Transcript
This isn't your average business podcast, and he's not your average host. This is the James Altucher show on the Stansbury radio network. This is James Altucher at a very special James Altucher show. I've got Seth going on as a as a guest. Seth, how are you doing? I'm fabulous. Thank you for having me, James. Now, Seth, I'm sure many people know who you are. You've written 15 bestsellers. Were they all New York Times bestsellers? I don't really keep track. I think the New York Times is pretty corrupt when it comes to the bestseller list. All I know is Okay. I've read I've read 15 of your books, so they're bestsellers to me. Good. Sometimes people come back to me and they say, I read your book and I found something in it that changed me, and that's what I'm going for. Well, you know, it's interesting, and and I'm gonna get into your background in a second. But you you said something you know, I read so much from you. It's hard to keep track of all the different kind of messages that have, meaning to me. But, you said something the other day. Keep track of the impact you make, not your metrics. So, for instance, if you're an author, don't always keep track of the number of sales. Keep track of how many people you may have had a real impact on. And I thought that was a very powerful message because too often, we get bogged down in metrics, and they're easy to game. So I thought that was an interesting concept. Yeah. I mean, especially in the book business. It used to matter that you made the list because that's when Barnes and Noble put you on sale, which meant you sold more, which meant you stayed on the list. But what it means now is that you are able to manipulate a group of people for 3 days enough that you, in the right stores, hit the right numbers. But that's a game, and it's not one that's particularly fun or gratifying. Well, guess how many, copies it took last week to hit number 20 the cut copies sold to hit number 20 on the, advice list for The New York Times. Let me know. I I can't even guess. 1800. Wow. That's ex that's extraordinary. Yeah. I heard that anecdotally. But what I really wanna start off with, you know, whenever I was a kid and I was into some superhero, I really loved it when they had the secret origins issue about that superhero. So so let's reel it back because there's so there's so many concepts you've introduced into the mainstream. There's there's so many things we could talk about. But let's just quickly start off where you came from. Like, who are you? Like, I you know, I I I really need to speed forward a little bit. I wanna speed forward to, like, your your business experience. Like, when you started a business, when you sold it, what did what did that business do, and so on? Okay. Well, the secret origin happened, a 180 miles north of Toronto in a place called Algonquin Park, Canada, which is one of the oldest coed summer camps in the United States in North America. I used to work there. And when I was, 18, I became the canoeing instructor. I had 66 cedar strip canoes, 16 feet long and my job was to teach anybody who came down to the dock how to canoe and the problem was that, windsurfing and sailing are more fun than canoeing. So no one was coming, like 4 people an hour. And what I had to figure out how to do was 2 things. 1, put on enough of a show that people would come because it was fun. But more important I discovered, figure out how to help them grow because people go where they grow. And so I became a teacher and I became addicted to helping people grow in ways they didn't think were possible for them. Interrupt, Darren. I I always get the criticism that I interrupt too much, but I get curious. So so going from canoeing to teaching people how to grow, that seems like a leap. Like, what do you mean by how do you how do you connect those dots? You know, so Joanna Gerwin was 13 years old, and whenever she got upset with someone, she smacked him in the face and knocked him down. She was good. Very smart strategy. And what I was able to do was once she was in a canoe all by herself, which when you're that age is the biggest vehicle you have ever piloted on your own, I taught her what it meant to not fight with the wind and this boat but to breathe and think and manipulate the tools that are at your disposal to make the thing you want to have happen happen. And after an hour of this, after an hour of an adult paying attention to her and helping her succeed at something without frustration, she saw a totally different path available to her. And I'm pretty sure it's the last time she ever punched anyone in the face. Well, and what's interesting to me in that story is that, believe it or not, I kind of see that theme, in almost all of your books where there's a concept, let's call it a product or a service or whatever that someone is trying to sell, and what they do then is they build a more powerful store. They might already have a good product, but to which really attract people, they have to build a stronger story around that product or service, and that's how the word gets around. That's how they market their product. That's how they either permission market or they get their idea virus out or that's their purple cow. You know, I'm gonna use one one twist with one twist, which is the story is never about the teller. The story is always about the person who is hearing the story, and that is where selfish marketers always fail. That's interesting because sometimes, you know, I'm I'm gonna take as an example, Buddha. Okay. So Buddha was an excellent marketer. He was in the 5th century BC. He had some ideas. He was surrounded by warring kingdoms. And his story that he told, he basically said, don't believe me. Try it for yourself. This worked for me. Now you could try it for yourself. And many people then believed him and tried it for themselves, and he protected himself from all the warring kingdoms around around him. So that's an example of someone who marketed by telling his own story. And you're but you're saying don't tell your own story. Tell the story of someone else or tell the story of the product. You know, the the semantics could go on forever, but I think as much as an egomaniac as Lance Armstrong was, the people who followed Lance Armstrong weren't cheering for Lance Armstrong. They were cheering for the parts of themselves that they saw in Lance. That when we admire Oprah, we admire Oprah because she, at some level, has something in common with us. If you look at the way every every religion that has become popular has become popular, it's because the acolytes of that religion say people like us do things like this. Right. So so Oprah us. So Oprah's telling her story. Now, yes, she has guests on, but very often, she tells her own story and people relate. And that's how that's the secret of her success, really. But it's not her story. She doesn't say, here's what a billionaire does with their 18 masseuses in her Rolls Royce, because we don't imagine what that's like. She says, here's what someone who's as unattractive as you felt, here's where someone who has as many weight problems as you have, here's where someone who came up from with less than you have, managed to find her way. Right? She doesn't busy she's not busy saying you could never be me. She's busy saying we share a lot of the same challenges and joys. I see. So the focus really is on where the common ground is. The story is about the common ground. That's exactly correct. And and how everybody can grow from there. And and, again, I think in all of your books, there's this common theme, and you present it in different and interesting ways, like, you know, kind of the free prize inside, the purple cow. For me, the most important book you've written are are those 2 books, Free Prize Inside and and Purple Cow. And I know they were a while ago, but I had an Internet business then, and they were very influential to me in essentially saying, look, I'm not gonna spend 1,000,000 of dollars doing useless advertising. I'm gonna find out what unique things I could provide that nobody else is gonna provide that are cheap and easy for me to provide and will also stand out. And that proved to be a very successful strategy. So I thank you very much for those those books that you wrote. You're welcome. I remember one other thing from those books, and correct me if I'm wrong if I'm not in the book and I'm remembering incorrectly. But you said in in one of them, you know, read The Wall Street Journal or ask someone who's reading The Wall Street Journal to name a single ad in The Wall Street Journal, and they won't be able to name a single one. And I thought that was very interesting also. That's right. You know, we we have bought into this TV industrial complex because it worked for a really long time. If you bought enough ads, you would make enough money to buy more ads. But there isn't one new brand built in the last 10 years, not one, that was built on the back of TV and newspaper advertising. And that's an amazing shift. That's really fascinating. So I'm trying to think, you know, what are some big brands? Okay. So so forget about Google and Facebook for a second. What are some big brands that have and that have been built in the past 10 years? You know, Minecraft obviously has not been built over How about Lululemon? How about, Chobani? How about Airbnb? How about, you know, Beats? These are companies that make a product that would have been advertised a lot in the old days, and they may run some ads now, but they're running ads defensively. That's not how they built their business. So so so, okay, I wanna get back to this in a second because it's also related to your most recent publications, but I still wanna get to the secret origins. And and I wanna talk about Yo Yo Dine. That was your kind of, you know, you had some smaller businesses. You had the book packaging business. You had businesses that you worked at. But Yo Yo Dime was your first real big push, into successful, you know, huge business. What was that company? Well, in 1989, I started playing with online services and built some products for Prodigy. The one that I launched in 90 or 91 was called Guts. It was the most successful online game of its time and that record lasted for a really long time. It made What did it do? Guts. Well, Prodigy had a problem, which is it was just like the internet except it cost money and every time you used it, it cost IBM and the other people who owned it money. So the more people used it, the more money they lost. That what they needed were people who would use it for 10 or 20 minutes a week and keep paying for it. It. So we invented a game that you could only play for 7 minutes a week and then it stopped working, and it was a massive trivia game that we were competing against 3,000,000 other people at the same time. And the prize was you got your picture on the front page of Prodigy. And so we had 3,000,000 people playing this trivia game all the time and I was busy going to Prodigy's headquarters in White Plains, New York at 4 o'clock in the morning, as their first outside contractor to make these things work. And I wasn't a technical person but they showed me how to use their systems because there were no you know, you couldn't log in to a database from far away. And what we found was we had found a shortcut that could make online services profitable. So I wanted to bring it to AOL and CompuServe and Eworld and everyone else, but I didn't have the technology to build a service for each one of them. So we said, well, email is what they all have in common. So we built one service that could let me offer these games to, anybody who had email and I wanted to be the Goodman Toddson game show company of the Internet. And what we found was that advertising actually worked beautifully in these games. We had an open rate of 77% to the emails we sent and a response rate of 35%. And on a typical day, we got and processed more email than any company in the world. So we built that up and then one day, the World Wide Web showed up and I said to the people I worked with, this is stupid. The world wide web is never gonna work. And I was wrong, wrong, wrong. And it took us a couple years to catch up but along the way we sold, big campaigns to American Express and Procter and Gamble and stuff. And what we did by 1998 is our advertising was half the price and twice as effective as Yahoo's. And Yahoo saw that and said it's cheaper to buy them than it is to beat them. So they bought our company and I became vice president of direct marketing at Yahoo for about a year. And I am the first to admit I had the best timing in the world, but I'm also the first to announce that I failed 400 times before that and 300 times after that. So getting up to bat has a lot to do with having good timing. No. And and and and you have told the stories of all your different, you know, attempts at business and so on, but, you know, you sold you owe your dime for about 30,000,000. I don't know. Did we were you able did you recognize that a top was coming in the Internet? Did you kind of, protect yourself, or or did you come out okay is what I'm asking? Well, I believed every single day that the stock market was gonna crash that afternoon. I didn't understand how companies with no revenue and no chance for revenue were worth all this money. And I also knew that we were competing against companies that were raising a ton of money and didn't have to make a profit, and I decided I wanted to make a profit. Competing against that is really hard and mostly I saw an opportunity at Yahoo! To have a laboratory where we could build really cool stuff. So it was the hardest thing I ever did. It took me years years to recover from selling my company. But What what do you mean, like, to recover from selling it? Did did you regret? Well, regret's the wrong word. You know, you you make your choices, but it was extremely difficult to lose the 70 people I had been working so intimately with. It was really difficult, to hand over the reins of this thing that I had built. One's identity as an entrepreneur is often really tied up in what you do all day and that identity was stripped. Within 3 months, all of the products we had built were shut down. And that was hard, but it know, it was their company. They're allowed to do whatever they want. And I am not complaining because it was my choice, but I am acknowledging the fact that it was a shift that really took a lot out of me. And then, you so you left. You stayed a year. You left in 1999 and went on to bigger and better. Yeah. I went on to different. You know, the goal after I left in 2000 was not to build a giant profitable company, nor was it to figure out how to become influential or famous. The goal was to do work that I thought mattered and to help teach people around me. And I found that books were a great mechanism for that. So 17 books later, I feel like I have created a body of work, that speaks for itself and I've had students of all stripes and shapes all around the world and the people my students teach are the ones that I am most proud of. That if I can create that sort of influence where people are teaching other people, that's a a good day's work. Let let's talk about 2 of your most recent books, and and these are not necessarily published on Amazon yet, but you've you've written them and they're spreading around. One is about placebos, which, I thought I think in its purest form is almost what we were talking about earlier, this idea of telling a story around a product or service, except in the placebo's case, it's pure story around almost inconsequential product. And so how how you know, and and not this is not necessarily a bad thing. Keep you you mentioned people actually get helped by placebos. The the wine tastes better when they're told it's an expensive wine, but it's still, you know, and there's all this scientific evidence about it, but it's still a placebo. It still has no real effect. Yeah. I'm not buying that, and that's why I wrote the book. You can find it if you type placebo book, Seth Godin. It's free. I don't buy that last sentence at all. I think that a placebo delivered with good intent is one of the most powerful things we can do in any field. And I do not think it's okay to poo poo it and say it's just a placebo, it's only a placebo. The problem with a double blind scientific test is we are not blind, we are not double blind. We are able to see and given that we are able to see, our job if we wanna help other people is to create an environment and a story that makes people better. And even if you're not a scientist, you are capable of making people better by the way you talk and act and the stories you bring into the world. So so, essentially and I think this is more important than ever in today's day and age because now everything is about how you communicate, whether it's on email or Facebook or Twitter or Instagram or whatever. Placebo does become a powerful way to spread a marketing message. So how would you use it now if you were selling something? Well, you know, I start and I say this over and over again in the book to say the the essence of an ethical placebo is when the person you have marketed to finds out it was a placebo, will they be angry with you? And if the answer to that is yes, then you have used it ethically. You've deceived people for your own personal gain. So give give me an ethical example. An ethical example. So I am selling stereo equipment. I am selling stereo speakers. And I have two ways I can make my speakers. One way I can make them is to make them look substantial and solid and sound good when I wrap them on the side and make them heavy. And the other way I can make them is have them look flimsy and, not have impact visually. We know that the first speaker will sound better and if I can offer that to somebody and I want them to enjoy listening to the stereo, I ought to do that. I should not say, no, you must do a double blind study. I can prove that mine are better even though you don't want them to be. What we need to do is acknowledge that the person came to us with a problem. Their stereo doesn't sound good. We can make it better in a way that once they know all the science, they'll still be glad we did that. Right? Or I think about somebody who's trying to market their company. One way to market your company is by spamming people, calling them at home on the phone, ringing the doorbell, and proving that your product is better. And it's not gonna work. And the reason it's not gonna work is we judged you before we got to see the results. We judged you before we got to see the science. And what we are judging you on is the fact that you're acting like a selfish jerk and we are unlikely to resonate with that. And therefore, your product isn't gonna work as well as the product that is sold to us by somebody we trust. Well, okay. So let's take an example. Beats by doctor Dre. Sure. The product might not be better than other products out there, but it's got this story that doctor Dre is behind it. Is there a placebo effect happening there? There's no question that Beats headphones do not sound as good as Sennheiser headphones in any reasonable test. Yet, people who go to the store and try them both on often buy the Beats. Well, are we to say to those people, you're deaf? How dare you? No. We need to say to them, oh, I get it. You care about how they look. I get it. You care about how people like you think about people like you when they see them wearing Beats. Oh, I get it. You like to tell yourself a story that you can afford a $300 pair of headphones. What's wrong with that? We gave that person the joy and the satisfaction and the control and the authority to pick something that made them feel taller, cooler, handsomer, and more connected. So, again, it it's back to it's back to what you learned with that 13 year old girl in canoeing. It's back to the storytelling. It's it's essentially how you package what you feel is an important service, but still build an extra dimension of story around it that is appealing to a larger body of people. Because you're gonna be judged anyway. If we were all MIT MBA graduates who did nothing but math, then math would win. But what wins, what changes people's minds is the story and the way we think of them. So so for instance, if you were gonna launch a new product like a restaurant, how would you how would you make use of this to think about how you would market it, how you would tell the story, and so on? Well, different stories for different people. So one of the things that you'll notice among a certain group of people is that the restaurant they want to go to is the restaurant they cannot get into. So one of the things you do to launch a successful restaurant for those people is promote it to the right people at the beginning so it's always full and make it really hard to get a reservation. Now you would think that from a utility point of view, that's not as good a restaurant as a restaurant. You can just walk in and have just as good a meal. But in fact, it's that vibe and that feeling that makes the food there taste better. Right? Another example of storytelling is scientists are happy to say we need to do something about global warming. Problem is global is a happy word and warming is a happy word. And we are going to see millions and millions of people die because they didn't understand the placebo effect in storytelling, and they didn't call it atmosphere cancer. Because that's what it is. It's a chronic degenerative disease of the atmosphere that's caused by an external force that's gonna kill us like a cancer. But atmosphere cancer doesn't feel scientific, so we called it global warming. And as a result, it didn't resonate with a lot of people. That's interesting. So, essentially, you would use this understanding this knowledge would allow businessmen to better package, an idea, a concept, a business, whatever. If they have right intent. But if you do it when you have wrong intent, then you are manipulating people, and what will happen in the end is they will become bitter, they will not trust you, and you will degrade our entire craft. So this all gets down to, you know, and all of your books I find are are somewhat related, but this gets gets down to your other book that's kind of making the rounds right now, which is, stop stealing dreams about education. And, essentially, you're saying, in this book, education has kind of gone off rails at some point, and we've started focusing on the wrong things. And I know your time is limited, but, you know, what are some what are some steps now we can take? If you I I have 2 children. I have 2 daughters. What could they do? What could I do for them to improve their educational experience? Alright. So quickly, school isn't off the rails. School is still on the rails, but the society changed. We built school, industrialists built school a 100 years ago to train people to be obedient factory workers. The first teacher's college is in Massachusetts. It was called the Normal School. It was to train teachers to make their kids normal. That's why they called it the normal school. I think I needed to go to that one. Yeah. Yeah. Me too. The problem is we don't reward obedient factory workers anymore. We are not creating any good jobs where you get paid to do exactly what you are told. Because if we can find someone to do what they are told, we will find someone cheaper than you. No. The future belongs to people who can do 2 things, and this is the only things we ought to teach kids in school. Everything else they ought to learn on their own. We should teach kids to lead, and we should teach kids to solve interesting problems. And we don't do either of those. How do you teach how do you teach kids to do either? Well, when my kids were 10, they were busy editing Wikipedia. And when you have a kid, who has a pension for storytelling, you get them to make videos and share them. When we have a chance to have kids go into the community and lead charitable or philanthropic efforts, we put them out in the world to do that. Instead of saying what year was the War of 18 12, something that's easy to look up, we say, please tell us the six reasons why the Internet happened this year and not 10 years earlier. Tell me the nine reasons why bananas are about to become extinct. Whatever it is, solve a problem for the first time that doesn't involve looking up the answer because that's all we want you to do going forward, is have the confidence to go to a start up weekend and do something new and interesting. Have the confidence to get into the Fashion Institute of Technology by inventing a fashion we've never seen before. That this idea of saying follow me is so much more important than saying, will this be on the test? I mean, along along with your book on this topic, have you thought about developing an entire curriculum, you know, for, you know, different challenges, different things to suit different people, because it seems like there's an opportunity here. There is, and I hope that I'm shedding enough light on it that people who are more dedicated and more passionate than I will go and do it. And that's the hint that I'm seeing. But 4,000,000 people have already downloaded Stop Stealing Dreams and the TED talk's approaching half a1000000, I think. People are seeing what I have to say. Now I want them to go make this ruckus that it's gonna take because it's not a top down solution. This is gonna be, what do a 1000000 parents say to 3,000,000 kids so that we start a cycle that's all about creating a generation that picks itself. So the final thing I want to talk about, your latest business, and it's been around a while, Squidoo. How's it going? You know, we have our ups and downs on purpose. It's a living, breathing experiment. We just launched a new, variation called HugDug, h u g d u g, that lets people review any product they care about on Amazon, and we give half our profit to charity. We learned a lot from Skidoo, and we put most of that into HugDug. So if people wanna see what we're up to, I hope they'll go look at it. We just launched it last week. And we've got thousands of people who are using it, and hopefully it'll become millions soon. But I keep persisting at this 2 pronged idea. 1, I think people who want to contribute online ought to have a platform to do so. And 2, they should be recognized and the output of their work ought to benefit a charity they care about. I would like both of those things to happen more, and so I'm trying to lead through example. Do you think the first thing is already happening with, like, Quora or with LinkedIn kind of unleashing their publishing platform so that more and more people can publish to big audiences without necessarily being stuck with their own blog or whatever? Oh, yeah. Lots and lots of people are doing this. 8 years ago, I don't think that was true. Seth, thank you very much for joining me on the podcast. I really appreciate it. Placebos has been an eye opener for me as has Stop Stealing Dreams. Again, I'm dealing with, 2 children that I'm constantly trying to figure out how to innovate their education. So this is very useful. Placebo is very useful from a marketing perspective. I really appreciate you, spending the time on the podcast. It's a privilege. Thank you for putting the work into this and sharing so freely. I know that there are hundreds of thousands of people around the world who appreciate the work you are doing. So thank you. Thanks, Seth. Thanks for joining us. Bye. Bye. For more from James, check out the James Altucher Show on the Stansbury Radio Network at stansburyradio.com, and get yourself on the free insider's list today.
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