11: The Market Matters Most in Business
In this episode, we’ve got another good one for you. We spent quite a few episodes walking you step-by-step through what you need to do to succeed with your new business venture. But did you know there’s one thing that’s more important than all of that? And today, we’re going to talk about it. I think, by the time you are done listening to this episode, you are going to have a complete mindset shift. So let’s get started…
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1. Build a good team and offer a good product/service, but accept that you still won’t succeed unless you fit the market, and that its size will determine the limits of your prosperity.
2. Your marketing will succeed better as you focus on channeling existing desires toward what you offer, rather than on creating new desires for what you offer.
3. If you work against the market, then you might labor hard for meager rewards but, if you work with the market, then prosperity will come naturally or even effortlessly.
4. You may prosper best by asserting a leading role within a sizable fast-growing market in which competition remains minimal.
5. Reject complacency but instead monitor markets (including via SWOT analysis) constantly as they constantly change.
[01:39] Zach and Thomas assert that, despite their initial skepticism in business school, they’ve learned from their own experience that the market is the single most important factor in determining one’s success in business.
[04:13] Thomas references how Richard Koch’s Growth-Share Matrix indicates that the most successful businesses are the ones that lead within a high-growth (>10%/year) market sector, such that the market growth itself helps those businesses to grow, and Zach cites Funded Today as an example.
[09:10] Thomas adds that you can prosper not only by owning such a “star” company, but also by working for such a company.
[09:52] Zach urges both employers and employees to constantly adapt to an ever-changing marketplace or else they’ll eventually be displaced—and, better yet, to assume an active role in leading such innovation rather than merely following it.
[11:26] Thomas and Zach overview venture capitalist Mark Andreeson’s theory that market always trumps both team and product.
[14:11] Thomas notes that products must fit the market or else they’ll fail, regardless of whatever other virtues they may have, because the market is the most powerful force in business.
[16:08] Zach and Thomas overview how marketing expert Eugene Schwartz enjoyed tremendous copywriting success by focusing NOT on generating desire for a product, but instead on channeling already-existing desires from the marketplace toward a given product or service.
[18:41] Zach says “the market is the market—you either adjust or you lose.”
[18:45] Thomas compares the power of the market to a “rip current.”
[19:40] Zach and Thomas explain that, if you’re working incredibly hard but struggling to find any success, then you’re probably working against the market, whereas growth will come naturally or even effortlessly to a a product/service that fits the market well.
[22:46] Thomas and Zach discuss evaluating both market size and competition to determine if a market sector is worth entering (or exiting), and pivoting accordingly.
[28:27] Zach warns entrepreneurs against complacency amidst shifting markets, which is why Blockbuster Video went out-of-business.
[29:46] Thomas observes that markets are changing unusually quickly at present, asserts that markets determine your ceiling, and recommends Richard Koch’s business books.
[31:40] Zach acknowledges that it’s good to build a great team and offer a great product, and that great teams offering great products can potentially create their own new markets; however, this is unusual and you should never depend upon it.
[33:08] Zach stresses that entrepreneurs should focus on the best market possible, bring both a good team and a good product/service to it, dominate it, and then pivot when it starts to decline.
[34:10] Zach and Thomas present this episode’s Projects of the Week.
Zach Smith: (00:00) Funded Today Nation, welcome back to the Funded Today Podcast. Last time we had the Director of Client Specialist of Funded Today, Curtis Child on, did you know existing products can still perform incredibly well if it’s the first time they have been introduced to Crowdfunding. To be honest that takeaway was profound for both Thomas and myself as well, and you can learn all about the strategy that has raised millions in our last episode, and remember 5 Star reviews and comments help us to continue to keep the show going. So if you could just spend a few minutes and leave a review or a comment for us we’d be so thankful. Now today we have got another good one for you. We spent quite a few episodes walking you step-by-step through what you need to do to succeed with your new business venture, but did you know there’s one thing that’s more important than all of that and today we’re going to talk about it. I think by the time you’re done listening to this episode you’re going to have a completely different mindset shift, so let’s get started.
Announcer: (00:58) The Funded Today Podcast is hosted by World-Renowned Entrepreneurs and Business Experts Thomas Alvord and Zach Smith. To get help with your next big business idea or to take your business to the next level go to fundedtoday.com.
Zach Smith: (01:11) Welcome back to the Funded Today Podcast, I am Zach Smith.
Thomas Alvord: (01:14) And I’m Thomas Alvord.
Zach Smith: (01:16) And in our last episode we spoke to Curtis Child “The Crowd Whisperer” on how to tell if a product will be a success check it out if you don’t mind please rate us and leave a comment or two on our website and tell us what you thought of that episode or what you think of our podcast so far we’d really appreciate it and every 5 Star review helps us spread the tip, tactics and techniques we personally use to make a lot of money and create great lives for ourselves with others just like you, and now with no further ado I am so excited for today’s episode. Did you know there is one thing that is more important than anything else, in fact it’s the single most important thing that will ultimately determine your success or failure in your entrepreneurial endeavors?
Thomas Alvord: (01:54) This isn’t hyperbole either, before we even dive in my hope is that people will understand from the quotes we share, from the ideas we share, that this is not something you and me have made up. This is not something that we’re thinking hey this is a cool tag-line like literally this is the most important thing and when I was in my Master’s program I remember putting together a business plan part of that business plan you have to write about what the market is doing? Where it’s growing or is it not growing? I hated that part. Of everything I put together I thought this is a waste of time. Why am I doing this? Here’s my product, it’s good people are going to want it why am I having to worry about the market. At that time I did not realize that the market matters the most, that was the most important part of the whole business plan that I thought oh, this is a waste and I don’t know if it was me who didn’t get it, or my professors who didn’t convey, or my professors who didn’t even know or what it was but after making millions of dollars raising hundreds and millions of dollars for clients and businesses, now I realize Oh! It’s actually the market that matters the most.
Zach Smith: (03:12) And you know what’s funny about that Thomas, when we talk about the market I go back and I think about Business School, I got my Degree in Accounting from Weber State University with the emphasis on Entrepreneurship and Business, and I remember doing some of those same exercises. let’s do a SWOT Analysis, let’s do a read of the market, and I used to think they were kind of silly too, and if you listen to other podcast or if you hear the hustle and grind kind of mindset you hear of a lot of these lifestyle entrepreneurs just go do it, just go figure it out, just go for it. I have to admit it one point in time I my kind of even was more of that mindset and I still do believe just go do it, but the market matters and it matters more than anything else and I think after you listen to this episode today you’re going to see why it is so important, particularly if you’re looking to grow something big, something bigger than yourself, something that has a lot of people, something that can become a billion dollar company or more. So I mean why worry about it? Why does it matter so much?
Thomas Alvord: (04:11) I don’t want people to think again that it’s you or me even though it is you and me saying this I want other people to realize wow the smartest minds out there they all concur, they all are saying the same thing, but in different ways. One of my favorite people is Richard Koch, he’s a Consultant, he’s a Venture Capitalist, he has invested in a lot of companies but in his consulting days “Boston Consulting Group” they used to have back in the 60s and it’s still around you can Google this what’s called the Growth-share matrix. The Growth-share matrix basically says there is four types of businesses. Each of these businesses go in a different quadrant in the graph. The most important successful business you want to be in or find is a high growth business and you’re the leader in the market, and by high growth it’s not that the company’s high growth but that the industry’s high growth meaning the industry itself is growing 10% or more per year and you’re the leader in that market.
Zach Smith: (05:18) Thomas any tips or tricks to figure out how fast an industry is growing? So is that a quick Google Search or?
Thomas Alvord: (05:25) Yes you can look online, they’re called CAGR’s, I think that’s how you pronounce it, that basically it’s the Compounding Annual Growth Rate of a market and there’s companies who put out this information to say hey here is -- this market here is the forecast here is how it’s going to be growing, and so that’s a way you can see.
Zach Smith: (05:45) What about Google Trends too icon like Google Trends or you just go on Google Trends and you can kind of search and you can look at search volume for given all apps and your industry?
Thomas Alvord: (05:55) And the reality is the industries that are going to grow the most are the industries that are created by the new business right, so you think MySpace or Facebook that was an industry, that didn’t even really exist so what you couldn’t really say here is how fast the industry is growing, but if you’re looking at getting into something look at an industry that has high growth if the industry is not growing it doesn’t mean your idea can’t work, you’re not going to be a star -- you’re not going to make tons and tons of money, it just is not going to happen.
Zach Smith: (06:30) It’s like a business quadrant then you’ve got high growth as a leader that makes you a star, you’ve got low growth where you’re a leader and that’s your cash cow.
Thomas Alvord: (06:41) And with that cash cow Zach the industry is not growing more than 10% a year so it’s more or less stagnant but you’re the leader in it so you’re going to keep generating revenue it’s a cash cow, but it’s not a star, it’s not going to make you tons of money, exactly.
Zach Smith: (06:56) That makes sense.
Thomas Alvord: (06:58) And then your other two are your high growth follower we call them those question marks according to Richard Koch, and then low growth follower and those are your dogs what does those ones mean?
Zach Smith: (07:12) Yes so if you’re low growth and you’re a follower it means your industry is not growing and you’re not even the top dog no pun intended because that actually is not to be that phrase dog is not meant to be used as the top dog but you’re kind of, you’re in a sucky position really.
Zach Smith: (07:29) You’re dogging right?
Thomas Alvord: (07:30) Yes exactly.
Zach Smith: (07:31) Got you.
Thomas Alvord: (07:32) Now if you’re in a high growth industry and you’re the follower it’s a question mark because you’re still in a good position, you’re going to keep growing but are you able to unseat the incumbent or the market leader or do you kind of just take whatever market share you have and continue to grow with the industry. And the idea behind this is if you’re in an industry that’s growing, you’re going to grow by virtue of the industry growing assuming you’re the leader or if you’re not the leader you’re still probably going to continue to grow right if you maintain 10% market share and the industry is growing 10% or 30% or 40% or 50% a year you’re going to be growing like crazy just maintaining your market share, and so the market is so much more powerful than anything else that you might be doing, and you want to be a star, you want to be in those industries where it’s high growth and you’re a leader.
Zach Smith: (08:26) I’ve kind of think about our own story, the story of Funded Today originally we probably could say that we were a star by all accounts four or five years ago everything was growing rapidly and we definitely emerged as the clear and obvious leader in that industry, and now Crowdfunding particularly Rewards Based Crowdfunding, Kickstarter, Indiegogo they’re are definitely lower than that 10% growth per year we’re still the leader, so we’re kind of sitting in that cash cow sector right now. If I were just looking at our own company would that be about right.
Thomas Alvord: (08:58) Well exactly yes.
Zach Smith: (08:59) Okay.
Thomas Alvord: (08:59) We absolutely were a star and then became a cash cow because that the market it's not growing like it used to be exactly and part of this too which I really love which Richard Koch has shared is you don’t even have to be an entrepreneur, you don’t have to be starting your own business maybe you’re going to go work for a company, maybe you do video work, maybe you’re an attorney right go and work with a company that is a star business. Go and work with a company that in an industry that has high growth and that’s the leader.
Zach Smith: (09:31) I love that.
Thomas Alvord: (09:33) Because you’re going to have more opportunities for promotions, for raises, to move up and so again this while we talk mainly about being business owners and starting a business it actually applies across the board and I think we’ve probably seen that with even people in our own company right?
Zach Smith: (09:50) Oh yes absolutely, and you know what I hear this question all the time I get asked and I see it around the world people say well I’m a farmer I’m in Middle America, I’m in the Midwest and my jobs are being lost or I’m a truck driver and Amazon or all these other places are transforming transportation and logistics and shipping or I mean let’s go way back in time and think about Blockbuster all the people who work there it was one of the biggest companies around for that, and then Netflix came in and completely disrupted things, I love Thomas’s advice about trying to work for a high growth company that is the leader a star in that Richard Koch Star Principle Matrix because otherwise you are basically setting yourself up to eventually be displaced by the next big thing, and nowadays with how fast the world moves and modern technology and all the disruption I mean disruptions kind of become a cool word in the Entrepreneurial Innovative Techie World, Silicon Valley like who’s disrupting things today? You need to be working for those companies that are disruptors because if you’re working for companies that are disruptors you’re going to lead the world, and you’re not going to be left behind because a lot of these people like well what about my job? What am I going to do? Innovate or Die that’s what you’re going to do, and the best way to innovate is to be with the people that are innovating instead of saying in those low growth follower categories the dogs that you may be in right now, that’s my best advice to you who are in that position, and again it’s all about markets.
Thomas Alvord: (11:26) Absolutely. Now recently Zach we passed around within our company this beautiful article that was presented at Stanford “Oldie but Goodie” I love this one this is by Marc Andreessen and the theory and it is a lot of theory and we don’t like theory.
Zach Smith: (11:45) And for those you don’t know who he is, he is one of the brightest minds in the VC World, in the Technology Space, he’s one of the brightest minds out there really. We’ll link to this article in the show notes too just so you can see how great it is, but the theory of this article, and again we don’t like theory that much at Funded Today, but this theory is backed up by real world experience and that’s why we like it so much. The theory is what’s most important team, product or market, that’s the question that he asks, and if you think about it, if you’re an entrepreneur and you’ve got a couple of buddies with you or maybe you’ve even got some seed money or some VC money you probably think team is the most important thing. You ask yourself well I’m working with these guys, I’ve hired the best people, I’ve got all of this talent we have the best team ever you hear people say that all the time our culture is amazing, we have the team to make it happen. Now let’s say part of your team you’ve got some product guys, you’ve got your engineers, you’ve got your designers well they’re going to say the product is the most important thing yes without us we don’t have a product who cares about the team, we’re building this amazing product that we’re going to bring to the market, but guess what as we talked about earlier we’re both wrong. According to Marc doesn’t matter about your team, doesn’t matter about your product, market trumps all. There’s a guy by the name of Andy Rachleff and he has a rule it’s called the Law of Start-up Success and it goes like this the number one company killer is “Lack of Market”, Andy puts it this way when a great team meets a lousy market, market wins, meaning you’re going to lose, it doesn’t matter how good your team is. When a lousy team meets a great market, the market wins. Thomas and I started Funded Today just as the two of us glad that we have a pretty decent sized company now, but it was just the two of us I guess that’s a team can two people be a team maybe in Spikeball, but we weren’t necessarily this big massively funded fully capitalized team, but we met an amazing Crowdfunding Market and the market won. And when a great team meets a great market something special happens and that’s what happened with Funded Today truly, over time we built a great team, met a great market and something amazing happened.
Thomas Alvord: (14:10) And really what you’re after is the product market fit, if you create a product and there’s not a demand for it in the market it doesn’t matter how amazing you make that product? It doesn’t matter how amazing your team is, you’re not going to go anywhere the market is the most powerful force out there. And again most people don’t realize this, most people think Oh yes it’s kind of something to think about or yes it kind of influences what I do.
Zach Smith: (14:38) Let’s be honest did we even know this when we originally started? No.
Thomas Alvord: (14:44) No, no I remember reading an article it basically was saying that you have these people who are money managers, asset managers and they pat themselves on their backs saying oh look how great we are, and the author was saying yes you’re managing their money in a bull market, the markets are up, you haven’t even beat the indices so I don’t see how you’re patting yourself on the back, but it’s literally nothing that you’ve done as a money manager it literally is just the market being up. Again, going along with the same idea this is money management but the parallel or corollary applies to business generally is the market is the most powerful thing it ain’t the money manager, it ain’t anything else it’s going to be the market that’s the most powerful.
Zach Smith: (15:34) So if you’ve got somebody who wants to trade your money maybe look at their track record over 10 years, 15 years, 20 years go a little bit deeper I love that, we get approached with people all the time that want to manage our money and I think one of the easiest questions to ask the person who wants to invest your money as well are you involved? How long have you been doing it and if they tell you two, three years we’re in some of the best markets in the history of America, of course everything they’re going to show you is going to look amazing, so very good insight Thomas I love that. Tell me a little bit about Eugene Schwartz and his famous book Breakthrough Advertising I think this goes in parallel with what we’ve been discussing a little bit.
Thomas Alvord: (16:10) Eugene Schwartz was one of the world’s greatest copywriters. He worked at a company I believe called Boardroom I believe was the name, they would create direct response mail pieces right? You’re sending copy, written copy to people in the mail he created a book called Breakthrough or wrote a book Breakthrough Advertising, if you look online it's you can find the PDF for free I think the copyrights no longer applicable -- I think I’m not 100% sure. I just know if you buy the book it literally is like $300 - $400 on Amazon. And his first chapter well he talks about copywriting, and how to write good copy and what’s so interesting is usually you would think oh tell me what words to use, tell me how to do a headline, tell me how to do this other stuff right typically that’s what people would think. But what he did was more of a nontraditional or rather other factors that you need to look at that are more important to having good copy, and in his first chapter he reads this and I love this it is so powerful and really hits home what these other experts have said as well, He says “The power, the force, the overwhelming urge to own that makes advertising works comes from the market itself and not from the copy”. So basically he’s saying look it doesn’t matter really how you write, that desire to own something it’s not coming from your writing, it’s actually coming from the market and he continues copy cannot create desire for a product, it can only take the hopes, dreams, fears and desires that already exist in the hearts of millions of people and focus those already existing desires on to a particular product, this is the copywriters task not to create this mass desire but to channel and direct it”.
Zach Smith: (18:09) Man that’s powerful.
Thomas Alvord: (18:12) That’s the goal of business you’re creating products where the market has a desire for it, and you’re channeling that desire into your product.
Zach Smith: (18:20) And Eugene Schwartz once more one of the greatest marketers, advertisers of all time that’s him saying it, this isn’t some guy just some random guy saying it, this is a guy whose entire job was to sell stuff and he still acknowledges the power that the market trumps on. I have a saying that I go by now the market is the market you either adjust or you lose.
Thomas Alvord: (18:41) And similar with that Zach I love bodyboarding, I love going to Southern California, I love bodyboarding and what’s interesting if you get in a rip current and you’re trying to swim back to shore that rip current is going to win, it does not matter you will lose, you could swim as hard as you want you could be a professional swimmer and eventually you would run out of energy and you die, that’s the power of a rip current. It's the same thing with the market, if you’re in a market and you’re going against the market you are going to lose, you are going to die. Now if you’re out in Hawaii and you need to catch those waves that are way out there, if you’re just trying to paddle out there it’s going to be a lot of work, but if you find those rip currents and you let those rip currents take you way out you’ll be out there so quick that’s what you want to do with business and with the market.
Zach Smith: (19:36) So, how about we bring this home now, let’s talk about some real world actual experience along with some of the experience that we’ve had ourselves that exemplify this principle that the most important factor that trumps everything else that will ultimately determine your success is the market. I think a story that really resonates with me is probably the story of somebody within our own company. He’s in charge of doing our Cross Collaborations and he had a phrase that he said not too long ago “I’m working twice as hard, yet getting one half, one-third of the results”.
Thomas Alvord: (20:10) As we’ve seen recently changes in Crowdfunding and not as many campaigns on Crowdfunding although still millions and millions of dollars been raised he used to be able to just kind of work here and there and it would just flourish right? But now with things a little slower especially this time of the season he is having to work harder, to try to catch up and maintain what he was doing but he’s not even getting one half or a third of the results he was getting before. Again it wasn’t even about the amount of work he was doing, but what was happening in the market. Richard Koch also says that when he goes in to a business, if he’s looking to put money as a VC into a company and he sees them working like mad and things kind of aren’t really working, and they’re just having to put in tons and tons of hours working 60-80 hour weeks for him he’s like that is not where I want to be because they shouldn’t have to be working. If you were in a good market it would kind of just take off and it goes, it’s similar to Marc Andreessen in the article from his presentation at Stanford where he says “you know when there’s a fit because the sales cost just come in, the cost from the journalists just come in, things just keep growing naturally without much effort that’s where you know you’re in the sweet zone”. And Richard Koch says only one out of 20 businesses are star businesses meaning high growth and you’re a leader. And it might take some time, but whether you’re trying to get in or whether you’re already in and there’s changes in the market like Colton had commented on yes that stuff does happen, and so to always be thinking about am I having to work harder to get the same result or even less, you’re probably in a market that’s declining or you’re not even trying that much harder and you keep growing you’re probably in a killer market and that was a very interesting comment that Colton had shared that really illustrate like wow yes that is exactly the power of the market.
Zach Smith: (22:15) That really is a great way of looking at things and in our next episode we’re going to talk a little bit more about some personal principles that you can apply to kind of analyze the situation and get those type of results where you’re working less or getting even better results, so I love that. Am I working harder but getting less? Or am I really not working too hard and getting great results that let you know what quadrant that you’re in. Thomas you had a personal experience along with this as well and something you did before Funded Today right? Tell me about the political petitions in that industry?
Thomas Alvord: (22:47) And this was part of the business plan that I had put together, while I was in my Master’s program that I was creating these political petitions that nonprofits could use to contact their representatives in Congress or the State Legislatures and I never really sat down and thought about it, but that industry is probably like a $5 million industry max and because I was within a sub-niche, of the political niche really I was probably only like $1 million or $2 million, if I were to capture like all of the market.
Zach Smith: (23:25) Now Thomas some of our listeners might be like $5 million that’s great, that’s huge, where do they need to be is there a certain benchmark of where they want to be, because I mean $5 million oh I can make $5 million a year it doesn’t mean that right, explain what that means a little bit for somebody who might be just getting started here, when you say a $5 million industry does that mean you could make $5 million a year if you owned 100% of it?
Thomas Alvord: (23:45) Exactly if you owned the entire market then yes, but you’re never going to own the entire market, you’re only going to own or have a portion of that right or your share of the market is it 10%, is it 20% and in that market there were not really many other players there was one large player who would charge $10,000 a year and then a couple other who would charge a few $1,000 a year, and so even there it’s like how many clients would I have to get to be making half a million or a $100,000.
Zach Smith: (24:18) Now Thomas you make a good point there, when you say there wasn’t many players in there I think that’s another aha moment. If you’re researching where you want to start a business or what you want to create or innovate, it’s good to look around and see if anybody else is in there, if nobody else is in there you might beyond like a Facebook or a MySpace or something like that, or you might be in a place that simply does not have enough of a market to justify creating a business.
Thomas Alvord: (24:48) You’ll be in a place that’s completely dead, exactly. Now for me at the time I think if I had me and one or two other people and it was making $300,000 a year yes that could have worked well, and I would have been happy. However the market was just so small, it just made a incredibly difficult, and typically for anyone out there who is starting something you might have a point where you say here’s how much, here is what I want to get and then from there I’ll be good, I’ll be content that might be the case but depending on what type of business person or entrepreneur you are, once you hit that level you’re going to set your goals to some higher, you’re going to set your sights to something more lofty and just keep pushing yourself, I think that’s how it is for many people. So again you got to see how big the industry is and if I had really realized that I probably wouldn’t have jumped in to that. And you and me Zach we’ve often talked about hey how could we create a business that does a billion dollars in revenue.
Zach Smith: (25:52) Yes.
Thomas Alvord: (25:53) Because as I often say why not me? Why not us other people are doing it, why not us? As we look at doing that in the Kickstarter, Indiegogo, Crowdfunding Space what have we come to realize Zach?
Zach Smith: (26:05) Well that’s what I think is such a great observation the way we started Funded Today was exactly along those same lines, glad that we didn’t do a SWOT Analysis, I think if we would have done a SWOT Analysis we would have said well our strengths are your advertising ability, my salesmanship, our weaknesses are maybe that we haven’t particularly applied these skill-sets to Crowdfunding generally, the opportunity is nobody was doing what we were going to do literally we were the first people to do the marketing that we did on Kickstarter and Indiegogo and then the threat is and here’s where it hits home to market, I think opportunity and threat are the two that tie most closely with market. The threat was well this is an industry that probably does only around a billion dollars a year in terms of total pledges, so is it possible for us to ever make a billion Crowdfunding no that’s the entire market I think that’s impossible nobody owns 100% of an entire market, unless the market suddenly gets bigger and bigger and bigger and that hasn’t happened it’s kind of stayed pretty consistent if anything maybe it’s even down a bit and so there’s no way when Thomas has his famous we need to get it trademarked why not us? Why can’t we be a billion dollar company the only way we can do that is if we hit it and move to a market that is bigger than Kickstarter, Indiegogo Rewards Based Crowdfunding and the threat for us going back to that SWOT Analysis the threat is well because we were so successful we’ve had a lot of competitors come up, and when you’re talking about a $1 billion industry and maybe when you’re talking about only a couple 100 products per month that are really good products that have the chance to raise millions of dollars, and suddenly you have five, six, seven, eight, nine, 10, 11 competitors it can eat into things even more and hurt your market, and I think that’s something that we’ve realized now that we are four or five years into this thing. So, I think most importantly, you can ask yourself the questions when Colton says I’m working twice as hard yet getting less results, when you’re working and everything just seems so easy when you notice things like that you can determine whether you stay the same or whether you pivot, and you look at those trends and you move before it’s too late. There is something about complacency and I think it’s really easy to get into that, and that’s probably a large reason why blockbuster somebody fell blockbusters on Netflix come in from a mile away but they just thought that everybody still wanted to go to a brick and mortar store and rent, and they had so much real estate, they thought about McDonalds and all the real estate that McDonalds own and they thought real estate that’s the power, that’s amazing, we’ve got all these locations, location, location, location and they didn’t see the market and they became complacent, and they got too comfortable with the status quo and they weren’t willing to put in the work necessary to stay on top. And I think that’s where we’re at right now as well Thomas, we have a really good business, it’s still doing extremely well and yet it’s easy to be complacent if we don’t work just as hard as we did to get to where we are, and if we don’t analyze the market and as we have analyzed the market and as we have seen that we don’t have that 10% growth rate we have to figure out where else we want to go next, where do we want to move before it’s too late so that we don’t remain complacent, so that we can become a star again so that we can take over a new industry either horizontally or vertically wherever we decide to go to capitalize on the power that ultimately trumps everything markets.
Thomas Alvord: (29:37) And it doesn’t matter if you’re in the startup phase, if you’re in established business, you’re always having to look at market and this is why if you look at Facebook who acquired the virtual reality company what was the name of that company Zach Crowdfunding campaign?
Zach Smith: (29:54) Oculus.
Thomas Alvord: (29:55) Oculus Rift thank you for $1 billion or $2 billion why did they do that, because they were looking forward where is the market headed, what’s going to happen, now whether that actually materializes remains to be seen, but markets change so much faster now than they did 100 or 200 years ago, it’s crazy it changes so, so, fast and I think it’s just going to continue to evolve and develop and change quicker and quicker. So you be thinking about markets it doesn’t matter how smart you are, it doesn’t matter how hard you are markets are going to have the most impact on anything you do in your business. It literally will define what you’re selling is, I’ve talked with my brother who has a successful company and we often comment about the market is the market, if you’re running stuff online or have SEO or Google AdWords you’re pretty restrain to whatever the market volume is outside of that, that’s your ceiling. So markets truly are the most important factor. I would recommend to anyone who wants to learn more to go read those articles in the show note and to go look at some of those books by Richard Koch they are powerful, they are probably the most important business books you could ever get or read because it really will help you think about what you should be thinking about most.
Zach Smith: (31:36) Now the devil’s advocate can say can’t great products sometimes create amazing brand new huge markets and the answer is yes absolutely, but that’s the Best Case Scenario and at Funded Today we’re kind of about trying to get to success as quickly as possible, we’re about emulating success and literally the way you emulate success in a more general broad manner is by looking at a successful market and then creating something within that market. You look at VMware they’re probably the most recent company to have done it and Marc talks about this in his article VMware’s product was so profoundly transformative, right out of the gate that it catalyzed a whole new movement toward Operating System Virtualization and that was a brand new market, but that was a scenario that is very rare, that was like kind of like a Facebook type scenario where the market was essentially created and Marc says it this way he says understand I’m not saying that you should shoot low in terms of the quality of your team the quality of your product or that VM’s team was not VMware’s team was not incredibly strong, they did have a really good team. He says I’m saying bring a product as transformative as VMware’s to market and you’re going to succeed. Short of that I wouldn’t count on your team or your product creating a new market from scratch, and I think that is the moral of today’s episode, focus on markets if there’s one thing you want to focus on if you’re like Zach, Thomas how can I succeed no matter what. Look for the most incredible market ever and innovate, bring a good team and just absolutely dominate, get as much of that market share as you can and as soon as you notice that market taper off, as soon as you notice that customers aren’t ordering your products, as fast as you can sell them, as soon as word of mouth isn’t the main reason why you’re getting new business it’s time to start looking to pivot to adapt or to change.
Thomas Alvord: (33:42) Perfect you said it beautifully Zach if I might modify one of our favorite phrases from Henry Ford “whether you think you can or you can’t the market is probably right”.
Zach Smith: (33:56) I love that. Alright it is that time again. The Funded Today product of the week and I’ve got a good one for you. Mine is the Meteor, M-E-T-E-O-R just like a Meteor and this is The World’s Most Innovative Massage Ball and I believe it, they believe that the traditional foam roller is dead, the Meteor is a better solution it combines heat and vibration to improve recovery and relieve pain, it’s basically a ball that’s why it gets its name so it’s like a meteor but instead of destruction this thing creates a lot of relief for your body try it out there’s only eight days left on Kickstarter at the time of this recording, but they will be on Indiegogo-InDemand and I’m sure you can pick it up on their website or on Amazon at a later date. Really cool, really innovative and these guys are actually from Utah, as well probably Utah so shout out to our local friends the team at Meteor, The World’s Most Innovative Massage Ball.
Thomas Alvord: (34:54) My product of the week is called “Plugo” it’s An Immersive AR gaming system, it’s for kids who are like five to 12 years old, and it basically allows you to have physical building blocks and other things that you can stack or build physically in the physical world but then there’s a monitor or a system that as you’re building it, it actually creates it in the digital world on the screen, so it helps them learn to create new things, it’s a learning system, it’s the best of STEM Learning is what they call. So if you have kids, young kids five to 12 years or so check it out Plugo An Immersive AR gaming system.
Zach Smith: (35:39) And remember don’t wait until tomorrow, get Funded Today.
Announcer: (35:44) Funded Today is the worldwide leader in a Rewards-Based Crowdfunding on Kickstarter and Indiegogo combined they have raised over $200 million and counting for thousands of new ideas and inventions worldwide, if you got an idea for a new product or invention visit fundedtoday.com to speak with one of their experts.
References and Resources
- Funded Today: Podcast: “Customer Service from Backers to e-Shoppers”
- Funded Today: Podcast: “Failure, Pivoting, and Success”
- Funded Today: Podcast: “Funded Today’s Origin Story”
- Funded Today: Podcast: “Life After Crowdfunding: Amazon Intelligence”
- Medium: “Mass Desire: The First Unbreakable Law of ‘Breakthrough’ Copywriting” (2014 Aug 08)
- The Pmarca Guide to Startups: “Part 4: The only thing that matters” (2007 Jun 25)
- Wikipedia: Blockbuster LLC
- Wikipedia: Growth-share matrix
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