Transcription
I just gave a guest lecture last week at the University of Texas for a class on entrepreneurship. There are some people here who don't try. One of the key questions that many of the aspiring entrepreneurs in the classroom asked is, "What should I sell?"
First off, we have to define what are the actual things that can be sold. And this may sound crazy, but there's actually fewer of them than you think. And there's digital and physical formats of each of these things, which actually give you 14 different things you can possibly sell. Once I define those, I'll talk about how we can increase the scale of the deliverable that we have using something that I call the delivery Cube.
Number one is you can sell products. You could sell a physical product, which would be like, I sell water bottles. A digital product would be something like a PDF. The second category is services. So this is stuff you do for other people. In the physical realm, a service would be a massage, mowing someone's lawn, fixing someone's car. On the digital side, oftentimes that service is something that happens in the digital space. So if you are an ad agency and you make ads, the ad itself that you're making as a service; also buying media is a service. All of those things would be digital services.
Category three, you have access. Visual access is like you lease a building; you gain access to the building. Digital access is you gain access to a library of digital content, like Netflix. Category four is attention. You can sell or buy physical attention; that could be like a billboard—cars physically drive past it and see it. To the same degree, Facebook and Google have digital attention, and they sell the eyeballs and the attention of that audience.
Category five, like the hurricane, is risk. Selling insurance, but you can insure a building, but you can also insure against, in the digital format, a cyber threat. If you're an established business owner and you sell physical products or even services, you can sell the risk associated with it, which is like ensuring the product. So some people give guarantees, but you can actually get people to pay for a guarantee, which is insurance—just like AppleCare is just paid-for insurance.
The next thing you can buy or sell is money itself. The entire banking industry is predicated on buying and selling money, and the rate they charge is the interest itself. And so you can have physical money, right, like the actual US dollars. You can also have digital money, which I'm not going to get into crypto, but that is a form of digital money.
Category seven is an endorsement or brand. In the physical world, I say, "Hey, you can use my logo on your shirt," and you give me a percentage of all your sales. In the digital world, when they sell a check mark on Instagram, that is selling an endorsement; it's selling a brand; it's selling some sort of status that gets transferred, and a fee is paid as a result of that.
One of the key points here is that it can be a combination of those categories. So if someone sells a rock concert, for example, you're selling access to an experience, but you might also sell drinks and t-shirts while you're there. Now you might record it and then also sell the digital versions. See what I'm going with here?
In terms of picking which one to sell, it's mostly going to come down to two things: one is the resources you have and your skills, value, experience. If you're a first-time entrepreneur, then you're like, "Well, I don't have any other experience," but you actually do, and let me hear me out. Your parents did something. And if you don't have parents, the people who raised you did something. And if no one raised you, people you knew did something, and you were around them. So, like, for example, my mom is a doctor; she's an eye surgeon, so I know a lot of stuff about eyes that would be a category of stuff that I actually know a lot more about than you might expect. If your dad was a mechanic, you probably know what a carburetor is. I have no idea what it is; I've heard the word before.
Oftentimes you've had little odd jobs. Like when I was in high school, I was a blender tenor, and then I did catering at an Orthodox Jewish company. You probably know a lot of stuff just from osmosis of being around it. We have these seven things—digital and physical—is there any one of these that you already have a little bit more experience with? And then of those things, which problem is the biggest that I think I can solve given the resources that I have access to?
What I was talking about with this entrepreneurship group is that they had a hundred dollars to start their business. Now that would probably preclude you from most physical products, probably most kind of digital like software type stuff. And so most of the time you're going to start selling your time, which is often services. Here's the person I provide the most value to for the least amount of money to me; that's where your sweet spot is as the first or next thing that I would probably package and sell.
Once you've established that, how can I enhance or make it more or less valuable or more or less profitable for me as a business owner? The delivery Cube has six pieces to it—that's eight, six. Number one is, can I deliver this thing one-to-one, in a small group? Can I deliver it one-to-many? Each of these have different value propositions that are associated with them. If you sold semi-private group stuff, it's a small group of five people doing something; that's different than doing a webinar to a thousand people at once versus having a call review system where you review someone's calls to give them feedback one-on-one.
The second frame of the delivery Cube is do-it-yourself (DIY), DWI, which is done with you, as in you're holding their hand through the process of whatever it is you're doing, or done for you, where you do all of the work yourself and you sell them a final product or final outcome. Each of these give you different levels of scale. Do-it-yourself, you can sell it unlimited; typically the value is smaller. Done with you, you have in between—the two extremes of do-it-yourself and done for you. Done for you is the most expensive, typically, sometimes the easiest to sell, but one of the hardest things to deliver on.
The third frame is what level of support am I going to do, and specifically on what medium am I going to offer support? Via chat? Am I going to offer support via email? Am I going to offer support via phone call? Going to be Zoom call? These are all different ways that I can support whatever the thing is that I'm selling. Obviously, if I do email support, that's going to be significantly more scalable; it'll probably also be significantly less valuable than somebody who's real-time available to hop on a Zoom call whenever they want.
Filter number four is how do I want them to consume the thing? They can consume it visually; they consume it audio-wise; they could consume it live; they consume a recording; they consume it visually via text. So there's different ways we can have people consume some sort of thing, whatever it is. Anything that's live is typically going to be perceived as more valuable, and if it's in person and live, probably the most valuable and probably the least scalable. On the flip side, if I did something that was recorded and was digital, it would be the most scalable, but probably the least valuable.
The fifth lens is the speed and convenience of whatever we're delivering. This comes down to multiple things. One is, is it 24 hours a day, or is it just nine-to-five? Frame two is how many days a week am I maintaining that level of service? Three is how fast is that response? So I might be open 24 hours a day, but I have responses that are guaranteed in 24 hours, which is different than saying I'm open nine-to-five, five days a week, but I respond within three minutes. And the ultimate extremes are either you're overstaffed, but your customers don't have to wait; you incur inefficiency so that they have convenience, or they incur the inefficiency, and all of your staff is 100% utilized because they're going call to call to call all day long. Different strategies; there's wildly successful companies that do both.
Frame six is what I like to call the 10x to 1/10th test. If I charge 10 times more for my current thing, what would I have to change about my thing that I sell in order for it to be worth 10 times more? This ultimately gets me thinking in much bigger ways about how much value I would need to provide. Let's say I go from a $10,000 thing to a $100,000 thing; that still would be profitable at a $10,000 thing; it just makes me think differently because I now have to justify my $100,000 price tag. The flip side of that is equally powerful, which is if I had to deliver the same or even more value than I currently am, but I could only charge one-tenth the price that I currently am, what else would I do that would be perceived as valuable but would not cost me enough so I could still justify one-tenth the price but maintain my value?
This gives me a very good starting point to both figure out what the first thing I might want to sell is, and then how can I scale it and make it more profitable and/or more valuable to my end consumer, and think through the ratio of how many people I would need internally—my company—to facilitate that. And so this is what I was explaining with the University of Texas, and if this was interesting to you, we actually have the entire full lecture in Q&A; the link somewhere around here; I'm sure it'll be available to you. If you want to watch the whole thing, go click there and check it out.