Farmer Ron, the Big Bailout, and the 80/20 Rule
My father-in-law, Ron, is a 77 year old retired farmer in Southeastern Nebraska. He wears a John Deere hat, sports a farmer’s suntan and talks kinda slow.
He had this to say about the Big Bailout:
“The people that stole my cow now want me to feed it. I resent that a lot, but I do not want my cow to die. So I guess we will have to send more cow feed their way. In the good ole days, we could have hung a couple of the rustlers and that would have delayed the next raid by awhile. Now they expect to get rewarded.”
Gotta love that simple farmer common sense.
Gotta love the fact that he’s from Nebraska. (Just like me.)
I’d like to add a few comments of my own.
First, the contrast between the mainstream news media and the entrepreneurial culture online couldn’t possibly be more striking.
Journalists, as a group, are the most financially threatened population in today’s economy.
Not because of the banking crisis, but because the Internet is destroying their business. They’re ALL scared. Radio, newspaper, TV reporters – all of them.
THAT is the lens they see the world in to begin with. The grim reaper is pounding at their door and this colors EVERYTHING they say.
Those reporters who are able to perceive opportunity have already abandoned ship to seize it. The ones still reporting are the ones who are still hanging on. Can you hear the water seeping in?
Not only are they paranoid, they are irresponsible and lazy. One time Ken McCarthy said, “Reporters don’t report, they repeat. They don’t investigate, they elaborate.”
You CANNOT trust these people to tell you what is really going on.
On the other hand, entrepreneurs are unanimous in their resolution to gain ground during this next season. Yes, we clearly understand we may witness all manner of turmoil.
But we know that many, many assets will be undervalued, that average thinkers will cut back on marketing and advertising and customer acquisition, that people whose stocks have gone down will do the stupidest thing possible and SELL them in fear of further loss.
Their loss is our gain.
All you have to do is read the emails and watch the videos that are coming out in droves from those of us who are on the front lines working with top performers. I spent last weekend with 65 other entrepreneurs at my Chicago seminar and the atmosphere in the room was powerfully upbeat, even effusive.
I fully understand how easy it is to see the good news as a masquerade and the disaster as being fully real. But as far as I’m concerned, the bottom line reality is still this:
1. Crisis ALWAYS creates opportunity. Always. “The time to buy is when blood is running in the streets.”
2. It’s like that old story about the two guys being chased by the bear. One says to the other, “I don’t have to outrun the bear. I just have to outrun you.”
Let’s talk about #2 for awhile.
It sounds so terribly vulture-ish to say that, doesn’t it? Doesn’t it sound so… exploitive? So mercenary?
Oh yes, it most certainly does.
But it’s still true.
One of my other favorite truths:
“In the land of the blind, the man with one eye gets to be king.”
Just about every market I’ve ever seen is a land of the blind. All but the most ferociously competitive niches, anyway. I’d be hard pressed to look at any business in any industry and not be able to find, within 15 minutes, significant holes in their marketing strategy.
If you’ve got holes, baby, this is the time to patch ’em.
Cuz here’s the deal:
Your market is the land of the blind, and… it might just constrict. (Or it might not. But it might.)
If it does, some vendors will go under.
Your job is to make sure it’s somebody else, not you.
80/20 Rule says:
20% of the businesses get 80% of the business.
That means the members of the 20% make 16X as much money as the members of the 80%. And it also means, if the water level rises, it’s the 80% who drown first. The 20% drown last.
The 20% seldom ever drown.
They plug their leaks, they tighten their ship, they whip their crew into shape. They prepare for the long winter and they get busy. They still drink and sing Irish folk songs at their crazy parties and they still have a good time. They enjoy their good time with resolve and determination.
For a long time we’ve had 5% unemployment. That means 95% employment. That means 95% of people who want a job, have one. Less employment than that surely requires some kind of exception to the laws of the universe!
That means of the bottom 80% – the mediocre people who have no inspiration and little sense of responsibility and can’t follow instructions – only 5% of THOSE are unable to find work.
A 5% unemployment is therefore a virtual violation of the 80/20 rule. A merciful one, but nonetheless a violation. Ah, the luxuries of a society that values equality.
Now…. let’s say the unemployment rate rises to 10% or 15%.
You know what that means?
It means you can fire any deadbeat you want and you’ll be able to almost instantly replace him with a savvy, competent, responsible, hungry person who can follow instructions and genuinely contribute to your bottom line.
If you have the guts to do that, you will pull out ahead in the race.
It means if you have any cash at all you can buy investments at record-low prices and rake it in big time when the market comes back.
Let’s see, a few other implications of the 80/20 rule….
80/20 applies to nearly everything you could possibly measure. It’s not merely a business abstraction, it’s a law of nature. Which means:
80% of the bad debt comes from 20% of the loans. (That’s the part they’re selling to the US government. Wall Street guys generally understand 80/20 stuff.)
80% of the corruption comes from 20% of the politicians.
80% of the pork is found in 20% of the legislation.
80% of the bills in Congress are written by 20% of the lobbyists.
Now here’s something else I know:
80% of the people on my email list will only effect 20% of the change that they need to make happen.
20% of the people on my email list will effect 80% of the change that is going to happen.
Yes, a small number of those within the sound of my voice will make huge strides in the next weeks and months.
In accordance with these principles, I am only sending this email to the top 20% of my list. The most responsive, the most proactive, those most devoted to their own education.
I am ignoring the other 80%. They don’t really deserve to read this message.
(That’s awfully elitist of me, isn’t it?)
It’s because I’m narrowing my focus. YES I will still be ruthless about acquiring new customers and selling with every tool in the arsenal.
I will be providing extreme value to those who have done business with me in the past and who have already shown, by their actions and their educational investment, that they are committed to staying ahead of the curve. The information you get from me in the coming months will be the best ever.
One more thing:
There is a top 20%.
There is also the top 20% of the top 20% – the 4%.
There is the top 20% of the top 20% of the top 20% – the 0.8%.
What you should really aspire to is to be a top 0.8% person.
Let’s compare the 0.8% person to the 80% person:
-Every move he makes is carefully chosen because his time is 16X as valuable
-He understands that of all the things on his list of 37 things to do, 4 or 5 of them are more important than all the others put together. The 80 percenter acts as though all items are equally important
-He is profoundly selective about the information he reads, listens to and acts upon; the 80 percenter is ‘open minded’ about almost everything
-He belongs to some kind of ‘good ol boys club’ – which is ’80 percenter’ lingo for a trusted circle of people among whom there is nearly zero transaction cost. Every successful business person I know has one; 80 percenters don’t have good ol’ boys clubs, they just gossip and have bitch sessions
-He doesn’t care what most people think, and knows that more often than not the masses are tragically wrong; the 80 percenter IS the masses.
Consider yourself privileged for having received this email. Something you did qualified you to get it. And don’t let grass grow under your feet. Survey your customers, find out what they’d like more of than what they’re getting from you now, and sell it to them.
Don’t be the slow guy. Be the guy who outruns him.
Carpe Diem – Seize the Day. Make sure the bear seizes someone else.