The Contrast Principle

Another tidbit from To Sell Is Human by Daniel Pink (the book I wrote about the other day) is the notion of the 'Contrast Principle'. Pink tells the story of when two ad executives were walking through Central Park and came upon a blind man begging for money holding a sign that read, "I'm blind."

They found that the man had only collected a few coins.

One of the ad executives decided to help. He asked the man if he could make a small change to his sign.  The man complied and the exec added four simple words to the sign.

Immediately, the execs noticed that people began to give the blind man more and more money. This continued throughout the day and the blind man had his most profitable day ever.

The four words that the exec added to the sign? "It's spring time and...".

"It's spring time and I'm blind."

By contrasting the experience of the person walking by with the experience of the blind man asking for change, the sign was able to give people better perspective on the blind man's situation.

Who knows if this story is true. But the point is a great one. Providing buyers with a contrast is critical. For innovation sales to work, there has to be a significant contrast between what exists now and what will exist in the future. The buyer must fully understand the current state.

Humans notice the difference between things, we don't notice absolutes.

Oscar Health's Competitive Advantage

A few weeks ago the Wall Street Journal did a short piece on Oscar Health, the New York health insurance startup that is out to revolutionize the industry. If you haven't heard of them, Oscar's goal is to take all of the complexity out of health insurance by providing clarity and top-notch user experience. The article points out that when a new customer receives their health insurance card from Oscar it comes in a box that looks like you're getting an iPhone (see below). The box is even shaped such that it fits perfectly into an Instagram frame so customers can share it easily online. A quick look at their site and you can see that they're really different from the big guys. They're all about the consumer.

But one thing you'll find is that they really aren't that much cheaper than traditional health insurance. Their play doesn't seem to be price. Their play is simplicity, clarity, beauty and ease of use. I love that. They're going to try to compete in a wildly competitive industry by doing nothing other than making their product easier to use and easier to understand. A seemingly minor competitive advantage -- but potentially a massively impactful one.

This product is perfectly aligned with what consumers expect (and are getting in most other aspects of their lives). We expect easy and simple and beautiful in all of the products we use and most healthcare products are not giving it to us.

Oscar is tapping into that consumer (patient) demand and will be a fun company to watch.

4 Ways to Improve Email

Many have written before that email is ripe for disruption. Something has got to give and I think we'll see lots of innovation over the next few years. In the meantime, here are four features I would love to get added to Outlook and Gmail that would make my life a little bit easier: 1. Character count. I'd love a character countdown (from, say, 200) to appear in the top corner of a new email. It would be a critical reminder to keep emails short. I'd even love a feature that would not allow the email to be sent if it exceed a particular character count. 'Pithiness', as required by the 140 character limit, is the best feature of Twitter. There's no reason it shouldn't apply to email as well.

2. Like button. I stole this idea from a comment that Donna White made a while back. One of the best features of Facebook is the 'like' button. It's an incredibly easy way to let people know you appreciate something they've posted without engaging in a back and forth. It's a super-efficient, low effort way to keep in touch with lots of people. Instagram and Twitter do this as well. I'd love the same feature to be added to email. Instead of having to respond with a one or two word response, the reader could just 'like' the email and that could be tracked and not require a new email to be generated. This would probably reduce the volume of email by 20%.

3. Reply tracking. I'd love to be able to click on a folder that show all of the emails I've sent that haven't been responded to for easy follow-up and tracking. I know there are plug-ins like Toutapp and Yesware but they're painful to install -- this is so basic it should be native to email programs.

4. External/internal reporting & filters. One of the pitfalls for people that are externally facing is ensuring that you're focusing the right amount of energy towards customers as opposed to internal work. A simple widget that tracks the percent of email flow that is internal versus external over time would be super useful. In addition, it would be great to have the ability to easily switch between internal and external inboxes and sent items folders.

The Argument For Net Neutrality

The other day I was writing about how I find it odd that most of the prominent venture capital firms seem to only invest in computer and software engineering companies and seem to avoid things like energy, telecom, transportation and infrastructure. The reason, of course, is that computer and software engineering is really the only big opportunity left that hasn't been significantly regulated. Well, as most of you know, that's about to change. ISPs are preparing to charge web services to use their pipes. This would do great damage to the "permissionless innovation" we've seen in the internet. The big companies that can pay the fees will flourish and the small innovators will be shut off. This would be a horrible thing for the industry, and, in many ways, the world.

But, some would argue, if Netflix is using a ton of bandwidth to make huge profits, the ISPs should have the right to charge them. If the ISP market was a completely free market, that would make a lot of sense. But it's not. Most consumers only have a couple of options for which internet provider they use. If those ISPs want to enjoy "duopoly" status, they're going to have to follow some rules.

With that in mind, I came across a comment from Phil Sugar the other day on Fred Wilson's blog that makes the net neutrality argument perfectly.

To me here is the question. I as a citizen through my elected officials have given the cable company, the phone company, the electric company, the water company, the gas company, the garbage company the right to serve me in a non competitive monopoly or duopoly.

I agreed to this arrangement because it is not cost effective to have twenty people digging up my streets, putting in wiring, plumbing, etc.

However, I demand for this right that I am served as a utility.

I do not want to pay more for electricity because I am running super secret trading algorithms on my computer versus having my daughter leave the light on.

I do not want to pay more for my water because I am crafting the best microbrew in the world versus my wife filling the claw foot tub.

I refuse to pay more per bit because a cable or telco company views it as more profitable for the company that is serving me.

Now if you want to cap my total bandwidth, limit my speed, etc, that is a discussion that we can have at the utility level. I don't necessarily think every plan has to be "unlimited" because I don't necessarily want to subsidize my bandwidth hogging neighbor.

Spot on.

Sales 3.0 & 'Problem Finding'

I've been reading To Sell Is Human by Daniel Pink, a great book that argues quite persuasively that we are all salespeople; that the most important thing that each of us does every day -- regardless of whether or not we're in sales -- is to sell. Selling your family, your friends, your colleagues, your customers, your boss. And he argues that most of the jobs of the future (mostly focused around education and healthcare) are going to be all about "moving people", e.g. selling people. Pink also puts a fine point on what I wrote about the other day where I compared Sales 1.0 and Sales 3.0. He notes that today's sales environment is more about “problem finding” than “problem solving”. He uses the example of someone purchasing a vacuum cleaner.

A guy might say, "I need a new vacuum cleaner". So the problem, is: he needs a new vacuum cleaner. It used to be that to solve this problem he would drive down to a a store and talk to a vacuum cleaner salesperson who would explain the options, features and pricing. This salesperson no longer exists -- or if they do, they're not that valuable anymore. Information on vacuum cleaners is easy to find on the internet. You can educate yourself on everything you need to know about buying a vacuum cleaner while sitting on your couch. The information is now a commodity. So the “problem solver" type of seller is going away. We don't need salespeople to solve the "I need a new vacuum cleaner" problem anymore.

But suppose that this guy’s problem isn’t that he needs a new vacuum cleaner. What if the screens in his house are letting too much dust into the house? Or what if his carpets are of poor quality and are attracting too much dust and replacing them would solve his problem?

This is what sales 3.0 does. It gives buyers insights (that's where the value is). But not insights on how to solve the problem, but what their problem actually is. Remember, information on the solution, in most cases, is now a relative commodity.

I love the vacuum cleaner analogy.

Sales 3.0 is about helping buyers understand their true problem.

Related to this, this is why RFPs (request for proposals) are now so backwards. Large enterprises don't need to execute an RFP to figure out what feature set will solve their problem at the lowest cost, they need advisers (sellers) to help them figure out what their problem is.

As more and more salespeople adopt the sales 3.0 approach, I think we’ll start to see the perception of salespeople begin to improve. If sellers are sincerely trying to provide buyers with insights on their business and helping them think through their problem, buyers won't avoid salespeople, they'll seek them out.

Is Innovation Accelerating Or Decelerating ?

I came across a great debate the other day between Peter Thiel and Marc Andreessen on the question of innovation and whether it is accelerating or decelerating. I found Thiel's perspective on this super interesting as he talked about the massive lack of innovation we've seen since the 1970s with regard to transportation and energy and infrastructure. I also enjoyed the debate around which metrics are best to use when measuring innovation acceleration -- things like GDP per capita, number of engineers and researchers, cultural attitudes toward technology, speed of cars and planes, patents filed, etc. Finally, I've always wondered why it seems that most of the notable venture investors out there always seem to be so heavily focused on computer and software engineering as opposed to more structural opportunities like energy, transportation, construction, finance, education or healthcare. The simple reason is that computer and software engineering is the one area that government regulation has (for the most part) not yet slowed down. This is why you're seeing the venture community so interested in things like virtual reality, drones and Bitcoin -- these are opportunities outside of software engineering that haven't yet been regulated. Little regulation means good opportunity for growth.

I enjoyed the debate so much I posted the video below. It's about 57 minutes long.

[youtube http://www.youtube.com/watch?v=VtZbWnIALeE&w=560&h=315]

Sales 3.0

I've written about this topic here in the past but lately I've been thinking a lot about modern methods of selling and figured it was time to update my thoughts. Over the years, I have witnessed three phases of sales:

Sales 1.0: Pitching and objection handling. This is the old fashioned approach of 'sell, sell, sell' and 'always be closing'. This is where a salesperson talks about themselves and their company and their product's features and makes bold claims and defends their pitch by responding to objections. It's selling with brute force. There are lots of salespeople still using this approach.

Sales 2.0: Consultative or solution selling. This is where a sales person focuses most of their time learning about a prospect's business, asking questions, understanding the prospect's challenges and problems and 'what keeps them up at night'. The trick, of course, is that the answers to these scripted questions result in the prospect believing that they need the seller's product to solve their problem. This is almost the exact opposite of Sales 1.0. The thinking is that the sale is not about the seller, it's about the prospect and the prospect's business. I've found that most people still believe this is the right way to sell.

Sales 3.0: Disruptive selling. With the emergence of the Challenger Sale, this approach is becoming more and more popular. With disruptive selling, a seller is basically saying this:

I don't know much about your business, but I know a lot about the specific area that my product focuses on. And the way that you are currently addressing the problem that my product solves is completely inadequate. I'm not here to sell you something and I'm not here to ask a bunch of questions about your business. I'm here to challenge you on a very specific part of your business and to get you to think about it differently and change the context with which you think about it. I'm here to educate you and inspire you and move you. Again, I don't know your business all that well but I do know this area much better than you do. I think about it all the time and I talk to your peers about it all the time. So I'm going to give you our perspective on it. If at any point you don't think what I'm saying is interesting or don't think that a partnership makes sense, please tell me and we'll shake hands and I'll leave. And if at any point I don't think a partnership makes sense I'll do the same. This is not a sale, it's a discussion about an issue that is relevant to you and an opportunity to determine whether a partnership might make sense.

The seller likely wouldn't say this so bluntly, but you get the idea.

Sales 3.0 is most frequently used in selling innovation, but from what I hear it's becoming more popular across all industries. The world is incredibly complex. It's simply not possible for an executive to understand and manage all aspects of their business perfectly. And that's ok. And that's why they need specialists (salespeople) that are super competent experts in their domain to challenge them aggressively on different aspects of their business. Increasingly, for salespeople, knowing the product (Sales 1.0) and knowing the customer (Sales 2.0) are commodities. That should be a given.

Salespeople should know everything about their domain: products, customers, competitors, trends, the history, the future. Everything. And then use that extreme expertise to challenge a prospect on that aspect of their business. With Sales 3.0, salespeople shouldn't sell or ask a bunch of scripted questions. They should be interesting. They should give insights. They should have a point of view. They should influence. They should challenge. They should find authentic synergies.

And if authentic synergies aren't there, they should leave.

A Word About Employee Stock Options

There's been a bunch of talk in blog circles about employee stock options over the last couple of weeks. I wrote a quick thought on this topic in a comment on a blog post the other day and thought I'd post it here as well. Put simply, in order to have an effective stock option plan that motivates and rewards employees, the employee must know three things:

1. The number of options they have.
2. The current valuation of the company.
3. The total number of shares outstanding in the company.

If an employee doesn't know these three things they should place no economic value on their options. Don't get me wrong, employees should take the options if they're offered, especially if they believe they're working for a high growth company, but the options should not be considered a measurable part of their compensation package.

You can't value something if you don't know its value.

ACOs: Cost vs. Convenience

Uber’s announcement that they’re launching an online delivery service is the latest sign that more and more consumers want more and more convenience. Personally, among other things, I book travel, buy groceries, order takeout, book dinner reservations and buy concert tickets from my iPhone. Amazon Prime and one-click shopping is now my expectation for a quality online shopping experience. People want convenient and easy and simple and beautiful in all aspects of their life. Slick apps like Kayak and OpenTable and Stubhub have caused consumers to be more and more spoiled.

We’re seeing this manifest itself in healthcare as well now with the explosion of urgent care centers, concierge medicine and tele-health sites.

This trend in healthcare is not only not going to not stop, it’s speeding up. When consumers want convenience, lots of companies pop up to give it to them.

It is this continuing demand for hyper-convenience -- and the willingness of organizations to offer it -- that makes me skeptical about the future success of Accountable Care Organizations (ACOs). Given the demand for convenience, will large portions of the population agree to be locked into a narrow network that limits choice, flexibility and ease of use? Do consumers (patients) want that?

The answer is complicated. But I think it hinges on an ACO’s ability to lower costs significantly enough that consumers are willing to start making some sacrifices.

When you consider the pendulum of convenience versus cost in healthcare, there are clearly defined markets on the fringes -- there are patients that will be happy to pay more for convenience and patients that will be happy to have less flexibility in return for lower costs. But the reality is that most patients are somewhere in the middle. The huge segments in the middle where convenience and cost matter is where the money will be made.

Providers' ability to walk this fine line between cost and convenience will be the thing that dictates the winners and losers and will be the key to the adoption of quality-driven accountable care.

People are going to want Uber to deliver their groceries, but if the price point is too high they'll just drive themselves to the store.

Facebook's Defensibility Is Gone

Traditionally when people have thought of Facebook and their defensiblity, they've pointed to its ubiquity and the size of its network – at last check they had something like 1.1 billion active users. People reasoned that Facebook would continue to dominate social because it's the one place that has profiles for all of your friends. All other social  networks would be forced to plug-in to the Facebook ecosystem. But as Facebook’s defensive purchase of WhatsApp shows, this is no longer the case. Users are bouncing from social network to social network. Social apps are much, much less sticky than initially thought.

Benedict Evans and others have pointed to the seemingly minor but incredibly impactful fact that any newly launched social app can easily tap into your mobile phone's address book and instantly build out a network equal to -- or better than -- Facebook's.

This wasn't a big a issue when most users accessed Facebook through the desktop site, but now that most users access it through their mobile app, Facebook's unbundling has accelerated.

More and more users are migrating to WhatsApp for messaging, Vimeo for video, Instagram for photos, Foursquare for location sharing, etc. And there are niche players internationally that are focused on badges, stickers and other features valued in those communities.  There are now dozens and dozens of social apps in the app store with more than one-million downloads.

Facebook's strategy of running the social ecosystem seems to be shifting more rapidly than they had planned. Because of the mobile phone's address book, the approach of plugging social apps into Facebook may be losing steam. Instead of just letting them plug-in, the better approach, it seems, might be to buy them.

5 Ways To Address The 'Build Versus Buy' Question

When a prospect says something like, "well, at this point, our decision really comes down to build versus buy", don't fear, you've already won most of the battle. Your prospect has recognized that they need a product like yours and that they have to act. Getting a prospect to act -- and act quickly -- is the hardest part of selling innovation.

That said, you still have to address the issue.

I've always believed that the best way to address this concern isn't to give an opinion or a pitch; instead, the best approach is to give the prospect some topical things to consider as they look to make a decision. You're an expert in this area, you know lots of stuff that they don't. Help them think it through.

Here are five things you can encourage them to consider.

1. Specialization -- the world is complicated, companies need to focus on what they do well. Your prospect is good at their business and you're good at your business. Is it worth it for them to deviate from what they do well to try doing what you do well? Could that energy and those resources be better utilized on their core business? As Peter Drucker said, "do what you do best, and outsource the rest."

2. Unintended costs -- project and product managers know that when they begin a new project they don't know what they don't know. There are always unintended costs, requirements, hurdles and delays that come up when pursuing a new venture. It can be helpful to lay out, based on your own experience, what some of those unintended costs might be as your prospect sets out on building it themselves. Give examples. Highlight some of the things you've learned yourself.

3. Leverage with vendors -- because your prospect would be building the product for just one client (themselves) there are no economies of scale and little leverage with vendors. The costs could be far greater than they might think. List some vendors where this might apply.

4. Risk --  in my experience, when a company is considering building something themselves, they generally don't believe that the thing that they're looking to build is all that important. They'd admit that they might not do it as well as an expert but, "what's the big deal?" It's worth having a few ideas about what might make it a big deal if your prospect doesn't build it well; e.g. "if you don't want to be very high quality in this area, that's ok, but here are some potential consequences."

5. Experience -- over the last few years I've interviewed lots of consultants at top consulting firms. I always push them on describing why they're valuable. That is, how do they justify going into a business that they know nothing about to people there what to do?  The answer is the same every time: "experience". They've worked on similar problems with similar companies in similar industries. They've been through it before. The same thing exists in 'build versus buy'. If you're really good at what you do, it's generally not because you hit a few home runs, it's usually because you've done all of the little things over the years, learned some tough lessons and iterated to make the product better. Your prospect is going to have to go through that pain too. Is it worth it?

As Drucker says in the quote above, if a project deviates from a company's core mission, it's generally best to outsource it. Pushing a prospect to consider these five things not only positions you as a thoughtful expert but it also helps screen out clients that aren't a good fit.

That said, be sincerely open to the fact that building might be the right thing for your prospect. So don't "tell" them, help "guide" them. If after considering each of these factors your prospect still decides to build it themselves, that's a good outcome. It truly is. It means that they don't value the uniqueness of your mission or product offering and likely won't make a great partner down the road. There's nothing wrong with that.

When a prospect is considering build versus buy, raise the five issues above. You'll typically find that the way your prospect addresses these concerns will either help them see your value more clearly or will help you screen out a partner that isn't a great fit.

Adaptability

A few weeks ago I read Thomas Friedman's new book, That Used to Be Us: How America Fell Behind in the World It Invented and How We Can Come Back. One of the early chapters begins with this quote from an unknown source:

It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.

This is so true. I've been fortunate to work with incredibly smart people with incredible credentials: people who have worked at the top consulting firms and investment banks that have worked at some of the world's most admired companies -- Goldman Sachs, Apple, Google and Amazon -- and have attended the best colleges and business and engineering graduate programs. But when I think back on the people who were successful in the start-ups I've worked in, I've seen that there is almost no positive or negative correlation with those great credentials (great companies, great schools, high standardized test scores) and actual success in the workplace.

As the quote suggests, it really isn't the smartest or the strongest that are the most successful.

To emphasize this point, it's helpful to use a sports analogy here (I like sports analogies because sports is very results-driven and the results are extremely transparent).Regarding strength, you might think that the best NFL players are the strongest and most athletic and come from the best college football programs and had the best college football careers. But this isn't true at all. There are countless instances of great college football players not making it in the NFL -- particularly in the more complex and cerebral positions. Case in point: Tim Tebow won the Heisman trophy and a national championship at the University Florida, Tom Brady was a third string backup at Michigan.

Regarding intelligence, each year every professional football recruits takes the Wonderlic Test. It's a test that measures the intelligence of the player and is often used in making decisions about which players to draft. You might suspect that higher scores lead to greater success. Wrong again. Ryan Fitzpatrick, the Harvard educated, backup quarterback for the Tennessee Titans scored a 50 -- the highest score of any current player in the NFL. Peyton Manning, arguably the best quarterback in the NFL, scored a 28.

I see the exact same thing in the workplace. It isn't great credentials or talent or SAT scores that makes people successful in a start-up, it's traits like grit and humility -- and perhaps most of all, adaptability. Something to keep in mind when looking for "A-players" to join your team.