Naked Business: How Honesty Makes You More Money – Jason Cohen – MicroConf 2012

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0:07[Music] a real honor to lead off this conference for a couple of reasons the first one is that I bootstrapped three companies and so and sold two of them by the way and so I I feel like a real kinship to everybody in this room I know exactly what you're going through I've gone through that all the horrible parts and the good parts like getting that first sale oh my god so great I still have a five dollar bill for my first sale which I actually had $5 I had a five dollar bill for the sale which is pretty cool framed in my office like I really get it

0:43I love it obviously everything I'm going to talk about today is specifically for this and I have walked the walk of all the things that I'm gonna talk about today so hopefully you will be able to take away some actionable stuff as well as some inspirational stuff from it and the second thing is that the first talk of a conference often helps set the mood or even a theme or an undercurrent that ends up propagating through other things that you hear and so again it's an honor to sort of have that slot to to do that and I think it's lovely that that Robin Mike picked honesty as the thing that

1:14might turn into a undercurrent for this conference and that's nice too so hopefully I can live up to that so I want to talk about honesty in business and specifically how I think it will make you more money I'm not interested in whether it's ethical or moral it maybe probably is but I don't care for the next hour I don't care at all just want to know if it's gonna make you more money or not and I want to present to you a case so this is a jar of Smuckers line of simply 100% fruit spread it's an everyone's laughing all right it's strawberry flavor for anybody that was

1:53not at business of software last year how what percentage of this jar do you think is strawberries 2012 you guys are so pessimistic zero man I'm not even a seed that could get in your teeth so the answer is 30 percent of it is strawberries and the rest of it is stuff like apple juice and and and grape juice lemon juice pectin and because that doesn't taste like strawberries they have to add natural flavors too for it to then taste like strawberries again now who is surprised and shocked that this thing only has 30% strawberries anybody shot the room spinning I can't believe it no that's

2:40interesting to me that in marketing and sales in your website on social media lying is just so common that we don't even we just take it for granted we're going to be lied to all the time and we're just not surprised and it doesn't shock us and we don't care and we just sort of accept and move on and so again the question is whether this makes Smuckers more money or not it probably does in this particular case this kind of foolery probably makes more money but this points have something interesting if you decided to be exactly the opposite if you decided to be brutally horribly honest all the time in your

3:18business you would stand out now well I don't know if that's good or bad yet but you would definitely stand out you'd be different you'd have some kind of competitive differentiation which as we all know in any business and especially a smaller one is really critical it would be a differentiator because it's so prevalent that doesn't exist so it's an interesting question where that differentiator also be valuable in terms of getting customers and money here's another fun one what do all these countries have in common they're not republics okay there's not Emma Craddock do not run by the people none of that right now this is really interesting to

3:56me because again like I'm sure no one here is shocked that North Korea is in fact not a democratic republic right so what does it mean that they're titling themselves this what is what is the message they're Cano ting they're certainly not succeeding in their goal of fooling you that their democracy right that there's no benefit there so all they're doing is saying I will lie even when it's obvious that I'm lying that's the only thing that's been established really by and so that means when I'm not sure whether you're lying or not or if I'm not sure of the facts then I will not believe you I you you've established

4:29that we don't have a trust relationship at all and my contention is that most websites are actually a whole lot like this and maybe even the Smuckers thing and again I wonder if that helps so for example here's a website that I found they do internet marketing and they say stuff like we're the leading provider of internet marketing and promotion services the leading provider here they are can't you tell it looks like the leading provider never mind they haven't updated their website since 2002 that's okay the internet has not changed that much in the last 10 years I'm sure marketing works exactly the same way it's ridiculous so again okay but but if

5:05that you know we got a lot of a B testers in here I'm sure we're gonna get a lot of talks about metrics maybe testing and wipe LD hates that or whatever but but still like maybe that works maybe this is a good idea maybe this is making them money but maybe this is like the People's Republic of North Korea and maybe this is a bad idea and maybe this is hurting your credibility and hurting your sales so this is a lot of maybe so I'd like to the whole rest of the time give you actual data a little bit of stories but data about all

5:31this stuff so that you can see what you think about and I want to start with social media because if there's any place in which people say that they value things like honesty and whatnot is here right the secret of social media I guess then Martel I hope I don't steal its thunder by telling it a secret is you got to be honest you got to be authentic you got to be right and all those kind of words got to be human even though humans are not really those things most of the time right but that's what they say and a lot of people will tell you to do this here's Gary Vee

6:02obviously he's a big proponent of being honest he's a proponent of big companies being honest he's got a million Twitter followers they all agree that you should be honest too and so hopefully they would be honest but are they so I did a sentiment analysis on Gary V's followers but how they feel about Gary Vee and whether they say happy things are not happy things to him and so I discovered that only 9 percent of the things that are ever said to Gary Vee are in any way negative and then I went and looked at those tweets to see what they were and they were stuff like this

6:33damn or bad damn okay that's that's not really negative garyvee it's my own fault for a don't know some self-deprecating thing so that's not really negative and this is actually saying Gary B's awesome because this book is doing better than Tim Ferriss so that's not really negative either and this guy says accidentally just butt-dialed Gary Vee sorry dude which is really just him going I have this phone number guys everybody did you know that so actually what I found when I look through all the tweets is that in fact none of them the zero of them were negative of course I was looking at a certain block of something like a

7:05thousand right and zero of them were negative and I've seen this kind of chart this chart before maybe you'd have to figure in the hardrock so I could make a a rock and roll reference okay so then I looked at my own Twitter following same thing I didn't even need to look through the tweets because the tool already said they're 100 percent positive in other words right the no one's arguing no one has anything bad to say etc it's not honest the very thing that everyone says you have to be it clearly is not that I realize this is only one weird dimension but the point

7:41is that it's not it's not true and if you look at the people who are celebrities on Twitter obviously there's many one of the things I find is that they have a very strong opinion and they're not afraid to say it and they're not afraid to stick with that all these people do it I was talking with James Altucher about his blog and he said that um he decided in November of 2010 to start only telling the truth on his blog all the time and he literally in a span of a couple of months went from 10,000 people reading it a day to a hundred thousand and it's been a couple months

8:09because he decided to tell the truth now it's not true that you tell the truth so magically your celebrity obviously it's not true but it is true those Twitter followers are right that to be successful in social media one of the components is a lot of honesty and yet they don't do it and yet it's still all Smuckers and and other stuff the the North Korean language to me is still the language on websites on social media and stuff even though it's clear and everyone even says that that's not what you should do so let me give you a very particular example which many of you may

8:42already have on your website or a contemplating which is the magic competitive analysis chart wait we're in hard rock so rock and roll quotes right you're right so your your product is awesome it has all the check marks and necks all the features and the other ones are sorely lacking because they're so crappy and they all look like this and what's interesting about these is it's not a direct lie it's not like saying 100 percent fruit when it's not it's a different kind of more subtle lie here's X compared Pro it has all these features I believe them that's not a lie probably that they have all those

9:15features but I know where axis merged there on the right side that has only two check marks I know they have eight billion features it would go on and on if you could list them so what this is a lie by omission right and you know the lie by omission is twice the lie maybe you've heard that before it's still a lie of course and again the question is does it work which I'd like to answer they all kind of look like this this one is horizontal that's really different this one's different cuz the check marks are red instead of green so that's nice they're reaching

9:41out I like this one because it's a it's a lice treatment and one of the one of the big advantages is that it's non flammable so I guess if you put your cigarettes out and your kid's head a lot that would be useful I also like I also like this last one lice are not resistant to the formula supposed to what like it's a formula unfortunately its water so then they don't care like anyway so and this one so long I can't even fit on a slide the this is typical right so again though I keep asking is it worth it is it you know is this a

10:13good idea so let's get to some actual data is this helping does this sell these products or actually is it holding back sales there was an experiment done with this because we actually know about products that say good and bad thing or that's display good and bad things on the page it's really prevalent now in the form of reviews consumer reviews right they show they say bad and good things it's like how many comparison charts that in fact lists good and bad things at the same time so it's an interesting question if you do that what happens now it's clear that sometimes reviews are will increase sales I mean

10:48after I look at this shirt you might be thinking to yourself is this shirt hideously ugly or really awesome unfortunately amazon has consumer reviews and so you can clearly see that it is awesome there's there's a there's one review here where the person said um unfortunately I already had a picture of this tattooed on my chest but the shirt comes in handy in cold weather another one said my child was born without bones and I put the shirt on him and he grew bones that's a good review actually what I think is funny is that 148 people hated it they're like no this is terrible well that's great and forty people were

11:34to stars you know I don't hate it but I don't know how you could be on the fence about it but they forty work but obviously you know a more serious example like here's a quote that was on our our company website for a while you know they solve problems by sites faster I made more money like this obviously quotes like this are going to sell more stuff we know that but then there's the other side of customer reviews which surely will will will in hinder the sale of products right this is the scary part like here's a product this is a stereo system and if you search for the stereo

12:03system on Google which I was doing this review comes up before the products own website so that's really scary right and so this guy had some stuff like he had elicited prose about it and then he gets into stuff like this was the worst pile of junk and he describes all this stuff he describes how he put a pipe on minute and send it back and then he's like but if if the government's watching I wouldn't really do it I'm joking and like all this bizarre rant and then he has some advice for people who are still considering making this purchase so obviously some reviews will hinder sales and so the

12:44question is on the balance would telling the truth on both sides be better and so there is actually a lot of experiments in a particular canon camera of all companies did it you'd think it would be some little startup some 37signals thing where they tried something crazy that everyone said wouldn't work or whatever but actually canon decided to do this very experiment and put reviews on their site and it was actually an experiment rare time that you have a experiment in the field with real data right so it's really cool to see what happened so here's what they did they said alright here's whatever the sales were already

13:17from their online sales of various cameras some of which they would later find to be highly rated and others would be lower related of course they wouldn't know at first so then they put up the reviews and then they were able to say like oh okay so generally now we know the the cameras that were high rated and low rated in anyway this is the revenue before we put up the reviews and now you can look at what happened and so it's not surprising to see that the highly rated cameras the sales doubled which is awesome and you know obviously a good reason to put testimonials up on a

13:48website so there's a little tip testimonials are good you knew that but it's nice to see data so the question is how much would these sales of the other side go down and would it be good and balanced and so here's what happened the sales are the low rated cameras went up almost the same amount as the highly rated cameras and they said how in the world can this happen and so they went and did a study but I experienced what they found in the study myself so I want to tell you it from my point view this is my daughter Abbey and she's playing here with oh by the way so I I was

14:20speaking a couple years ago at a conference and I had a picture of my baby there and um I was going like I don't know 12th and you know in the conference and so I was waiting and it seemed like every presentation picture of their kid in it and so somebody twittered on the the hashtag why are all these geeks putting pictures their kids in the slide deck are they trying to prove they're not virgins and I had a different presentation but it still had my kid in it and I left it in and called her out on it and I was up on stage anyway so here she is putting her

14:54her spaceship man on the toilet but she thinks it's a bed that's okay in the in the spaceship and of course she puts the toys in the spaceship and she closes the door and then it's a spaceship so she except like this and goes this is right like it's a spaceship and when she does that the door opens by itself it doesn't stay closed and hits her in the head and all the toys fall out so when we saw this the first time we're like oh man that sucks and Momo who bought her the because my wife's from Baton Rouge so it's Momo but Momo who bought her the spacious said yeah it

15:28does that like what I mean yeah yeah it has a design flaw like right you know what's up with that and she said well I read the reviews and if everyone said the door opened by itself and was kind of annoying but that the rest of it was really cool and the sounds were nice and so it was the best thing I could find for under $40 and that is why the sales of the low-end products go up because when you buy a cheap or product of course it has various things that are not as good about it and everyone expects that that's not weird but you don't know what those things are

15:59and when you know that the problem is that the door opens but otherwise it's really good then you buy the thing instead of shopping around or trying to find other information you just make the purchase decision and with Kannon it's the same this camera on the left is a thirtieth of the cost of the camera on the right they have a big range and obviously it's going to be all kinds of stuff different no kidding so when you know the trade-offs you're gonna get you're okay making them and making the purchase decision anyway so putting those negative things up on the website helps people decide to buy anyway

16:33another interesting way to measure that this effect that was sales that was revenue but it's also interesting to see profits obviously profits went up because sales went up but the profits for the low rated products went up more profits which of course is more interesting anyway than revenue isn't it and that's because returns of the products went down 20% and the returns went down for the same reason because I know the door opens then I don't return it because the door opens right like I knew that so I don't return it and even in software returns are really expensive it and this is why returns are expensive

17:08for Canon but it's it's true it's definitely true of software to don't don't everything it's not but out of $100 sale canons bottom-line profit is about 10% so they so 990 dollars of the ten dollars goes right back out the door and they make ten dollars when they sell $100 camera as soon as it gets returned the rule of thumb is you've lost all of your money on the camera because although maybe you can pack it up and fix something and send it back out that all cost money you're shipping stuff around some of them are broken and you lost it like the general rule of thumb

17:38is you've lost all that money so now they're in the hole by $90 so that means they have to sell ten more cameras to make up for the $90 and just get back to where they were in the first place when the first time is sold one return cost them ten more cameras before they can start making a profit again it's ridiculous so if you can get the returns down a little it helps a lot in the bottom line and the same thing is true in software it's true that you don't have this hardware costs but there's all that tech support and the crap they say

18:04about you on Twitter and also returns just simply indicate that someone thought you were the right choice and wasn't they wasted time they obviously wasted your time and it's just a bad sign that there was a there was a bad fit and obviously that cost you money and this was not a one-time thing they this experiment was run by a company in Austin called bizarre voice and they did it with 500 companies over the course of something like seven years and always found the same thing you always made more money on on products and profits always went up more every single time on every kind of product that you can

18:37imagine it is a universal rule that if you say the good and the bad you sell more and you make more profit no way that's why I didn't come up try again yeah there's a guy named Eric Cink who has a blog that he doesn't really write anymore but in the I guess it was early 2000s when I was doing smart beer it was like Bible getting so highly recommended anyway his older stuff and he is a saying which is that conferences conferences are like sex in that when it's good it's really really good and when it's bad it's still pretty good and so I say also telling the truth and

19:14advertising is the same it's it's still good even when you say bad things it's still good to do so on the competitive analysis chart I think this is the wrong chart I think maybe not even a chart is necessary one of the things that I like doing is instead of trying to compare yourself against the competition which of course brings them up also which you may not want to do even instead you could just decide on the things that you particularly are good at but that you uniquely do better than them and just say we're the best at the following three things and just go blame blame

19:47blame because that way you're not saying anything negative about that them per se you were just highlighting the things good about you but you can also say what you're bad for you can say things like hey like in our case it's WordPress hosting if you don't have a lot of visitors and you don't care that much about your WordPress blog you shouldn't come to us because you're gonna spend more money than you need to and you don't there's no reason to do that just go to wordpress.com or go to shared hosting you should not use us if you're in this category and if you're cnn.com you also should not use this you should

20:17go to automatic VIP and use them in other words if you literally say yeah we're no good for you you need to go over here then that's it but if you're in this category you're my boy like that that is that is a nice way of doing it and of course it's not just a feature comparison chart it's all this and the company about page is maybe one of the worst places where this happens here's one from web methods web methods provides business integration software to integrate I'm not going to not gonna read it um it's hideous and it's common right this is typically what you find on the

20:50leading provider of this or the key word buzzword thing that investors maybe put or that you think your big customers want to see because it makes you look big or something like that this is common but I want to use I'm gonna pick on penalty because it seems like I always pick on penalty especially when he's here but um this is what Pelle D had on his about page at balsamiq everybody here probably knows balsamic well now balsamic is a big multinational enterprise but back when it was just he'll be this is what his company page looked like there he is it says hello yeah I'm one dude that's

21:30honest that's not trying to look too big that's all that right and then it's worse then he goes I know it sounds iffy his company page says it sounds iffy that's the word he used if he how can a small other one guys support whole software company well it remains to be seen I'm not sure I can in other words I know it's iffy you're right of course this was his revenue in the first year that's a million dollars over there and of course being honest doesn't mean you'll make a million dollars right like that's not the lesson the lesson is that being honest does not stop sales as I think a

22:04lot of marketing people would not have you say on your home page that you're one person I or sales people I obviously does not hinder sales I would say that it that penalty being one human being and blogging about what was going on and all this stuff was part of what part of what drove people to love the product and put up with whatever faults ahead because all the all products have faults for ever and especially at the beginning of its life of their lifespans and I think you you earn forgive for forgiveness in fact in fact this is I think the central message of this whole

22:41thing is that when you're honest and proactively honest like Pelle d-doesn't just answer the phone and if asked how many people are at the company he says one no no he volunteers that there are there is only one person he pushes out that honesty into your face just like the consumer reviews too we are proactively honest here's all the good stuff and the bad stuff here's what's really going on then you earn the believability when it's stuff like so you should trust me that I'll take care of you so you should trust me that I'll fix the buck so you shall trust me that this product works like I say it's gonna

23:13work exactly the opposite of North Korea that establishes that you can't trust anything that they say this does just the opposite when you admit the problems or admit things that could be a negative you you earn the ability to then say happy things and people believe you because you've already said look here's my warts and weird stuff but I have a nice ass and then okay right so I want to give you a very specific example of this thing with data so you can see what I mean so this is our short-term cancellation rate meaning if someone signs up for this was this is from last

23:50year but when someone signs it for our service do they cancel within 30 days and this is a trailing 30 day number so you can see it generally something like 6 to 8 people percent sorry 6 to 8 percent yet cancel within the first 30 days okay and suddenly there's this mountain of of cancellations oh no what happened so what happened was we had an hour of downtime right here and just complete downtime so imagine you're a new customer signing up for a hosting company and then they're down for an hour obviously a lot of people would just quit because that's that's ridiculous so I'm surprised it's not

24:27more than 20% what we did is yeah okay so so that was bad but as you can see it came back down because of course then there's newer people and they don't remember that they didn't know that they weren't here when that happened so they didn't know it so of course it levels back out but right here we had a 12-hour outage 12 hours all day gone and look what happened to the cancellation rate nothing whatever we did there this should be 12 times worse or at least just as worse whatever we did over there mitigated a hundred percent of the problem that we created over here 100 percent and the difference

25:09is how we handle the situation here we thought well maybe people won't notice a lot of people don't go there blog will just like see if we can fix it really fast we don't really want to admit that there's a problem and so we just kind of didn't say anything and of course then there were problems and we kind of said stuff like what you do you guys even know it's down because right how would they know whether we knew over here we did just the opposite we started having problems we started tweeting and putting on our status blog right away this is happening this is happening

25:38now both of these by the way were not our fault in the sense that both of these were complete data center wide outages so in that sense it was like well anyone that was in that data center all of those people were out and so in that sense it's not something we did but it doesn't matter is still our customers and their sites are still down so who cares but because we proactively talked about every problem as it came out it mitigated a hundred percent of people's negative opinion about what was going on a hundred percent and so again yet another example that when like reviews like like the way you

26:13treat customers customer service so forth when you admit any even the worst things it comes back to you and some people feel some people feel like yeah but if but I'm gonna turn people away if I say I'm one guy in in the site or you know in the whole company and they're calling from Lockheed Martin then they're gonna go oh my god just hang up the phone and not and not want to work with me because I'm too small and what I would say to that is right and they don't want to work with you because you're too small and if you try to pretend like you're not too small

26:49Lockheed Martin's going to find out because you're not going to act like what they want you to act like and then you still lost the sale except now the relationship is soured on top of that and you're not going to be successful doing that in any case and so you know if someone didn't want to use a you know design mock-up tool because it was only pel D working on it well then they shouldn't work on it cuz you know what the tools gonna be like a tool that only one person's working on it's gonna develop features at that rate they're gonna answer tech support email at that

27:15rate in Italy and not necessarily on California time that is when in fact is going to happen if you set up those expectations because you were honest about what's gonna happen then they either accept them like the door opening in the in the toy and and then we're fine and they don't care about all that stuff or they don't accept them but they weren't going to accept them anyways and so if Pelley just hadn't said anything they would just have had a bad experience and so I I don't think that hiding the truth actually by is there anything there so the obvious thing to do is go look up that old pelty page and

27:47copy it because it worked right it worked for pel D so copy it and unfortunately that doesn't work either that doesn't work either to just copy something like that that works and this is why it doesn't work so this is Blake Mycoskie Blake was traveling in the poor portions of argentina and he saw that the children had no shoes now this is a problem for two reasons the first is that if you have no shoes then your feet get punctures and then you contract disease and parasites all the time and you're sick the second reason is that if you have no shoes then you can't go to school

28:24because you can't travel long distances because imagine if you don't have shoes you certainly don't have a car and if you can't go to school then you can't educate yourself outside of the level of the community around you and if you can't get educated that it's very unlikely that you're gonna ever change the situation that you're in so not having shoes is a really big problem and so Blake decided I'm making a shoe company called TOMS there's the shoes and every time you buy a pair of toms they give a pair to a child and I don't mean they ship one somewhere they physically give one to a kid this is the

28:56logo it's an Argentinian flag it says Tom's and there's the shoes again there's Blake given shoes two kids they've given millions and millions of shoes to kids now this is marketing this is a this is sales and marketing it's the best kind because it's the kind we like and we want and it's true but it's still marketing it's still a way to sell shoes right we just it's good kind okay and if you see good marketing things a lot of times you copy it so in 2010 Skechers came out with bob's by bob's we'll give one to a kid those shoes look familiar you can copy the way he looked right so

29:42sketch was put this up and in 24 hours there was such a backlash of anger to them that they took it down back quickly 24 hours but if you think about it that's kind of weird like if you think about it in economic terms that's weird more kids get more shoes right like if it was good that one person did it isn't it good that okay another company's giving more shoes to more kids what are you so angry about the problem and the problem is the only difference between these campaigns as you can see because everything is identical right the only difference in the campaign is that with Blake it was

30:16it was an honest campaign and with Skechers this is what they did right with Skechers it was a trick because they copied it so you don't copy pal that you don't copy the page but you can copy the the idea behind it which is to be completely forthright about what you are who you are what you value and so forth on our page for example actually I'll show you this part of our page so we have more of like a like a less less kind of friendly and a little bit more sort of oh we're secure and big like a bank kind of a thing because it's more

30:52expensive and and then our competitors and we do try to offer more features to be like that but we're proud of Austin so we talked about we're from Austin and we proudly host point zero zero zero six percent of the WordPress blogs on earth showing that we're humble but happy to be here and then we say something that I don't think any other hosting company says which is when you host with us you're betting on us personally so here we are and then we list everybody in the company and I think that's a nice way of putting it especially in something where it can easily be an industry that it

31:25that is somewhat commoditize everyone's got servers and RAM and crap and the WordPress works and adds kind of for the first approximation it's all the same and so for us saying like yeah so so I mean all the servers are the same in the first approximation so it's it's us that you're betting on and so we better tell you who hire exactly so you can decide if that's a good idea to bet on us another thing that's not on the slide is if you go to our careers page we say this is these are the things that we value and we literally just like list here's what we do in these different

31:58circumstances here's when we here's what we do for customers here's how far we go and here's where we don't go that far here's where we decide that we're being abused by the customer and we just say it on the website and the idea is like this is how the this is how we're going to try to treat you we're gonna hire people that want to do it this way this is all things we're communicating by putting just putting it on the website putting our essentially our corporate culture on the website that's a whole nother subject by the way which I never realized how important the company culture is to me

32:28is just like touchy-feely like yeah its culture and I know a lot of people here are going to be solo founders forever but many of you have partners at least or you know might hire some folks at some point and I think I heard it best once that you're going to have a cult corporate culture so the only question is whether you decide what it is whether you hire to that standard whether you act to that stare and so on that's the only question whether you decide what it is or it just evolves so we decided to decide what it is and put on the website

33:00so our customers could see and every time a customer sees that we've gotten good feedback of like I can't believe you said that and like I want to be at a company if this is true if this is how you act I want to be at this company and of course the response is you can hold us to that standard if we deaf to why we put on the website again more putting it on the website now there is a subtlety here because okay there's there's omissions like the like the comparison chart but still there's lots of truth right like there's thousands of pictures of me but I picked one to be my avatar

33:32not the other ones where I don't look I think as good right it's like a good pic of they're all true I'm gonna obviously select the one that's that's that's you know convenient for me and so of course there's there's there is presentation as opposed to a and and that matters as well and so I want to give you some very specific examples of doing that especially its tarps but I want to start with them some of this data from OkCupid which is a free dating site that has lots of data right and they have a cool blog that you should totally see if you think this is cool

34:02but on the subject of photos and and picking the right one I want to show you some data because it matters so for example this is how if you if your dude and you want to get a date what should you do in your photo because they have lots of data so for example best thing you can have is an animal you know oh here's a dog like that's the best thing you can have second best is showing off muscles although the they noted that if you only if you have muscles to show so worst is travels now we don't want to see wandering dude that's

34:32mmm not not attractive and just because we have to do both sides to be fair so for women posing with the animals the worst just the opposite don't want to see you with your cats and stuff and not interested that you would think like the best thing would be slots with showing skin showing cleavage stuff like that it's actually not would I think surprising the best thing by far is what they call the MySpace shot which is where you hold the camera like she is kind of up and at an angle and on top and make one of these kind of photos by far most you know they get the most

35:02emails when you have a kind of photo weird right all the photos of you are true so it is useful to have data about which photos might be you know if you're dating that but of course same thing is true with their startup there's ways of presenting it that are a lot better that are not you lying there you you know using the truth to your advantage so I want to give you some of those some of those presentation things specifically that I've used every time I was a solar founder or had just like one other employee and did stuff and and specifically what I say about it because

35:33again it's it's always this principle that if you admit what is really happening then you're allowed you're allowed to get credit for other stuff that you can you and you alone can provide let me show you exactly what I mean to me like what was just one person and you're making you know a thousand dollars a month this is the kind of stuff you hear just all goddamn time the software's buggy I called you at 2:00 a.m. on Sunday and nobody answered yeah your blog is too transparent and you don't reveal enough whatever like just stuff so so here's here's exactly what I've done so so we're a hosting company

36:05we don't have 24/7 support you cannot pick up the phone and get someone all the time we have an emergency number so that's not 100% true but we don't have 24/7 support and so of course everyone says oh I want it right and I'm sure a lot of you have heard that sort of thing so here's what we say you can go to a competitor and get 24/7 support you can call Rackspace at 2:00 a.m. on a Sunday and you will absolutely get a human probably on the first ring because they're awesome and that human being will tell you that the server is up and the network is up and he can't help you

36:34because he's obviously not a WordPress expert he's a guy that's awake at 2:00 a.m. on a Sunday and so there's only a certain level of support you're going to get then even from them now if you call space on Tuesday at 2:00 p.m. you're gonna get that same person now in my company you're not gonna get that same person you're gonna get someone who's a true expert and can help all kinds of different stuff even so that that's outside of our purview technically we're still gonna try to help you so it's true that we don't have so you know number one got to tell the truth so you're

37:06right you're right we're not gonna answer the phone and other people will and that's awesome and I'll just throw in and they're less expensive I don't know if that's true I don't think that's true but but when you really need the help see now I get now I get to go the other side and get the believability but when when you have a deep question an army of love l1 tech support people are not going to answer that deep question and we are going to that is what we do is we answer those things and guess what people who are that good and everything don't generally you know

37:37aren't gonna be up at 2:00 a.m. on a Sunday now they still might say yet but I want someone answer the phone that's fine because once again they're gonna be disappointed with me if they go with me and and they need that right but I positioned it so that there is an advantage of going with me a specific one that I can deliver on by the way we've never lost a customer on the basis of not having 24/7 support using that argument never here's another one that of course everybody here is how could you not right I don't want I'll be your biggest customer and I don't want to be

38:09again the first thing is you're right you're gonna be our biggest customer the worst thing you can do is pretend like you're they're not your biggest customer because you're you're gonna screw it up and you're not gonna treat them the way that they might expect and it won't be like a big company would treat them it's not gonna be like that right so you're right you're gonna be our biggest customer and that means we might actually cause problems because because we haven't done this before yikes that I mean that's pretty much just saying like yeah we probably can't handle it this is like penalties page right yeah you did you're right now that

38:42I think of it you shouldn't do this I've actually told that to people I've actually said yeah you know what you're really big I would love to have this account but you should really go with somebody else just tell them that I guarantee you they won't hang up the phone they'll go really and then they'll start arguing with you well I don't know I mean like I but I liked what you guys said about this like it's so weird to have in a sales call it's a sort of situation or someone to say that that they literally won't put down the phone they'll want to keep talking so it's so you can't lose

39:11really but now you get to say other things you can say look here's the thing you're right you'll be our biggest customer and for that reason you will be so important to us that literally it will be our day and night everybody at this company's job to make this thing go as well as possible and if there is a problem we are all going to be tools down trying to fix it we have to because we have to have your account we need this money in fact this company cannot live cannot ever grow and thrive unless we make customers like you successful if we don't do this we will literally not have

39:42a business that's how important you are to us and I guarantee you this no other company will have that attitude towards this account and they count where you're the hundredth biggest customer they will not feel that way towards you and we will so that's already a nice one here's another one we say but again you can also just take and copy so we have a biggest customer right now somebody's our biggest customer right basic math so why don't I connect you with them and you can see what it's like being our biggest customer we made it they came in they faced exactly the dilemma you're facing which

40:20you're very right to have a dilemma so why don't you see how we when you ask them how do we treat them did we have problems how do we deal with those problems was it this kind of Rockstar white glove treatment that we just said we would give you or not just go talk to them directly here's their contact information right and again we have never ever ever lost a customer a biggest customer with this argument not once it works I'll give you one more because I have time some of you may be thinking about doing enterprise sales calls and many people will tell you that

40:56you can't do enterprise sales if you're not a Salesman don't have a sales force don't have a Buick that you can drive around and don't have a suit and aren't funded and all this other kind of stuff not true that's exactly I did a smart bear I was doing five figure deals while it was still just me and we only had a handful of employees when we were doing six figure deels and zero salespeople for the first well until I sold it we had zero salespeople so I mean we tried and they failed and it was better not to so you can absolutely do it that's guessing a

41:26whole nother talk but what's interesting is of course again as I walk in there again what am I going to pretend like we are like IBM walking in there with you know the SE and a sales guy and stuff so since I'm not that I just went completely the other way completely honest and completely opposite that because that's what we are completely opposite that that you ever want to be happy that we're completely opposite that or they're not happy so I would go in there and say hey um I I know you guys were looking forward to 44 PowerPoint slides with our company mission statement and stuff like that so

42:00I hate to disappoint you but I don't have PowerPoint I just have a demo is that okay if we just give you a demo let's see if you like it and you know everyone's you know oh my god no PowerPoint I like already yeah another thing I did in the realm of tech support as I would say because I knew we I knew I would give them good tech support right and I know that other big companies that are in there of course won't have good tech smart as a rule so I knew that was gonna be an advantage of mine so the way I sort of you know use

42:27that as I would say you know when you're trialing up this product our tech support is part of what you should trial all right that way it because if you like our tech support you'll feel like you're being taken care of and if you run into problems you'll know that we can fix them and so that'll be okay so you should test our our tech support you should try them out and make sure that you're okay with that one time when I said that a guy in the back literally got out his wallet and slapped on a table and said I'm buying it now and I

42:54why he's like because if if you're if you're that honest about it and you're not you know obvious about it then I know what's gonna happen when I call tech support it's gonna be good and anyway I just like this attitude you're just you're just telling what's going I like the attitude I'm in it works even in even in a setting like an enterprise sales sort of situation where again traditionally that's not what you do you dress up in a suit and you do the show and it's it's a it's a complete farce but again I argue to you again this is why it works this is my honesty works

43:23because it's always a farce it's always crap and when you're not crap people responded that they liked it they know intuitively that your being that way and it works so I would say as a micro printer you have certain advantages and you have to bang on these advantages because these are your advantages you don't have more money than the competition you don't have more employees in the competition you don't have more funding than the competition you don't have more tension than the competition you're probably not as old I mean as a company and not as old as the competition and so on there's all kinds of things that you will not have as an

43:51advantage so rather than pretending that maybe you're a bigger company or you know saying this and that on the website to sort of try to mitigate that by pretending that maybe you're okay I say you have competitive advantages and by telling the truth about all of them you can use them and a lot more people than you might think are ready to get on that bandwagon and be okay with your limitations so specifically if you're trying to do a project with somebody especially a larger company one of the things you can do is take on risk that they can't take on I'm sorry that your competitors can't take on you can say

44:23I'm gonna do a special project for you but you have to sign up for a year of service and ahead of time and all this kind of stuff but you can take on the risk that that project doesn't work out and they don't pay you you can do that your competitors who already have revenue streams and and 30 employees to feed cannot take on those kinds of risks anymore you can that's something you can do so you should of course you can also be faster because companies get big they can't do you know that already and you can think of interesting new ways to do the deal it doesn't always have to be a

44:51price list and you do this maybe it's a custom job maybe you get paid later maybe they pay maybe in exchange for paying a lot of stuff ahead of time they get a much lower rate but that's good for you because you need to get funded that way that's impossible for another company because they have cash flow to worry about right you don't have legacy code to maintain you know any kind of new software like that yeah it's buggy but you also can do whatever you want because you're not beholden to 10,000 customers that expect it to be another way so you can be more nimble that way now you know these kinds

45:23of things you can be nimble what I'm saying is it's not just that you could do that it's that you must do it these are your competitive advantages you don't have many these are what they are so you must bang them on the head and use them because this is where you can completely win against the competition if the customer appreciates those particular things and again if they don't appreciate it forget it anyway right and again you can be all in I've sort of described how that about the biggest customer thing you are all in people love that and you know you've heard of course a million times people

45:55respond to people who are passionate and all that kind of stuff you heard that but this is specifically how that manifests by saying things I used to say it smartbear people would say something like man you guys are I can't believe the founders talking to me over tech support and and my go-to line was always like well if this doesn't work we all have to go back to working at Sonic and people thought that was hilarious like no really right and people the people people like that when you when you you know again just put that out there they want you to succeed it's sort of like a comedian

46:28being on stage or even something like this like you don't want the lecture to or the speaker to be embarrassed or awkward or whatever you want them to be successful you want them to be funny the customer wants you and your little company to succeed most people do anyway the kind of people that are will be your first customers do and so and finally of course I would argue that this being completely transparent honest to something you can do because you can just choose to do it and larger companies will just not do that and in fact forget larger companies most people who could choose to to it will not do it

46:58this can be a big competitive ang so I feel you must use it as a competitive advantage so I want to pick apart what happens at that very moment where you tell the likes I think it's very interesting so and telling so I would get on the phone on at smart bear when it was just me and they'd say how many people are there as they do right yes like that and that it was just me and I said three and it's interesting me what happened in this moment where I said three I obviously had to decide to say three cuz it's not the truth so I had to decide to

47:32say three and not maybe five maybe that's too big like who even knows what I was good with what was unconsciously happy it doesn't matter I chose a three so why why do I say three I think there's two reasons why we do things like this I say we cuz I do it I try not to anymore hopefully I haven't in in in the last few years but I think we all you know sort of defensively you know skew and do this kind of thing so I don't think any of us are exempt from this so the first reason I think we do it is to continue a lie that's already

48:01existing in other words if your website doesn't say that you're one person and sort of implies there's a whole company behind this you can't say that you're one person it's sort of discontinuous and probably reveals that you're not telling the truth and is awkward at least and maybe queers the whole deal at right because it's it's it's strange and not what they expected so I think continuing a lie that you already have is one reason but I think the main reason is fear I think it's I don't want them to know it's just me I want them to think that I'm bigger than I am you

48:32could say better than I am I'm more stable than I am because I want the deal real bad you don't want them I don't want them to think anything that might make the deal go south but I think that even though I've done a bunch of course in the past I really do not think that that is in fact the way to win over the same people and then it's not sure that they feel that way and I have even some interesting kind of data about that this is a book by two women in New York who interviewed hundreds of women entrepreneurs to discover not only what

49:07made them successful in their business financially but also personally in other words what was fulfilling or not fulfilling about what they did what kinds of choices would they make not just to make a bunch of money but to be fulfilled in what they're doing happy in what they're doing integrating with their life and so on because that's really I think what every people in this room really want is not to make a billion dollars or to make a Twitter right it's it's to do something that you're in control of yes to make good money you know hopefully more money than you'd make it a day job but to do

49:40something fulfilling something that you just need to do it's just in your DNA that you have to go do these things and you want to fulfill that and be happy doing that and so anyway so she interviewed these women and in particular on this issue of being honest and upfront on these exact issues like saying there's one person instead of three and all that sort of thing almost all these entrepreneurs it just it happens we're micro preneur so it would be fair to say and overwhelmingly they said every time we told these little white lies it was bad it came back to hurt us somehow they

50:11found out and then it was weird I felt bad I felt that saying that in the first place it was just weird like why am i why am I having I'm supposed to be doing something that's fulfilling and happy and I'm lying well why am I having to lie about the thing that's supposed to be my life's work it's it's it's kind of weird it causes consternation and in particular this was the point they they drop drew out of it they found that when they lied about those kind of things it didn't help like imagine luck and this again absolutely happened imagine Lockheed Martin calling me Lockheed Martin there

50:43was probably a dozen people on their end of the conference line a dozen calling me right how many people are there now and I exaggerate and say three is that really that different is now Lockheed Martin will do business me because there's three instead of one there's 12 people in that in that little cubicle over there no I'm teeny-tiny it doesn't change anything there's almost no it's almost no incremental benefit from that lie almost no it may be none but the downside is huge when they find out it's not true I've just lost all my credibility so there's very little to gain it seems because you can't stretch

51:17it that far anyway you can't pretend like you're that much bigger than you know you can't get too far away or else it'll obviously collapse so you're not helping yourself that much and yet the downside is very large so hopefully I've convinced you that this is sort of a universal truth across all kinds of things whether it's like social media stuff or big brands doing things to consumers or bootstrap startups doing things enterprise sales calls and so forth then all these different realms tech support and sales and marketing I have I have more stuff I just don't have enough time to go into it when I sold

51:47smart bear and you know you get into like negotiations about the term sheet and the valuation what do you tell them and do you go high and then hopefully you come down to a number but what if you go high and just scare them off because it's ridiculous and what if and like this is dance and this thing that you're supposed to do and that's not at all how it went down with smart bear I literally sat down at Trudy's which is a tex-mex restaurant in Austin like like it's sort of middle-of-the-road kind of restaurant and a the guy from who eventually ended up buying the company

52:16on behalf automated eqa literally just said like you probably want to make like this much have this much money in the bank right yeah yeah well why don't we just make it so that you end up with that much money in the bank however however big that is and we'll work out the details we is that okay and it is okay and that's pretty much how that part went down and four months later I'd sold the company for millions and millions of dollars and by the way that wasn't the whole thing obviously I took it around and talked to a whole bunch of advisers and whatnot

52:48about this in fact 17 of them I know because I have index cards for each one so anyway I forget what they all said and all of them but one said this is this is actually a really generous deal it's good you know everything that's happening and edited uh like this is good you should do it except for one that's okay um and so it was it was act in fact not a bad thing even though it wasn't you know in that sense it wasn't really negotiated and anyone will tell you that selling a company from scratch in four months is almost unheard of maleeh at that size anyway um I mean

53:18anyway anywhere I can find that I'm honest things tend to work well and it's not even in just startups so Howard Stern obviously the most by far the most successful popular you know radio star ever and he's asked an interviews of course what's your secret what's the thing and he always says the same thing and I don't think anybody really pays attention he always says this shows honest that's what he always says the difference is I'm honest like just talk like a normal human and we just talk about stuff that we think is interesting or funny now of course he's lewd and all the stuff not not so much anymore but of

53:54course that that's a lot of people think of him as oh he's the shock jock but think about actual shock jocks everybody that came after him talk like this and then they do stupid stuff and none of them are that popular compared to him because it wasn't about the shock 'part it was that it was honest because of Hattin it was honest and he'll tell you that he always says that too and I don't think I don't think people pay attention to that because even though this is I think it's ubiquitous that people say that they want honesty they say it on Twitter and then they don't do it right

54:27but they say and Howard Stern says it and everybody says it the other speakers I guarantee have said on their on Twitter and blogs that this is the right way to to go and I think there's data from all over the place saying that again not worrying about whether it's right or not that you'll just make more money and be happier and it's kind of a weird thing to bring up at a business conference but it's true if you tell the truth and so I guess the only question is whether you're gonna do it and help and whether you're gonna take it all the way and it's hard it's

55:00really hard to say one when they when you answer the phone and it's hard to make that about any page that just has you and about me and not about us and all that it's hard to do that of course nobody in this room would be here if you were afraid of doing hard things so I don't think hard is a good enough excuse to not do it nevertheless I still know that almost no one in this room will in fact go all the way and do this with their website with their sales with everything that they do and really do it in the face of a customer looking in the

55:33face on the phone and so forth and that is why if you do it if you actually decide to do it I still feel even in this room you'll have a massive competitive advantage and I believe that you'll make more money and be more successful Thanks [Applause] [Music] you