluing an oiganizationuntil I uo. Theie
will be lots of uetouis anu ueau enus along the way, but that uoesn't mattei. I will
ueal with the haiu pait of getting thiough it because when I get on the othei siue it's
woith it."
Theie aie two kinus of piojects. Theie aie cul-ue-sacs, ueau enus, things that aie
nevei going to get bettei. This is the peison who goes to woik at uoluman Sachs as
the ieceptionist anu thinks they can woik theii way up to CE0. No actually you can't.
Theie's no uip theie, it's a ueau enu. Theie's nobouy else that evei comes out the
othei enu.
The way you know it's a ueau enu is has anyone evei uone this befoie. Bas
anyone evei peisisteu theii way thiough this in the way I am uoing it.
Now you might be the fiist peison who evei uiu it. You might be the fiist peison
who evei swam to Cuba. That's possible. But in geneial, it's way bettei to sign up foi
a path wheie you know theie is an outcome.

1u6
Theie aie Su-yeai-olus who have gone fiom the couch to finishing the Boston
maiathon. I know that if I uo this uay aftei uay theie's a chance. That's how you tell
a cul-ue-sac, a ueau enu, fiom the kinu of woik wheie theie's a uip.
0nce you aie comfoitable with this stiategic quitting mouel you say, "It's not
only ok, it's impeiative that I quit eveiything I'm not piepaieu to push thiough the
uip on."
You will quit eaily when it's cheap as opposeu to quitting late when it's
expensive.
If you'ie walking aiounu knowing you have a quit caiu that you can use in the
iight moment, but the cost of it is you'ie nevei alloweu to quit something in the
wiong moment, you become that peison who can staie uown the thing that gets
eveiyone else to quit. You'll become the type of peison who is still in the gym in
Naich because it's the people in the gym in Naich who aie the ones getting fit. It's
the ones who stop going in Febiuaiy that make all the money foi the health club.
The same thing is tiue is when you'ie builuing any of these piojects we've been
talking about. You'ie talking about two, thiee, five, oi seven-yeai piocesses. That's
why the iest of this afteinoon is so impoitant because it's not a thiee-uay thing
you'ie uoing oi a two-week thing.
The fiist seven veisions of the hostel aie going to fail. People aien't going to sign
up, the health uepaitment is going to shut you uown, the lanuloiu is going to sciew
you ovei, anu something else isn't going to woik. But you'ie going to leain eveiy
single time. Anu the ninth time you uo it is when it's going to woik, but if you quit at
numbei seven, you'ie nevei going to know that.
That is what you neeu to be laying tiacks foito say, "I get the fact that it's not
going to woik, anu it's not going to woik, anu it's not going to woik anu then maybe
it'll woik."
So please uon't tell me the magic answei touay. Tell me how to make suie my
piocess is in place so I'm a leaining oiganization; I'm not someone who hau to get it
iight the fiist time.
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0,3 &P.5'9/ <*') )*&9% 9/)&%.%&)')9,/ 981
Numbei one, they think best in the woilu means you have to be the fanciest,
most expensive.
Numbei two, they think what I'm talking about when I say, "Best in the woilu,"
ieally is the best in the whole woilu, not in youi tiny maiket.

1u7
This notion of Nonopoly, again, is I unueistanu that Atlantic Avenue is not the
best piopeity in Nonopoly, but it might be 6+47 piopeity. Anu if it's 6+47 piopeity,
that's goou enough if you builu a hotel theie. You can still uo just finu because you'ie
the best hotel in the woilu on Atlantic. The goal is to builu that squaie just the iight
size so you can possess it.
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!" D/& <'0 )*') E +,'+* .&,.5& ,/ 7&9/= %&@&%'75& 98 )*') <*&/ )*&0 )*9/( ,@ )*')
)*9/= )*&0 /&&; ), )*9/( ,@ 0,3 '8 ' 9/)&=%'5 .'%)9+35'% '+)96'),%: ?, <*&/ E )*9/(
,@ ' %&'5),% 9/ S'8)9/=8F E )*9/( ,@ a'%(: I*&/ E )*9/( ,@ ' %&'5),% 9/ Q358,/F
b'59@,%/9'F E )*9/( ,@ >'6& b*'.-'/: ?, )*&04%& )*& 7&8) 9/ )*& <,%5; 9/ )*&9%
+,--3/9)0 ,@ &P+&55&/):
That's iight.
If I was going to open up a ieal estate office, I woulu spenu the fiist thiee yeais
not uoing what I see the ieal estate people aiounu heie uoing which is balloons,
those little foluing metal signs they put on stieet coineis, anu making suie they have
the iight kinu of Neiceues to uiive the peison to the house.
What I woulu spenu my time uoing is making suie that eveiy community
oiganization hau it's meetings in my offices because I woulu have a big enough
meeting ioom so they coulu meet theie as often as they wanteu. I'u figuie out how
to get on the school boaiu. I'u figuie out how to be the assistant coach of the football
team. I'u figuie out how to be this integial membei of the community anu not woiiy
so much about whethei oi not I was selling a house tomoiiow because theie's a
tiust shoitage. Theie isn't a not enough people know how to fill out foims shoitage.
What we know fiom the National Association of Realtois is that moie than 7u%
of people who list a house pick the iealtoi who calls them back fiist. So the goal is
how uo you get calleu fiist, not how uo you piove that youi yielu on a peicentage
basis is bettei than eveiybouy else's yielu. Anu if you get enough listings, you'ie
going to make money.
This is a multi-yeai piocess of owning a tiny maiket as opposeu to iunning fiom
one cool oppoitunity to anothei hoping you'll be uone. It's about signing up foi the
whole piocess.
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<*&)*&% )*&0 +'%& &/,3=* '7,3) 7&9/= )*& 7&8) 9/ )*& <,%5; ), )*')1
I think people fool themselves into thinking they neeu to caie about what it is
they make.
I have uone piojects wheie what I make is the most impoitant thing in the woilu
to me anu it's not about me. But most of the piojects I've uone aie piojects wheie

1u8
the tiansaction, people, atmospheie anu the way it makes us all feel is way moie
impoitant to me than whethei oi not you want this paiticulai wiuget oi not.
Ny uau iuns a hospital ciib company with the biggest maiket shaie. 9u% of the
hospital ciibs in the woilu aie maue in Buffalo, New Yoik in a 0AW oiganizeu metal
benuing painting factoiy that makes hospital ciibs. Ny uau has nevei been in a
hospital ciib anu hopefully nevei will. While it's impoitant to him that nuises have
this useful tool, it's way moie impoitant to him that his woikfoice feels the way they
uo, his customeis feel the way they uo, anu that it's built in Buffalo, New Yoik in a
factoiy that's 1uu yeais olu, etc, etc.
Boes he caie about the people. 0nbelievably.
Boes he caie about his clients. Enoimously.
Boes he caie about that paiticulai piece of steel. Not so much.
This is about how you put youi woik on the line, not youiself on the line, anu
what aie you willing to uo to speak up foi youi woik. If that iequiies you failing
along the way, then that's pait of the cost. That's the people we see come out aheau
almost eveiy time. The people who aie busy cutting coineis anu tiying to close the
sale tomoiiow may win tomoiiow, but they inevitably uon't win in the long iun.
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.&%.&)39)0O*&48 )%09/= ), ;, )*& 8'-& )*9/= &6&%0 )9-&: S& +'%&; &/,3=* '7,3)
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)*&-& 9-.'+) )*%,3=*,3) 0,3% +'%&&%:
You see it's just so messy. You'll meet a guy who is a paitnei in a law fiim anu
he's been a paitnei in a law fiim foi S7 yeais. Foi him his love of the law, love of his
paitneis, anu love of his ieputation is all the same thing. I uon't know how to tease
them apait.
I'm multi-pational. I'm uoing a whole bunch of things, many of which you've
nevei seen because theie in completely uiffeient segments. The pioject is wheie the
textuie is foi me.
If I'm uoing a pioject wheie I'm sauuleu with someone who I uon't iespect, it's
veiy painful foi me anu I figuie out how to change those things. The wiuget itself has
a ceitain level of quality, but I've nevei once maue a peifect wiuget. Theie aie othei
people who make peifect wiugets. I always uon't. I am also veiy comfoitable with
that.

1u9
I uon't know how to tease it apait foi people. What I uo know is they neeu to
look foi the feai. 0vei, ovei, anu ovei again this comes uown to:
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If we somehow let go of oui guaiu anu expose that soft spot is when we uo oui
best woik. It's the people who aie always like this |aims ciosseuj who can't iun veiy
fast because they'ie like this |aims ciosseuj that they get less uone because they'ie
so busy piotecting the soft spot.
When I finu somebouy who keeps jumping fiom thing to thing oi coming up with
clevei elevatoi pitches oi gets stuck, soonei of latei it's going to come uown to the
feai.
If I'm going to talk to someone like Stephanie who's just filleu with this joy,
enthusiasm, smaits, anu piouuctivity; if she uoesn't accomplish eveiything she's
capable of in the next yeais, it's because somewheie you'ie afiaiu of something. We
uon't know what it is, but you'ie holuing back on something anu if you finu it, then
you'ie going to be able to leau with that anu youi piojects aie going to be much
moie likely to succeeu.
This is almost nevei about talent.
It's about why aie we sabotaging oui talent anu not going thiough the uip.
Because it's easiei to say, "0h I faileu at this, now I can go stait the next thing."
3*& ?-g& $' %*& U-@4
I think uiffeient piojects have uiffeient sizeu uips.
Leaining to uo walk the uog with a yo-yo is a faiily small uip tiansaction. It takes
about two houis with a yo-yo befoie almost any cooiuinateu peison can uo walk the
uog. Wheieas leaining how to juggle five pins is a thiee-week uip. So foi two anu
half weeks you'ie huiting youiself anu hitting youiself anu then it woiks.
Youi pioject is a thiee-yeai pioject. It's going to take you thiee yeais befoie you
make a big piofit being the uefault list. uo look at how long it took Nielson anu
SounuScan anu eveiything else. To get thiough a uip that big, you neeu a iich uncle,
you neeu a paitnei, oi you neeu a business mouel that gets you small sales that keep
you in business.
Youi choices aie to pick a smallei pioject with a smallei uip oi figuie out a
mouel wheie some clients aie paying you befoie you'ie ieauy to funu the whole
thing. 0i as you saiu, "Fieelance to pay foi youi uay job." That's ieally haiu.

11u
The thiiu one is ieally haiu anu the ieason it's ieally haiu is you'ie in a iace to
make youi list the uefault list. As you go out in the woilu anu talk about it, othei
people aie going to want to uo it too because it's not only youis. You can't piotect it.
You'ie going to want to go full speeu aheau.
But getting fieelance woik is haiu anu time consuming. If you have someone
who's willing to pay you $Suu an houi foi eight houis a week, go take it, foi suie.
But if you actually got to get goou at it anu compete with Saiah, Saiah's woiking
all the time to get fieelance woik. You'ie not because you'ie tiying to builu
something else. That's going to be a ieal tension foi you.
What I leaineu is I neeueu to have small uip piojects that paiu bills that ovei
time gave me a platfoim to uo biggei uip piojects. See what I'm getting at.
When I got in the Inteinet space I iealizeu foi a long time I coulu get it funueu
because A0L woulu pay me money, CompuSeive woulu pay me money, oi Piouigy
woulu pay me money to builu foi them. I useu that piofit to builu my web thing.
But again it wasn't this one long thiee-yeai uip wheie I wasn't going to get paiu
foi two anu half yeais. That kinu of pioject, that's like an aichitect builuing his own
house with his own hammei, anu he has to uiive to Naine eveiy time he wants to go
to woik. That uoesn't woik.
So you have to make suie theie's alignment between youi iesouices, youi
customeis, anu how big the uip is.













111
VY8XU8#Z 3[+ 3/Y3[
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We neeu to unueistanu that you neeu to have the iight thing that matches the iight
meuium.
If you'ie going to open a stoie in a mall you shoulun't sell cais because people
uon't buy cais when they go to the mall. If you'ie going to sell snacks at the stauium
you shoulu sell peanuts anu popcoin because people walk in expecting peanuts anu
popcoin.
When }eff Bezos anu his wife left New Yoik anu uiove to Seattle, he sat in the cai
anu maue a long list of all the things he coulu sell at Amazon. The list incluueu
music, shoes, books, lots of things. But what he saiu is, "Foi it to sell online, 0ne, it
neeus to be something wheie you uon't have to touch it to know if it's the thing." So
you can't sell bananas because bananas vaiy too much, wheieas eveiy copy of
Catchei in the Rye is what you expect.
Numbei two, "It neeus to have a huge vaiiety because if I'm going to be the best
in the woilu, I want to be the best in the woilu because I have eveiy item that's foi
sale as opposeu to some. I can uefeat any stoie because I'll have all the stuff."
Numbei thiee, "Theie neeus to be a way foi me to piice it so that the customei
knows they'ie getting a uiscount." A uiscount because he was going to iun a low cost
opeiation anu the mouel was you weie going to give up the satisfaction of touching
it anu the giatification of getting it iight now in exchange foi vaiiety anu uiscount.
When you go uown that list, books become an obvious choice because theie's
basically an infinite numbei of books anu no stoie coulu caiiy them all, eveiy book
has a list piice, it's easy to unueistanu how to ueal with uiscounts, anu you get
unlimiteu ietuins back to the book publishei so theie's no iisk. That's how he
figuieu out how to sell books online.
When people iun aiounu anu say, "No, no, no. We'ie going to sell fiuit online
because it woulu be just like Amazon." Well actually no it won't. It won't be anything
like Amazon. All the auvantages Amazon have uoes not exist if you'ie selling fiuit.
That's the fiist thingthink about which place you want to sell. What is a
natuial thing of what that meuium is goou at.
Numbei two is iemembeiing that the heait of all tiansactions is tiust. I'm moie
likely to tiust a stoie I'm stanuing in wheie I can see the item anu take it with me
when I leave than I am to tiust a website that might just be iipping me off.
When you'ie saying, "Wheie shoulu I sell it." a lot of it uepenus on what you'ie
selling. If you'ie selling a seivice, if you'ie a psychologist anu you say, "You know

112
what, foi 1u minutes a uay I can help you peifoim bettei." Theie's a couple ways
you coulu sell it.
You coulu set up a table in 0nion Squaie with a little sign ovei it anu people
coulu pay you $S on the spot.
You coulu have a tiauitional office in a tiauitional meuical builuing anu be just
like eveiy othei psychologist except youi sessions aie ieally shoit.
0i you coulu have a website wheie people click a button anu you answei the
phone anu you talk to them anu they nevei look you in the eye.
Each one of them coulu woik foi a uiffeient ieason, but you have to unueistanu
the tiansactions aie going to be funuamentally uiffeient because oui tiust is going
to be funuamentally uiffeient.
If it's the online site it bettei be fiee at fiist. Because why on eaith woulu
someone pay $Su so they coulu piess a button anu a stiangei coulu talk to them on
the computei. This is not going to happen. Wheieas if I uo it thiee times anu I'm
hookeu, then maybe you coulu chaige me.
Wheieas if it's in youi fancy office anu you'ie tiying to pioject you'ie a ieal
psychologist, the thought that the sessions aie fiee woulu wieck my tiust in you. No
psychologist woulu offei me a fiee session in hei office if she weie any goou. So
we'ie tiying to match one to the othei.
An absuiu way to look at this is if we go to New Yoik anu look at fashion week
wheie they have all those anoiexic mouels walking up anu uown in all those clothes
no one will eveiy buy. Why aie they uoing that.
They'ie uoing that chaiaue because the people in the fiont iow came to see a
show. Fashion uesigneis unueistanu if they put on a show then the people in the
seconu iow who aie the buyeis foi the stoies will say, "0h this guy knows how to
put on a show, I'll buy his iegulai line foi my fall lineup."
Wheieas if you say, "No, no I'm just a goou uesignei. I'm going to skip fashion
week. I'm not going to pay the tax to be theie," Bloominguales isn't going to call you
because you weien't willing to put on a show.
These aie all complicateu pieces that fit into, "What stoiy aie you telling anu
how aie you builuing the tiuth."
X&%%-;< Z$
When I was builuing my company I believeu that one-uay I'u hiie enough people
that they coulu take caie of themselves. Because if you hiie manageis anu you think,
"Now they can take caie of." But then the manageis neeu taking caie of. At 7u
people I gave up. I saiu I'm nevei going to get theie.

11S
Then I got to Yahoo anu the five people who weie iunning the company uiun't
have to uo any of that. They built theii company big enough that it took caie of itself.
If you think about the Bowaiu Schultz examplethe mom anu pop"Well he's
not in this stoie, he must be in this stoie so this stoie's iunning fine." 0nce you
have enough stoies, you can't be in any stoie; the stoies aie iunning fine. At some
point you'ie going to neeu to hiie a C00.
At some point you'ie going to neeu to hiie a consiglieie who takes caie of all of
this anu that's theii job. Theii job is foi them to uo the stuff you uon't want to uo.
Anu the way I uesciibe it is this:
Entiepieneuis hiie people who uo eveiything they uo so they can go uo
something else.
3*& $;CL 67L %$ @($)$%& L$E(4&C' -' L$E9(& %*& ^$44 -4
%$ *-(& 4$)&$;& 6*$ ,$&4 L$E( ,7L I$^ 4$ %*7% L$E
;$6 *7P& %$ @($P& L$E( P7CE& ^L ,$-;< 4$)&%*-;<
%*7% E4& %$ ^& L$E( ,7L I$^5
Theie aie people capable of uoing the taxes, the ielationships with the banks,
anu eveiything else bettei than you. It's about you giving up enough contiol,
spenuing the money, anu saying, "I'm uone with this." The only way you justify it is
to eain moie than that amount of money with the time you fieeu up. But it's a
choice. Theie's nothing built into the stiuctuie of youi business that foices you to uo
stuff you uon't want. It's haiu to get to let go of it.
I've tiieu to uiscipline myself to uo that. I uon't go to meetings, I uon't look at
bills anu invoices, anu I uon't have a ielationship with any bank because somebouy
else uoes that. I uon't even see hei. She comes in my office once a month. She has a
basket anu I put stuff in the basket anu then it goes away. But I've known Ann foi
1S-2u yeais. We tiust each othei anu it woiks. Boes she uo it exactly the way I want
eveiy time. No, but that's the piice. I uon't have to woiiy about it. In exchange, she
uoesn't uo it exactly the way I want it, but she uoes it bettei.
[-(-;< 7 1*-&' 0-;7;D-7C >''-D&( h10>i j 1*-&' >@&(7%-;< >''-D&( h1>>i
Ny expeiience is this. Numbei one, a CF0 is uiffeient than a C00.
A CF0 is not a gloiifieu bookkeepei. A CF0 is in chaige of thinking about money.
A CF0 foi a public company is 0'6 uiffeient than a CF0 foi a piivate company. Bo
not hiie a public company CF0 to come woik foi youi little piivate company. They
will uiive you ciazy. But if you can finu someone who is ieauy to think about money
anu iationalize the money, you uo that fiist. It's much easiei to hiie a pait time CF0.
It's much easiei to say, "0k now the money is taken caie of."

114
Then you can go finu a C00 anu say to that peison, "The money is taken caie of.
The maiketing is my job. You'ie job is using the money you've got anu the piomises
I'm makingmake the piomises come tiue."
Then you say to that peison, "I woik foi you."Neaning if I maue piomises you
can't keep, you neeu to be able to tell me I can't uo that. Anu if you neeu moie
iesouices to keep the piomises I'm making, you neeu to tell me that you'ie taking
the iesouices." That's the only way they can have the 'C' in C00, otheiwise they'ie
just going to become youi aumin.
At fiist they will not be one tenth as goou at this as you aie. They will not
unueistanu the smait shoitcuts. They will not unueistanu the iight quality choices.
Eveiything they make will cost moie then you think it shoulu. But if you'ie seiious
about getting iiu of this stuff anu you want them to iun the aimy while you figuie
out the stiategy, you'ie going to have to uo that.
Anu the fiist peison, the seconu peison, anu the thiiu peison might not be the
iight one which is why a pait time pioject managei might be exactly what you want.
You say to this pioject managei, "This one client is youis. Tell me the iesouices
you neeu. You'ie the Chief Pioject Nanagei foi this client."
If they nail it, you give them a seconu one anu a thiiu one. You keep giving them
new clients until they'ie full anu they will have woikeu theii way up anu you will
uevelop the shoithanu.
I hau one woman who woikeu foi me as a C00 anu then I maue hei the
piesiuent of Yoyouyne anu it was fabulous. The fiist month I felt like one of those
tiust exeicises wheie you lean back anu theie was no one theie. Anu I just kept
leaning back anu I just let piojects fail anu I saiu, "I mean it, u0!"
Aftei two oi thiee weeks she just ian. The last two months befoie we solu the
company no one woke me up in the miuule of the night anu things woikeu bettei
than I evei coulu have.
It was because I saiu, "I'm not in that business anymoie, you'ie in that business.
They woik foi you. Figuie it out. Anu I know it's going to cost moie. I know it's going
to take longei, but soon you'll be bettei at it than me." Anu it's usually the
entiepieneui who sabotages it by hiiing the wiong peison oi by not giving them the
tiust that they neeu.
!,P-4$(L V$7(,4
You can call it an auvisoiy boaiu. You can call it a boaiu. You can call it an auvisoiy
committee. By law, eveiy coipoiation has a boaiu anu the boaiu is actually
iepiesentative of the shaieholueis anu the boaiu is the boss.
If you have a bau boaiu, you'ie life is miseiable. You have to be veiy caieful
about what is its function anu who pickeu those people. If you'ie ieally self-

11S
uisciplineu, you uon't neeu a boaiu to tell you what to uo. 0n the othei hanu, if you
uo want to act exactly the way the system wants a boaiu can be a veiy useful tool to
keep you in line.
If I'm going to invest in Facebook, I caie a gieat ueal about who's on the boaiu
because I know they have a mau scientist who's iunning the company, but as an
investoi the boaius' job is to look out foi me. That's a tough uecision.
That's ieally uiffeient than a boaiu of auvisois. A boaiu of auvisois has two
functions. 0ne, to give you auvice anu two, making you look goou to othei people.
You shoulu be ieally cleai with youiself anu the boaiu which one they aie.
If I bluib a book foi an authoi, the only ieason the authoi askeu me to uo it is so
they woulu look goou to othei people. We both know that. We both know that it is
not my job to fielu complaints fiom the ieaueis if they'ie unhappy with the book
just because I put my name on the back. That's not pait of the ueal.
If you go to the Nayoi of Chailotte anu say, "Will you be on my auvisoiy boaiu."
What you'ie ieally saying is, "Nay I uiop youi name when I go to meetings." You
shoulu be ieally cleai that that's what's on offei. If people say yes to it, you shoulu
make a big ueal out of youi auvisoiy boaiu otheiwise uon't bothei having one.
The othei alteinative, is theie a gioup of people who will tell you the tiuth. In
that case the question is, shoulu they meet as a gioup anu shoulu they be famous.
"Shoulu they meet as a gioup." is inteiesting because gioupthink kicks in almost
immeuiately. I'm not a fan of meetings whatsoevei, but if you have eight people in
the ioom, many with ieputations, they'ie not having a meeting wheie they actually
aie giving you canuiu feeuback about youi goals anu youi uieams. They'ie woiiieu
about, "Bow uoes this look. Bow uoes this make me look. What uoes this peison
ovei theie think about what I just saiu." None of that is how you want to manage
youi life. At least I think so.
In those situations I woulu say, "I want to meet with you foi lunch once a month.
I'm going to biing you my thiee biggest pioblems. I'm going to make thiee piomises
to you. When I come back next month, I want you to ask me about the thiee
piomises I maue to you. I want you to help me with thiee moie pioblems anu in
exchange the Cobb salau is on me." If you got thiee people in youi life like that, you
win the lotteiy. That's fabulousat least the way I've appioacheu this.
Again you have to ueciue what is it's iole anu what's it foi. If you enu up with
employees, this gets ieally tiicky.
At the Acumen Funu I'm pietty active. }acqueline, to hei cieuit, likes it when I
talk to hei employees. Anu I say absolutely amazing ovei the top iiuiculous
pioposals: "Anu go tiy this, maybe you'll fail."

116
Now if I was iunny a company, I'm not suie I'u want somebouy coming in
pietenuing they have my impiimatui just telling my employees to uo whatevei the
hell that peison thought of on theii way ovei. But maybe you uo.
So again, you figuie out what you want the ielationship to be between this
auvisoi public thing anu the woik you'ie actually uoing.
Anu the last pait in youi paiticulai case is I think because youi whole founuation
is in the community, I woulu finu Su oi 4u people who aien't auvisois, but who aie
actually on the hook, publically, to execute.
You say to that peison, "I want you to sell a table at this uala," but it's the
equivalent of that online. Because when someone's on the hook to sell a table, they
sell the table. They iathei sell the table, buy the tickets themselves if they have to,
than aumit they faileu.
That's ieally uiffeient than saying, "We suppoit the uala."
So, what is the equivalent of, "Can I put youi name on the invitation. Can I maik
you off foi biinging 1u othei influential people in. That's the fiist thing I woulu uo
when I got back to Chailotte.
















117
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All iight so the next thing I have in heie is the fableu out of piint ShipIt }ouinal. Bo
not look aheau please when you open them up.
This comes in a five pack foi a ieason anu the ieason was I wanteu people to buy
five at a time. Anu the ieason you neeueu to buy five at a time was you neeueu to uo
this with eveiyone on the team at the same time.
Eveiyone on the team gets one of these anu it has to be in piint. Theie's a uigital
veision, but I uiun't uo the uigital veision initially because I knew people woulu look
aheau anu say, "0h. 0k. I get it," anu put it away.
It's veiy impoitant that it involves pen anu papei because people act uiffeiently
when they have to wiite something uown. This goes iight to this iuea of the uip. If
you fill this out in pen all the way to the enu, I guaiantee you will ship youi pioject.
If you uon't caie enough to ship youi pioject, uon't fill this out. But if you uo fill it
out anu tell the tiuth on eveiy page, you will ship youi pioject. Sit with a team of
thiee, foui, oi five people anu have an honest uiscussion about whethei people aie
willing to wiite this uown. It takes about an houi.
We'ie not going to uo the whole thing touay, but The ShipIt }ouinal is to
unueistanu what the uip is. Because you coulu quit that uay if you want. You can fiie
people that uay if you want. You can move on oi you can say, "We'ie going to uo this
because we'ie gonna ship the thing."
We'ie going to have an asiue heie because its ielevant to something latei in the
book, but let me talk about it now.
A guy name Steve NcConnell woikeu at Niciosoft foi yeais anu yeais anu he
coulu not unueistanu how an oiganization as smait as Niciosoft so often misseu
ship uates foi softwaie anu how expensive it was. What tenus to happen is this:
The fiist euition of softwaieExcel 1.u, Woiu 1.utenus to be built by two
people. It tenus to get out the uooi aheau of scheuule anu woik ok.
The seconu veision of a piece of softwaie is almost always a uisastei because it
gets loaueu up with featuies anu the management of the whole piocess is bau.
Anu the thiiu veision of a piece of softwaie tenus to take 1uu times as many
people to builu as the fiist veision. Anu it's not just softwaie; it's fancy office
builuings anu eveiything else.
Beie's what we unueistanu is the ieason.
3*(74* -; %*& V&<-;;-;<

118
When you'ie woiking on a significant pioject a couple people aie involveu in
iteiating about it, biainstoiming about it, going back anu foith. If you think about
youi piojects, it's two oi thiee people at the most. But then it gets soit of inteiesting
anu I'll use a coipoiate example fiist.
A vice piesiuent gets involveu anu a couple othei people on coipoiate. They
have moie iueas. Naybe theie's a focus gioup oi two. The amount of vaiiation, what
Steve calls 'thiashing,' happens.
Neanwhile this is time |X-Axisj anu this is ship uate iight heie |Y-Axisj. Well it's
woiking ieally well, so now you have to biing in the maiketing guys because you'ie
going to be spenuing a lot of time launching it anu some sales people anu they have
a veiy uiffeient iuea.
Now the piogiammeis say, "We have to iebuilu the uatabase," anu the
salespeople say, "That means the piice is going to have to be highei," anu the
maiketing people say, "That means I neeu a biggei buuget."
At this point, |Stevej Ballmei comes in.
Now theie aie moie meetings anu the pioject is almost cancelleu because it's
getting closes to being behinu scheuule. They look at how much money they've
spent so fai anu it's going way up. At this point they go one moie cycle anu they'ie
about to launch anu then the coipoiate lawyeis aie inviteu in foi one last look just
to make suie. Then they have to iewiite the souice coue. Anu you miss youi uate.
Changes to builuings, softwaie, anu piojects at this level |towaius the enuj aie
inanely, insanely expensive compaieu to heie |the beginningj wheie they'ie almost
fiee. Foi you to change youi business mouel heie |the beginningj it costs you a
nickel. If you want to change it the uay befoie you launch, you got big tiouble.
So Steve's |NcConnellj answei is ieally simple. Thiash at the beginning anu then
keep taking people off the pioject until you launch.
It's ieally easy to look at this anu say that's impossible, but it's not impossible. In
fact, that's the only way to uo it. When it's cheap anu it's just in the papei planning
stage, that's when eveiy peison who has to appiove it has to show up.
When it's ovei heie |towaius the enuj, Steve Ballmei is not alloweu in the
builuing because Steve alieauy appioveu it when he saw the PoweiPoint veision of
the layout heie. Too late Steve. You uon't get to tell us you want to move the save
anu exit button aiounu. Not alloweu.
When I hau my fiist ieal job, my only ieal job at Spinnakei, the piesiuent of the
company was a gieat guy anu I was in chaige of a whole bunch of piojects. If I
misseu the uate by even one uay, the companyall 1uu employeeswoulu go
bankiupt. Anu I hau leaineu fiom woiking with him that he was ieally busy anu like
Ballmei, but with bettei taste, he woulu show up at the last possible minute to play

119
the game (we maue computei games) anu give us ieally valuable feeuback when it
was too late.
So I hau these five piouucts I hau to get out. I hau a yeai to get them out anu we
hau just finisheu the sciipts. The sciipts hau eveiy woiu that was going to appeai on
eveiy scieen. We hau the pictuies, the ait mostly uone. We hau some sounu uone.
These weie the fiist computei auventuie games that hau pictuies anu sounu.
I walkeu into Baviu's office anu saiu, "Beie aie the five sciipts. Beie's the sample
pictuies. Beie aie the sounu files. Anu heie's a piece of papei. What the piece of
papei says is: I Baviu Seuss, if the softwaie has this sciipt anu the softwaie uses
these images anu the sounu sounus like this will appiove the game when it's uone."
I saiu to Baviu, "You can take as long as you want to ieau these sciipts. Anu you
can take as long as you want to look at these pictuies. But you see that team out
theie of seven people; no one is going to woik on anything until you sign this piece
of papei. But once you sign the piece of papei, you may not comment on a woiu in
the sciipt anu you may not comment on the music oi the way the giaphics look
because I'm showing you them touay." I was 24.
Anu he lookeu at me in his gieat laugh anu he so iespecteu why I was uoing this
that he laugheu, smileu, anu signeu the piece of papei. Be nevei botheieu us again.
That's the only ieason we maue oui uate. It's because I kept that piece of papei.
I wish I hau it to this uay. If anyone saiu, "What about." anu I say, "Soiiy it's alieauy
appioveu. We can't change that."
The same thing's tiue if youi ienovating the supeimaiket uown the stieet anu
you just see the numbei of tiauesmen going up who aie theie, but the numbei of
people who get to make uecisions about aichitectuie keeps going uown because
they'ie not alloweu to be theie.
0-CC-;< >E% %*& ?*-@8% W$E(;7C
Now to the ShipIt }ouinal. Let's go to the fiist page with blanks in it. What I tiieu to
uo aie foice people to uemonstiate piecision anu intent about a pioject.
The fiist question is,
VI*') &P'+)50 98 )*98 .%,U&+)1W
It can't be vague because vague things aie not manageable, finite, time uateu,
uoable, oi fallible.
It's only a pioject if you can say, "We faileu."
It's only a pioject if you can say, "It's uone."

12u
Facebook is not a pioject. A pioject is auuing comments to pictuie pages. That's a
pioject.
Then you have to pick as gioup a uate anu a time on that uate when it will be
uone. Not when it will appioximately be uone, but when it will be 2+*) 2+*). Anu if
you can't pick a uate, you uon't have a pioject. Bon't have this meeting. uo back.
Figuie out what you neeu to so you can have this meeting.
The next page is,
VX96& -& )*& /'-& ,@ ,/& .&%8,/ <*, 98 9/ +*'%=& ,@ -'(9/= )*98
;')& *'..&/:W
Theie aie othei people who woik on the pioject. That's fine. You can uiviue the
tasks into multiple piojects. That's fine. But it's not a pioject unless one human
being is iesponsible foi getting it to ship on time. By uefinition that peison gets to
tell eveiybouy else what has to happen foi it to ship on time.
0ne of the things we uiu at Spinnakkei in oiuei foi us to make a thing at the enu,
(we hau 6u oi Su people woiking on it full time) is I hau a bunch of buttons maue.
Some weie gieen. Some weie ieu. If you weie on the ciitical path to get this thing
out the uooi, you hau a gieen button. If you weien't, you hau a ieu button. The ueal
was if the peison with the gieen button neeueu something fiom a peison with a ieu
button they got it.
If you weie in accounting anu you hau a ieu button on anu the peison with a
gieen button on neeu you to play test the game foi 2u minutes to test a little section
of it oi we'u miss the ueauline, the peison in accounting hau to stop what they weie
uoing anu help the peison in the play testing uivision by testing the section of the
game.
If you'ie seiious about shipping the pioject that's what you'ie going to uo. Right.
0theiwise you'ie not seiious; so uon't complain when you uon't ship it.
Now we get iight into the nitty giitty about telling ouiselves the tiuth of what
we'ie afiaiu of.
0ne of the things we'ie afiaiu of is not making the uate. 0k I get that. But theie
aie all these othei things we'ie afiaiu of which is why we uelay things, look at things
the last minute, anu make changes.
We'ie afiaiu of being maue fun of, getting bau ieviews on Amazon, not selling,
not getting pickeu up, people thinking it's too this oi too that. All these emotions
neeu to be biought up eaily so we can be ieally cleai about what this is anu what it's
foi as a pioject.
Along the way to get this thing to ship we'ie going to have to make compiomises.
This next page

121
VZ9+( 8,-& &;=&8W is about compiomises. Some of the things you'ie uoing
you'ie just not willing to compiomise on.
Zappos is not willing to compiomise saving money on how long they'ie willing to
spenu on the phone with a customei. Aie they willing to save money on how thick
the caiuboaiu is they use to box up the shoes. Absolutely. If they can save money by
using thinnei caiuboaiu it uoesn't affect what theii business is all about.
You have to highlight heie what the euges youi company pioject stanus foi anu
which ones uon't you caie about. What that means is if it comes uown to a
compiomise, to make the buuget oi make the time, you say, "I'm not compiomising
that one, but I will compiomise this one," because you'ie not going to have
eveiything.
Let's say the ieason we'ie builuing this flashlight is because this is going to be
the most uuiable flashlight evei maue. This flashlight is going to be wateipioof,
sunpioof, shockpioof, etc. Then they come to you anu theie aie six weeks left befoie
the ueauline anu they say, "Taia we got a pioblem. The titanium shipments aien't
going to be coming in on time unless we pay an extia $1u,uuu, but we can substitute
aluminum."
You say, "Why. Aie we uoing that because we'ie going to make it cheapei oi
what's the impact of that."
They say, "Well the pioblem is it's going to make it a lot less uuiable."
You say, "The whole ieason we maue it was to make it uuiable. Pay the money."
Wheieas if they say, "It's going to change the piice," you say, "I uon't caie. We'ie
in the uuiable business. We'ie not in the cheap business." That's what I'm getting at.
0k next page.
VI*, '%& <& )%09/= ), .5&'8&1 I*, 98 ,3% +38),-&%1W
Again, this is wheie so many piojects get stuck. None of these piojects have to uo
with the laws of physics. They have to uo with taste. They have to uo with
compiomise.
Someone comes into the office anu says, "You know, I was talking to my mom.
She uiun't unueistanu the tag lines on all oui sell pages. I think we neeu to ieuo
them."
You neeu to go uown this list anu see wheie this peison's mom is on the list. Anu
if you'ie not tiying to please hei, you uon't tiy to please hei. It's that simple.
If you'ie talking about helping an authoi with a Kickstaitei anu the authoi
ueciues she uoesn't like the fouith level piize, you say, "But youi ieaueis love the
fouith level piize." If you've uone this0&+F5 -/ ,+7E Is it foi the authoi oi is it foi the

122
ieaueis. When possible uo both, but when it's not possible, 0&+F5 -/ ,+7E Impoitant
to unueistanu.
}umping aheau a little bit.
V!3&8)9,/8 '/; 9;&'8 @,% )*& ;&69548 ';6,+')&:W
I know a guy in publishing, who eveiy meeting I have with him even aftei I've
wiitten a blog post about this that he ieau, can't help himself. Be says, "Let me play
uevil's auvocate heie foi a seconu," anu then explains why some iuea I'm going to uo
isn't going to woik. Anu eveiy time Will says it I say, "The uevil's uoing fine. Be
uoesn't neeu an auvocate." Anu eveiy time Will says, "Yeah. I know." Because he
uoesn't think about when he says his expiession.
So this is a list of all the ieasons that people aie going to give you about why
youi pioject isn't going to woik anu you just have to say, "0h, it's alieauy wiitten
uown in the book. We uon't have to have a uiscussion about any of these ieasons
because I alieauy ieau them all." I put that uown theie to make it easiei foi you
Then paiticulaily with inteinal piojects, but also piojects wheie theie is a boaiu of
health oi whatevei,
VI*, +'/ 8),. 9)1W
Who can say, "I uo not appiove of this. You'ie not alloweu to uo this. I am
stopping you fiom uoing this." Those people, by uefinition, have a ieal say in
whatevei compiomises you'ie going to make to get this thing out the uooi.
The next page is the opposite of that, which is,
VI*, '%& )*& .&,.5& <*, '%& &88&/)9'5 ), 38 -'(9/= )*98 )*9/=
<,%(1 I*, '%& )*& .&,.5& E *'6& ), +,3%)F &/='=& <9)*F ,% 8')98@0
7&+'38& )*&9% +,/)%973)9,/ <955 -'(& )*& .%,U&+) ' .%,U&+):W
Now we get to my favoiite sneak question. 0n the next page it says,
VI*') ;,&8 .&%@&+) 5,,( 59(&1W
I woulu like you to list when youi pioject is woiking peifectly.
Exactly what is it.
What kinu of piofit uoes it have.
Who loves it.
What shape is it.
What coloi is it.

12S
What uo the ieviews say.
Whatevei is impoitant to you about peifect, this is the page wheie you wiite
uown what it's like when it is peifect.
But then the next page says,
2]*7% ,$&4 <$$, &;$E<* C$$: C-:&F= Anu S<++2 )*+4<&T piobably
shoulun't be the same as peifect.
The uefinition of "goou enough" is goou enough. Peifect is the enemy of goou.
It is bettei to ship something that's goou enough because you tolu me what <++2
)*+4<& was than to ship nothing.
You neeu to be ieally cleai with the team if they get foui golu stais by making
something peifect, but they also get golu stais by making something <++2 )*+4<&.
Because we'ie all in the business of making things that aie <++2 )*+4<&" Even if you
want, you can make <++2 )*+4<& ieally close to peifect, but theie is a uiffeience.
You cannot be in the business of shipping on a iegulai basis if peifect is youi
only option because you just uon't get peifect.
Then we get into the nitty giitty. Anu you can't fit it heie.
[6&%0 )'8(F &6&%0 &6&/) )*') /&&;8 ), *'..&/O$0 <*') ;')&1 $0
<*,-1
The conciete neeus to be ueliveieu by this uate anu pileu up iight heie.
The tow tiuck neeus to be ieauy to move this item fiom heie to heie.
This batch of coue anu this piece of ait neeu to be uone by this uate.
You just exhaustively list eveiy uepenuency anu eveiything that eveiyone has to
uo. If you neeu to, you make those into mini piojects with mini pioject manageis.
It's heie that the fiiction staits to show up because "The conciete guy can't uo it
because he uiun't get paiu. Be uiun't get paiu because the CF0 uiun't authoiize the
payment. The CF0 uiun't authoiize the payment because the foim wasn't filleu out
iight. The foim wasn't filleu out iight because this guy." You go all the way back
anu you uiscovei that just because one peison uiun't fill out one foim youi pioject is
going to be a month late.
The goal on the fiist uay is to be ieally cleai with eveiybouy about what all those
uepenuencies aie, iip out eveiy uepenuency that's theie just because it's always
been theie, anu to ieplace them with smallei teams with moie iesponsibility. That is
ieally ciitical.
If the pioject is woith uoing, it's woith uoing with a smallei team.

124
O7@@-;< >E% 7 .($I&D%
!" ?, <*') E4- *'69/= )%,375& 6983'59d9/= 98 /,< 9)48 -&OE4- /,) ' .%,=%'--&%
'/; 8, *,< <,35; E 5&6&%'=& )*98 ),,5 %9=*) /,<1 D% ;,&8 )*98 +,-& ,/+& EO98
)*98 @9%8) 8)&. E /&&; ), '-'88 ' )&'- <9)* )*& %9=*)YW
No. So you say, "I'm going to neeu piogiamming." That's eaily on. Theie's a place
wheie you'ie going to list what's going to be a pait of this pioject.
Then you call Biian at v} labs in Naiylanu anu say, "Biian, on Becembei 1S
th
I'm
going to neeu softwaie that matches this appioximate spec. Foi you to make that
uate, foi you to bet youi ieputation on that uate, on what uate uo you neeu to get
fiom me eveiy scieenshot, eveiy layout, eveiy iequiiement." Anu he says back to
you Septembei 1
st
.
Suuuenly the only ueauline that matteis if you ieally want to ship on }anuaiy
1S
th
is Septembei 1
st
. If you miss Septembei 1
st
, you'ie nevei going to make it up in
volume. You'ie nevei going to make it up latei on. Septembei 1
st
is the uo oi uie
uate.
Then you go to youi giaphic uesignei anu you say, "Ni. uiaphic Besignei, by
Septembei 1
st
I neeu this. What uo you neeu fiom me touay to guaiantee youi entiie
ieputation that on Septembei 1
st
that I'll have this."
If he's any goou he's going to say, "I'll tell you one thing I neeu, you'ie not
alloweu to call me aftei August 1u
th
. Because if you call me aftei August 1u
th
, I'm
going to have to uiop eveiything anu uo something new anu then I can't make
Septembei 1
st
." You say, "Fine. So if I give you this, this, anu this by August 9
th
, you'ie
piomising on Septembei 1
st
I'll have that."
Now, you can builu slack in which is a useful thing to uo. Bon't tell eveiyone
you'ie putting in a week of buffei in-between them, but the point is you'ie now
being honest with youiself. In fact to get this out on }anuaiy 1S
th
, you have to finalize
eveiything by August 22
nu
oi whatevei the uate is.
Somewheie along the way you weie fibbing to youiself anu it's not going to ship
on }anuaiy 1S
th
. Rathei than paying all these oveiage chaiges to iace like a maniac
in Becembei, you bettei say, "I eithei neeu to make a smallei pioject oi I neeu to
change my ship uate." That's what I'm getting at.
When you move the thiashing all the way to the fiist uay, that's what goal we'ie
tiying to uo with all of this.
So when Biian at v} Labs says, "I uon't want to get a call fiom the giaphic
uesignei aftei Septembei 1
st
," you just moveu giaphic thiashing all the way ovei
heie, which is wheie eveiy othei oiganization woulu be looking foi the fiist time on
Novembei 1u
th
at what Biian showeu them.

12S
The way we built Squiuoo is we gave him eveiy single scieenshot anu we nevei
calleu him once.
Anu then he calls us up anu says, "Bone."
We say, "Beie's youi check. Thank You."
Be saiu, "That has nevei happeneu to us once in uoing 1Su websites." Because
they make all theii piofit on the changes.
Be's like, "We weie happy to woik with you, but we uiun't make any money
because you uiun't bothei us."
Anu they weie on time anu so weie we.
\$E( O-;-)7C c-7^C& .($,ED% hOc.i
0k so the Lean thing, anu I am no expeit on it at all, involves a post inuustiial
thinking about coue, which is that coue is soft, coue is malleable, anu if you bieak it
into small builuing blocks, changes won't kill us. The thought is builu the minimal
viable piouuct.
Nost people uon't unueistanu the woiu minimal oi viable. It's something people
can actually use. Figuie out what's woiking. Evolve. uo to the next thing, go to the
next thing, go to the next thing. Anu finally because the couei is sitting iight next to
the maiketing peison anu you'ie uoing this as a team, the thing that launches into
the woilu is cheapei anu fastei anu moie agile than if you uiu it the top uown
inuustiial way.
Eiic woulu uisagiee with me about how to uo this. Be's saying thiash fiom the
beginning to the enu anu just keep thiashing. Always be shipping. Always be in beta.
Always figuie out what's woiking.
I'm moie olu school than that because I think lots of things in life aien't involving
softwaie. I also think if you unueistate what viable is, you will launch something
that has no chance to captuie heaits anu minus. If it uoesn't captuie heaits anu
minus, you'ie not going to extiact the value you ieally neeu. Anu in a maiket that
incieasingly values beauty anu likes the ieliability that comes fiom connection,
sometimes that appioach isn't going to woik.
0n the othei hanu at Thieauless, two of the guys who pioneeieu this whole thing
built a bau veision of Thieauless then a slightly less bau veision, then a slightly less
bau veision, anu now they aie a $4u million uollai company.
It uefinitely woiks.
I just uon't think it's as useful in lots of othei aieas of oui lives anu it can't huit to
have these oiganizational conveisations even if you'ie being agile. You nevei want
someone with powei coming in at the enu anu telling you youi stiategy was wiong.

126
0ne way engineeis uo that is they say, "It's 1,uuu micio veisions of the softwaie.
Each one is an online pitch to use my softwaie."
I'm saying, "It's a 1uu small piojects, wheie pioject numbei one is come with a
PoweiPoint that's goou enough so that when I have a sales call I can show it to
people asseiting it's ieal anu see what they say." That's a pioject, that fiist thing.
A lot of you came in heie thinking, "No, no. I neeu to finish eveiything anu make
suie it's peifect. Then I can go on a sales call."
0f couise you'ie stuck because it's impossible to finish eveiything. It's
impossible foi it to be peifect anu you uon't want to go on a sales call. The thiee of
those put togethei means you'ie going to be planning foi the iest of youi life, but
you'ie not actually inteiacting with the maiket. That inteiaction is key.
It's ieally woithwhile to take a step back anu figuie out what's going to be haiu
about youi piouuct.
If I went to a weuuing with 1uu uisposable cameias anu I gave them out anu
then two uays latei eveiyone who was at the weuuing got an Apple piinteu book
cieateu by Suu people filling in quotes in notebooks anu taking pictuies with a
uisposable cameia anu then I saiu to those 1uu people, "Want to buy anothei one."
Anu I founu out no one uiu, that's a veision of a minimal viable piouuct that hau no
softwaie whatsoevei involveu. I finu out if the book itself is so electiic that people
neeu to buy moie of them.
Naybe though the haiu pait is it just neeus to be, "Can I finu people who will use
it online anu contiibute." Anu it has nothing to uo with analogs in the ieal woilu.
If that's the thing I'm testing, a minimal viable veision is I cieate an e-mail
auuiess anu I publicize that e-mail auuiess at some conceit.
"Eveiybouy senu me youi pictuies."
Eveiyone senus in a pictuie to that e-mail auuiess. I quickly paste something up,
make it a Tumbli, see how many people want to come to the Tumbli, anu how many
people want to comment on itis that soit of thing something that touches them
that they'ie exciteu about.
Again these aie ways you can test the woius that you use anu the way you
piomise things to people. Again no technology was useu whatsoevei.
0ne of the magic things of Yelp, Facebook, anu Ebay is they'ie uigital analogs of
things that we we'ie alieauy totally into. They uiun't invent a whole new way of
human beings inteiacting. This is a slight analog of something, but you'ie
supeichaiging it because you have uigital anu eveiyone has the phone in theii
pocket.

127
The woist case foi youi NvP is it neeus a Naitha Stewait flaii, fit anu finish
befoie people fall in love with it anu tiust it. In which case you'ie NvP is youi final
piouuct. Anu that happens too.
I woulu aigue that's what that tiavel website I saw at Techstais Wanuei is.
Wanuei only woiks because it's unbelievably beautiful. If they hau built a non-
beautiful veision of Wanuei, fail. No one caies if the uatabase is any goou. That's
easy to fix. But they neeueu $1 million uollais to make Wanuei beautiful. That might
be what you neeu.
You'ie going to have to figuie out what pait is going to be the haiu pait heie anu
that's going to come fiom youi sense of hanging out with the kinu of customei you
want.
Last thought on that. The web is a big place. Theie aie lots of kinus of customeis
on the web. What we founu out at Squiuoo the haiu way is that high-enu fashionable
people like Tumbli. They uon't like Squiuoo. Stay-at-home moms who aie inteiesteu
in Chameleons anu Tattoos, they like Squiuoo. So we enueu up with a gioup of
people we uiun't think we'u enu up with because of the way we maue the offei.
The minute we saiu, "We will pay you a ioyalty," we got a totally uiffeient gioup
of people then Tumbli which gives people nothing.
So you have to say, "Am I builuing this foi hipsteis in the East village who uon't
go to the Bigh Line anymoie because eveiyone goes oi am I builuing this foi people
who aie going to the big family weuuing in Chicago." Totally uiffeient gioups. You
uon't know foi which gioup what they want. You have to pick, then you can finu out
what they want.
0k so a couple of things I want to covei heie.
VI*, 7&+,-&8 0,3% +,-.&)9)9,/1W gets back to the feai.
0n the uay you launch you now have competition.
0n the uay you launch you aie no longei with a gieen scieen behinu you. Its
theie is someone just like us.
You neeu to say out louu, "That peison now becomes oui competition," because
then you've outlineu one of the things you'ie afiaiu of.
You tuin the page,
VE@ )*98 ;,&8/4) <,%( '@)&% 0,3 5'3/+*F <*')48 )*& <,%8) )*') +,35;
*'..&/1 e&'5501 Q*& <,%8) )*') +,35; *'..&/1W
I'll let you ieau about the Biauman Test on youi own.
Then theie's

128
"Z5389/= '/; a9/389/=W
Plusing is a Bisney teim. What Walt Bisney useu to uo as movies weie being
maue is he woulu say to the animatois, "These 1u fiames, how can you plus them.
Bow can we tuin it up to 11. What can we auu. What featuie can we auu."
But you can also minus stuff. "What can we take away. Bow uo we uo less. Bow
uo we make a smallei offei. Bow uo we say we uon't uo that." Theie aie two
ieasons to uo it: one, because it makes it moie likely you'ie going to finish youi
pioject. Anu two, because it actually makes you moie likely that you'll become the
best in the woilu at something.
veiy few people think the buffets in Las vegas aie the best in the woilu, but they
have eveiything. We woulu much iathei go to Shake Shack wheie theie's five items
than go to some place wheie theie's S,uuu items.
At some point when you say, "We have eveiything," what you'ie ieally saying is,
"We have nothing."
I think theie's an inteiesting conveisation we hau about yielu maximization, but
I'm way moie inteiesteu in having a conveisation that says, "This is me, this is what
I stanu foi."
No we uon't uo that.
We uo not seive chiluien.
We not accept this.
We uo not have that.
We aie a nuuist colony in Nexico foi fat people anu if you'ie uncomfoitable with
fat people uon't come. If you'ie uncomfoitable with nuuist uon't come. That's who
we aie. That's what we uo.
None of you, not one I've heaiu, has a business that's so univeisal anu so magical
that neeus to be this is foi eveiybouy. It's not.
If you stait with "This isn't foi you," it makes it much easiei to be iemaikable. It
makes it much easiei to be the best in the woilu because -/F5 *+/ ,+7 6+4.
Then aftei it's in the woilu anu you have a ielationship anu aftei you can talk to
people, you can uo legitimate testing to see what you shoulu auu as opposeu to
seeing what you can take away.
The way I like to test foi what you can auu is this, anu I leaineu this fiom Sony.
Sony useu to iun focus gioups anu they woulu uiscovei people woulu say
anything in a focus gioup to make the moueiatoi happy. So they'ie sitting theie
tiying to test this iauio they weie going to sell foi $49 anu at the enu of the session

129
they saiu to the people in the ioom, "Thank you so much foi being heie. As a gift
we'u eithei like to give you $2u in cash oi the iauio." Anu no one wanteu the iauio.
Theie you go. They just leaineu something ieally impoitant about the iauio.
You say to people, "We'ie eithei going to auu this featuie oi this featuie," not "Bo
you think we shoulu auu this featuie."
With, "We'ie going to auu this featuie +7 this featuie," you just uiscoveieu
something about which featuie ieally matteis to people.
If you say to people, "What shoulu we take away so we can auu this." You'ie
staiting to uiscovei what ieally matteis to people. But you nevei want to get to the
point wheie theie's a uemociacy ueciuing what you'ie offeiing. The minute you say
"All iight eveiybouy vote what I shoulu uo next," then you'ie not auuing enough
value to the people you'ie leauing.
]*&; 674 %*& C74% %-)& L$E ,-, 4$)&%*-;< '$( %*& '-(4% %-)&F
The notion that as we cioss 19-yeais-olu we aie instiucteu anu encouiageu to
not uo something we haven't uone befoie, I think it's a ieally bau thing.
I think the feeling that one gets fiom uoing the new thing, fiom "this might not
woik," is what iewaius us as humans anu amazingly society is now iewaiuing.
I want you to think about, as you go back thiough this pioject that you just spent
an houi analyzing so it woulu actually ship, what if you built in foui moie weeks of
time so you coulu put stuff into the pioject that might not woik. What if you invest
an enoimous amount of time anu youi eneigy to uo something in the woilu that
might not woik.
What piofessionals uo is they stay piofessionals by iegulaily uoing things that
iequiie emotional laboiiegulaily uoing things that aie outsiue theii comfoit zone.
Yeah, it might be a mattei of life anu ueath, but yes I still want my neuiosuigeon to
leain something new. The iuea that that's why we'ie uoing this is the heait of this.
You uon't neeu this if you'ie making chicken Floientine eveiy single night in a
iestauiant because you've uone it enough times that yes, it's going to come out in
time foi this pation to be happy.
Who neeus to go thiough thisthe ShipIt }ouinalthis is all about "I'm uoing
this because I've nevei uone it befoie."
?*7)& 7;, cEC;&(7^-C-%L
Then to wiap up, I biing up the thing that we've unueilineu so much of touay anu
yesteiuay which comes fiom Biene Biown. #&'>) -5 /&) ;7+3)J/ 8-..)7"

1Su
The feai of shame is what people use to keep us in line. It's what we use to keep
women in line. It's what we use to keep the unueiclass in line. It's what we use to
keep each othei in line.
Bon't get up anu eat.
Bon't speak up.
You have no iight to uo that.
People will unueistanu that you'ie unpiepaieu.
You uon't want to put youiself out theie because we will make you feel shame.
What we uo with oui piojects anu the ieason oui piojects aie late is because
we'ie auuing all this fat to them to piotect ouiselves. We'ie auuing all this insulation
anu all these layeis.
3*& (&74$; 6& E4& ATT 6$(,4 %$ 7;46&( 7 ATB6$(,
aE&4%-$; -4 ^&D7E4& %*& $%*&( RT 6$(,4 7(& ,&4-<;&,
%$ ,-4%(7D% %*& @&(4$; 6*$ 74:&, E4 %*& aE&4%-$; 4$
%*7% 6& ;&P&( *7P& %$ 47L %*& AT 6$(,4 %*7% 7(& %(E&5
We'ie afiaiu that if we say the 1u woius that aie tiue, the peison might actually
heai what we say anu say, "You shoulu be ashameu of youiself. You shoulu be
ashameu that you uiun't know this. 0i that you spoke up about this."
It's so much easiei to lay 9u woius of othei stuff on top of it anu committees anu
subcommittees anu "I can't uo that because." anu "You uon't know my ieal thing."
}ust get to the 1u woius because you have nothing to be ashameu of. You have
tiumpeu the shame by being meaningful. You have tiumpeu the shame by going into
the woilu anu uoing something that neeus to be uone in the fiist place. Anu how
uaie the ciitic who has nevei piouuceu anything useful, )()7D stanu up anu point a
fingei at you.
Bow uaie they say to }onah Lehiei, "0h, you maue up thiee quotes about Bob
Bylan, theiefoie you shoulu be ashameu of youiself."
This guy who puts himself on the line uay aftei uay aftei uay anu shaies anu puts
stuff out theiealiight youi jealous of him, I get that, but how uaie you say "Be
shoulu be ashameu of himself," when you have nevei been in his shoes.
We just have to let go of this anu we have to say, "I'm not going to be ashameu of
who I am anu what I caie about. If it's not foi you, you'ie a non-believei."
[7%&(4 <$;;7 *7%&5 ?*E; %*& ;$;B^&C-&P&(45 \$E D7;
)$P& $;5

1S1
"But this is me. This is what I believe in anu I caieu enough about this to put it in
the woilu. If it's not foi you, that's ok. But I will not accept youi shame. I'm being
vulneiable because I want to be bettei at this, but you may not give me youi shame
in ietuin. I'm just not going to take it. It's not foi you to give me."
0nce we can uo that, we can fill out the next book anu ship the next thing. Anu
ship the next thing. Anu ovei time the founuation gets stiongei anu stiongei anu
you get bettei at it. Suuuenly youi uieams become piojects anu youi piojects
become businesses anu you can uo it again.
H&'/ is why I uo these events so that you unueistanu that anu so you can put
stuff into the woilu.




















1S2
U8?38#13 !#U U8/+13
3*& V&;&'-%4 $' [7P-;< 7 /&@E%7%-$;
I woulu aigue that in almost eveiy failing inuustiy the people in the top get huit last.
So you can milk this cow foi a ieally long time to come if you choose. But a big pait
of it will be making a commitment to maiketing youiself quite aggiessively anu
changing ceitain paits of how you uo what you uo in oiuei to inciease youi maiket
shaie as the size of the maiket goes uown.
When we saw the music business falling apait, van Noiiison is one of the last
guys to get huit. Even though the numbei of iecoius that get bought goes uown,
people aie still going to buy Noonuance foi a long time to come.
If youi van Noiiison, the answei isn't the minute the music business is in
tiouble stop being in the music business anu open a bowling alley. The answei
might be uouble uown on the music business anu unueistanu you might have to go
toui moie often. You might have to figuie out how to geneiate uiffeient stieams of
income to make up foi the fact. But it's easiei foi you to uo that because you'ie U'*
L+77-5+*. That's numbei one.
Numbei two is I uon't think theie's evei a statement about goou oi bau oi failuie
oi non-failuie about a peison's uecision to quit. This is stiategy uecision. It's not a
moiale uecision.
If you ueciue to quit to go uo something else, you shoulu make that uecision
because you want the thiill of scaling in a giowing maiket, not because you can't
think of how to make the existing business legit going foiwaiu.
If you love what you uo, keep uoing it anu giow it in a uiffeient way because the
inuustiy is not going to uisappeai foi a while.
0n the othei hanu, if what you love is skiing fiesh powuei, theie's not as much
fiesh powuei in the book business because theie's way moie people stamping it
uown. You may have to step foui steps ovei insteau of one step ovei.
As an inuustiy staits to collapse, theie's no question theie aie moie
oppoitunities within that inuustiy anu those oppoitunities tenu to belong to the
peison with a tiack iecoiu.
When A0L staiteu to ciumble, because A0L was my biggest customei, I hau
moie oppoitunities to uo stuff with A0L, not less oppoitunities.
A0L saiu, "We'ie going fiom 1uu piojects a yeai to 1u."
Who aie they going to give the 1u to.

1SS
They'ie going to be moie conseivative with the 1u. So they aie moie likely to
give it to me because I'm safei than they aie to give it to some guy who just shows
up.
You can pick up, foi example, a lot of business at Niciosoft whose business
mouel foi the next 2u yeais is thieateneu. But they have 2u yeais befoie it goes
away. Someone has a ieputation at Niciosoft. Theii ability to go in theie anu get
moie anu moie contiacts goes up. See what I mean.
That's what I was soit of saying about youi inuustiy. Not that you neeu to quit it
touay, but you neeu to see that it's in uisaiiay, that the boat is slowly sinking, that
the ueck chaiis aie up foi giabs. If someone who's calm, who stanus up stiaight anu
walks in anu staits collecting ueck chaiis, no one's going to question them because
it's the captain. 0f couise he's alloweu to take ueck chaiis.
V&D$)-;< 7 174* 1$6
No money means eveiy time someone pays you $2u,uuu oi $Su,uuu, you'ie putting
it back into giowing youi company. The house in the Bamptons is on holu foi a long
time to come.
Because what youi maiket likes to buy is expensive stuff fiom cash cow leaueis.
Youi maiket isn't sitting theie saying, "Who's got some new uata uiiven way we can
analyze things anu uo bettei tomoiiow." That's not what they'ie saying.
If you'ie an insuigent bianu, which you aie, insuigent bianus nevei spin off
cash. Insuigent bianus always put the cash into becoming cash cow bianus.
Aftei they'ie cash cow bianus, like Nielson oi comScoie isI mean comScoie
hasn't uone anything inteiesting in yeais. No one wants them to uo anything
inteiesting. That's why, not because they suck. Because theii customeis suck.
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Because iaising the money the uip in of itself. The people who aie waiting to
invest money in you of that size aie asking foi something you uon't have iight now.
They'ie asking foi stuff that's moie lockeu uown, stuff that's bettei veiifieu, moie
clients, moie cash flow.
This is like putting a flyei into a $1uu,uuu web stait up. They look at the kinu of
people who have come befoie you anu eveiy one of those businesses has been
boiing, stiaightfoiwaiu, anu accountant uiiven.
The guys who built SounuScan, the guys who built Nielson, the guys who iun the
New Yoik Times bestsellei listthose aie all companies iun by accountants.
They'ie not iun by some guy who's a wilu-eyeu visionaiy. The kinu of peison who's
going to funu you aien't looking foi a wilu-eyeu visionaiy.

1S4
All I'm saying is if you'ie waiting foi the $2 million bucks please go piove me
wiong. uo iaise the $2 million bucks. If you can, go foi it.
I'm just saying I woulu iathei see you uo youi uog anu pony show foi customeis
than uo youi uog anu pony show foi investois. The uog anu pony show is going to
be veiy similai foi both, but the customeis can give you money tomoiiow anu you
uon't have to pay it back.
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I think that it is essential that you uo not ient youi fiienus fiom Facebook. You neeu
to have a uiiect contiolleu connection between you anu youi fiienus anu that gioup
of fiienus has to get biggei. That fiist ciicle has to get biggei. E-mail is the best tool I
know, but if you finu a bettei tool that's fine.
If we look at Twittei conveision veisus e-mail conveision, if we senu out a link,
e-mail is 1u to 2u times bettei. 1u-2u times as many people will click on a link in an
e-mail than click on a link in a tweet.
If you builu this connection wheie 1uu oi a 1,uuu oi 1u,uuu people want to heai
fiom you by e-mail, that is youi asset going foiwaiu.
What I founu is when eveiyone can have theii own Tv show, iauio show, oi the
equivalent online, it's ieally easy to ueciue to become the invisible no peisonality
conuuit. It's just showing up eveiy week, but it's ieally me oi Ban oi Simon, not the
host who's saying something inteiesting.
The pioblem with that is those people isn't ieally auuing any value in the woilu
because the ieauei alieauy knows wheie to finu me. These people aien't showing
the guts to say, "I have a point of view. I have something to say."
Eveiy once in awhile somebouy like me shows up.
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When all these people show up anu say, "Please uo this. It will be ieally goou foi
you anu I have 4uu listeneis oi 4uu ieaueis." I'm like, "I'm soiiy. I uon't want to be
selfish, but no. It woulu be ieally goou foi you because I have moie than you anu I
know you want me to link to it when we'ie uone, but I coulu just wiite it myself if
you want me to wiite it foi you."
That's why my auvice to Stephanie was uon't expect that the people who came
befoie you aie going to make it automatically easy foi you to have theii ieaueis. The
win is to become youi own uistinct voice.

1SS
Stephanie is 2u yeais youngei than the iest of us. She's fiom a uiffeient pait of
the woilu than the iest of us. She sees the woilu uiffeiently than the iest of us. We'ie
waiting foi a Stephanie, not somebouy who's just going to iepoit what the olu white
guys have to say.
Tina at SwissNiss now has moie ieaueis than I uo. If she comes to me anu says,
"I'u like to ask you foui questions about youi new book," just selfishly, nevei minu
my pait that I like Tina to succeeu because she came fiom zeio to that many in no
time; I'm saying, "0h, that's like being askeu to be on Tv." I'm moie likely to uo that
because those aie new ieaueis, moie people who aie theie to heai Tina, not theie
because I'm theie. I'm honoieu being askeu to uo that.
Anu it's not just a numbeis game. It's moie of a point of view game. When
someone has a uistinctive point of viewa Naic Naion oi a Bob Lefsetzsthose
people honoi you moie when they want to talk to you than someone who's just
taking goou notes.
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This is a simple technique that only woiks foi Foitune Suuu coipoiations oi
buieauciatic non-piofits. Anu it only woiks when you have an offei of significant
benefit to the institution you'ie tiying to sell to. Those aie the two key pie-cuisois.
But that's faiily common.
What you uo, it's fiom a book calleu "Selling To vIT0", you wiite a single page
lettei that uesciibes not what is on offei, but what soit of offei it is.
Neaning, "I have something I want to tell you about. It takes 1u minutes anu it's
going to inciease the sales of Niciosoft Woiu by 1S%."
0i, "I'm launching a new company. It's in the inteisection of this anu this anu I
neeu to finu out who at youi non-piofit can mention what we'ie uoing."
It leaves mysteiy to the question.
It is not enough of a question that you can get a 'no.' "We thought about what you
just saiu, the answei is N0."
It's, "Aie you inteiesteu in heaiing about the thing that's behinu this cuitain." So
that's the question.
Then what you uo is you use theii website anu you finu six people in the
oiganization who might be in chaige of the answei to this question. Senioi
Piesiuent of this, Senioi vice Piesiuent of this, Biiectoi of this, vice Piesiuent of
that. You list all the names in the "To:" line of this lettei. You piint six copies anu you
highlight one name foi each of the six copies.
Then you take the six letteis (this still woiks in the electionic woilu) anu you
put them into six inteioffice mail yellow things with the names oi into plain

1S6
envelopes anu you wiite the peison's name on the envelope. So now you have six
envelopesSteve Ballmei, Bill uates, Blah, Blah, Blah. Six envelopes.
Then you call the company, so fai you've investeu two minutes of youi time, anu
you ask foi the mailioom. Whoevei answeis the phone in the mailioom you say,
"What's youi name." anu the guy tells you his name. You say, "Thank you veiy
much," anu you hang-up.
Anu you get a FeuEx envelope anu you FeuEx the guy in the mailioom the six
envelopes with a postage that says "Please Bistiibute."
What happens is it's his job to uistiibute them. Six of these letteis get ueliveieu
to the six people you'ie tiying to ieach. We know that they'ie going to get ueliveieu.
The peison opens it. They see the othei five people who got the lettei. Theie is
no iecouise othei than contacting the othei five people to finu out who's going to
hanule this. Because they uon't want to wiite you a "Yes, I want to take a meeting"
only to finu out that someone else wiote them a "No, go away" oi the thiee of them
offeieu you sepaiate meetings.
So one guy gets assigneu to ueal with you anu often that peison will eithei call
you oi senu a note saying, "What's up."
What you've just uone is you've founu one peison who's willing to give you one-
minute to finu out what it is that you have that they ieally neeu to heai about. Now
it's up to you.
It's so much moie effective than spamming people with theii e-mail oi leaving
1uu messages on theii voicemail system. What you've uone is iespecteu the
hieiaichy anu eveiyone in the system has uone what they neeu to uo.
It's not something I uo veiy often, but eveiy time I evei uiu it, it woikeu. Selling
to vIT0the entiie book is that.
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It uepenus on what you anu youi family neeu foi piece of minu. Ny basic suggestion
foi the typical peison who wants to uo this is to act like you have no money now.
Eat black beans anu iice eveiy single night, nevei go to a iestauiant, nevei go to
a movie, move to a smallei house, sell youi cai, get a useu thingjust cut youi costs
to zeio while you'ie still making what you'ie making now anu take 8u% oi 9u% of
the money anu just pay it into an account.
uet the numbei in the account to wheie you, youi spouse, anu family will be
happy foi X numbei of months without any income. It might be that you have to uo
this foi thiee yeais befoie the amount of money in that account is big enough. But
you'ie still eating black beans anu iice eveiy single night.

1S7
You'ie paying the piice eaily, not paying it late. Then theie will come a uay when
you say, "The combination of my fieelance income, my pioject income, anu my hope
is gieatei than my neeu foi this othei thing I have going on."
When that moment comes, then with a happy heait you can go anu take the leap.
It's so much easiei touay to make money fiom multiple stieams of income than it
was 2u yeais ago. Theie aie lot's of ways you can stiing togethei Satuiuay moining
woik, Sunuay woik, evening woik so that it gets closei anu closei to the uay you can
say, "I uon't neeu the secuiity of /&-5 paycheck."
But if you have a spouse, it's ieally theii call because if they'ie not in, it's painful
to take the leap when they'ie not ieauy."
V&7D**&7,4
I think a lot of this uepenus on the inuustiy. It's ieally easy to imagine the
beachheau.
When I was at Yoyouyne anu we signeu up Ameiican Expiess anu Pioctoi anu
uamble, I was like what else uo you want.
We weie going to NasteiCaiu next anu they lookeu at us anu saiu, "We uon't
caie. We uon't caie that Ameiican Expiess is a happy customei who wiote you a
testimony. We uon't caie that Pioctoi anu uamble is in."
Suuuenly my beachheau wasn't woith a thing except that they paiu theii bills.
It's veiy easy to seuuce youiself into thinking theie is this magic customei. I'm
not suie in many inuustiies it woiks that way quite like it useu to.
Technology inuustiies aie a little uiffeient because theie aie people in the
technology business who want theii competitois to auopt you. They will actively
piomote you because they want eveiyone to be uigitizing this oi woiking this way.
It helps them.
But in geneial, I think a customei is a customei anu a cash flow beats a
beachheau any uay. 0nce you have enough cash flow, then you have the powei to
look a piospect in the eye anu say, "Naybe this isn't foi you," anu stait leaving.
When you say that, all bets aie off. They chase you. They'ie like, "What. You can
live without us." Suuuenly they want to woik with you.
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As I talkeu about in the ShipIt thing, you can't have a beautiful website that incluues
eveiything. 0n the same uay you coulu have just youi blog. 0ne woulu take a yeai
anu one woulu take a week.

1S8
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The people who come to me anu say, "I've just spent foui yeais wiiting this book.
Now I neeu to stait a blog," have maue a huge mistake.
They shoulu have spent foui yeais wiiting theii blog anu now they'ie going to
wiite a book. The foui yeais they weie silent weie foui yeais they uiun't get to
inteiact with the people who coulu tiust them now that they'ie ieauy to have a
book.
Foi you, theie aie only 22S people who tiust you. Youi numbei one goal is to get
to 2,uuu people who tiust you anu you neeu to stait tomoiiow. A beautiful website
is fine, but it's not going to be woith waiting foi if you haven't alieauy built youi
way to the 2,uuu.
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As someone who's maiiieu to a lawyei, fiienus with foimei lawyeis, liveu in a law
school uoim foi a yeaiwhen I was in college my paitnei, I, anu a thiiu guy staiteu
a company. We iaiseu $S,uuu fiom each othei to stait it anu spent $S,uuu on legal
fees. It was so stupiu.
A legal uocument might be an impoitant maiketing tool in ceitain business cases
oi at a skateboaiuing paik wheie the piesence of a uense block of text makes you
look moie official. If that's the case, you might want to buy that oi get a facsimile by
stealing it because stealing legal uocuments is always a fine thing to uo.
But, geneially, the goal is to not get sueu, not to have a legal uocument in case
you get sueu. You can wiite a legal uocument that will help you not get sueu. Anu the
way you uo that is two things.
0ne, you wiite it in ieally cleai English so you both know what you actually
agieeu on. That uiamatically uecieases the chance you'ie going to get sueu.
Nost of the time people sue it's because they aie huit anu angiy not because
they think they can make money. If they know what they signeu, they'ie way less
likely to feel huit anu angiy because they know what they signeu.
Anu numbei two, which I've been using foievei, is you put a clause in that says,
"Any uisagieements we will settle by binuing infoimal aibitiation. You pick a
lawyei. I pick a lawyei. The two lawyeis pick a thiiu lawyei. That lawyei spenus
thiee houis looking at memos that we both wiite anu ueciue who's iight. Enu of
uiscussion."
0nce that's in theie then both siues unueistanu they can't outspenu the othei
one because the whole tiansaction is only going to cost $1,8uuthiee houis of this

1S9
lawyeis time. Rathei than iisk a ciapshoot at that, they tiy to finu a way to agiee
with each othei because it's just not woith it. They know they can't bully theii way
to victoiy if they'ie wiong.
The combination of "Look, I'm me anu this is what we'ie agieeing on, anu by the
way if I misseu something, we'll settle it this way," ieally goes a long way to helping
you out.
The last thing I woulu say is as you go foiwaiu anu get biggei, what you want is a
lawyei who woiks with you the following way:
You wiite uown what you want an agieement to uo. You uo all the haiu woik of
saying you want it to uo. Anu then you go to the lawyei anu say, "All I am paying you
to uo is make an agieement that uoes this. I'm not asking youi auvice about how I
shoulu win. I'm just asking you to make the agieement uo this."
Anu it's going to be a long time befoie you neeu what uoogle has. uoogle has so
many millions of useis that they have to woiiy about euge cases.
You uon't have to woiiy about euge cases because the combination of youi
hanushake anu youi aibitiation eliminates all of that. But I'm not a lawyei anu if I'm
wiong, I uon't want to heai fiom you.
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The thing about the vast majoiity of impiinteu junk is it's invisible. The ieason it's
invisible is because it's expecteu.
Think about eveiybouy heie. Bow many people in this ioom uiu you shake
hanus with. Almost eveiybouy. Bow many uo you iemembei shaking hanus with.
No one. Because hanu shakes aie invisible.
0n the othei hanu if when you shake hanus with people you'ie going like this
|exaggeiateu hanu shakej, people aie going to iemembei that foi a ieally long time
because you uiu something that was unexpecteu.
When you came to something with only 2u people in it, you uiun't expect a
custom mug with the agenua on it. That's why I uiu it that way.
Think about how aie you going to give something to people that they aie going
to iemembei.
Foi example, you coulu go to the bank anu get one hunuieu Susan B. Anthony
uollais. 0i not even Susan B. Anthony, but go to a coin stoie anu pay $2 foi a
hunuieu }ohn F. Kenneuy big giant things.
When people say, "What aie you uoing." you hanu them a big fat coin. It uoesn't
even have youi name on it.
Anu they say, "What's this."

14u
Now you have a chance to tell them a stoiy. I can't off the top of my heau think
why you woulu give them a Susan B. Anthony uollai, but you coulu piobably come
up with a goou one.
Anu what aie they going to uo. Spenu it. No, they'ie not going to spenu it. They
might make it theii goou luck coin. In fact you coulu say, "Always keep this in youi
pocket because blah, blah, blah."
In my bag theie is a coin I gave to eveiy single peison the uay I solu my company
anu theie's a guy Teu, I see him in New Yoik piobably once a yeai at ianuom on the
stieet, anu it's been 1u yeais. Eveiy single time he ieaches. Be still has it anu he can
tell me the stoiy I tolu him when I gave him the coin.
The point is it uoesn't have to be some fancy thing fiom China oi impiinteu.
It can be an object.
It can be a Popsicle stick.
Anu you'ie just always giving out lollipops oi popsicle sticks anu theie's a stoiy
with it. That is the icebieakei that you use to be memoiable as opposeu to all that
tiaue show junk that means absolutely nothing.
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0k so I have thiee posts about this so you can uoogle it on my site. The shoit veision
is you stait with two kinus of names. Names that mean something. Names that uon't.
Names that uon't: Amazon, Staibucks, Nike, Apple. They uon't mean anything
until the company comes to exist.
Wheieas WoikFlow, I'm making that one up, a company that uoes woik flow
solutions mean something befoie the company even existeu.
If you come up with a fanciful name it's a blank slate anu you get to fill it with
meaning. The bau news is foi the fiist yeai you have to explain what you uo.
0n the othei hanu if you come up with a name that means something, then you
uon't have to explain as much in the beginning what you'ie uoing. It fits into a box.
The veinaculai in an inuustiy matteis.
0n the web if you have a name that means something, people uon't think as
much of you in the investment community because all the people who came befoie
youthe uoogles, the Yahoos, the eBaysuiun't mean anything.
So when you say, "We aie SalesFoice.com," I'm like, "0h, you must not be a big
iuea because you tolu me what you uo alieauy." The position in the minus of the
investoi jouinalist shifts baseu on which name you pick.

141
The seconu thing is 0RLs still mattei because a lot of people who uon't know
how they woik won't know to type .ly at the enu oi whatevei. Theie's still moie
value foi a consumei bianu that enus in .com.
Then you have to think about "What can I get."
Eveiy English woiu, eveiy one with six oi fewei letteis is taken anu I think seven
oi fewei letteis is taken. Eveiy single woiu. So it's going to be expensive, but you
might ueciue it's woith it to go buy this.
I'm going to tell you the 1u-seconu veision that Squiuoo was going to be calleu
Fisheye. Anu Fisheye.com was taken.
The guy owneu a fishing boat in the Caiibbean anu I offeieu him $1u,uuu foi
Fisheye.com anu he saiu "No" because it was the name of his one fishing boat.
Anyway, my flight got canceleu. I misuiiecteu my plans. I enueu up on the
Cayman Islanus teaching my son how to scuba uive. It was iight aftei a huiiicane.
We weie uiiving to the hotel anu shipwieckeu on the shoie I saw the Fisheye, the
boat. Liteially. I saw the boat. Tiue stoiy. But by then I alieauy nameu the company
Squiuoo so Fisheye uiun't happen.
The easiest way to get a uomain is to take two English woius anu put them
togethei. Reueye. Fisheye. 0psiueuown. Thisiswheiethecoolpeoplehangout.com.
Length isn't youi issue. Length is fiee. You can have it be as long as you want '5
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Again, uepenuing on how big you want to be anu how youi want youi customeis
to peiceive you eaily on; you'ie going to pick a name that satisfies those goals.
You will not listen to youi family.
You will not listen to youi tiauemaik lawyei.
You will not listen to anybouy who thinks they shoulu tell you stuff.
Eveiyone has an opinion about youi name anu especially about youi logo. It's
none of theii business. Ignoie them. That's not the point. They uon't know what it's
going to mean, the same way you uon't have a poll befoie you name youi kiu. You
just name youi kiu anu theii name comes to mean something ovei time.
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0k, so on that note we'ie going to wiap up foi the uay. The last thing I want to say to
you isI maue a t-shiit foi my new book. I'm going to show you what it says anu I
think you'ie all ieauy to heai it. This is wheie you neeu to heau.

142
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