Seth Godin

Business guru extraordinaire!

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Episode Transcript

Speaker 1 (00:08):
Welcome, Welcome, Welcome back to the Bob left Sets Podcast.
My guest today is business expert extraordinaire, the one and
only Seth Godin. Seth, good to have you on the podcast.

Speaker 2 (00:22):
It's a treat I never thought it would happen, and
I never asked. And I've just been sitting here thinking Lefsets,
who has so generously chronicled the oral histories of so
many people who changed my life, my childhood, my young adulthood.
What I have impostered syndrome. I'm not sure why I
am here.

Speaker 1 (00:43):
I'm not sure how to respond to that, So I'm
gonna jump right into the questioning. Okay, we just had
a presidential election. What did we learn about marketing in
this election? Let me just sort of set the landscape.
Traditionally it was a ground game, it was network TV.
There's a campaign where we saw the power of podcast.

(01:03):
What's your insight in terms of the selling of the candidates.

Speaker 2 (01:08):
I think most people don't understand what marketing is. It's
not advertising or hype or hustle. It's not a logo.
It's this ephemeral, ephemeral story that doesn't easily have words
on it that we consume, and then we attach a
narrative to it. So I don't chime in about the

(01:32):
horse race of politics because it's a distraction and.

Speaker 3 (01:34):
It's designed to divide us.

Speaker 2 (01:36):
But I think we can learn a lot about which
stories resonate and why they resonate. And lots of people
in the music business understand intuitively that they're storytellers, but
they can't find words for it and figure out how
to put the words on it so that we can

(01:58):
tell a better story. Time to get back to what
people really want, which is affiliation, status, belonging, freedom from fear,
and believing that they were right all along. When those
things kick in, the story sticks and the words are secondary.

Speaker 1 (02:19):
Okay, how important is the marketing relative to the quality
of the product itself.

Speaker 2 (02:26):
The marketing is the product itself, So let's dissect that.
Quality has nothing to do with luxury or goodness or
whether you like it or not. Quality is whether it
meets speck. And so art has problems with quality because
there is no speck for a perfect Joni Mitchell song.

(02:47):
There is no speck for how do we create this
resonant story, because the second time we do it is
not art anymore. The second time we do it, we're
just a little bit more in tune. But back to
your original point, marketing that story that resonates with people,

(03:09):
we will make up all sorts of facts about its
quality to justify the fact that the story resonated with us.
So simple example, Saint poly Girl beer Beck's Light, Which
one do you like better?

Speaker 1 (03:23):
Bob Well, I no longer drink, but when I did drink,
I liked Becks better.

Speaker 2 (03:30):
But okay, it's exactly the same beer, made on exactly
the same assembly line, put into slightly different bottles. And
that's because the story of Saint Pauly Girls fraternity brothers
and the story of Beck's Light is yuppies, and they
told different stories, and people would argue about this, just
like in a double blind study you can't tell the

(03:50):
difference blindfolded between a Ford and a Chevy truck. But
they're Ford people and they're Chevy people. Because the story
is about identity. There is identity in being a Stones
fan instead a Beatles fan, and vice versa. And it's
this need that we have to live a life before
we die, to be part of something, to not be alone.

(04:12):
That's identity. And then identity can express itself through music,
and if you hear the song over and over and
over and over and over again, growing up becomes part
of your identity. It's not because it's quality, it's because
of who you are.

Speaker 1 (04:26):
Okay, just to stay on that same theme, something has longevity, because.

Speaker 2 (04:35):
So what did I buy when I bought a one
hit wonder top forty song that I was totally into
for a week? What I bought was it was going
to be replaced next week by a new one. That's
what teeny boppers do. What did I buy when I
became a Bruce Springsteen fan for life and pay six

(04:56):
hundred bucks to go see him? I bought the tribe.
I bought the circle of people that I identified with.
They're different products, and there have been people in the
music industry have been churning out the first one forever
and the second one we sort of back into. But
every once in a while a musician works hard to

(05:16):
build that arc to say, you know, I'm not sure
when the Warlocks decided that The Grateful Dead was going
to become a lifestyle, but it's pretty clear after a
couple of records that that's what they were committing to,
that they were making music for the family, not eagerly
trying to find new listeners.

Speaker 1 (05:37):
Okay, if you started in the late sixties and the
sixties when the Warlocks turned to the Grateful Dead, everything
happened much more slowly. We hit the MTV era, where,
you know, in aligned with their logo of the rocket ship,
you could literally go from zero to hero overnight. But
it's well established that the faster you went up, the

(06:02):
faster you came down. So what can we say about
that ascension?

Speaker 2 (06:10):
That's interesting. I was listening to your Dire Straits podcasts
a couple of weeks ago, and I'm not sure that
the evidence backs that up. I think that one of
the breakthroughs that happened for Dire Straits was MTV, and
yet today they're still part of the fabric of a
whole generation of people. One of the things that happens

(06:32):
when you get programmed because you buy your way or
luck your way into the top forty is by its nature,
most of the top forty is disposable. But then that's
part of the reason Billboard had to invent a new chart.
Because those other people who were selling and selling and
selling and selling and selling, they were important in the

(06:52):
music industry, but they weren't the hit of the day.
I don't know if that makes any sense.

Speaker 3 (06:57):
You know way more about this thing.

Speaker 1 (06:58):
No it does. I mean the case is the dire straits.
I don't want to get into the weeds, and that
most of their success was prior to the MTV era,
and then they blew up in the MTV era. I
don't want to, you know, split hairs here. But the
question is can I'll put it a different way. A
member of another band they said, we're afraid of having

(07:19):
a hit. This is in the modern era, it will
destroy our career. Yep, we're as it is so hard
to be recognized at all. And he was taking advice
from older acts who'd already had hits.

Speaker 3 (07:36):
Yeah.

Speaker 1 (07:37):
So you know, when you have this level of success,
you can't really plan it a lot of times anyway.
But I think today, to have some level of ubiquity
can only be a good thing.

Speaker 2 (07:50):
No, no, it cannot only be a good thing. The
system wants to chew you up and spit you out.
I think it's worth asking the musician, what's this for?
This journey you're on? Why are you here? What are
you doing it for? If you're doing it to make
as much money as possible. You didn't pick a great

(08:13):
industry to do that. Because someone's going to win the lottery,
it's probably not going to be you. If you did
it to have this craft, you know. I'm a huge
fan of Patricia Barber. I was lucky enough to sort
of produce at an executive level one of her records.

Speaker 3 (08:29):
But I've known her for a while.

Speaker 2 (08:31):
Patricia Barber plays beautiful jazz piano, and first it was
at the Green Mill. Now it's at a different club
in Chicago. They basically turned the clobe over to her
once a week. The rest of the time, if she
wants to, she can sell out a pretty big jazz
club in New York if she wants to go on
the road. But once a week she shows up. That's
her living room and I'm talking to her and I said,

(08:53):
you've got that one song that gets everyone out of
their seats, that sits in the in the beautiful overlap
between jazz and pop. But most of the songs you're
playing are calmer than that, more melodic than that. Need
more insight than that.

Speaker 3 (09:12):
What are you doing?

Speaker 2 (09:13):
What's the goal here? And she said, my goal isn't
to sell records, right. My goal isn't to be famous.
My goal is to create the conditions for this music,
for this music to reach people. And if there's only
two hundred people in the room and she can do
it again next week, that's fine. So the trick that

(09:33):
social media and media before that has pushed on creators
is this, you know, it doesn't matter what you say
as long as you're famous and they spell your name right.
I think that's ridiculous. I think that makes the executives
at the record label happy, but I don't think that's
how you build the career you want to have.

Speaker 1 (09:52):
So what comes first? You're in your bedroom, there's a
belief in yourself or is it the ta years of
music lessons? Or is it the people? You know? What's
the germination of this career?

Speaker 2 (10:12):
So Dave Grohl wrote a book in which he argued
that it's what your mother did when you were eleven,
and he interviewed all these rock and roll moms, and
you know, we're all living in a high school for
the rest of our lives. High school does something to us.
And for pop music, it's from the stories I'm hearing.

(10:35):
It's often what happened in high school? How did that
help you find an identity? And then by hook er
by crook, who did you become? And so if we
think about someone like David Bowie, or we think about
other musicians who we think we know what they sound like,
and then you listen to their early music, they didn't

(10:58):
sound like that, right that.

Speaker 3 (11:01):
What happened was.

Speaker 2 (11:02):
They became whatever they needed to become to do their
music for the people they wanted to do their music for.
And that experimentation and exploration is driven by an unsatiable desire,
an empty hole that a certain kind of musician is

(11:22):
trying to fill. Sometimes they get fortunate and it happens
right when they needed to happen. Sometimes it happened sooner
than they needed to happen. I think Ricky Lee Jones,
it happened sooner than she was ready for it. But
when you watch what Ricky Lee Jones has done since
she blew up with a couple of records, is she

(11:43):
doesn't care how big the venue is. She wants to
play her music her way for the people she's playing
it for, to share the noise in her head with
other people. So I'm mixing together a bunch of ideas
about creativity here. But I don't think these people.

Speaker 3 (11:58):
Were talking about are born that way? Really confident that
they are made, not born.

Speaker 1 (12:03):
Okay, you're not born that way. What is the biggest
influence the mailstream of high school or your parents or
luck of the draw?

Speaker 2 (12:13):
Yeah, it's all three, It's all three. What radio station
was playing every night when you went to sleep? You know,
you think that you were born to sing and perform
a certain way? Well, what a coincidence. No one's doing
that with this sitar because they weren't born in Bangalore, right,
And so the noise in your head combined with the
encouragement or discouragement you get, combined with your identity, combined

(12:38):
with did you get a call when you were at
Risdy to join Tina and David? Or didn't you because
if you didn't, we've never heard you play.

Speaker 3 (12:48):
The bass or the or the drums.

Speaker 1 (12:52):
Okay, breaking it down on a granular level, success, what
percentage is luck?

Speaker 2 (13:05):
Well again, I keep playing with words with you, Bob.
I'm sorry, I'm not sure what you mean by success,
and I'm not sure what you mean.

Speaker 1 (13:11):
Oh okay, okay, let's use conventional wisdom, which is not
internal success, but the measurable success of the external world.
It can be dollars, it can be chart positions, et cetera.
We live in a world where you have these billionaires
write books saying how I did it, but people don't

(13:34):
understand is that's how they did it. You can't replicate
those steps. If you know those people, they are unique individuals. Okay,
Then there are people who say, I'm sick of hearing
the rich people tell me how they did it. They
were just lucky. Whatever. Let let's let's go to Bill Gates.

(13:55):
Bill Gates was approached by IBM. They said they need
an operate system for their new computer system.

Speaker 4 (14:02):
He didn't say I don't have that. He said, well,
hold on a second, I could do that for you.
I mean when bought some other operating system and sold them.
So the question is, no matter what he did, would
Bill Gates have been successful?

Speaker 1 (14:17):
Okay? Or you know, are there people who are really
good but they just don't hit the right situation.

Speaker 2 (14:27):
I have no doubt in my mind that every billionaire
that I've ever met is lucky. And Bill Gates was
lucky long before he got that call from IBM that
the books in which someone tells you here's how I
did it, are a selective recall of some lucky moments
interspersed with a small amount of grit and determination. It

(14:52):
is very clear that lots and lots and lots of
people are born with enough privileged to show up in
Silicon Valley and then fail, or that something goes well
and then they double down on it and they fail.
But sometimes they double down on it and it goes well.

(15:15):
So the mythology that this sort of external success is
completely earned is just mythology.

Speaker 3 (15:23):
And you know so a.

Speaker 2 (15:24):
Simple example, Yahoo was built on the Stanford computer system,
and as it grew, two students at Stanford were making
the thing work. Stanford calls them up and says, look,
you guys are using way too much bandwidth. We're kicking
you off. And they know my friend Lisa, and my

(15:46):
friend Lisa knows the people at Netscape. Now, the people
at Netscape at the time, we're getting more trafficked to
their website than almost any other website.

Speaker 3 (15:55):
This is nineteen ninety five or six or something.

Speaker 2 (15:59):
And if you went to Netscape, the homepage for the browser,
so when you turned on the best browser on the internet,
it took you to Netscape's homepage. There was a search box,
and they had a problem, which is people were typing
stuff into the search box and sometimes they would overload
whichever search engine you went to. So Netscape said, sure,
we'll put Yahoo on our servers so that way it

(16:23):
won't crash when we send people to them. If that
hadn't happened, you never would have heard of Yahoo. That
had nothing to do with David or Jerry. That had
to do with proximity, the luck of the draw, the
network effect, the multiplication of small advantages getting to be
bigger advantages. And the same thing's true for Howard Schultz.

(16:44):
He takes over a coffee shop that has two outlets
that doesn't sell coffee. Well, Howard had a really insightful
idea about what Starbucks could become, but it could just
as easily have been Pietz or somebody else that ended
upping the United States. I think we can set ourselves
up to increase the chances we get lucky, or to

(17:07):
multiply it once we do get lucky. But I don't
think people should bet their life on getting lucky.

Speaker 1 (17:14):
Let me give a personal example. When I was living
as a ski bum in Utah. I was living with
these guys. They would meet people out on the hill
and they would invite them to stay with us. Okay,
and this I would never do anything like that. I
guess my upbringer, who are these people? Where are they
coming from? Taking to my house? Whatever? So is that

(17:38):
mindset ultimately working against my having lucky situations? Or is
it about finding your own situation where your personality works.

Speaker 2 (17:49):
Okay, So now we're talking about strategy, and I love
talking about strategy. That's what my new books about. Strategy
is a philosophy of becoming. It's about seeing the system them.
So the strategy of the first person who funded my
internet company was if anybody had a pulse and an

(18:09):
internet company, he would write them a check for one
hundred thousand dollars because he had enough money to do
that eighty times, and he just believed that this thing
was going to go in a certain direction. If you
think about the strategy that someone like Barry Gordy brought
to building his record label, it wasn't are you a

(18:30):
guaranteed hit? It's do I think that this small amount
of money is going to take to record a track
from you is going to get me to the next level,
just be promiscuous about it. So perhaps these guys had
a strategy that said, more surface area, more exposure to
the kind of people who come here, will make our

(18:52):
lives more interesting. And if the strategy we bring to
whatever change we're making is working, fantastic, that's great. But
in the music business, particularly since it's changed in the
last twenty years, many of the strategies that we were
indoctrinated as music people to believe don't work anymore, and

(19:16):
it's boiling down for some of those people to I
hope I get lucky. That's not a strategy, that's just
a wish. And so when you see somebody who says, oh,
there's a new social media platform, my strategy is every
time there's a new social media platform, go in early
and make a splash, because I will have outsize influence
there and it's more likely I'll grow to the next step.

(19:38):
That's a strategy. It's not a strategy to say I'm
going to sound just like this person and I hope
I get more spins on Spotify.

Speaker 1 (19:53):
Tell us more about your new book.

Speaker 2 (19:56):
So a lot of people people like you will ask
me questions that they think are marketing questions, but they're
really strategy questions. And I don't do any coaching or consulting,
but I like chiming in with interesting problems. And I
found that people didn't see what I was seeing about strategy.
Strategy is games and empathy and systems and.

Speaker 3 (20:22):
Time.

Speaker 2 (20:23):
Games, empathy, systems and time, and if you can see them,
you can make a different path forward. Games are simply
I made this move, it didn't work. I'm not a
bad person. I just made the wrong move. I made
this move. They made that move.

Speaker 3 (20:39):
In return.

Speaker 2 (20:40):
Systems are what you've been writing about so eloquently for
all these years, right with personalities involved. But you see
the system, you see which forces push things in which direction.
Empathy is I don't know what you know. I don't
believe what you believe. I don't even want what you want.

(21:01):
But I'm going to bring you something that matches what
you believe you want. So if I'm a musician playing
my hit for the four thousandth time, no one in
that room has heard me play it four thousand times,
I am bringing it to them because they need to
hear it, not because I want to play it. So
it's a gift and time. Time is the key to

(21:23):
the whole thing in the music business. Not four or
four time or five to four of your Dave Brubeck,
but time says, the first day my record, my song
is out there, only one hundred people are going to
listen to it. What do I have to do to
make that one hundred go to two hundred, five hundred,
one thousand and a million. Over time, these things unfold.

(21:44):
And so when we think about the legends that are
still in our lives, like you know, Joni, part of
the reason is because she's been at this for a
very long time. And there are other people who did
a thing in nineteen sixty nine and then stopped fertilizing
and stopped planting, and so time ran out for them.

(22:05):
So what we're doing is planting seeds to create the
conditions for tomorrow.

Speaker 1 (22:14):
You know, this is interesting. There are a couple of
classic examples in the music business of people who achieved
great success and then intentionally went in a different direction,
alienating their audience. So you have people like Neil Young,
he doesn't want to be pigeonholed. You have someone like

(22:36):
Bob Doing, who happens to be eighty three. He is
on the road singing material that most people cannot recognize,
even when it's well known material. Are we just saying
he's saying to himself, I am this old. I can
do it however I want to. Or do you think
he has a conscious strategy?

Speaker 2 (22:59):
So this is where the art comes in. And this
is why I have so much respect for people like
Herbie Hancock and Miles Davis and what Dylan decided to
do several times in his career, the willingness to get
booed offstage because the musicians say, I got into this

(23:22):
business because I want freedom. I got into this business
because I want to let the muse out. I got
into this business because I want to be a musician,
not a cover band. And yet almost all the people
who have been at this for a long time are
cover bands of their former selves, and they gave up
the dream in order to be popular. So when Miles

(23:45):
played with his back to the audience, or when Dylan,
according to his fictional autobiography, intentionally went back to the
same city three years in a row, and what it
says is the first year, what I'll do is I'll
offend the fans who came to hear the old me.
The second year, the people I didn't offend will bring
their friends, and then the third year I'll have my audience. Right,

(24:09):
there was this act of independence. So I don't know Bob.
I have no idea what noise he's got in his head.
And lots of strategies are intuitive. But as a creator me,
I regularly don't do sequels. I am trying very hard
not to be a cover band of me because I

(24:30):
got into this because I want to make art, not
because I want to be popular.

Speaker 1 (24:37):
Okay, I just want to don and I from earlier
in on conversation, you're talking about the motivation of musicians
in high school and you talk about filling a hole inside.
Can you amplify that for us?

Speaker 3 (24:50):
Okay?

Speaker 2 (24:51):
So this the insatiable needs. That is how you become
a billionaire. That is how you build something for the ages.
Everyone has a need for lunch every day, but it's
not insatiable. We don't eat lunch four times a day.
One lunch is enough for most people. But we have
an insatiable need to be loved often, or to be respected,

(25:15):
or to achieve something. And what often happens when someone
becomes successful is they try to top what happened to
them last time, which is why it's so difficult to
win a gold medal in the Olympics, because you might
not be able top that again. And so if that
was your need to show the naysayas they were wrong
and to always get a better personal best, you better

(25:37):
find a new way to make a living because you're
not going to find it running to decathlon again. And
so what happens often for the driven musician is, yeah,
I'm in another city twenty three out of twenty four
days in a row, in another grimy bar. But here
is that chance to fill that hole again. And I

(25:59):
know it's not going to be filled forever, but filling
it tonight is the most important thing in the world
to me. So someone like Springsteen, who's worth more than
half a billion dollars, how much would you have to
pay him to go do a performance he doesn't feel
like you couldn't. What he feels like is filling the
hole at least for now.

Speaker 1 (26:19):
Okay. I have a theory. People always ask how come
these people have hits and then they dry up. Most
of the people from the classic era today the landscape's different.
Classic era. These were alienated people, didn't interact that well
to use the vernacular, couldn't get laid. So they work

(26:40):
with this incredible effort. They get wealth, they get sex,
and they realize it still doesn't fill the hole, and
then they just don't have the motivation anymore. They just
can't do it anymore.

Speaker 3 (26:52):
I think as part of it, I think.

Speaker 2 (26:55):
A very big part of it is a fear of
being seen as a front odd fear of failing from
the perch that they're on. And so if you don't
push outside of the new comfort zone, then you can't
get in trouble. If you stay in the new comfort zone,

(27:16):
you're back to being a cover band, and cover bands
don't get booed off stage. And so it takes a
much deeper hole to have to decide, Okay, I'm going
to do a completely different thing and I'm going to
fail at it. And you know, Billy Joel and Paul
McCartney and Sting make classical music albums. Well, they knew

(27:36):
intellectually that the classical music world wasn't going to embrace them,
but they needed the feeling that would come from going
way outside that comfort zone, even if it meant that
it wasn't going to work.

Speaker 1 (27:52):
Okay, So once again, how much of this is conscious
and how much is just intuitive? And does it depend
what walk of life you're in.

Speaker 2 (28:04):
So I was talking to a friend of mutual friend
of ours who has made many gold and platinum records,
and I said to him, so, what's the secret of
a hit record? He said, Oh, it's the song, There's
no question about it. You got to find a great song.
I said, well, how do you know if it's a
great song? He said, because it's a hit record, And

(28:26):
he had no words to describe the intuition. So there
are many industries where intuition drives the whole thing. And
then there are other industries, like I would say heart surgery,
where being a scholar of it definitely helps you do
better because the words help you improve quality as you go.

(28:49):
So if you look at the way they used to
make cars, the crafts people on the Rolls Royce assembly
line could feel whether the piece of metal was going
to be stressed or not. They could feel how it
should fit together. You can't build a Toyota by doing that.
You build a Toyota by using words and measurement for everything.

Speaker 3 (29:13):
So I think we have failed every.

Speaker 2 (29:19):
Time we've tried to come up with words and algorithms
for making hit music that lasts for the ages. But
I think it's very clear that words help record executives
do much better because now if they can articulate to
people what they're trying to do, they can get other
people to do it with them.

Speaker 1 (29:41):
Okay, staying with the music business and staying with the
traditional executives, the traditional pillars of success, print, radio, physical
distribution have all been decimated such that a lot of
things start independently, whether the especially online. To what degree

(30:05):
must you change your philosophy with the external and what
are they not seeing about the future?

Speaker 2 (30:11):
Okay, so you've taught me so much about this, but
let me try to use a different story to help
people understand the system. There were two key things that
most people would not name that led to pop music
as we know it. The first one is the law
of physics that affects spectrum of the radio. There can

(30:33):
only be a few radio stations in a city, and
when you're add FM, it goes up by double but
that's it. There can only be a few. And number
two the headphone jack. When Sony came out with the
transistor radio. The breakthrough was it had a headphone jack,
and so for the first time in recorded history, teenagers
did not have to listen to the music their parents

(30:54):
were listening to. It made it so that teenagers, it
invented teenagers could find what their peers were doing instead
of having to sit in the living room.

Speaker 3 (31:03):
With their parents.

Speaker 2 (31:05):
Those two things created a forty year cycle that brought
us all this classic music. And what happened, well, we
got rid of radio and we don't need the headphone
jack anymore. The end result is there is no scarcity
of spectrum. There is no desire for the shorthad. The

(31:27):
long tail is real. People connecting with small circles of
people is real, and the music industry is gone. We
have music, more music than ever before. But the industry
cannot be called the industry the way it was because
it's not a few assembly lines turning out stuff that

(31:50):
are hits. It is instead this permeable long tail. The
same thing has happened in my industry of books. The
number of books published every year has gone up by
a factor of twenty five, and the laydown of a
new book, meaning how many of the stores take in
the first week is down by a factor of twenty

(32:10):
and so yeah, that's what decimated means ninety percent gone.
And we're going to need a new model if we
want musicians to make a living, and we need definitely
need a new model if the people who help musicians
and get paid.

Speaker 3 (32:25):
For it are going to make a living.

Speaker 1 (32:28):
Let's stay with books for a second, your area of
true expertise. What's the future for books?

Speaker 2 (32:36):
So five hundred years, a book is a physical object,
and in order to get a book into a bookstore,
another book has to leave the bookstore because the bookstores
can't get any bigger. And this physical object that we
had to spend years of our lives writing and bringing
to you that effort is received by the reader. It

(32:59):
means this is important. It's not a blog post someone
about in fifteen minutes. Someone invested in this. So there's
a lot to be said for the Pristian value of
I am holding this artifact. But it has been ripped
to shreds, not with mal intent, but for sure by
Amazon and Audible because it's very hard to tell a

(33:23):
page of a kindle book from a blog post, from
a series of tweets. And when we atomized ideas we
rip the heart out of the industry. Add to that,
the death of the independent bookstore and book publishing is
on fumes, and it only survives because of the backlist.
It only survives, as you've talked about, because of the

(33:46):
royalties you're making from the stuff you published ten or
twenty years ago. This is a crazy time to start
a new publishing company, which I just started working with.
But books matter still, particularly to people of our general
because they're a symbol and a totem. And I don't
think we're ever going to see books be more important

(34:08):
than they are today. And books are way less important
than they were twenty years ago.

Speaker 1 (34:14):
Okay, you have a new book, so what's the strategy.

Speaker 2 (34:19):
So my strategy, which because I'm a writer I've said
out loud, is this. I stopped looking for new readers
twenty years ago because I found chasing new readers would
force me to be a writer. I didn't want to
be writing about stuff I didn't want to write about.

Speaker 1 (34:40):
Could you just be a little deeper? What would you
not want to be? What would you not want to
write about?

Speaker 2 (34:45):
So if what happened to the media of in my
space anyway? Starting about twenty years ago is you should
be quote authentic and vulnerable, and you should have meltdowns,
and you should pick fights, and you should tell really
simple things and this amazing secret will reveal everything, and
you should dumb it down. And if you're lucky, when

(35:10):
you do that, you could sell a whole bunch of
clicks or books or whatever it is you want to sell.
But it doesn't last. And instead I said, I'm here
to write for the people who give me the benefit
of the doubt. I'm here to write for people who
trust me to tell them something that they need to hear,
and then maybe they'll tell their friends. So if those

(35:34):
people go out and share an idea, that's when I succeed.
I'm giving ideas to people who benefit from telling the others.
So my strategy for the Strategy book is how do
I create the conditions for people to talk about it?
So in addition to the book, I made the five
point two million combination card deck, and I made the

(35:55):
collectible chocolate bar with trading cards in it, and mostly
I went on one hundred podcasts and I talked about
it in a way that would help other people talk
about it. Because I'm not trying to sell a paper
piece of paper. I'm not even trying to sell a book,
trying to sell a conversation, because if the people who
are listening to us today sit down with their colleagues

(36:18):
and talk about their strategy, I will have accomplished something.

Speaker 1 (36:30):
Let's say you're on a podcast and your goal is
to get someone to start a conversation. You just say
I am who I am, and that's going to be natural.
Or do you say there are certain things I want
to say and how I want to say them.

Speaker 2 (36:44):
So what we're trying to do, whenever we make a
change happen is to create tension. And the tension for
a teenager with music is, oh, I haven't heard that
new song. I need to hear it because I'll be
left behind. The tension for somebody who in their dreams
was going to go see Taylor Swift is the concert's
going to sell out. I got to figure out a

(37:05):
way to get a ticket before they're all gone. Tension
is very common in things where there's scarcity and time
is involved. But there's other sorts of tension that come
even just from the simple dana because the person who
hears it needs to say Dana or else they're unsettled.
So what I am doing with my work is opening

(37:31):
the door for people to see where I'm going. But
I don't steal the revelation. If I tell them every punchline,
there's no growth, there's no learning. So instead I can
lay out this groundwork and they can come to the
conclusion on their own in their industry that there's something
they can do next and it makes sense to them.

Speaker 1 (37:53):
Okay, so you have a new book. How far in
advance of publication did you have the eye be to
do the book?

Speaker 3 (38:04):
Okay, so.

Speaker 2 (38:06):
Some people, including me, in the old days, if you're
in the book business, you need a book where you
don't get paid. So I would wake up in the
morning and think of book ideas. When I was a
book packager, I sold one hundred and twenty books a
book a month for ten years, and in order to
do that, I had to think of a new book
every two or three days. That's what I did, and

(38:28):
I stopped doing that about ten years ago because making
a book is exhausting and I can get my ideas
into the world much more efficiently and to more people
with a blog post. So I only write a book
when I have no choice, and I have no choice
because the book made me do it. So what happened
here is I write every day, no matter what. And

(38:51):
I started writing about a year ago, but not to
write a book, just to write down a bunch of
blog posts that I thought would rhyme with each other.
And after I had written twenty of them, which took
about three days, I realized there were all these pieces
in between that we're missing. So then I had forty
of them, and I thought, uh, oh, I have a

(39:14):
problem now because I have a book. And I was
not in any mood to publish a book because it's,
as I said, a slog. But it wouldn't let me go.
So there was a book starting in November. I wrote
it in not a lot of time, and then I
rewrote it two or three times. Then the work of

(39:35):
publishing the book that takes six more months of design
and discussion and layout, and I do all the typesetting
and coverge design myself, etc. Recording the audiobook cost me
my voice for over a month, going to DNT and
getting scoped. But the book won't let you go.

Speaker 1 (39:54):
Okay, there was an element there I want to drive too,
which is promotion. You know, the music business, we've been
through a lot of stuff. In the last twenty five years.
There was all the issues of leaks. Albums were coming
out prior to the official release date. Someone in the
manufacturing plant stole a copy whatever, and everybody was freaked out.

(40:19):
Now we've actually gone two things have changed. One, it's
hard to gain notice at all at some level. Would
be great if you were leaked, okay, And then a
lot of major artists don't do any advance publicity at all.
They just put the album out and then things go.
So what's the status of advanced publicity today?

Speaker 3 (40:42):
All right?

Speaker 2 (40:42):
So Tim O'Reilly famously said your problem is in piracy,
your problem is obscurity, And speaking just for me, if
I thought five million people would read my book tomorrow,
if I just uploaded the PDF, I would do it
in the heartbeat. The hard part now for music but
always for books, has been getting people to pay attention, right,

(41:06):
And attention is scarce. You don't get any more of it.
It gets rebuilt every day, but you don't get any
more of it. So what's the point of advance publicity? Well,
if there's retail, if there's strawberries and Tower and three
other record stores that are going to kick you out
of the shelves if you don't sell in the first
four weeks. You need to prime the pump. So the

(41:29):
first couple of days are really hot, but Spotify doesn't
kick people out, so there's no upside from a streaming
point of view. To advance publicity, what you need to
do is become popular enough that the people who want
to only listen to things that are popular are going

(41:49):
to listen to you because you're popular. And that happens
when you concentrate the promotion geographically and over time, because
that burst of focus causes people to say, you got
to go do this, and you know, we see this
with you know, about half of the time you review

(42:09):
something that's on streaming TV in your letter, it's because
it's sort of new and you're noticing it because other
people are noticing it. And sometimes you find a gem
that we missed a year ago. That's a whole different story.
But the story of launch and promotion is the author's

(42:32):
job is to sell the first ten thousand copies of
the book, and then after that, it's the book's job
to sell the rest.

Speaker 1 (42:40):
Okay, So in your particular case, the six months of
getting it all together to publication date. You have these
external products you're using as hype. How do you feel
you're going to sell the first ten thousand copies?

Speaker 2 (42:58):
So I recorded eighty guest podcasts over the course of
two and a half months, and my deal with each
person who is super great to work with was you
got to hold it in Simbargo to October twenty second.
So on one day I was on eighty podcasts, which
means that you know, through the math, let's say eight

(43:19):
million people give or take two million people somewhere in
there heard me talking about this idea, and that was
my biggest lift to make it happen. And then the
second part is I'm very lucky a million people read
my blog in one form or another who give me
the benefit of the doubt. And I said to them,

(43:41):
with no advance hustle, today's the day. What I did
a month before that was I said to the true fans,
the people who are the super fans. I've got one thousand,
seven packs, seven copies of the book, a chocolate bar,
the strategy deck, and my online course together worth eight

(44:04):
hundred bucks. I'm selling it for one hundred and twenty
five dollars. And so the people who for whom that's
an instant yes, said great. And that means that we
sold out in thirty six hours, and that's a little
bit like what Ryano can pull off with a grateful
Dead record. And so I sold seven thousand books before

(44:24):
the book came out, So getting to ten thousand wasn't
that much of a lift.

Speaker 1 (44:31):
So how long do you expect the life of the
book to be well?

Speaker 2 (44:36):
I was at a conference on Friday and someone walked
up to me and said, Purple Cow changed my life.
And I wrote that book twenty three years twenty five
years ago. So that's my goal. My goal is to
write a book that twenty five years from now isn't
some weird dated artifact, but is in fact worth looking
at even then.

Speaker 1 (44:56):
So you have all this great insight you did go
to Stanford Business School, were you taught or is this
all insight you gained individually?

Speaker 2 (45:08):
I taught none of this at Stanford Business School. Stanford
Business School when I went was an interesting cultural experience
that was largely devoid of actual content that you could
that would take more than six hours to read in
a book. If someone had just like condensed everything they

(45:29):
taught us. It would only take six hours to read.
But the cultural experience of being in a group of
people who were expected to go into the world and
do a certain sort of thing really made a difference
when it came to feeling like an imposter, made a
difference of changing the perspective you would have. And then

(45:51):
the rest of it was being fortunate enough to be
in the room where I didn't get thrown out when
I said stupid things, and I could figure out what
a stupid thing was and not do it again. And
that cycle doing it as fast as possible is the
best life advice I have when young people ask me

(46:12):
what they should do. If you want to learn marketing,
do marketing. If you want to build a career, find
the fastest growing company you can because in a fast
growing company there's always.

Speaker 3 (46:21):
A new job to do.

Speaker 2 (46:22):
You're not taking away responsibility from someone else, it's just
sitting there. Someone needs to grab it.

Speaker 1 (46:30):
So, to my knowledge, which is not extensive, Stanford Business
School is a little bit different from the others in
that it focuses on small groups. A to what degree
is it different from other environments and was it really
the hothouse of being at Stanford because you hear a
lot about Harvard Business School and it's people say it's

(46:50):
primarily about the relationships they make more than what's in
the school. So what was your experience.

Speaker 2 (46:57):
Well, the best man of my wedding in my old
business partner went to Harvard when I went to Stanford,
so I had sort of a close view of this.
The indoctrination at Harvard. Again, we're telling you a long
time ago, but the indoctrination at Harvard is very intentional,
and it's not just the relationships with your section. So

(47:18):
here's one way to think about it. The first day
of the first class at Harvard, you elect your alumni representative.
That's profound. I love that because they're sending this message
that says you're going to sit through this for two years.
But the reason we're here is because you're going to
be alumni. But it doesn't change so much from year
to year, so it doesn't matter if you're Harvard eighty

(47:40):
six or Harvard ninety four. Harvard people are Harvard people.
We know they're going to behave in meetings, we know
they're going to you know, brutalize their way through when
it needs an unlimited amount of time or whatever. So
they hire each other and they respect each other, and
there's a status thing going on. Stanford when I was there,

(48:01):
felt like it was much more focused on helping people
see themselves as independent, thoughtful, consulting type professionals who could
you know, like Samurai, who would walk into a place
and be the smartest person in the room, even though
we weren't the smartest people in the room. It was

(48:24):
just this understanding that being smart was sufficient, And I
think that's wrong. And my gut is that they have
changed it a lot since then, because what most business
is about, especially the music businesses, in that meeting, in
that interaction, are you engaging with someone else to create

(48:46):
the conditions for something new to happen. This isn't about
using spreadsheets to squeak out an extra nickel. It's about
finding a window that's worth opening and a door that's
worth walking through. And that is a practice, just like
writing a book is a practice and writing a song
is a practice. But we don't do a very good
job of teaching it to people.

Speaker 1 (49:09):
Let's stay you mentioned consulting, not in other way. I'm
going to bring it up. There's a huge backlash against
McKinsey and other consultants. What's your view of consulting.

Speaker 3 (49:21):
I have.

Speaker 2 (49:22):
I don't think we've heaped nearly enough. Shame on the
people who said I'm just doing my job but also
busy figure out how to get more people to smoke
a jewel or figure out how to get some monopoly
to extract more money from people who don't have money.
You're responsible if you're doing the work, your fingerprints are

(49:42):
on it. You should own what you do. And consulting
in general is magical when someone from the outside can
see a problem that you can't see because you're too
close to it. But that's not what most consultants get
to do because the hardest part of consulting is getting clients.

(50:04):
And getting and keeping clients requires an enormous amount of
understanding the status quo and making sure your right answer
is acceptable. And it's not really about the right answer,
because we're not doing engineering here, we're doing people.

Speaker 1 (50:31):
I know someone who's CFO of a large company worked
for one of these name brand consulting firms, McKenzie. I say,
why'd you leave? Because I didn't believe in the model,
Because they're taking fresh graduates. We're going out there. We
don't know what we're talking about, right.

Speaker 2 (50:51):
So you know, when you look at a place like
McKinzie or Arthur Anderson that has so many people there,
clearly half of them are below average no matter what
scale you want to look at. But mostly the problems
aren't that hard. Mostly the problems simply require verbalization. When

(51:12):
you hire McKenzie, you're often hiring them so you can
go to the board of directors and say, I'm doing
this because McKenzie said we should, and that's what you
paid for, not that they came up with some sort
of brilliant insight that you couldn't come up with on
your own. It's very cool when you see the rare

(51:33):
moment when a consultant comes up with a brilliant insight. So,
for example, in the eighties, seventies and eighties, digital watches
started to show up. And there's something in the production
of semiconductors called experience curve, which is the ten thousandth
chip you make is way way, way, way way cheaper

(51:53):
than the first one, and all these people who were
making digital watches were pricing them fairly at three hundred
dollars because it was costing them three hundred and two
hundred dollars to make them. And this consultant figured out
and explained to Texas Instruments, if they made a lot
of watches, they could make them for four dollars each.

(52:13):
So Texas Instrument lowered the price of digital watches to
way below what it costs to make, so that they
would sell a lot of them, and thus their costs
would go down and no one would be able to
catch up for years and years. And that's exactly what happened.
That's that's a consultant bit of brilliancy. But that's not

(52:34):
usually what consultants are busy doing.

Speaker 1 (52:37):
It's interesting you speak of watches because in the watch world,
especially with Rolex, which is a major brand, they're constricting availability. Yep.
And you believe that's a strategy just about image or
what do you think the thinking behind that is.

Speaker 2 (52:55):
I love this topic, Bob, It's so much fun to
talk to you. Okay, so we should talk about luxury goods.
Luxury goods aren't better except at one thing, right, Like
a Rolex watch does not tell more accurate time then.

Speaker 1 (53:12):
It tells, it tells less accurate times I happened to
have one.

Speaker 2 (53:15):
Exactly than a digital watch. So what exactly do you buy?
When you buy a burken bag or something from Louis
Vuittont or go out for dinner for four hundred dollars,
You are not buying the quality by most definitions of
what you purchased. What you're buying is something where the

(53:36):
motto is I paid a lot and I didn't get
what I paid for. That the intentional waste of a
verbulin of a what's his name verbulin good? Is the
price is the quality. The price is the point. The
scarcity is the point that if they made as many

(53:57):
Rolexes as they could, it wouldn't be a luxury good anymore.
That what makes it something that's worth owning is that
you can afford to have paid more than you should
have for the thing that does what's on your wrist.
And luxury goods, as we see more and more income inequality,
have become ever more profitable because the makers of luxury

(54:21):
goods have figured out that every time they raised the
price and lower the availability, profits go up, and so
does demand.

Speaker 1 (54:30):
Okay, let's go a little bit deeper, because this is
happening right now, some of these luxury goods. Burbery, which
is not a super top, they started appealing to the
more casual customer. I won't say things are cheap, but
they're not out of reach yep. And they have now been.

(54:50):
The brand is on a downhill slide. Okay, So what
would your strategy be for a luxury good I'll give
you one more exact Mercedes Benz. Mercedes Benz decided to
decrease overall production and then move it to more expensive cars.

(55:11):
So what do you think about the varying philosophies on
each side of that.

Speaker 2 (55:14):
Okay, So, once you're a public company, the stock market,
which is an idiot, wants you to make as much
money as you can right now. So if we think
about outlet malls, Burberry, but particularly Ralph Lauren, discovered that
they could make different products in a different factory. Call

(55:35):
them outlet mall direct to consumer seconds or whatever. But
they're not seconds. It's not like they went and they
got the seven thousand dollars cashmere thing and they found
a little error in it and they're selling it for
seventy bucks. It's a totally different sweater made in a
totally different factory. The last time I checked, half of
Ralph Lauren's profits came from outlet malls, from stores they

(55:57):
owned in an outlet mall.

Speaker 3 (55:59):
So it's a one way road.

Speaker 2 (56:01):
You start down that road, you make a lot of
money for a while, but it's almost impossible to reclaim
the super exclusivity thing. So Burberry's has been dancing back
and forth with this, trying to have it both ways.
Very very hard to do. So when you think about
the car business, car business gets even more complicated because,

(56:23):
unlike a handbag which you can leave in your closet,
cars you're gonna drive around and cars you're gonna drive
around for a while, and the narrative of the person
who's buying the car if it's not the Maybach, if
it's not the most expensive one, is much more complicated.

(56:44):
So Mercedes is one of the biggest car companies in
the world. It's really hard for them to make that
an exclusive luxury brand. It's also really hard for them
to compete with Toyota. So there's somewhere in between, and
there's always going to be this painful churn for people
in that industry because they can't change the way Diane

(57:05):
von Furstenberg Kay, Diane, you come out with a new
line in six weeks for a small group of people.
It takes six years for Mercedes to do that.

Speaker 1 (57:17):
Okay, switching back a gear. You're from a similar vintage.
I'm a little older than you. But when I went
to public high school, there were uh, there were the
art kids. Everybody was middle class. If you were rich,
you drove a Cadillac. No one knew what a billionaire was,
and no one ever wanted their kid to be an artist.

(57:39):
But some people that's you know, the path they went down.
So today life is much harder financially, just period. I
just remember this comes up with by physical therapist all
the time. You know, you could live I'm seventy five
or one hundred dollars a week, even if you adjust
for inflation. You can't do that today. The scions of

(58:00):
the middle and upper middle class. What people don't realize
is people of that vintage young teenagers. They know the
score better than anybody, and they don't want to grow
up and be poor. They don't want to take the risk.
So a lot of these more risky endeavors, certainly artistically,

(58:21):
it is the lower classes that enter these fields. Let
me let me go a little sideways to make the
point even further. When Survivor blew up, the people whod
Survivor believed that they were now stars. That did not
turn out to be the case, but they believed it.
When we hit Jersey Shore, people say I'm doing this

(58:42):
as a lark, that I'm going back to Poughkeepsie. There
is no future here. So when you have the lower
classes involved, there's a different ethos. I'll do whatever you
tell me to because this is just a lark, as
opposed to the Jefferson airplane or the middle class artists
of the sixties seven said, I don't want to do that.

(59:04):
That doesn't feel good. So to what degreed does income, inequality,
wealth disparity sit over all these creative arts and other
elements of our society.

Speaker 2 (59:15):
Wow, there are lots of ways into this, and I
don't think there's a definitive answer. I think we can
begin with the fact that for a very very long time,
the only people who were professional artists were people of wealth,

(59:37):
and they either had a relative who was wealthy or
they were wealthy themselves. And you know, you got the
Jane Austen, that whole thing. You're not finding someone who
is in a small village making music with any expectation
that there's going to be an industry.

Speaker 3 (59:57):
That's going to propel them forward.

Speaker 2 (01:00:00):
We get to this zone, the zone when the phrase
writer's block was invented. Writer's block is a made up malady,
and it started shortly before Ernest Hemingway was named by
Percy Shelley, Mary Shelley's partner brother husband.

Speaker 1 (01:00:18):
One or the other, you're out of my league, all right?

Speaker 2 (01:00:20):
Anyway, Writer's block is an affliction of middle class kind
of creatives who don't want to fail on their way up. So, yes,
you're touching on something important here. Now we get to
the current day, but I think what you're leaving out
of it is this golden age of artistic riches that

(01:00:46):
came from the scarcity from the gatekeeper. It's going away
that you can win TikTok, you can win YouTube and
get a check. But it's not an industry the way
it was when John Hammond would pick you. It's on
an industry the way it was when you know, we
listened to who was going to be the next hit.

(01:01:08):
So with that said, I don't think we're going to
end up with a lot of people who are fifteen
years old today growing up saying I'm going to be
the next Van Morrison, because I think they are smart
enough to know that there might not be that path
that they shouldn't, you know, get on a bus, go

(01:01:29):
to LA and hope to get discovered at a drug
store because that's not you know, starmaking machinery isn't there anymore,
and I don't know what happens after that. We're not
gonna runt of music, We're not going to run out
of video slash movies, but it feels to me like
the path is not particularly well lit either.

Speaker 1 (01:01:51):
There's been consolidation in the record industry. There are three
major labels who are putting out fewer records in few
were genres in error before Because we've referenced earlier, they
can live off their previous product, which is generating capital
and essentially no investment. But for a mature business like

(01:02:13):
that in a changing environment, what might they do.

Speaker 3 (01:02:21):
Right?

Speaker 2 (01:02:21):
So this is a key strategy question, which is the
feeling of entitlement that we get about how do we
keep this going? But you don't get tomorrow over again?
So what should they invest in to be able to
have the careers that they want to have because the
shareholders are going to ring every penny they can out

(01:02:44):
of the assets that are already there. And what I've
argued is we need to take a deep breath and
think about what are the assets you own, and what
are the skills you have, and what is the change
you seek to make. So Simon and Schuster and Random,
how if I had stopped by their offices, as I
often did in nineteen ninety and said ask them those questions?

(01:03:07):
They would say things like we organized the world's information.
And if I said, no, what you do is you
cut down trees and then hold them hostage, selling them
to independent bookstores, they would look at me like I
was clueless. But they could have started Google. It only
took two people to start Google organizing the world's information. Right,
Why didn't the book publishers start the search engines? Why

(01:03:31):
didn't the book publishers take this great corpus of stuff
they have and own a big piece of chat GPT
Because they don't think that way. They're looking backwards, not forwards.
So these three record labels have a particular competence in
understanding what youth culture needs. Finding unknown creators and helping

(01:03:54):
nurture those unknown creators to bring that idea in some form,
to use culture to define in the generation. But instead
of thinking that way, they're just looking for the next
Taylor Swift, and I think that's a mistake. I don't
think the middlemen are going to be rewarded the way
they used to, because creators are discovering that they should

(01:04:16):
go to the middlemen after they've become a hit, and
then they're going to get to keep way more of
what they have.

Speaker 1 (01:04:23):
Now. At this particular point in time, three major labels
are either individually public companies Warner and Universal or Sony
that's part of a much larger operation. No one there
has skin in the game, which a you have a
developing industry over decades, all these independent labels before this

(01:04:45):
ultimate growth and consolidation to what degreed does having skin
in the game affect employees and success.

Speaker 2 (01:04:55):
I have no idea what share Walter Yetnikov had in
the game. I don't think that's what he thought of
on any given day. I don't think that the people
who I've met and have known in the music business
were thinking about it strategically. I think they had a job.
They loved, and I think they had interactions, sometimes bullying people,

(01:05:15):
sometimes stealing from people, sometimes taking credit for other people's work,
that every day was more fun than the next while
they were doing it. Some of them got really wealthy,
but I don't think that's what drove them. So what's
missing for me when you bring in the nbas and
you say, here are the spreadsheets and here's the balance sheet,

(01:05:37):
go make us some more money, is if that's what
you're if that's what the prize is, that's what they're
going to go get. And this industry and the stories
that people share with you on this podcast make it
very clear this industry at some level was built by
people who love the game, not by people who want
to make as much money as possible.

Speaker 1 (01:06:05):
Switching gears a little bit, we talked about Bill Gates,
We talked about your experience at Stanford. Right now, there's
a huge discussion about whether people need to go to
college or not. If you had a family friend, you know,
and they had a teenage son, not a schlepper, as
we put it, someone who could go to a good school,

(01:06:27):
but says I have a business idea, I have to
do this. What would your advice be actually.

Speaker 2 (01:06:33):
Give advice like this all the time to family friends.
First of all, you got tricked too by the college
industrial complex. You said good school. There's a good school
and a famous school. Famous schools either have football teams
or endowments, right, And it's very clear, and there's plenty

(01:06:54):
of data to show this that people who get into
Harvard and don't go have just as much happiness and
wealth in their life as people who get into Harvard
and do go. That the hard part is having the
privilege and background and experience to get in, not what
they did to you in class. Add to that the
fact that you can take any class you want in

(01:07:17):
the world for free online, maybe not at that institution,
but somewhere. So what these institutions are selling are two things.
One the badge accreditation proof that you got your ticket stamp,
because that way you don't have to teach somebody everything
you know. You can just show them this one piece
of paper and they make assumptions. And the second thing

(01:07:40):
is group cohesion, a group brainwashing to say, people like
us do things like this, this is the way we
see the world. And so for a long time, Saturday
Night Live was written by people who worked on the
Harvard Lampoon, and you know that's where a lot of
talk show people have come, etc. Because the indoctrination of

(01:08:02):
being a student at the Harvard Lampoon for all those
years was actually your college experience. So now we've got
this grand reshuffling, and the question is what would make
you good at the future. And I don't think it's
I need to start a business and make a lot
of money and I can't wait four years because there's
always going to be a problem worth solving. I think

(01:08:23):
it's what experiences are you collecting and where are you
learning these lessons? And how are you learning them? Do
you have the discipline to roll that yourself? Are you
willing to read a book a week every week for
the next four years instead of going to college? Because
if you need high school discipline to get smarter, then

(01:08:46):
doing it on your own is probably going to be
a mistake because you're gonna get stuck in that rut.
And so what I challenge people to do is two things. One,
I think almost everyone should take a gap year. They
should take a year to do a hard project with
some supervision, to grow up and to discover what it's

(01:09:07):
like in the real world to understand that college isn't
like high school, but with more binge drinking, it can
be something different than that. And then the second thing
is to go to the cheapest, good enough school and
use the money to create experiences and a curriculum for
yourself so that you learn way more, way faster than

(01:09:30):
your peers. And most of those things require discipline, and
unfortunately that's hard to find. But if you can do that,
I think you come out ahead.

Speaker 1 (01:09:42):
Tell me about the hard project that you might do
in a gap year.

Speaker 2 (01:09:47):
So a friend of the family came to me years
ago and said I'd never met him. He said, my
dad knows you. He said you could tell me how
to get into Yale, And so I gave him ten
projects you could do, and one of them was fly
to India and figure out how to make enough money
to get home. Now, the problem with that project is

(01:10:07):
it doesn't take a year, and it's not particularly generous.

Speaker 3 (01:10:10):
But if you.

Speaker 2 (01:10:12):
Find a nonprofit that is working deep in a community
to help transform that community for the better, and you
commit to spending a year with them, you don't need
the Peace Corps to send you somewhere. You can do
that tomorrow. If you decide to start a record label,
which I did years ago, you can start a record
label tomorrow, run it for a year fully online, see

(01:10:35):
what happens right that. If you're doing that and you
know that you don't have to make money doing it,
you have to make a difference doing it, you will
learn an enormous amount compared to going tow NYU and
taking a class in music production.

Speaker 1 (01:10:53):
You know you're talking about. Let you know, let's say
I take the path where I'm not going to go
to college. I read a week, I do this. I
have found amongst the people I know, other than the
very successful people I know who I know, no one
has this level of discipline.

Speaker 2 (01:11:12):
Yeah, so where's the discipline come from? How long do
you need external discipline before you'll understand internal discipline? And
how can you practice it the same way you practice
the trumpet? Because I think you can practice discipline for
a week at a time. And so if you're asking
what I would say to a sixteen year old family friend,

(01:11:33):
the woman down the street who I worked with, she
put on a massive climate conference for high school students
in our county and over one hundred people came. She
had guest speakers. She got a grant on her own
from the Bloomberg Philanthropies, and she put this thing on.
If I look at what she did compared to all

(01:11:54):
the other students in her high school class, there's no
comparison how she spent the last six weeks. She's going
to remember this forever. She discovered she's not a fraud,
and she's discovered all the things that don't work and
some things that do. So no, don't skip college and
commit to a four year thing out of the blue.

Speaker 1 (01:12:14):
But show me a one.

Speaker 2 (01:12:15):
Week project, and then a three week project, and then
a five week project, and then go to a gap year.

Speaker 3 (01:12:20):
And if you have no.

Speaker 2 (01:12:22):
Self control whatsoever, yes, please go to the most famous
college you can pay for. Get on the track of
getting one of those scarce jobs where someone tells you.

Speaker 3 (01:12:30):
What to do.

Speaker 2 (01:12:31):
But for almost everybody else, it's this combination of generous persistence,
self discipline and solving an interesting problem, because if you
get good at solving interesting problems, you're never going to
need to go get a job.

Speaker 1 (01:12:47):
Now. Ultra successful people, let's not talk about someone who
worked their way up at Procter and Gamble and is
now on their private jet people who have a more
entrepreneurial path. Are they all inherently using the vernacular fucked
up trying to fill some hole? Is that what drives?

(01:13:07):
Are there any well adjusted? I mean, look at someone
like Elon Musk, certainly a lot of success, but he's
evidence seeing the issues in his personality right out in public.
Does that go with the territory?

Speaker 2 (01:13:22):
I would like to leave out of the discussion the
few handfuls of people who are in the media because
a lack of boundaries and media attention are a very
challenging problem for everybody else. And I know a lot
of people who have succeeded on their own with projects

(01:13:44):
as entrepreneurs. Most of them are well adjusted. There's a
game being played here and they don't take it too seriously,
and they see the game.

Speaker 1 (01:13:56):
And when I.

Speaker 2 (01:13:58):
Started, I took it all personally. And when you take
it personally, it doesn't feel like a game. When you
take it personally, you get rejected. I get eight hundred
rejections in a row from New York publishers. It feels
like they are rejecting you, and it takes a while
to realize they don't know me. They're just rejecting what
I sent them. What we have now is this weird

(01:14:23):
media structure where you're supposed to be vulnerable and you're
supposed to be authentic, which I think is nonsense if
you're trying to strangers and then when it doesn't work,
you end up in a ball on the floor instead
of saying this was the move. I brought this to
the world. That happened. How do I do it differently
next time? And I believe that's what great musicians do,

(01:14:45):
particularly jazz musicians. You watch a jazz musician and they
know when they're launching into the next lick that in
this setting, in this room, it's going to work. And
the reason they know that is because they've done it
before and they see the difference in the room between
one that's going to work and one that doesn't. And
that's the opportunity amidst all the chaos and mailstroam that

(01:15:09):
we're in of solving interesting problems. Is you can practice
without a medical degree, without a legal degree, without a
business degree. You can practice human interaction and get better
at it.

Speaker 1 (01:15:21):
Switching gears. Once again, there are different This is streaming
television Netflick releases all episodes of the series at Once
Prime used to do that sort of at this point,
but the other competitors, Disney, Paramount, Apple do not. What's

(01:15:42):
your insight there?

Speaker 3 (01:15:43):
Yeah, I read.

Speaker 2 (01:15:44):
You were ranting about this the other day. You and
I disagree, which happens from time to time. I was
talking to Ted Sarandos at Netflix. I said, Ted, I
only want to ask you one question. I completely understand
why you started with binging, and the reason is this.
What Ted and Reid figured out how to do was

(01:16:07):
use stock market money to send a signal to Hollywood
and to viewers that you couldn't live without Netflix. And
the way they differentiated themselves from every other way you
could watch television is they weren't gonna hold TV hostage.
You can have all you wanted. The only way you
can do that is if you have an enormous amount

(01:16:27):
of money, because you blow through one hundred million dollars
TV series in a day. Right, So it was brilliant,
but now they won, and once they won, it's not
in their interest to keep allowing people to do this.
And the reason is what they gave up was the

(01:16:48):
water cooler conversation. Because if you've seen seven episodes of
Lydia poet, and I've seen one. If you talk to
me about it, you're going to ruin it for me.
So you don't talk about it the way you would
if it was on every Monday. And so I said, ted,
why do you keep doing this? And it was fascinating

(01:17:08):
because I thought he would have a detailed, nuanced database
research answer. And he said, because that's what we do.
It's been built into the culture. But I can show
you the economics of it. They should stop, and I
think they will because they can't keep burning shareholder money

(01:17:29):
the way they were and the game theory of it
doesn't make sense.

Speaker 1 (01:17:34):
Tell me more about the game theory and game theory
in general in business.

Speaker 2 (01:17:38):
Okay, So game theory has nothing to do with monopoly
and everything to do with understanding what people do when
they each seek to maximize their benefit. So everyone understands
tic tac toe, and we understand you shouldn't go in
one of the side pieces, you should go in the
center because that forces the other person to go certain ways.

(01:18:00):
So Netflix looks at the world a lot of entrenched players,
people with lots of backlists and lots of libraries, and say,
we can't possibly make enough really really good shows in
a very short period of time that will get people
to join us for money when they could watch these
other things on television for free. So what we're going

(01:18:21):
to do is play a game they can't play. And
this is the key to strategy, playing a game your
competitors can't or won't play. And the game they could
play is they could sell more stock anytime they wanted.
They could lose as much money as they wanted as
long as they were getting new subscribers. And by saying
to NBC or HBO, we're going to break your cardinal rule.

(01:18:44):
We're gonna take our best show and just blow it
all in one day, the opposition couldn't respond because they
didn't have enough money or inventory to catch up to
that game. So they redefine the game the same way.
When you look at Hotmail, which revolutionized viral marketing, everybody

(01:19:05):
else was charging for email accounts. Hotmail built a company
that was structured so they could give it away for free.
By making that move, they undid the game that everyone
else had no choice but to play. So what we
you know? And when Rick Rubin leaned into hip hop,
he was making the bet that the big guys weren't

(01:19:28):
willing to go where he was going to go, and
he was right. It took them a very long time
for the people who were running those labels to get
comfortable bringing out the music he was bringing out because
of their upbringing compared to his moment in time. So again,
what we're seeking to do with game theory is understand

(01:19:49):
the rules of the game and then make moves that
either box out the other people or moves that they
are unwilling to make.

Speaker 1 (01:20:04):
Okay, staying on streaming television, Apple uses the old model
of an episode a week, right, financial disaster. Okay, Now
they're leaving intentionally certain low hanging exploitative fruit on the ground.
It's like they won't just do something with titillation, nudity.
Whatever they do these high cost productions, there is no catalog,

(01:20:30):
no backlist like Netflix licenses or now actually owns. Sir,
what would you tell Apple?

Speaker 2 (01:20:40):
Okay, So let's be clear. Apple TV does not exist
to make a profit, and if you are looking at
it through the lens of making a profit, it would
it seems like a mystery. Apple TV exists to be
a branded arm of a luxury goods company. Apple is

(01:21:00):
the most successful luxury goods company of all time. You
can buy a phone that does almost everything an iPhone
does for a lot less money. The one thing it
doesn't do is give you the blue bubble and the
Apple logo, and so that is supported by the halo

(01:21:23):
of something like Apple TV. So what Apple needs to
keep doing is create this reality distortion field around the
value of what they make and sell people identity.

Speaker 1 (01:21:39):
Staying with Apple for a second, Steve Jobs famously did
no market research. What's your view on market research? Well,
Steve did a lot of market research. What he didn't
do was pay consultants for traditional market research. What Steve
did was he had an intuitive understanding of the needs, desires,

(01:22:01):
and identity of the people who would propel his thing forward,
and he played it like a violin. He totally understood
status roles and how to turn this thing that was
for geeks into a luxury good. Most market research, most
focus groups exist to make the committee happy. They don't

(01:22:23):
exist to lead to hard decisions, and corporations are organizations
that stick around for a while, and there's a lot
of soft tissue in between the various people and market
research can be used as a tool a lever to
help people empower stay in power, but it is not

(01:22:45):
often used to help them make better decisions. Okay, on
the same point here with making decisions. Ultimately, let me
put it down. A mature business, Okay, skiing. Skiing in

(01:23:07):
the sixties, it was a middle class sport. Everybody did it. Okay.
Starting in the late eighties they put in these high
speed lists, which costs a lot of money, improve the experience. Okay.
Now there's been consolidation. There's two major companies which actually
are spreading from the United States to internationally. Now a

(01:23:28):
there's a perception problem because skiing is never been cheaper
to actually do, never mind the number of lodging and food,
et cetera. But it's a mature business. Where does a
mature business go from here? They're not Sierra Club. You
can't build more ski areas, concert promotion. We have Live

(01:23:50):
Nation in aeg Okay, used to be the land of renegades.
When you have a mature business, what happens next?

Speaker 2 (01:23:58):
So, uh, your rant on this with Zach Cune was brilliant.
I loved listening to it.

Speaker 3 (01:24:03):
Zach.

Speaker 2 (01:24:04):
I don't know if he told you it was my
next door neighbor, so I watched him grow up. He
doesn't live in New York anymore, but skiing is, and
I did it for a very long time until I
directed both my shoulders. Skiing is clearly a mature industry,
but it's also a luxury good. It's a luxury good
because it costs way more for the actual athletic moments

(01:24:31):
of it then it's worth. What you're paying for is
the way it feels to go, the way it feels
to talk about it, the way it feels to put
on the equipment, the way it feels to be in
the lodge. That is what is actually for sale. The
data I saw a few years ago is that the
typical visitor to Veil was on the slopes for less

(01:24:53):
than forty five minutes a day. Because that's just a
tiny part of what is for sale the nation skiing
I went. I grew up skiing at Kissing Bridge in Buffalo,
which is basically a big hill, and you could do
thirteen runs in an hour. And so the people who
went there to ski, they were skiing, they weren't partaking

(01:25:14):
in the luxury lifestyle of skiing. So what to be done, well,
what's always done with an end of cycle. Stable businesses
is you raise the price for the people who are
committed to going. It is really, really difficult to capture

(01:25:38):
the next generation because you don't have the network effect,
the viral connection that causes the next generation to come
in the numbers. You need them to come to keep
the business going on in the way you wanted it
to go, the same way if you had you know,

(01:25:59):
whether it's Georgia or Armani or Heart Shaftner and Marx
hart Schafter in Marx doesn't have a prayer of capturing
people who are twenty years old. People are twenty years
old are never gonna wear three piece suits. It's not
coming back. And so what I think it's worth embracing
is Schumpeter's creative destruction. There's nothing that says this particular

(01:26:21):
corporation is entitled to last. And the half life of
American corporations keeps getting shorter because people stick around, but
brands and corporate entities they're designed to be disposable.

Speaker 1 (01:26:36):
Well, staying on that same point, antitrust, I have a
friend who is a liberal who does not believe in
the antitrust enforcement, believing that the marketplace will always ultimately
come into competition.

Speaker 3 (01:26:53):
He is.

Speaker 1 (01:26:53):
Example would be I'm gonna ask your take.

Speaker 3 (01:26:57):
That's why having trouble with keeping my take to myself.
But go ahead, yes, no, no, I want to hear your take.

Speaker 1 (01:27:02):
Okay. He we know Google's search has now been challenged
by Amazon by TikTok have by the same token. Google
is being sued because they have monopoly on advertising. What
is your belief in the anti trust and monopoly?

Speaker 3 (01:27:19):
Okay?

Speaker 2 (01:27:20):
So we begin with Adam Smith, who I think everyone
can agree is the known father of capitalism. He has
many lines that say the biggest defect in capitalism is monopoly.
Monopoly is broken capitalism. And the reason is simple because

(01:27:41):
once a company gets to a certain scale, the single
most profitable thing they can do is create the conditions
to have no competition, to lock people in. And if
they do that again, the math is super easy to show.
The consumers do not benefit that it harms everyone involved.

(01:28:06):
And so what we need is what Coreydoctor calls adversarial interoperability.
Adversarial interoperability says, go ahead, get as big as you want,
but you must build doorways so that competitors can play
in a way that gives customers a choice, because the market,

(01:28:28):
when it works, is about giving customers a choice. Now,
what ended up happening here when antitrust began to get
corrupted in the seventies and the eighties is simple. Milton
Friedman plus others started trying to persuade us that the
purpose of our culture is to enable capitalism. They got

(01:28:52):
it backwards. The purpose of capitalism is to enable our culture.
And as long as the market is actually free, where
people can make a choice, that is more likely to happen.
But when monopolists are unfettered and can lock people in
their choices, go away, and nobody benefits except the monopolist,

(01:29:16):
and in the long run, the monopolist doesn't do as
well either. If Microsoft had agreed to be broken up
all those years ago, or IBM, both those companies would
be doing better today than if they had fought as
hard as they did to stay.

Speaker 1 (01:29:27):
Together, giving IBM just staying with Microsoft. What would Microsoft
look like today if you've been broken out?

Speaker 2 (01:29:34):
So Microsoft got in trouble and I was a victim
of one of their hijinks years and years ago, because
they owned the operating system, they owned the web browser,
they owned the software stack, and they kept feeding them
one into the other into the other. So for example,
you click on a link in word and you had
no choice but to have Internet Explorer to be able

(01:29:57):
to look at what it had. So you can seeeople
would suffer because there's no incentive to make a better
web browser if the it doesn't hook up right. And
if the shareholders end up with each one of the platforms,
then the amount of value that's produced for consumers goes up.

(01:30:19):
And when the amount of value that's produced goes up,
each one of those companies, even if they're not going
to have one hundred percent share, will end up being
more resilient and do better over time. And so when
they broke up at and T and built the baby Bells,
I think, I mean, we didn't have mobile phones. Fax
machines were pain in the neck. Think about the explosion

(01:30:40):
in what we could do with telecommunications once different companies
could play in a different way. And so instead of
spending all that time and money having an existential fight
about breaking up, if they said, all right, we're going
to build the breast browser in the world, and now
it's going to work with every word processor, and we're
going to build the best software stack in the world,

(01:31:01):
but now it's going to work with every operating system
and on and on and on. They would have ended
up way ahead of the game. And that's that's largely
what they're trying to do.

Speaker 1 (01:31:11):
Now, let's be very specific with Google, which has almost
all the market share and conventional search. Yeah, what would
be the best solution there for everybody?

Speaker 2 (01:31:24):
Okay, So I built a company to raise money for
charity called squid Doo before social media really caught on.
We were the fortieth biggest website in the entire country.
I had eight employees. There were three hundred thousand people
building websites. Most of the money they were value they
were creating was going to charity, and again we were fortieth.

(01:31:46):
One day, Google did the math and realized that we
were sending a lot of traffic to Amazon, and Amazon
if they were getting traffic from us, wouldn't have to
pay Google as their largest advertiser for promotion. So our
traffic in one day went from being the fortieth biggest
website in the world to forty millionth They turned.

Speaker 3 (01:32:07):
Us off just like that, flip the switch.

Speaker 2 (01:32:11):
So even though it hurt me, in three hundred thousand
other people. That's not my point. My point is when
you have one person who has the switch, they can't
help it as a public company, but to keep flipping it,
to keep pushing. So you may remember the old days
of Google, the homepage would have maybe one ad on it,
maybe a few on the side, and now there's almost

(01:32:33):
no links whatsoever because they said to the people in
the ad business, make as much money as you can
by any means necessary. So this doesn't help consumers. It
also doesn't really help advertisers, and it doesn't help the
ecosystem that's being built. So there are lots of suggestions
as to how a company like this could work. But

(01:32:54):
imagine the following. You've got Google, the search core, which
likes this is itself to anybody who wants to start
an ad network, and you've got all these different ad
networks that work together with different search engines and different
interfaces to create different experiences for different kinds of users.

(01:33:15):
The end result would be the market would decide which
kind of interface and experience they wanted when they were searching,
and the ones that weren't serving their consumers well would
fade away. Advertisers would want to pay extra to go
to places that work better for them and the consumers, etc.
It wouldn't be one organization saying how do we make

(01:33:36):
this quarter's numbers? It would instead be an ecosystem of solutions.
And I was at Yahoo when Yahoo tried to be
the monopoly that Google is today, and it's really toxic
in the end because you have to make compromises that
you're not proud of.

Speaker 1 (01:33:58):
Okay, just taking me with the ads, The user experience
on Amazon is terrible. Now you can't find what you're
looking for. Is their room for a competitor? What advice
would you give to Amazon itself? Right?

Speaker 2 (01:34:13):
So Amazon only makes a little bit of their money
by selling things like books, and they make billions of
dollars selling the ads. So how does this work?

Speaker 1 (01:34:25):
Well?

Speaker 2 (01:34:27):
For many products, the only way that you're going to
get any clicks at all is by buying ads because
that's what people see. So how do you pay for
the ads? Well, Amazon has a policy that you have
to offer the lowest price you offer anywhere on Amazon.
So instead these companies raise their price on other sites
to make enough money to have their ads run on Amazon,

(01:34:48):
which means that Amazon becomes more attractive to consumers because
the price of the thing everywhere else is higher. So
this is a death spiral that doesn't help anybody except Amazon.
And their thesis would be, well, if it's legal, we
can do it. And community action is the spirit of
saying yeah, but we're the community and we are coming

(01:35:10):
together saying you can't do that anymore. And Amazon is
filled with some very smart people who can solve problems
when you give them constraints. And so there are plenty
of constraints. I can imagine where you can say there
are different ways that the algorithm can be used, different
sorts that could be available, different kinds of experiences you

(01:35:32):
can have. And there's a warehouse company that knows how
to ship stuff, and there's a website company that knows
how to run things on the web.

Speaker 3 (01:35:39):
But having it.

Speaker 2 (01:35:40):
All in one place with a tiny group deciding what
will make them the most money this week, I don't
see any data that says that's good for all of us.
It's not. It's not good for any of us except
the people who need to make the stock price go up.

Speaker 1 (01:35:54):
Okay, so at one point, if one forgetting the changes
in government we have Leni Khan now won't enter in
the new administration. At what point do you say you're
a monopoly and we should take action? What is the trigger?

Speaker 2 (01:36:10):
Okay, so I need to reiterate I am not an
expert in any of this. I know people who are,
but people who are conservative should and many of them
are opposed to monopoly power because it's the opposite of
this idea of small markets and people taking responsibility for
what they do. And Robert Work and others worked very

(01:36:33):
hard to change the definition of what made something a monopoly.
In the old days, the definition was, by definition, if
you control a big chunk of something limiting people's choice,
you're a monopoly. The new definition eventually became, if prices

(01:36:53):
are going up, consumers aren't benefiting, now we're going to
take action. That's not the reason it's not valid is
prices for some people might go down, but you still
have all of the hard to measure effects that come
from a lack of choice. So it is harder today,
for example, to somebody, for somebody to build a business

(01:37:17):
online unless they're going to get an unreasonable amount of
traffic from Google, so people don't even try, right, It
is hard today for someone to build an alternative to
YouTube because they know that it's so deeply ingrained in
the Google infrastructure that they're never going to get the
traffic that they need, so they don't try. And what

(01:37:40):
we're looking for in a civilized, industrialized world is the
churn that comes from these innovations. Patents aren't the answer,
Monopoly power isn't the answer. The answer is people solving
other people's problems and getting paid for it. And you know,

(01:38:01):
we saw what would happen when someone tried to corner
the market in music. They try every few years. It
doesn't help anybody except for the person who's trying to
corner the market.

Speaker 1 (01:38:10):
Well, staying in music, we have the government suing for
a breakup in Live Nation and ticket Master. Now, if
you use the definition of pricing, it will not affect
price whatsoever. The government's position in the modern era would be, well,
if you divide them up, it will stimulate innovation. What

(01:38:35):
is your thought there?

Speaker 2 (01:38:36):
Yeah, So the scalping thing is this fascinating understanding of
supply and demand. And back to this idea of monopoly
that when only one person is allowed to sell the tickets,
you have this interesting dilemma that they have. So I
talked to Bill Graham when he came to Stanford in
nineteen eighty three, and I was like this young whipper snapper,

(01:38:57):
and I raised my hand and he says, what do
you got? And I said, but you got Springsteen coming
to San Francisco. You're only charging eighteen dollars a ticket.
Why are you leaving so much money on the table.
You could get a hundred, and he said, because I
book all the concerts in San Francisco. And yeah, I
could get a hundred for Bruce, but then my customers

(01:39:17):
would be out of money by the time we got
to March. So I'm taking this long view, and I've
remembered that for a long time, because you're right, when
you write about the scalpers, someone is gonna charge extra.
It's this whole lottery mindset doesn't make any sense. But
that's I don't think at the heart of why you

(01:39:41):
want to think about monopoly power with someone like Live
Nation and Ticketmaster. You're correct, it's not how to get
rid of the problem of scalpers, even though it makes
good sense politically to go after it. When you've got
young people who are obsessed, who are insensed because they
have to pay so much. I think what we're talking
about here is what kind of choices and innovations will

(01:40:04):
come from those choices when people who are behind the
scenes here have a choice when they play folks against
each other. Would Ticketmaster have to lean harder into its
technology stack to come up with innovative ways to deal
with scalping if there was someone breathing down their neck?

(01:40:26):
And I think history would say yes they would. And
when you've locked up all the useful venues and contractually
people can't compete with you, I don't see how that
comes out in favor of the artists or the fans.

Speaker 1 (01:40:50):
Staying on the same subject of the touring, one of
the reasons we have this gap and all this problem
is the acts believe that if they charge what the
ticket is worth, they will be perceived in a negative
way by the fan. What would you tell the act?

Speaker 3 (01:41:12):
Okay?

Speaker 2 (01:41:12):
So the principle of permission marketing is delivering anticipated, personal
and relevant messages that people who want to get them.

Speaker 3 (01:41:22):
Is the future.

Speaker 2 (01:41:25):
A lot of what people are interpreting when it comes
to this ticketing thing is that the artist has no
understanding of who the fan is. That I gave a
talk at Columbia Records a few years ago and I
held up a Dylan album from sixty five and at
the back it said you could write to Bob at

(01:41:47):
this address. They threw all the letters in the trash.
Of course they did, what were they going to do
with them? But now artists can directly connect to fans.
If you can imagine a scenario where fans that are
connected to the artists for the long haul and demonstrate it,

(01:42:10):
get tickets at a price that makes sense for them,
you have differentiated the audience. If some of them want
to turn around and scalp it, well they got a
prize for being a fan for a long time. But
most of them won't, and so you will end up
with the right people in the room who know that
the ticket was worth a lot because someone offered them

(01:42:31):
a bunch of money on their way in. That builds
your fan base for the long haul. But what I'm
trying to highlight here is there's a technology thing that's
new that's missing from the old way of thinking about it,
which is, instead of finding fans for my music, let
me find music for my fans. And if a fan
can demonstrate that they're really a fan and I can

(01:42:52):
take them on that journey that benefits all of us.
And so I don't know practically how I would do it,
particularly for up and coming groups, but I would imagine
it would be something like, there's a talking heads to
our coming dire straits is going to open for them.
As a result, they get to piggyback along on that

(01:43:14):
attention and that trust, and so the artists become more
of a kingmaker because their taste extends and their circles
grow again. We've taken out the selfish middleman and flattened
it a little bit. But I'm making all this up.

Speaker 1 (01:43:29):
I don't know, Okay, going something more in your air
of expertise. Clayton Christensen, who's no longer with us, wrote
the book Innovator's Dilemma, which was about disrupting yourself before
you are disrupted. Now, just staying this a little inside baseball,
there was professor at Harvard said, there's no such thing

(01:43:51):
really as disruption. So what's your take on all of this?

Speaker 2 (01:43:55):
He said, there's no such thing as disruption?

Speaker 1 (01:43:57):
She went. He said, yes, I believe that's the woman,
But I don't want to saying that. If you look
back at history, all these companies that they said were
disrupted ultimately one in the end. Let's leave that aside. Okay,
let's talk about Clayton Christensen. Do you believe his philosophy

(01:44:20):
was correct?

Speaker 2 (01:44:24):
Western Union had the chance to buy AT and T
and they didn't. They made better telegrams instead. And I
was at Yahoo when they had the chance to buy
Google for ten million dollars and they didn't. The reason
there's this challenge is that innovations at first always suck,

(01:44:49):
and compared to the polished, perfect and profitable thing you've
already got, it's very hard to say, oh, no, no,
we're going to do that. It's very hard for GM
to say we're going to make the first generation of
electric cars because it doesn't match their culture, it doesn't
match their strategy, and so you end up going to
all these meetings where you have to justify it. It

(01:45:11):
gets dumbed down, averaged out, and someone else with less
to lose goes ahead and does it instead of you.
And this challenge happens over and over and over again,
and being willing to start with it in a way

(01:45:32):
that makes the powerful people uncomfortable is very tricky. So
another Netflix story, so Ted and Reid decide after they've
beaten Blockbuster that the only threat that Netflix has for
the near future is streaming because Netflix is making all
those DVDs in the red envelopes they want, but someone

(01:45:56):
they believe is going to come up with a streaming
solution and wipe them out. So they decide they're going
to do it. And this is a classic innovator's dilemma
problem because remember DVDs, they're perfect, the video is really
high quality, the technology has all worked out. They know
exactly what to do. They're buying them from the studios

(01:46:16):
and they're making a fortune. So Ted and Reid start
this project. And the first rule is this. No one
in the DVD division at Netflix, which accounts for one
hundred percent of their profit, no one is allowed from
that division to come to the meetings.

Speaker 3 (01:46:35):
Think about that.

Speaker 2 (01:46:37):
That's when Netflix became Netflix. That was an act of
brilliance because they knew that the DVD people were in
the room. They'd have to average it out, dumb it down,
keep it small, and they yeah, it doesn't look as
good as a DVD, and we're not gonna make as
much money as a DVD. But they didn't have to
have those meetings because they weren't involved.

Speaker 1 (01:46:58):
Well, staying on that same point point is one would
remember the transition. They announced that they were streaming company.
They were ahead of the consumer. The consumer revolted, then
they blinked, then they went back to streaming. If you
are a company, you know, I look at streaming music.

(01:47:19):
Streaming Music when it launched in America was way ahead
forgetting Rhapsody before, but Spotify, which really changed the game.
It was ahead of what the public wanted. So to
what degree do you consider the public? To what degree
do you plan to get the public in your hand?
What are your thoughts on that?

Speaker 2 (01:47:40):
Which public? Which public? Is the key to all of
these things. So I got online in nineteen seventy six.
I was Prodigy's first contractor in the nineteen eighties, and
I showed Prodigy to people and they said, that's stupid,
that'll never work. And if Prodigy hadn't shan changed, that's correct,

(01:48:01):
it never would have worked. But which people? There were
some people who said this is for me, and I'm
going to tell other people, particularly as it grows, because
what you're not trying to solve is what's the expression
of the solution. You're trying to identify what's the insatiable

(01:48:22):
whole the project, the problem that I can begin to
solve for customers. If I can begin to solve it,
I get traction, and customer traction is the key. If
you're an A and R person, what you want to
know is the fans of this band. How often do
they come back? Not how many fans do they have,

(01:48:45):
how often do they come back, and who do they
bring with them? Because if the answer is they don't
come back and they don't bring anyone with them, it's
a stiff. But even if they only have a thousand fans,
but they can't stop showing up and talking about it,
Now you have something that's in an innovation.

Speaker 1 (01:49:02):
Okay, when did you decide that you were going to
blog every day?

Speaker 2 (01:49:09):
So I started blogging on a platform before this one
and before that one in the nineteen nineties or just
around two thousand and It was just a way of
telling the skeptical people I was related to that I
wasn't doing nothing all day. It was just like an
update as to what was going on.

Speaker 1 (01:49:30):
Wait, let's slow down, my Literally, the skeptical people you
were related to, meaning you were family, were they down
on you because it was a dip in your career,
or they couldn't understand the whole world of the internet.
What was going on?

Speaker 2 (01:49:48):
Yeah, I mean it began as an email newsletter in
the nineties. It was I had no no, no, what
was going on in your family? No, I'm getting driven right, Okay, okay.
I hadn't sold my company. It was struggle. I didn't
have a job with a name, and there were plenty
of people who were.

Speaker 3 (01:50:05):
Like, what do you do?

Speaker 2 (01:50:06):
So I could write these letters. These not that different
than I left this letter to people saying is this
I tried this, this didn't work, blah blah blah. And
then sometimes I was Once I had this new platform,
I was doing it two or three times a day,
and I discovered that there was a voice that sounded

(01:50:30):
like my blog voice. The first one hundred posts, I
probably only had two that sounded like me. If you
go back and you look at the one on my
visit to the Apple Store, that's the one where I thought, oh,
I sound like this now on my blog. And what
I didn't want to do was regularly decide if a

(01:50:50):
blog post was good enough to post. So I made
the decision once that there's gonna be a blog post
tomorrow now because it's my best but because it's tomorrow.
And once I made that decision once, oh, it was
so great because then all day you're imagining what are
you going to do for tomorrow's post because there's going

(01:51:10):
to be a post, and having that hole to fill
transform my writing, and it transformed the ability I had
to have a conversation in front of people.

Speaker 1 (01:51:22):
But that can be a burden. You can wake up
and you can say, well, I got to have something
for tomorrow. If I knock it off at ten am,
I'm free for the rest of the day. If it's
eight pm and I haven't written anything yet, what am
I going to do?

Speaker 3 (01:51:35):
Yeah?

Speaker 2 (01:51:36):
And so that burden is called work, and that's what
I wanted was to sign up for it. I needed
a hack once I got to a thousand, because when
they got to a thousand and I went, oh, I
have a streak here. Now I'm up to almost ten thousand.
I have a streak here. I don't want to get
the flu and blow my streak. So I figure out
how to queum up. So now I can take a

(01:51:59):
day or two. Often there's still going to be a
post tomorrow. But what I do is every night before
I go to bed, I read tomorrow's post. At about
one out of five times, I delete it and just
write a whole new thing.

Speaker 1 (01:52:11):
Okay, how do you feel about repeating concepts and ideas?

Speaker 2 (01:52:18):
If I'm not doing that, I'm making a mistake. I
gotta be repeating ideas and concepts.

Speaker 3 (01:52:24):
This is not.

Speaker 2 (01:52:26):
A demonstration of how creative I am. This is me
Teaching and pedagogy is about repetition, consistency, frequency, and helping
people like My best blog posts are very simple. My
best blog posts are I tell you something you already
know in a way that makes it easy for you
to tell your friends.

Speaker 3 (01:52:47):
That's what I'm trying to do.

Speaker 1 (01:52:49):
But every once in a while, I mean, I have
still have bookmarked your original permission marketing post, and you
wrote one a couple of weeks ago that I wrote
about that really made a huge impact. What is it
like when you do this is something I don't know.
Maybe you'll agree with me, maybe you won't. When you
do something that's in eleven, you know you've been doing

(01:53:10):
it so long you're never gonna write something terrible. But
every once in a while, you write something transcend, it's
the nature of doing it. Does it bother you that
you sort of can only do it once. If you're
a musician, if you write a hit song, you go
on the road for forty years and play that song. Okay,
do you ever feel I wrote it? It was great,
and now tomorrow it's another thing?

Speaker 2 (01:53:33):
You know, Bob, There's two answers to this. The first
part is I will write an eleven and no one
else will know.

Speaker 3 (01:53:42):
That.

Speaker 2 (01:53:42):
I have no clue which posts people.

Speaker 3 (01:53:46):
Are gonna love.

Speaker 1 (01:53:47):
None.

Speaker 2 (01:53:49):
And the second one is when I do write something
that resonates, I don't forget it. It shows up on podcasts,
it shows up when I'm on stage, it shows up
in a book, And so I'm you know, no, I
don't get to play free Bird all the time. But
I also don't have the problem of having to play
free Bird all the time. But I have riffs that

(01:54:14):
become the fabric of the foundational thing I'm talking about,
And when I'm on stage and I know, I get
to bring up the next one because I don't have
a script. When I bring it, I'm like, oh, this
is great. And every once in a while it'll stop
working and oh I love that one. It's gone now,
So there's that. But I disagree. I don't know when

(01:54:36):
I write an eleven, I.

Speaker 1 (01:54:37):
Wrote, okay, to what degree does feedback affect you?

Speaker 2 (01:54:43):
So there's no comments on my blog There used to
be comments. What I found was within a week I
was writing differently because I was anticipating the comments and
writing to avoid that criticism. Whatever I thought would happen,
and my writing went to shit. And so I said,

(01:55:03):
I'm not gonna have true choices. I can either have
a blog with comments and no blog posts or a
blog with blog posts and no comments. And I went
with blog posts. And I don't regret it one bit.
I don't know how you do what you do. It's
a miracle. You and I are completely different in this respect.
And then Amazon reviews, A one star review from an

(01:55:27):
anonymous person who didn't get the joke would really unsettle me,
because a one star review doesn't mean it I didn't
do a good job. It means it wasn't for them,
and I haven't learned anything from that. So I stopped
reading my one star reviews. But if you didn't do that,
you have to stop reading your five star reviews. So
I haven't read an Amazon review in seven or ten

(01:55:49):
years unless someone emails it to me, which I don't want.

Speaker 3 (01:55:52):
Them to do.

Speaker 1 (01:55:53):
Okay, but you're not someone who lives in complete isolation.
You're out doing gigs whatever. There are some greatest hits.
I'm sure people come up to you and go, you
know what you wrote about X. Yeah, I read Okay,
Purple Cow, Yes, which you've been. But my point is
just go because I'm interested. You don't know when you

(01:56:16):
hit it way out of the park.

Speaker 2 (01:56:18):
When it's just me in my underwear, no idea. So
I don't talk about evolution on stage anymore, and I
hardly blog about it. I wrote a book it took
me nine hours a day for a year called Survival
Is Not Enough. Charles Darwin wrote the forward. I am
super proud of that book. And whenever I start talking

(01:56:40):
about sexual selection and mutation and all the stuff that
I know a lot about crickets, just the room, just
people's eyes glaze over. They do not want to go
to the next level of understanding how ideas are like
jeans and all that stuff. And I get talk about
it all day and people don't want me to.

Speaker 3 (01:57:00):
So I don't. It's done. But when I wrote it,
I was like.

Speaker 2 (01:57:04):
This is Nobel prize stuff, this is this is an eleven.

Speaker 3 (01:57:09):
Nothing.

Speaker 1 (01:57:10):
Okay, you know in my particular case, certainly when it
comes to politics in the national vibe, I get that
from the feedback. Having said that, I understand your concept completely.
It is inhibiting getting the feedback and wrestling with that
all of the time. So how do you put your

(01:57:31):
finger on the pulse? How do you take the temperature?
What is your input?

Speaker 2 (01:57:38):
So I mean, I'm meeting hundreds of blog posts a day,
and I'm in the world and I talk to people.
But here's my thesis. Most people have been indoctrinated if
they see something they don't understand to just walk on by.
If there's something in the world that is illogical to
me that is working, but I don't think it should work.

(01:58:00):
That isn't working, but I think it should work. I
can't let it go. I have to sit and look
and look and look until I have a thesis. And
that exploration is the fuel for a lot of my work.
Please explain to me how the culture ended up like.

Speaker 1 (01:58:20):
This, and before we know, what's the status of your stereo?

Speaker 2 (01:58:26):
So I built speakers and some two A three two
bamps that I got that are handmade, and of course
Paul McGowan built all the stack on the streaming side.
But these speakers, which I painted in Evecline blue, combined
with the three watt per channel amps. Just like I

(01:58:49):
used to buy you speakers a new set every three
to five months on audio Gone done with that, I
haven't had a new set of speakers in three years.
It's I was listening last night to O brother and
what a genius t bone was is?

Speaker 3 (01:59:07):
They sound great? It makes me very happy.

Speaker 1 (01:59:10):
Okay, Well, in the chain the sound is affected definitively
by the speaker. We can talk about everything that comes
before that will colors, but every speaker inherently sounds different. Correct, Okay,
So what is it about these speakers that, with all
the experiences you've had, you finally decide this is the one?

(01:59:32):
All right?

Speaker 2 (01:59:32):
So the most I ever spent on a pair of
speakers was sixty thousand dollars. And the cool thing about
Audiogon is you can buy a used pair of speakers
and sell them for what you pay for them. So
I've actually broken even pretty much on all of my
speaker adventures. These speakers are baffleous, which means there's no box.
You've got the driver, which is a hole in a

(01:59:53):
big sheet of butcher block, and this the front and
the back are both exposed to the outside world. And
that means they're super fast because they're not pushing against
the compressed air inside the box. And because they're so
efficient ninety eight dB efficient, I only have to give

(02:00:13):
them a little tiny bit of power. And the thing
about amplification is two bamps of the fifties were better
than almost any ant made today, but they couldn't get
very loud because they only have a few watts per channel.
So when the transistor came along, the manufacturers loved it
because they could give you one hundred two hundred, four
hundred wats and it only cost them four bucks. So

(02:00:37):
by going backwards with the tubes, I got the chance
to get that sweetness. Maybe it's not completely realistic, but
it sounds so nice. So it's the bafflus, it's the
high efficiency, it's the quick speed, and it's the fact
that I'm in the sweet spot of what the tube
can do.

Speaker 1 (02:00:56):
Okay, you built your own speakers, who designed them, who
decided on the components, right, So there's only one driver,
and there's no crossover, so the tweeter, the woofer, the midrange,
they're all one thing. And it's two brothers in China

(02:01:16):
who are audiophiles who decided to use Chinese ability to
make things much cheaper than they should be, but to
spend a lot to make these drivers. So the drivers
cost six hundred dollars a pair, and if they were
made in the US, they would probably cost twenty thousand
dollars a pair. So about the six hundred dollars pair

(02:01:38):
of drivers and everything else is just me screwing things together. Okay,
so they're full spectrum one driver fuir spectrum. Can I
ask how many inches they are across?

Speaker 3 (02:01:50):
Twelve inches?

Speaker 2 (02:01:51):
And I'm looking on my web here to tell you
the name of the company because it's been a little while. Aldo, Okay,
it's called Lee Song l II, And what you're looking
for is, oh, they're down to three hundred and ninety
nine dollars. They're the Lie Song fifteen inch full range

(02:02:16):
speaker driver.

Speaker 1 (02:02:18):
And then you decided how large a piece of wood
and how to installment or they get tell.

Speaker 2 (02:02:22):
You, no, I built a whole enclosure and I tried
different approaches and it's not that hard because there aren't
that many choices.

Speaker 1 (02:02:32):
And then what do you use for source?

Speaker 2 (02:02:35):
So I used to have a huge collection of CDs,
and then for a while I got into vinyl, but
I found I kept coming back to streaming using Rune,
which is a piece of software that everybody who loves
music should have. Are n And what Rone does is
it's the interface between title and cobas as your sources

(02:03:00):
and the streaming box. And it's this beautiful interface that
lets you see album art and all about the album.
It's really lovely. It makes listening to music more fun
and it also suggests the next song I want to
listen to, and it's very smart about that. It's not
being used against me because I paid for it. There's
no ADS, there's no nobody's getting payola. It just works.

(02:03:26):
And so I've got that thing running next to a
box from PS Audio, and the PS audio box is
the thing that takes the Ethernet cable and turns it
into an analog signal, and then that analog signal goes
to an amp. Now, the thing about the amps. The

(02:03:49):
amps come from a website called hi Fi Shark, which
I also strongly recommend everybody. High Fi Shark is where
all the people who are into this trade use stuff
back and forth with each other, and it collects all
of these different sites that have stuff. So you can
set a search inside Hi Fi Shark that will send

(02:04:12):
you an email every time one of these things comes
up for sale. And so I'm looking now and I
can see Bottlehead makes. There's one there, here's an audio
note one that's super fancy, and I like to find
the ones that are mostly hand built by hobbyists. But

(02:04:32):
building at two a three am outside of my area
of expertise is something that a really good hobbyist has
no trouble doing.

Speaker 1 (02:04:40):
And just because you mentioned about the ads, what do
you believe about Netflix adding an advertising tier?

Speaker 2 (02:04:49):
Okay, so what Netflix is trying to do now is
pick up all the crumbs they might have missed first
time around. And what they're going to have to do
to make sure they do it in an intelligent way
is cripple the ad experience enough that people can afford
and want to pay for. Netflix will because they'll always

(02:05:11):
make more money from that than they will from ads,
and then get enough people to watch the ad part
that they can get enough advertisers who will pay extra.
And this is critical because bottom fishing ads the kind
you see on late night TV wreck the viewing experience,

(02:05:31):
which means fewer people watch them, which means that they
wreck it further down.

Speaker 3 (02:05:34):
It's a race to the.

Speaker 2 (02:05:35):
Bottom where you want to super Bowl ads, where advertisers
pay extra to be in front of a lot of people.
So I think Netflix's plan is to keep differentiating so
that people like me and maybe you will pay their
twenty or thirty bucks a month and then build a
big enough audience that you won't see YouTube ads, you'll

(02:05:57):
see super Bowl ads on the rest.

Speaker 1 (02:06:00):
Well, if we you know, basically Netflix blinked after a
bad quarter, if we we wound the tape, do you
think adding an advertising tier was wise?

Speaker 2 (02:06:14):
Again, I guess it comes down to what kind of
company do you want to build? And you know, as
we bring this around to this where we started, if
you're going to be owned by short term thinkers in
the stock market, you have really dumb people as your bosses.
And Netflix enjoyed this really significant and rapid rise. They're

(02:06:34):
much better at something like that than I would ever be.
But if you want to build a company you're proud of.
I don't think you want advertisers, and I don't think
you want short term owners. I think you want to
be able to say we are beholden not to advertisers,
but to our viewers who are paying us, and we

(02:06:56):
want owners that are going to stick around so that
we can build that Because the goal of a company
shouldn't be to make as much money as possible for
the people who own it today. It should be to
do work you're proud of.

Speaker 1 (02:07:11):
And I'm proud of the wisdom you've dropped on us today, Seth.
I want to thank you so much for taking this
time spending it with my audience.

Speaker 2 (02:07:20):
Bob, you are such a mention. You are a national treasure.
And to find someone who I like so much, who
thinks so differently from me, what a treat. Thank you
for having me. There's a bucket list item.

Speaker 1 (02:07:31):
Well, now you're raising a lot of questions, but that'll
be another time in terms of thinking differently in any event,
until next time, this is Bob Luff sets