I got this note from long-time Planet Perry member and expert copywriter Nick Neilson. Nick always asks great questions:
In the software company I’ve started, I was torn between re-learning to code or hiring it out. I learned to code several years ago, but I’ve never been great at it. No doubt, there are middle school kids that can code circles around me. But I do know the theory of OOP and have the capacity to pick it back up.
I had a choice – do I maximize my existing strengths and stick with the marketing (my inner Dan Kennedy is screaming this at me) or do I expand my understanding of mathematics and technical understanding of my product (a perhaps malformed version of my inner Perry is gently persuading.)
Nick Neilson
Nick,
If you crave the personal satisfaction of indulging a technical adventure, then your answer is also a personal one. Follow your passion and consider it a HOBBY.
The business answer hinges on USP. What is *your* personal Unique Selling Proposition? In your new software company, can you deliver and uniquely guarantee better than anyone else in the world?
From what I know of you, I doubt it’s writing code. I bet you can hire coders 10X better than you for less than your pay grade. Code all by itself is a commodity. Seldom does code cost more than $100 per hour.
I suspect your real contribution is the architecture: orchestrating the grand picture, defining your product and putting the ribbon on top – exactly as your customers want it and need it. Then demonstrating it to the world.
Henry Ford used this formula to create a Billion Dollar USP.
Ford didn’t invent the automobile. Nor the assembly line. Nor many ideas of modular manufacturing. His true genius was stir-frying outside ingredients together so magnificently that many people suppose he invented all three! The foundation of a century-long legacy.
The big lever in any venture is *defining* your product’s USP, through your ingenuity and market knowledge. When your project hits pay dirt (which of course is seldom guaranteed) that is $10,000 per hour work.
My experience is, the true magic of the marketer is where multiple realms overlap. Some peculiar aspect of code writing or software architecture AND intimate knowledge of some tribe or market AND intimate knowledge of some additional factor, blending all together for a truly unique recipe.
Cross-pollinating multiple disciplines doesn’t require massive mental horse power. Mostly it’s fueled by passion and a willingness to not overlook the obvious.
That’s what a killer USP looks like, tastes like, smells like. There may be facets of software or coding or math that will serve you, especially in the high-level architecture. Whatever they are, choose your tasks carefully!
http://www.perrymarshall.com/usp-breakthrough/
Perry Marshall
P.S.: One of the joys of my biz is funding all kinds of explorations and intellectual rabbit trails. But never confuse those with the business itself. The fun part is, sometimes those explorations do become new businesses!
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About the Author
Perry Marshall has launched two revolutions in sales and marketing. In Pay-Per-Click advertising, he pioneered best practices and wrote the world's best selling book on Google advertising. And he's driven the 80/20 Principle deeper than any other author, creating a new movement in business.
He is referenced across the Internet and by Harvard Business Review, The New York Times, INC and Forbes Magazine.
8 Comments on “Secret of the Billion-Dollar USP”
Quantella,
If you’re an idea person, who is good at generating ideas, why not sell ideas?
Luke
Quantella – thanks for contributing to the conversation.
I assume you’re referring to this blog post: http://sivers.org/multiply
If so, here’s my take on why “idea guys” (and gals) get a bad rap:
I obviously don’t know any details about your ideas, but personally I’ve never met someone who had an idea that in and of itself was valuable and unique enough to merit an investment of significant time, work, or money.
You mentioned “R&D” surrounding your ideas – this is very good. Some details as to what that R&D looks like would further the conversation as to what your next steps should be.
But again speaking frankly, most people with good ideas have little research and almost certainly no development associated with those ideas. This ensures that they will never see the benefit of those ideas.
True R&D for a business idea is a three part formula (according to me at least):
1) Empathy – Vision & Purpose
2) Efficacy – Knowledge & Order
3) Execution – Actuation & Analysis
Ideas for businesses, innovations or inventions are by definition a half-baked version of step 1 – i.e. a general sense that a new product or service could help someone.
Often they don’t even define who they’re going to help or what problem they’re going to solve – they’re just “cool” ideas in the mind of the person who has them.
Here’s an example of the worksheet I use as “R&D” for step #1 Empathy – i.e. an entrepreneur’s understanding of their market and the problem they uniquely solve for it.
http://relevantordie.com/Entrepreneurial_Empathy.pdf
It’s a fair amount of mental effort to get through that diagram – and it’s just step #1. There are two more after that before an idea even can even begin to turn into a real business – or be a business I’m willing to write copy or create content for.
So, is an idea valuable? Well, the truth is, that’s not a valuable question. A valuable question would be – “what steps do I need to take to test, prove, and scale this idea into an actual business?”
If the answer is truly – I don’t know because I’m not an operations person, then there is no value because there is no true R&D and success as an entrepreneur is beyond your grasp. It sounds like you’re past that stage with some of your ideas Quantella, so that’s a very positive sign.
It’s positive because if you’ve tested it, if you’ve proven it, and if you’ve created a plan to scale it, then you’re ready. Then you can take that proof, that plan, that R&D and find the right operational help.
But the truth is that most people stop at the idea. There is no research and there certainly is no development. There’s just an idea. If you stop at the idea and then sit and wait for someone else to come do the rest, they won’t. Then your idea will be worthless in terms of the money it makes you because nobody will ever see it, much less pay for it.
Dear Mr. Neilson,
Thanks for your response. I agree with your points regarding the need for practical “R&D”, but my point was focused more on the personal side of things.
If an idea person, such as myself, doesn’t trust that they can honestly share a notion-does that diminutive work better for you?-about a potential market with an operations person and receive helpful, critical feedback….then the process stops.
In all honesty, I don’t think very well of most techies either. I find them to be rude, arrogant and completely lacking in any understanding of how people actually use the stuff they insist we desperately need. As an example, 3-D Printers. Studies have shown that they release a huge amount of highly dangerous micro particles into the confined spaces of a house…but you never hear the techie cheerleaders talking about this potentially deadly hazard.
After hearing about, admittedly from afar, the experiences of the Winklevoss Twins, The Twitter mess…..the JOBS stiffing THE WOZ…it doesn’t seem to benefit someone like me to collaborate with anyone in this marketplace. Perhaps it is unfair to stereotype US based techies as being extremely sharp-edged and greedy, but I’ve worked darn hard on the things I have finally decided are worth pursuing. I don’t want to be made to feel like I’ve been taken advantage of just because my skills lay elsewhere.
And finally, I guess empathy can be defined in numerous ways. I would define it as not taking advantage of someone who you have an obvious edge over. In other words, you-and that you is general- don’t need to steal a company, but do so because you can by relying on the ignorance of your “partners.” It’s just like a burglar or a murderer. They don’t need to murder you or steal your stuff, but they do so anyway…simply because they can. And believe me, since it’s happened to my IP a few times in the last year, you feel the sting just as much. I estimate I’ve lost $20M+. And I could really use it.
And off target a bit, the Winklevoss debacle wasn’t, in my opinion, really about Facebook because they have said over and over again that the were trying to build a network for the “Golden-spoon” set. I think they sued because they were upset that he agreed to work for them, and then he stabbed them in the back. Again the personal stuff.
I am sorry-I honestly was just trying to share a viewpoint from what I feel is the much maligned idea person side of things. I certainly wasn’t trying to start some long lasting debate. I have no intention of changing my opinion and quite frankly, I doubt you do either. I will always believe that without ideas, the rest of you: techies, lawyers, accountants, marketers etcetera would not be necessary.
What else are you executing if not someone’s ideas?
Sincerely,
Quantella Owens
HI,
Just wanted to add my half cent: I had this “eek” reaction when I read this:
-“- When I point out to Feross that the whole playlist thing has been done before, he smiles. “Ideas are a dime a dozen,” he says. “Execution is what matters.””-
because I once read a post by Derek Sivers about the whole “ideas are worthless” thing and I can’t help but think…if ideas are so worthless, why are there so many unemployed MBAs, lawyers, accountants etcetera?
I mean, technically the whole point of getting an MBA is to be able to “execute” correct? So with all the “free ideas” out there ripe for the stealing-oops, I mean “executing,” why aren’t they executing the heck out of them?
Could it possibly be because they have literally NO IDEA to execute? I mean, I would imagine that they figured that they would be making tons of moola executing an idea that someone else started. But again, that leaves someone else with the supposedly “worthless” task of coming up with something for these very valuable beings to “do”-or should I say “execute”?
The reason for my question isn’t sarcasm…it’s genuine perplexity. You see, I have tons of ideas. Most I consider quite valuable, but not everyone is an operations person…and when you have your ideas “executed” for you without any compensation or any consideration for all your hard work to get it to that point, it becomes a matter of never trusting anyone and not being able to build the scale and type of business you would really like. I’m in that place right now on several massive projects and my only viable solution thus far is to look overseas for co-founders who might not take the “execution” of my R&D so cavalierly.
If someone here has another solution, I’d be delighted to hear it. “Execute” it? Whatever…..
Perry, Nick, Adam,
I am also of two minds like Nick. The core business of technology companies (like Google, Amazon, Facebook, etc) isn’t social networking or search. It’s about technology and innovation (Amazon air anyone?). Yes of course marketing is a necessary but still insufficient piece of the puzzle in a high growth tech startup. This has always been very different category from a mom-and-pop business who wants a website, even in the 90s.
Specifically with software architecture, in my opinion, you can’t be a good architect without coding. If you aren’t actually writing code, you are relying on third party accounts, and code is very unforgiving–either it works or it doesn’t.
It’s also very hard to think simultaneously about both “the business needs” and “the architecture” at the same time, even by people who are skilled at both. Current trends in software development-like agile-acknowledge that. Ultimately everyone has to figure out what their USP is.
Given sites like elance, I think it’s dangerous to think that software engineering talent is a commodity. In fact you could just as easily say software entrepreneurs are more of commodity. For example, a pretty frequently mentioned problem on tech startup blogs is how to find a technical co-founder, and not the other way around.
You are always constrained by the limits of you can do with technology. Outsourcing/off-shoring coding work is definitely not the way to build a sustainable technology company; at some point you need to build a great team of engineers who can build what you want and make it scalable. A lack of technical skills, and people who want to (and can) contribute is a serious bottleneck to technology company.
At best, outsourced work gives you whatever you put on the spec. Your spec is the upper bound of what you can achieve, and on average 25% of requirements are wrong or inappropriate anyway. And it’s often written by someone who doesn’t really know what’s possible and easily achievable, meaning the whole project costs a lot more and takes much longer than it could.
In contrast, if you capture the imagination of a good technical co-founder for a startup who really has skills, you can build & launch products that no one has even thought of yet.
Hey thanks for that interesting response Nick! I think the clue is in fact that the bubble boys are actually “an entrepreneur’s club”, they’re not just coders. So they want to keep things in house.
However App development is now much easier because of the modular nature of the process now. With tools such as Balsamiq non coders can make up very detailed wireframes or mock ups , to give to coders. And the is the point that you don’t really need a Stanford entrepreneur/coder to do the tasks, that is just overkill. You just need someone competent with basic programming skills, of which there are many.
In fact the applications produced by the group were very dull and, I don’t think commercial. What makes a good app is not the code, it’s an intimate understanding customer needs, and building app which they will buy. The code is secondary to this. As Perry said code by itself has no value, it has to have a context to give it value. Your results will depend on how well you provide this context.
What I think is valuable is the concept of “iteration”, explained very well by Eric Ries, in the.
The Lean Startup, which sets an approach to start ups which does make sense to me.
An interesting debate!
Thank you for the response Perry. I’m crafting a video response back, but for now, I wanted to share the following snippets regarding Adam’s post.
Adam, you’re comments are very relevant to where I was with this decision. Thanks for contributing.
To continue the conversation, I pulled quotes from the NYMag article you referenced. A conversation can certainly be had about how these quotes interact with, contradict, refine, or confuse Perry’s response.
But, the central theme for the discussion in in my mind would be the frenzied nature of bubbles – creating a fear that a new force is taking over the world and you can’t be a part of it – yet under the surface… the exact principles Perry articulated (combining diverse insights and the ability to operationalize ideas)are what is actually fueling these ventures. These are traditional entrepreneurial functions, not tech functions.
In fact, Goeff Woo’s comment that “If you don’t have the skills, I don’t know what to say to you.” seemed like the most self-serving, disingenuous and frankly irrelevant part of the entire article.
At a minimum, I can tell Mr. Woo that there is a nation (several actually) of coders that live outside Silicon Valley and outside of the US that are every bit as smart as he and his cold pizza eating friends are and very happy to get paid by lowly businessman to get a coding project done.
I’ll post more with my video response, but for now, here are key talking points from the article as I see them:
– The advantage of working at an accelerator is you’re surrounded by entrepreneurs with similar brains (large, hyperactive, mildly Asperger-y).
– …venture capitalists stalk the campuses of Stanford and Caltech, looking for fertile ideas on which to sprinkle dollars.
– When Pulse went live on the iTunes App Store, it was clunky and slow, with an ugly 3-D graphic pasted across the background. Still, it quickly became the top-selling paid iPad application, with more than 15,000 downloads in the first few weeks. “I was like, Why are people buying this shit?”
– The most important shift for programmers isn’t the economy or even social networking. It’s a concept called abstraction. Abstraction basically means automating low-level tasks (like designing a button for a website from scratch) so that you, the creator, can focus on high-level problems (like how the website looks and feels). Over the last decade, coding has become increasingly abstract. Thanks to the open-source software movement, engineers have access to vast online troves of free code they’d otherwise have to write themselves.
– YouTube Instant is, in essence, a mash-up of two existing technologies: Google’s “suggest” algorithm, which lets you search the most common terms, and YouTube’s embedding capability. “I didn’t do these things myself,” says Feross. “I just combined them together in a way that hadn’t been done before.”
– Pulse came to life in only five weeks because many of the components—scroll functions, buttons, fonts, layouts—already existed.
– All this would seem to mean that anyone with an idea could bring it to market, regardless of programming talent. In fact, it means the opposite.
– When I point out to Feross that the whole playlist thing has been done before, he smiles. “Ideas are a dime a dozen,” he says. “Execution is what matters.”
– Thompson was recently working on an app for the iPhone called Recollect… [He] wasn’t the first to have the idea — Phone Halo and Cobra Tag already exist. The difference, Thompson says, is he’ll do it better.
– “If you guys were the inventors of Facebook, you’d have invented Facebook,” Jesse Eisenberg’s Mark Zuckerberg tells the Winklevoss twins in the film.
– “You have to be embarrassed by your first product,” says Lee, who helped create Geomon. “If you’re not embarrassed, you’re taking too long to get it out there.” As Feross puts it, “Done is better than perfect.”
– “Fail fast,” the mantra of tech entrepreneurship, means everyone moves onto the next idea sooner, which in turn means there are a lot of ideas out there—many of them bad.
– “Successful people aren’t any different from you and me,” he continues. “They’re not inherently more brilliant. The difference is they had the wisdom to get their hands dirty and be part of the game instead of just observing it.”
Really enjoyed your post! This is a difficult one.
I recently read an article: The Bubble Boys: “Out in Silicon Valley, the last bastion of full employment, the Steve Jobs and Mark Zuckerbergs of the future are staying up all night writing code in dorms.” They have a launch-now-iterate-later approach.
They are building software apps and starting businesses at a fast pace, but they insist on writing their own code.
Here’s the thing; They get a dozen e-mails every week from businessmen looking to hire a programmer. Very few hear back. “If you don’t have the skills, I don’t know what to say to you,” says Geoff Woo, the group’s former president.
So not having the lack of coding skills mean you lose power, and you don’t have an understanding of the powerful potential of coding and software.
How do you overcome this, retain your power and be able to drive forward a project, as a non-programmer? Can you instigate a tech start-up?
This is a link to the article: http://nymag.com/news/features/silicon-valley-2011-9/
I’d be keen to hear what others think!