Entrepreneur Derek Sivers: GET A CUSTOMER!

[Rickson9]

"The book follows the often-gripping story of how Sivers founded CDBaby.com in 1998 with $500, grew it to with no outside investors ever, lead the company through hypergrowth, and sold it for $22 million in 2008 when it had grown too large for his leadership tastes. Right before selling, he donated the company to a charitable trust for music education, so all the proceeds from the sale went to the charitable trust."

Derek Sivers continues and says,

"This has made me a really annoying 'guru.' Everyone comes up to me and says, 'Hey, you’ve had this success. What do you think of my idea?' Everyone wants to tell me their startup idea. For almost everything, I just say, 'Well. are people into it? Are customers wanting to pay you?' That’s all there is to it."
One of the Best Hours You’ll Ever Spend - Michael Ellsberg - Need to Know - Forbes

This is similar to Jame's Altucher's message,

"People say, 'Execution is important'. That’s not really true either. Execution is useless. It’s a commodity. The only thing that’s important is money. You get money by having a customer. You get a customer by satisfying a need that’s so important to them they would be willing to pay for it. If you have a customer that’s willing to pay you money, then execution becomes a lot easier. Life as an entrepreneur is hard. Why make it harder for yourself?"
The Easiest Way to Succeed as an Entrepreneur Altucher Confidential

Derek has also re-iterated something that I had posted before - that marketers are very good at tapping into our primordial egos to make us want things, to make us buy things, to make us fatten company profits. Only the few monied individuals are able to resist the siren call of the savvy marketer - 'slowlane' marketers are smarter than you (think).

"Getting to know her and her parents, I realized, you can just opt out of all of this. As long as you’re able to keep your living costs low—if you can live on $1,000 a months, or better yet, $700 a month—you don’t need to do anything for anyone, you can just do the occasional little odd-job, and say no to the rest. I really adopted that philosophy, when I was 22. I actually quit my job at Warner Brothers, and that’s the last time I’ve ever had a job. Ever since then, I’ve just found ways of keeping my life very cheap, saying 'no' to the whole advertising industry’s desire to make you want things." - Derek Sivers

 

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[Darkside]

He does make some good points, but overall I think he's a terrible example to follow. I don't care that he gave away the entire 20 million that he sold his business for to charity; that's his personal choice and if he's happy with it, that's all that matters. However, in terms of not wanting to grow your business; purposefully keeping it small, I think he's actually got an anti-fastlane mindset.

Sure, if you want to have a small Mom and Pop type of business then this guy's business philosophy is what you should follow; pleasing only 1% of people and ignoring the concerns of the rest, or turning down money from big-label advertisers because you don't desire it. He's got the hippie guru thing down though; I'll give him that.

 

[Rickson9]

Just an FYI, from Wikipedia:

"CD Baby was the trading name of Hit Media, Inc., a Nevada Corporation founded by Derek Sivers in 1997. Sivers sold CD Baby to Disc Makers in 2008 for $22 million, bequeathing the proceeds to a charitable trust for music education in an arrangement that provides him with 5% per year of the company's sale price in income (annually $1,100,000 pretax, based on the sale price of $22 million reported by Sivers) until death, while upon death the remainder if any will ultimately go into the trust."

Another FYI, when Siver sold his company he had 85 employees and $100M Revenue.

The advice from Sivers and Altucher is still invaluable: get a customer!

Best regards.

 

[Rickson9]

"Our enormously productive economy demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfactions, our ego satisfactions, in consumption. The measure of social status, of social acceptance, of prestige, is now to be found in our consumptive patterns. The very meaning and significance of our lives today expressed in consumptive terms. The greater the pressures upon the individual to conform to safe and accepted social standards, the more does he tend to express his aspirations and his individuality in terms of what he wears, drives, eats- his home, his car, his pattern of food serving, his hobbies.

"These commodities and services must be offered to the consumer with a special urgency. We require not only 'forced draft' consumption, but 'expensive' consumption as well. We need things consumed, burned up, worn out, replaced, and discarded at an ever increasing pace. We need to have people eat, drink, dress, ride, live, with ever more complicated and, therefore, constantly more expensive consumption. The home power tools and the whole 'do-it-yourself' movement are excellent examples of 'expensive' consumption." - Victor LeBow, 20th Century U.S. Economist

The Story of Stuff

As intelligent as an individual may think they are, they will be unable to outwit the savvy 9-to-5, slowlane, marketer who can get them to regurgitate technical specifications and marketing messages. Power. Performance. Zero-to-stupid in 3 seconds! Buyers smart enough to make millions, but unable to recognize, manage, deny base ego-driven impulses or the consequences of being ordinary.

Best regards.

 

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[Rawr]

Ricks, this is some good stuff, but the next question is - what to do now?

I was discussing this with my gf last night, we were discussing coffee, and how neither one of us had drank coffee growing up, and only used it very very occasionally to feel the jittery boost - now we both drink at least 5 cups per week, and don't really feel anything - what's worse it's making our health worse. Why are we drinking it then? So the point made was - perception, this is exactly how starbucks made a fortune. The idea that coffee is going to make you productive, or give you an image of someone who is "doing things". Nonsense. Complete bullocks.

When you are not drinking coffee, and try some, and get the first jitter, may be you feel "strange" and that you can do something, but is it going to make you WANT to do the things you NEED to do? ...or as one comic put it "coffee..do stupid things faster"

So then I put this out:

We have many things in this life that supposedly improve our lives. Get a nicer car, get a comfier couch, get a bigger tv with better picture, an ipod cause it's small, a super shoe cause it's good for walking - Let's grant that all these things DO improve some quality of life.

But the two points to remember, at ALL times - is 1. that we really can do just fine without them!! A couch is something you sit on, not a luxury experience you must have or you're failing.

and

2. It is literally impossible to acquire all the "good stuff that improves your life" You can't afford all of it, and new stuff, at full retail price is coming out all the time. So now you are left with the idea that something surely is going to be lacking. If you have tons of stuff, someone has more, or different, or more of what you think you want. Hence the self esteem issue.


We imagined a person with these tags on him, like on a shirt, that said "HD TV" or "Iphone" or Trendy haircut" and then imagined the person realizing what he REALLY needs, and dropping the rest.

This is what I suppose Derek is talking about. If you are comfortable, and can deflect the societal pressure, you can concentrate on doing things you really want to do.

That's the issue though, that pressure, is everywhere, at all times, with everyone bought and sold into it. And you have to be good and show that value because you will be judged by the cover first, brains second.

Thoughts?

 

[Rickson9]

Thoughts?

I love the introspection.

I think as investors and entrepreneurs we are a bit more familiar with sales/marketing and can better appreciate how business attempts to influence our decisions.

 

[joona]

To the first post: yeah, Derek is spot on. A business is not a business without a paying customer. And yeah, having a paying customer makes execution hell of a lot easier and forces you to do more of the right things, things that provide value.

About his philosophy in life. Sure, he is not the fastlane kind of person. But that doesn't mean that you can't learn anything from him. Of course, if your goal is to become a billionaire then maybe it's better to focus on other people. However if you want to be wealthy and have a relaxed lifestyle and freedom.. I think he is worth paying attention to.

 

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[moonjun]

I like him, he's damn good.
Also, getting customer is as important as execution.
If you don't do anything, how do you even get a customers?