Derek Sivers podcast

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Care about your customers more than about yourself Jul 15, 2011

Show notes

At a conference in Los Angeles, someone in the audience asked me, “What if every musician just set up their own store on their own website? Since that’d be the death of CD Baby, how do you plan to stop that?”

I said, “Honestly, I don’t care about CD Baby. I only care about the musicians. If some day, musicians don’t need CD Baby anymore, that’s great! I’ll just shut it down and get back to making music.”

He was shocked. He had never heard a business owner say he didn’t care about the survival of his company.

To me, it was just common sense. Of course you should care about your customers more than you care about yourself! Isn’t that rule #1 of providing a good service? It’s all about them, not you.

But even well-meaning companies accidentally get trapped in survival mode. A business is started to solve a problem. But if the problem was truly solved, that business would no longer be needed! So the business keeps the problem around so that they can keep solving it for a fee. Anyone who’s in business to sell you a cure is not motivated to focus on prevention.

It’s kind of like the grand fables where the hero needs to be prepared to die to save the day. Your company should be willing to die for your customers.

That’s the Tao of business: Care about your customers more than about yourself, and you’ll do well.

You don’t need a plan or a vision Jul 14, 2011

Show notes

Do you have a big visionary master plan for how the world will work in twenty years? Do you have massive ambitions to revolutionize your industry?

Don’t feel bad if you don’t. I never did.

A year and a half after starting CD Baby, it was just me and John, my first employee, running it out of my house.

One night, I decided I should think more about the long-term future of this thing. I sat with my diary for a few hours of introspection. Afterwards, I wrote John an email that went like this:

“I think there’s a chance that this thing might be huge one day, so we better start preparing for that now. I mean some day, we might have a thousand artists. We might need a third employee! We’d need three computers, and need to figure out how to network them together. We might even need to start moving CDs into the garage, since eventually they might fill up the living room. Yes, I know it sounds grandiose, but I think things are headed that way.”

Years later, after I had 100,000 artists and 85 employees, John would often get a good laugh out of this letter I sent him in 1999.

Journalists would ask, “What’s your long-term goal?”

I’d say, “I don’t have one. I surpassed my goals long ago. I’m just trying to help musicians with whatever they need today.”

So please don’t think you need a huge vision. Just stay focused on helping people today.

Why no advertising? Jul 13, 2011

Show notes

I got a call from an advertising salesman, saying he’d like to run banner ads at the top and bottom of cdbaby.com.

I said, “No way. Out of the question. That would be like putting a Coke machine in a monastery. I’m not doing this to make money.”

He asked, “But you’re a business. What do you mean you’re not trying to make money?”

I said, “I’m just trying to help musicians. CD Baby has to charge money to sustain itself, but the money’s not the point. I don’t do anything for the money.”

This goes back to the utopian perfect-world ideal of why we’re doing what we’re doing in the first place.

In a perfect world, would your website be covered with advertising?

When you ask your customers what would improve your service, has anyone said, “Please fill your website with more advertising”?

Nope. So don’t do it.

Proudly exclude people Jul 12, 2011

Show notes

You know you can’t please everyone, right?

But notice that most businesses are trying to be everything to everybody. And they wonder why they can’t get people’s attention!

You need to confidently exclude people, and proudly say what you’re not. By doing so, you will win the hearts of the people you want.

When CD Baby got popular, I’d get calls from record labels wanting to feature their newest, hottest acts on our site.

I’d say, “Nope. They’re not allowed here.”

The record label guys would say, “Huh? What do you mean not allowed? You’re a record store! We’re a record label.”

I’d say, “You can sell anywhere else. This is a place for independents only: musicians who chose not to sign their rights over to a corporation. To make sure these musicians get the maximum exposure they deserve, no major-label acts are allowed.”

It’s a big world. You can loudly leave out 99% of it.

Have the confidence to know that when your target 1% hears you excluding the other 99%, the people in that 1% will come to you because you’ve shown how much you value them.

Formalities play on fear. Bravely refuse. Jul 11, 2011

Show notes

A year after starting CD Baby, when it was going pretty well, I got a call from a friend who was setting up his own similar web-based business.

He said, “Do you have any advice about how to do our ‘Terms and Conditions’ and ‘Privacy Policy’ on the website? Which lawyer did you use for that?”

I said, “Huh? I don’t have any of that legalese stuff. I’ve never hired a lawyer.”

Shocked, he said, “That’s crazy! What if some kid buys a CD from you, then kills himself? What if you get sued over that?”

I said, “Then no stupid footnote legalese would protect me anyway, so I’ll worry about it if it happens.”

Do you passionately love the “Terms and Conditions” and “Privacy Policy” pages on other websites? Have you even read them? If not, then why would you go putting that garbage on your website?

After CD Baby grew to fifty employees, all the business-to-business service companies started pitching me on how I needed an official employee review plan, sensitivity training, “Terms and Conditions” postings, and all this corporate crap.

I got such joy out of saying no to all of it.

Never forget that there are thousands of businesses, like “Jim’s Fish Bait Shop” in a shack on a beach somewhere, that are doing just fine without corporate formalities.

As your business grows, never let the leeches sucker you into all that stuff they pretend you need.

They’ll play on your fears, saying that you need this stuff to protect yourself against lawsuits. They’ll scare you with horrible worst-case scenarios. But those are just sales tactics. You don’t need any of it.

Start now. No funding needed. Jul 10, 2011

Show notes

Watch out when anyone (including you) says they want to do something big, but can’t until they raise money.

It usually means they’re more in love with the idea of being big big big than with actually doing something useful. For an idea to get big big big, it has to be useful. And being useful doesn’t need funding.

If you want to be useful, you can always start now, with only 1% of what you have in your grand vision. It’ll be a humble prototype version of your grand vision, but you’ll be in the game. You’ll be ahead of the rest, because you actually started, while others are waiting for the finish line to magically appear at the starting line.

For example, let’s say you have a vision of making an international chain of enlightened modern schools. You picture it as a huge, world-changing organization, with hundreds of employees, dozens of offices, and expensive technology. But instead of waiting for that, you start by teaching somebody something this week. Find someone who will pay to learn something, meet him anywhere, and begin. It will be nothing but you, a student, and a notebook, but you’ll be in business, and you can grow it from there.

If you want to make a movie recommendation service, start by telling friends to call you for movie recommendations. When you find a movie your friends like, they buy you a drink. Keep track of what you recommended and how your friends liked it, and improve from there.

Want to start a new airline? Next time you’re at the airport when a flight is cancelled, offer to everyone at the gate that you’ll lease a small plane to fly to their destination if they will split the costs. This is how Richard Branson started Virgin Airlines.

Starting small puts 100% of your energy on actually solving real problems for real people. It gives you a stronger foundation to grow from. It eliminates the friction of big infrastructure and gets right to the point. And it will let you change your plan in an instant, as you’re working closely with those first customers telling you what they really need.

Since I had already built a website for my own CD, the first version of cdbaby.com took me only a few days to make, and it did almost nothing. It was a list of a few CDs, each with a [BUY NOW] button. Clicking that would put the CD in your cart and ask for your info. When you entered your info, the site would email it to me.

That’s it. For the first year, that’s all the site did, and that’s all it needed to become profitable.

I spent only $500 to start CD Baby. The first month, I earned back $300. But the second month I made $700, and it was profitable every month after.

So no, your idea doesn’t need funding to start. You also don’t need an MBA, a particular big client, a certain person’s endorsement, a lucky break, or any other common excuse not to start.

The advantage of no funding Jul 09, 2011

Show notes

Having no funding was a huge advantage for me.

A year after I started CD Baby, the dot-com boom happened. Anyone with a little hot air and a vague plan was given millions of dollars by investors. It was ridiculous.

Most business owners I knew would tell you about their businesses by talking about their second round of funding, their fancy encrypted replicated load-balancing database server, their twenty-person development team, their nice midtown office with a pool table, and their weekly promotion parties. When you asked what the business actually did, they couldn’t explain it clearly.

Then they would talk about LOI, ROI, NDAs, IPOs, and all kinds of things that also had nothing to do with actually helping people.

I’m so glad I didn’t have investors. I didn’t have to please anybody but my customers and myself. No effort spent on anything but my customers.

I’d get weekly calls from investment firms, wanting to invest in CD Baby. My immediate answer was always “No thanks.”

They’d say, “Don’t you want to expand?”

I’d say, “No. I want my business to be smaller, not bigger.”

That always ended the conversation.

By not having any money to waste, you never waste money.

Since I couldn’t afford a programmer, I went to the bookstore and got a $25 book on PHP and MySQL programming. Then I sat down and learned it, with no programming experience. Necessity is a great teacher.

Even years later, the desks were just planks of wood on cinderblocks from the hardware store. I made the office computers myself from parts. My well-funded friends would spend $100,000 to buy something that I made myself for $1000. They did it saying “we need the very best,” but it didn’t improve anything for the customers.

Never forget that absolutely everything you do is for your customers. Make every decision — even decisions about whether to expand the business, raise money, or promote someone — according to what’s best for your customers.

If you’re ever unsure what to prioritize, just ask your customers the open-ended question, “How can I best help you now?” Then focus on satisfying those requests.

None of your customers will ask you to turn your attention to expanding. They want you to keep your attention focused on them.

It’s counterintuitive, but the way to grow your business is to focus entirely on your existing customers. Just thrill them, and they’ll tell everyone.

Just like that, my plan completely changed Jul 08, 2011

Show notes

When I first started CD Baby, I thought it was just a credit card processing service.

It was supposed to be a website that musicians would use to say, “Go here to buy my CD.” Just click to buy, charge your card, and then go back to the musician’s website. Kind of like PayPal, but this was two years before PayPal was invented.

The day I launched cdbaby.com, my second customer was a guy in the Netherlands. A week later he emailed to ask, “Any new releases?”

New releases? I didn’t understand. I asked why he wanted to know which new people are using my service to charge credit cards.

He replied, “Oh, sorry. I thought it was a store.”

A store? Oh! Interesting.... He thinks I’m a store! I hadn’t thought of that. Maybe if I set it up like a store, I’d actually be doing my friends a bigger favor, by getting total strangers to buy their music, too.

And just like that, my plan completely changed.

Five years later, Apple asked us to be a digital distributor. I hadn’t thought of that. But I said OK.

And just like that, my plan completely changed again.

Any time you think you know what your new business will be doing, remember: No plan survives first contact with the customer.

If it’s not a hit, switch Jul 07, 2011

Show notes

For the first time in my life, I had made something that people really wanted.

Before that, I had spent twelve years trying to promote my various projects. Trying every marketing approach. Networking, pitching, pushing. It always felt like an uphill battle, trying to open locked or slamming doors. I made progress, but only with massive effort.

But now... Wow! It was like I had written a hit song. A songwriter can write a hundred songs; then suddenly one of them really resonates with people and becomes a hit. Who knows why? It’s not that it’s necessarily better. But through some random circumstance or magic combination of ingredients, people love it.

Once you’ve got a hit, suddenly all the locked doors open wide. People love the hit so much that it seems to promote itself. Instead of trying to create demand, you’re managing the huge demand.

So what’s the lesson learned here?

We’ve all heard about the importance of persistence. But I had misunderstood.

Success comes from persistently improving and inventing, not from persistently doing what’s not working.

We all have lots of ideas, creations, and projects. When you present one to the world, and it’s not a hit, don’t keep pushing it as-is. Instead, get back to improving and inventing.

Present each new idea or improvement to the world. If multiple people are saying, “Wow! Yes! I need this! I’d be happy to pay you to do this!” then you should probably do it. But if the response is anything less, don’t pursue it.

Don’t waste years fighting uphill battles against locked doors. Improve or invent until you get that huge response.

This ain’t no revolution Jul 06, 2011

Show notes

Five years after I started CD Baby, when it was a big success, the media said I had revolutionized the music business.

But “revolution” is a term that people use only when you’re successful. Before that, you’re just a quirky person who does things differently.

People think revolution needs to involve loud provocations, fists in the air, and bloodshed.

But if you think true love looks like Romeo and Juliet, you’ll overlook a great relationship that grows slowly.

If you think your life’s purpose needs to hit you like a lightning bolt, you’ll overlook the little day-to-day things that fascinate you.

If you think revolution needs to feel like war, you’ll overlook the importance of simply serving people better.

When you’re on to something great, it won’t feel like revolution. It’ll feel like uncommon sense.

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