The Productocracy: How To Print Money (Legally!)

[thechosen1]

What is it your trying to do @thechosen1 ?

Drive people to a website or get people to order a product (these are some of the things I've worked on outside of my main job).

In most cases, I've ended up spending more on ads than I make in profit. I do get sales, but it's expensive.

Meanwhile, the old-fashioned service business requires zero advertising.

 

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[WJK]

I think this part about having a following or brand is really hard for those of us with business experience but not marketing experience.

it seems most of this forum has “marketers” with lots of history making ads, creating landing pages, building brands etc. I’ve learned to be more of an “operations” guy I guess - I need to work on this marketing stuff.

It can be developed I’m sure, but there’s a whole missing link here and it’s hard to find the right training or info on developing that marketing skill set.

Most of the info online just sends you into another marketing net, where you pay big money for advertising ...

I'm just not sure that I'm up for all of it -- to start again and go through the whole long process of building something new. I started a business blog a while ago, and it just became another job for me to post every week. I just let the website go a couple of weeks ago.

I did my own marketing for my RE business, but it was a different time and place. When I started, we had NO calculators, cell phones, computers, printers, fax machines -- even b&w copy machines were expensive and rare. I've seen a lot of changes that I've embraced & use over the years. I'm a great salesman, especially one on one. And, I understand a lot about the concepts of marketing systems.
I still do all the marketing for my trust deed business -- I'm using the same marketing plan that I've used for 45 years -- the research is all online these days.

I can write a good, helpful book. I have a lot to say. I've had a very interesting career and life. But, I'm not sure that I want to put in the effort to take that path. I'd have to find someone to do all that work past the writing part.

 

[Andy Black]

I'm just not sure that I'm up for all of it -- to start again and go through the whole long process of building something new. I started a business blog a while ago, and it just became another job for me to post every week. I just let the website go a couple of weeks ago.

I did my own marketing for my RE business, but it was a different time and place. When I started, we had NO calculators, cell phones, computers, printers, fax machines -- even b&w copy machines were expensive and rare. I've seen a lot of changes that I've embraced & use over the years. I'm a great salesman, especially one on one. And, I understand a lot about the concepts of marketing systems.
I still do all the marketing for my trust deed business -- I'm using the same marketing plan that I've used for 45 years -- the research is all online these days.

I can write a good, helpful book. I have a lot to say. I've had a very interesting career and life. But, I'm not sure that I want to put in the effort to take that path. I'd have to find someone to do all that work past the writing part.

Don’t start a blog. Do what you do in the forum ... post in communities where it will help, inspire, and entertain people. You’ve so many stories and experience it should flow off your fingers. What’s more, it will be fun too.

 

[Andy Black]

Drive people to a website or get people to order a product (these are some of the things I've worked on outside of my main job).

Maybe don’t drive people to a website OR get them to order a product. Just try to get them to order a product? How were you driving them to the site? How many bought? What was the price point?

 

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[thechosen1]

Maybe don’t drive people to a website OR get them to order a product. Just try to get them to order a product? How were you driving them to the site? How many bought? What was the price point?

FB ads. I did a local newspaper ad too. Sold maybe a dozen over the span of 2 months, each unit is roughly $30-60, didn't make any money (lost money). Also sold some through organic Amazon search, but competitors ended up drowning it out there.

Sold some in person to people I talked to; that was easy, somewhat profitable, but time-consuming and not scalable. We're talking minimum wage for the time put in for that - not horrible for just starting out, but difficult to see the path to a real biz selling that product that way.

I also had several meetings with a distributor, but they said my wholesale price was too high.

An educational thread would be very beneficial to everyone on this forum; maybe there is one already. But if nobody knows about your product, it is impossible to sell any.

 

[Andy Black]

FB ads. I did a local newspaper ad too. Sold maybe a dozen over the span of 2 months, each unit is roughly $30-60, didn't make any money (lost money). Also sold some through organic Amazon search, but competitors ended up drowning it out there.

Sold some in person to people I talked to; that was easy, somewhat profitable, but time-consuming and not scalable. We're talking minimum wage for the time put in for that - not horrible for just starting out, but difficult to see the path to a real biz selling that product that way.

I also had several meetings with a distributor, but they said my wholesale price was too high.

An educational thread would be very beneficial to everyone on this forum; maybe there is one already. But if nobody knows about your product, it is impossible to sell any.

For paid ads I like to start with search for a reason. What search term indicates the searcher has a phone or credit card in hand and is desperately trying to find someone to talk to and give their money to?

 

[WJK]

Don’t start a blog. Do what you do in the forum ... post in communities where it will help, inspire, and entertain people. You’ve so many stories and experience it should flow off your fingers. What’s more, it will be fun too.

Thanks, Andy, that's exactly what I'm doing. I'm paring down my life and making more space to do what I want to do these days.

 

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[WJK]

After reviewing my posts in this thread, I realized that I haven't really appreciated my success much in this business. Recognizing, acknowledging, and then feeling the improvements -- has felt like watching paint dry on a rainy day. Monday marked 22 years since I took title, and many of those have been very long years. I know my numbers. Yes, the gross income has increased to six times where it started. Yes, I'm all rented up. Things are going great. BUT, I get tired of the daily grind. I looked out at all of that snow outside of my window today and wished I was back walking on the beach in California...

 

[Djioul]

Excerpt From: MJ DeMarco. “UNSCRIPTED : Life, Liberty, and the Pursuit of Entrepreneurship.”

Sprinkled throughout the Phoenix area is a quaint little pizza chain called Oregano’s Pizza Bistro. Each location is branded identically in an odd combination of Western rustic and mid-century retro. Hit the bar and you won’t find HDTVs airing sports, but instead old black-and-white films of yesteryear. Instead of LeBron draining jumpers, you’ll get Fred Astaire tap dancing or Jimmy Stewart galloping through Bedford Falls. And the Chicago deep-dish pizza? A diet-destroying, roll-your-eyes-in-the-back-of-your-head, delicious taste explosion. Yum yum.

Unfortunately, any Oregano’s visit must be planned with girded expectations. Hit any location near dinner time and expect a crammed, tortuous wait. I hope you’re patient or not very hungry.

Anyhow, the interesting thing about Oregano’s? I’ve never seen or heard them advertise. Nope, not once.

I’ve never heard a radio commercial, seen a newspaper ad or been mailed a “20% OFF” coupon from the mailbox SuperSaver. The point is they don’t flood the market with advertising because they don’t need to advertise. They possess entrepreneurship’s Holy Grail: a productocracy.

Whereas a meritocracy pulls power to the skilled, a productocracy pulls money to the value creators, businesses who grow organically through peer recommendations and repeat customers, compelled by a distinguished product/service not readily offered elsewhere.

The short-and-sweet definition? Your product contagiously sells itself. Take for example the cancer corollary, a pure productocracy. If you owned the cure for cancer, how long until you made a fortune? Once a small group is cured, your product’s growth would snowball by raves and recommendations. News organizations would stampede your office with billions in free publicity. The need to advertise would be like pissing in the Pacific Ocean to remedy a low tide.

View attachment 29122

Ultimately, a productocracy is what separates average, survive-the-month, zero-growth businesses who are ad dependent from ones who grow exponentially through an expansion loop, or network effects.

In my pizza example, the Oregano’s product and concept is so good that satisfied customers fuel the expansion loop, repeating visits and recommending the restaurant. One satisfied customer creates more satisfied customers, accelerating growth. One plus one equals three. A productocracy is like a raging inferno, whereas advertising is the gas, an optional accelerant, not a necessity.

A productocracy is also the key to attracting value-vouchers, as discussed in the money/value dichotomy. With a productocracy, all excuses and drama become meaningless. No one cares that you failed four prior businesses. No one cares that your teeth are jacked or your dad didn’t love you enough to watch your T-ball game. A productocracy is so impervious to externalities it can overcome a crappy location.

THE PUSH (BUY MY SHIT) VS. THE PULL (YOU WANT MY SHIT)
Every podcast and interview I’ve ever done happened because I was asked. I didn’t solicit myself in a cold email, begging to be interviewed. Likewise, I won translation licenses in the same manner: Publishers contacted me, asking to be a part of my book’s success. My book did the selling, not me.

Behind this phenomenon is a push-pull polarity—the genome that determines if your company is one that grows spectacularly, a productocracy, or one that struggles to survive. Companies held hostage by advertising chain themselves to a push. Companies that grow like weeds and enrich their founders, boast the pull.

Not long ago, whoever spent the most on advertising would win the sales. If the toilet leaked, you searched “plumbers” in the Yellow Pages and phoned the one with the biggest ad. If you ate a new snack cracker, you either saw it advertised on television or it was slotted favorably in the grocery store, where its colorful labeling caught your eye. Both required wheelbarrows of cash. To sell large volumes of product, corporations had to buy large volumes of advertising. Advertising pushes its product to the masses, pushing sales.

Conversely, the pull in the push-pull polarity is a productocracy where products or services have gravity. Customers come to you. Each time the product/service is used, its gravity strengthens. The essence of a pull is word of mouth, social proof, and satisfied users.

A great pulling example is Tesla Motors. In an earnings conference call, Elon Musk implied that his advertising expense (in 2015) would be none. And yet Tesla has sold billions’ worth in cars. How does that happen? The pull of a productocracy. If clients are recommending and sharing your products on social media, congratulations, your product is pulling. Which side of the fence your company sits on is determined by one thing only: the market’s reaction to your product.

When my book was first released, I don’t remember its first sale or how many sold over the first few months. I didn’t care because that wasn’t important. What was important was spotting gravitons, or instances validating a productocracy’s pull. I do, however, remember the first email from a stranger who said the book was life-changing. Then the book was recommended on Twitter by a stranger. Then I saw the same thing on Facebook, and it repeated. These gravitons symbolize a productocracy and its pulling DNA. It also meant I could commit to my book and endeavor for worldwide scale. Without pull’s gravitons, I’d be left with just an unappealing push. And that would make me no different from the other 900,000 books self-published that year.

No thanks.

Unfortunately, most companies operate from a push modality and rely on multi million-dollar ad budgets to maintain sales or marginal growth. Many of these companies start as productocracies, but over time their operations disintegrate into pushes, usually due to stakeholder demotions (more on that later).

Think about it.

When was the last time someone recommended a McDonald’s hamburger to you? Or a nice cold drink of Budweiser? Funny, eh? The truth is, I am suspicious of any company who advertises heavily because it suggests a product that can’t pull.

For example, I avoid both Geico and Progressive Insurance like a stranger on the Vegas Strip snapping porn cards in my grill. Both companies advertise as often as a Chihuahua barks, so anytime I see “Flo” or the gecko, I’m reminded to shut off the television. Despite the advertising, I've never been recommended either.

The same suspicions flow locally.

Ever get one of those thick envelopes filled with coupons mailed to you? The one stuffed with advertisements from nearby home remodelers, pizza joints, and carpet cleaners? Again, the businesses that advertise every week are foisting the red flag of product mediocrity. I simply don’t trust them, and I’d rather go online and post a query to the neighborhood Facebook group.

To test my theory, I conducted an unscientific study. By memory, I wrote down every company who heavily advertises on the radio. Since I listen to a lot of sports talk radio, this was easy. Whenever a company advertises so much that I can’t stop humming their commercial’s musical jingle, they become top-of-mind—but not favorably. So within a few minutes, I came up with five companies. I removed their identifying names (but kept the industry). Here they are:

1. AAA Flooring
2. BBB Air Conditioning & Repair
3. CCC Roofing
4. DDD Pest Elimination
5. FFF and Sons (HVAC)

So after compiling these companies, I logged onto Yelp and examined their user reviews. Mind you, I didn’t do any research into this; I simply wrote down my “top-of-mind” companies who advertised heavily. Here are the results:

AAA Flooring	Rated 1 star out of 5.
BBB A/C & Repair	Rated 2.5 stars out of 5.
CCC Roofing	Rated 2 stars out of 5.
DDD Pest Elimination	Rated 2 stars out of 5
FFF and Sons (HVAC)	Rated 2.5 stars out of 5.

The average Yelp rating for these advertising behemoths?

A pathetic two stars.

And if you included many of the Yelp “not recommended” reviews, it would be in the ONE-STAR range.

Conclusion?

None of these companies are running a productocracy.

Read their reviews and some of their customers go as far as saying they’re running scams. They need advertising to survive. Newer, oblivious customers need to replace the dissatisfied ones—the push is the business.

And if advertising is needed to drive sales, sorry, you’ve got a product problem.

ENGINEERING A PRODUCTOCRACY: IF IT MAKES CENTS, IT MAKES SENSE

As a newbie entrepreneur, whether you live in Menlo Park or in Podunk Park, your number-one goal shouldn’t be sales, but a confirmation of a productocracy. A productocracy is entrepreneurship’s grease fire: exploding growth, filling wallets, and keeping spouses happy. Consider the CENTS framework the scaffolding for a productocracy and an UNSCRIPTED yellow brick road. In other words, if your business eventually makes CENTS, it makes SENSE.

The Commandment of Control
The Commandment of Entry
The Commandment of Need
The Commandment of Time
The Commandment of Scale

Excerpt From: MJ DeMarco. “UNSCRIPTED : Life, Liberty, and the Pursuit of Entrepreneurship.”

Wow, seeing this thread made me read this chapter again.

I read the French versions of your 2 books but I will definitely buy the next one(s) in English. Much more impact !
Thanks !

 

[Creative_Name]

I know this thread hasn’t been touched in a while, but why do Apple and BMW advertise so damn often? I’m thinking it’s because they always have some new fancy thing to sell and need people to know about it.

 

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[Striver]

I know this thread hasn’t been touched in a while, but why do Apple and BMW advertise so damn often? I’m thinking it’s because they always have some new fancy thing to sell and need people to know about it.

Apple has to advertise so they can convince people to continue buying "basically" the same phone year after year. This whole 12, 13, and 14 thing is almost like a joke! They just move the cameras around and claim to be innovative.

Seems to work!

 

[Almada64]

Apple has to advertise so they can convince people to continue buying "basically" the same phone year after year. This whole 12, 13, and 14 thing is almost like a joke! They just move the cameras around and claim to be innovative.

Seems to work!

I’ve started a business less than 3 years ago and I was wondering where the limit is for putting out ads. I new business needs to put out ads or nobody will never hear about you. It takes time to “spread the word”
I totally agree with the thread and referrals is the best possible marketing strategy

 

[Andy Black]

new business needs to put out ads or nobody will never hear about you

Be careful of the word "need". It often preceeds a limiting belief.

 

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[Dami-B]

It's an amazing coincidence that this thread and Alex Hormozi's latest video are preaching the same truths, even have the same title, Mjs concepts have transcended time.

View: https://youtu.be/K8MFC9t7snY

 

[Almada64]

Be careful of the word "need". It often preceeds a limiting belief.

I agree. Just couldn’t find a better word for it.

 

[Andy Black]

I agree. Just couldn’t find a better word for it.

I personally advise new businesses to NOT start with ads.

Start with your current network and ask if they know anyone who needs XYZ.

Use online communities to find people who need help.

And "Spend your money on diesel and coffee"

 

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[adl75]

Great thread!

 

[MartinG]

Contagious | Jonah Berger

A further good book on the topic also