with barriers to entry so low, what stops people from under-cutting the competition?
TRANSCRIPT
With Barriers to Entry So Low, What Stops People From Under-Cutting the Competition?
Since you’re asking the right kinds of questions, let me skip you five years ahead on your learning curve in the next five minutes.
Competitors are human. They want easy profits.
Because our animal instincts lead us to conserve energy, embracing difficulty and complexity is your number one business advantage, as you’ll soon see.
For example, business success Donald Trump is not necessarily an especially virtuous or talented human being. He’s simply willing to tackle harder problems than his competitors, leaving him in a category of one, because nobody will bother competing with him.
Anybody could compete with Trump, but it would be “too much work.”
Here’s an example of an unfair, breakthrough advantage:
The Gutenberg press was roughly a thousand times faster than copying by hand.
According to Francis Bacon and many others, the Gutenberg press changed the world, just as the mimeograph helped win two world wars.
If the movable-type printing press is a thousand times faster and cheaper, you’re not going to compete with it on price. But you know what?
Hundreds of years later, people still write by hand, and hire people who write by hand. Why?
Because you don’t need a thousand identical copies of everything. Sometimes, you just need one. And here’s where all your competition disappears:
Custom suits sell for a small fortune. Hair salons and plastic surgeons do custom work. Custom choppers. Limited-edition cars. Commodity pricing does not apply.
A modern example of the same kind of advantage:
Today’s growth hacking technology (which is harder and more expensive to test and implement) gives companies about a ten thousand fold advantage over their competitors.
Growth hacking has already profoundly changed the world, for example, leading to the social media-powered collapse of tyranny in the Arab Spring, the wide distribution
Copyright 2014 by Roger Abramson Learn more at http://www.RogerAbramson.com
of free email platforms like Hotmail, and the rapid rise of social media itself.
And yet people still hire high-tech and low-tech marketing consultants who know NOTHING about this technological growth advantage, paying them $10,000 - $50,000 for a day of business growth consulting. This proves:
You don’t need to be the best OR the cheapest to succeed.
The fastest-growing companies and the soon-to-be richest man in the world (Mark Zuckerberg, presently worth nearly $30 billion dollars) used what he calls “tools” (growth hacking) to grow to 1.3 billion Facebook users.
Reality doesn’t give a damn what you think it is. Quantum mechanics and relativity are fine examples of reality failing to conform to human intuition.
Why should business conform to our intuition? I don’t care how well-bred your family tree… Human intuition hasn’t had time to evolve or adapt to a radically different, high-tech business environment.
Want to go jogging or throw a stick? Go with your gut. As soon as it’s time to do anything as technologically advanced as lighting a fire without a match, your intuition instantly fails.
Business success isn’t hard-wired into your intuition.
Meaning your guess is as good as garbage. Why do you think eighty or ninety percent of businesses fail within five years? Because our best ideas prove useless alarmingly quickly, even though every one of our ideas seemed good at the time.
You’d think people would try to learn from these failures, but in fact they don’t.
● The average American reads one book per year. ● It’s typically not a business or finance book. ● The average reader makes it to page 18 and quits.
This should instantly tell you how ridiculously easily you can stand out from the crowd.
Learn a little to stand out a lot.
Where your gut can be pretty good: Do you feel like you can trust someone? If so, then either they’re trustworthy or they’re a sociopath. Just like a politician who’s learned to systematically engineer trust, or they might be a trickster. Here’s the problem:
In small communities, tricksters, cheaters, and players eventually get caught. In a tiny tribe, a cheater may trick a girl out of her virginity, but they’ll have to make an
Copyright 2014 by Roger Abramson Learn more at http://www.RogerAbramson.com
honest woman out of her or face banishment in the wilderness alone.
Maybe your gut feeling worked pretty well when you only knew 150 people in the whole world. In a tribe of seven billion people, tricksters easily fly under our radar.
Buying Behavior is Baffling
Human behavioral psychology is almost as baffling as any other technology. Being around people for your whole life doesn’t begin to qualify you to choreograph human buying behavior.
These days, to be successful, honest, hard-working people need to think, scheme, and calculate just like dishonest people do.
Old guys of mediocre success will tell you that experience is what counts. If so, then why utterly limit yourself to YOUR own single lifetime’s worth?
Multi-millionaires tell you trial and error is the least efficient way to learn. How do they learn? Tests, research, studying, and associating with ridiculously successful people.
Great ideas rarely find you.
You’ve got to seek them out. Take one good step toward great ideas, and they’ll take ten steps toward you, as this answer demonstrates.
When you find great ideas, you’ve got to grab on with both hands. Print out a copy. Pin it to your fridge. Follow it down the rabbit hole.
Hint: Follow the person with great, outstanding, self-evident ideas.
You’re right: The barrier to entry has been dropping ever since the U.S. Census started keeping track of success. Here’s the funny thing:
Exponential increases in opportunity have had almost no measurable effect on the relative distribution of wealth or income in over 60 years. The poorest half still retire broker than broke. Only one in twenty will ever wind up financially free, usually after a lifetime of simply making others rich.
People are motivated by emotion. Not reason.
People don’t believe in God because they saw a compelling pie chart. They didn’t perform a demographic study or comb through census data to arrive at their faith. The spirit moved them.
Motivation comes from emotion.
From buyers to boards of directors to scientists to accountants, human beings are
Copyright 2014 by Roger Abramson Learn more at http://www.RogerAbramson.com
compelled to rescue a child from danger or choose a supplier or grow a mustache because they’re caught up in the instinct and emotion. Not because they studied any global trend data.
If the numbers were what mattered most, consultants would never need to smile, to shake hands, to make eye contact, to wear a flashy but conservative suit and tie. They could show up in a T-shirt and shorts with a few numbers scribbled on the back of a napkin.
Look at the way people dress when left to their own devices.
The fact that a board of directors wears stuffy suits instead of comfy sandals proves they’re emotional basket-cases utterly devoid of rational capacity and they feel threatened by anyone who’s not dressed as foolishly as themselves.
In business, you need to stimulate buying behavior.
Mot: To move. Like motor. I was moved to tell you about the motion of an emotional motivation.
If action is your goal, emotion is your motorboat.
● People regret taking actions they can’t justify to their friend. ● People regret missing big opportunities, like the time they could have bought
Microsoft stock. ● People want to be the envy of their friends.
There’s a reason nobody ever taught you this stuff in the government schools and government-approved private schools.
"They" don’t want competition.
Here’s one thing which stops many from entering “easy” markets:
Nobody I’ve spoken with has seriously contested the idea that Congress is currently for sale to the highest bidder. It’s not news.
What’s little known is how cheaply political influence can be bought.
So if you were on top of the business world, then you wouldn’t want tens of millions of brilliant, young, quick-witted competitors stealing your spot on the top of the mountain, right?
Neither the silver-back gorilla nor the chief of the tribe wants to battle every successive generation.
Associations, colleges, and government schools want to produce tens of millions of
Copyright 2014 by Roger Abramson Learn more at http://www.RogerAbramson.com
obedient employees and consumers who are no threat to the status quo.
By all measures, they seem to have been profoundly successful at achieving this stated goal. Yes, Rockefeller’s education board actually put this in writing in 1913 in General Education Board, Occasional Papers, No. 1. Look it up.
So why am I telling you this?
Right now, we’re on track to have at least 25 times as many billionaires in the next 25 years.
Ivy League schools compete to attract top talent. Guess what? Top talent such as Zuckerberg and Gates quickly drop out to pursue larger opportunities.
● The richest men on earth knew this: The most expensive schools in the country are simply not the best investments of time, money, or attention. Not even close.
The guy in the news who was recently accepted to all 8 ivy league schools stands a pretty good chance of being another future billionaire whether he attends college or not.
Then why do top schools have such esteemed reputations?
Not because top schools educate well, but only because they select well.
Once they’ve selected great candidates, their job is done. Then they can do what every jerk in the office does: STEAL credit for your accomplishments.
You could pretty much lock these high-achievers in a closet with no windows for four years and they’d pop out as billionaires, probably by writing an amazing app using nothing but their cell phone.
In fact, you’d damage their earnings potential less, according to studies of billionaire PhDs.
Most people fail to appreciate that some of us are billion-a-year achievers, making money about 40,000 times more quickly than the average American. Most of us have some small fraction of this potential, but aim too low to ever discover what it could be.
What you earn is literally a drop in the bucket compared to what’s possible. Our schools don’t teach us to be mediocre. We’re taught to be damn-near broke and STAY that way.
● If you’re somehow making $10 million - $50 million per year, then you’re actually achieving less than 1% of human financial potential.
● Ten million a year ain’t rich. It’s actually far closer to broke than it is to rich. ● 99% of us are closer to broke than we are to $1 million a year.
Copyright 2014 by Roger Abramson Learn more at http://www.RogerAbramson.com
● Only 5% of us will save as much in a whole lifetime. ● Most people will retire flat broke or in debt.
Money motivates people. It also makes them do incredibly stupid things.
● Like working hard instead of working smart. ● Like following a crowd destined for financial failure. ● Like sacrificing their future to make a quick buck.
Buying behavior is predictably counter-intuitive. In market tests, setting higher prices often increases response. Meaning MORE people buy when it’s more expensive.
People don’t think like you and I. Yes, there are bargain shoppers. For most people, price isn’t their top priority. It barely cracks their top ten list.
Because of economies of scale, like purchasing power, efficiency and frugality generally belongs to the big box stores. And it’s a huge advantage. Wal-Mart is the biggest company in the country, known for its low prices.
Trump isn’t known for having the lowest prices. For example, he charged a staggering $1 million dollars for a one-hour speech at the Learning Annex. At that rate, he actually does repeat business, because his name draws a crowd. He was able to command a 50% higher fee for his next 17 speeches.
“He’s worth every penny.” - Bill Zanker, The Learning Annex, on Trump’s speaking fee.
To be perfectly clear: You simply can’t compete with Trump on price.
Every public speaker will gladly take his spot for $1.4 million dollars. Price ain’t the primary factor. It’s not even in the top ten.
On cattle, the brand was a stamp of quality. A man’s staked his reputation on the quality of the product marked with his brand. It’s efficient. You don’t need to ask if the cattle is corn-fed, free-range or well-bred. The brand instantly tells you what you’re getting.
Seeing the brand evokes an almost Pavlovian response. My generation is literally neurologically conditioned through Operant Conditioning to associate the Pepsi with good feelings. How? They’ve carefully associated themselves with Britney Spears, Michael Jackson, Enrique Eglasias, Pink, Beyonce, Queen, big arenas, and the Superbowl.
In other words, the flavor isn’t the only neuro-association happening. Seeing the word “Pepsi” operates at a subconsicous level, and it’s designed to drive buying behavior.
Red Bull competes with other soft drinks and charges about $2.90 per 8-ounce can by
Copyright 2014 by Roger Abramson Learn more at http://www.RogerAbramson.com
differentiation. It’s in a smaller can, and it’s associated with extreme sports.
Essentially, Pepsi and Red Bull are both energy drinks. The “Pep” in Pepsi is about putting pep in your step.
A case of Red Bull is selling on Amazon for 18 cents an ounce.
A case of Pepsi is selling on Amazon for about 8 cents an ounce.
A new company is successfully competing against multi-billion dollar energy drink competitors, and they’re charging 125% more per ounce.
Think gasoline is expensive? Try 16 ounces of bottled water, which sells for more than the cost of 16 ounces of gasoline.
Want even more expensive water? Try a disposable one-ounce water spray mister, selling for $4 - $40 dollars an ounce.
Yup. You can actually go out and buy a tiny bottle water that’s a over 1,000 times more expensive than gasoline. The differentiator: Its brand name, packaging, and possibly a floral scent. Make no mistake…
They’re actually selling WATER for up to $5,000 per gallon.
On a warm day at yoga class, you can spray it on your face so you won’t sweat.
You want to know what gets in the way of a startup’s success? The same thing that impedes science: Our preconceived notions about what “should” work.
I’ve taken examples from all different industries to show that human behavior is equally insane andpredictably irrational in all industries.
By predicting and testing buying behavior, you’ll have a tremendous advantage, regardless of price. And competition, no matter how entrenched, may become utterly irrelevant.
Does that help?
About the Author: Roger Abramson is the founder and CEO of the largest and fastestgrowing training service of its kind. His forthcoming book, High Fee Secret Weapon: Faster, Simpler Consulting Success describes the shifting trends, technologies, and techniques for our automating and marketing a premiumlevel consulting business in the new economy. His Silver Elite enewsletter is currently available by invitation only.
Amazon.com®, Pepsi® and Red Bull® are trademarks of their respective owners.
Copyright 2014 by Roger Abramson Learn more at http://www.RogerAbramson.com