Seth Godin (00:00:00):
Attention is a scarce resource. It keeps going up in value because more people want it. Trust is scarce. It keeps going up in value because more people are hustling, going for the short hustle, not hassling their way into make a buck today and disappear tomorrow. So if you earn attention and you get the benefit of the doubt and you're able over time to earn trust, you have an asset, you have an asset that few organizations or brands [00:00:30] can possibly attain.

Eric Ries (00:00:33):
The two scarce elements of our economy are trust and attention. That's Seth Godin, today's guest on the Eric Ries Show. He has written so many great bits like that over the many years. If you don't know him, he is a marketing genius and the author of books like the Purple Cow, The Dip, Linchpin, This is Marketing and of course one of my favorites, Permission Marketing from 1999 that we talk about in our conversation. Seth has been the chronicler par excellence of [00:01:00] the new marketing that started with the rise of the internet around the turn of the millennium, and has been a consistent advocate for treating people with respect, building companies that are trustworthy and that are likely to stand the test of time. He's a very successful speaker and blogger. He has written probably one of the most successful blogs of all time. He has stuck with it in a daily format. If you're not subscribed to Seth's blog, you are missing out. It's a daily dose of wisdom.

(00:01:26):
In addition to his wisdom and terrific writing, Seth is also an [00:01:30] entrepreneur. His advice is always practical and rooted in his actual experience of building companies that he can be proud of. So many people have had their career accelerated by Seth and his advice, me among them, and I think you're going to really enjoy this wide-ranging and interesting conversation. We talked about the importance of trustworthiness. We talked about the rise of the new AI. We talked about the difference between governance and politics, between management and leadership, and of course how [00:02:00] to think and act for the longterm. Really my pleasure to welcome you all to a conversation with Seth Godin.

(00:02:09):
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(00:03:25):
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(00:04:16):
Seth, thank you so much for being here. I really appreciate you joining me.

Seth Godin (00:04:20):
Eric, you're a legend. It's great to see your name in my inbox and I'm happy to be here.

Eric Ries (00:04:25):
Oh, that's really great. I appreciate it. Now look, you are famous for [00:04:30] having written so many awesome books about marketing, which I have really enjoyed. I think probably listeners will be most likely to know, I don't know, the Purple Cow or All Marketers are Liars or what's your most.... Oh yeah, well you got the Purple Cow right there. Yeah, exactly.

Seth Godin (00:04:43):
The bestselling one is either Purple Cow or This is Marketing.

Eric Ries (00:04:48):
Yeah, This is Marketing is really a classic, but to me you're not the maybe all time most popular blogger. Is that possible, since the genre was created? One of the most popular [00:05:00] bloggers, certainly a famous Ted Talk speaker, obviously an entrepreneur in your own right. But to me, you will always be the author of the 1999 classic, Permission Marketing. Can we start there?

Seth Godin (00:05:12):
Thank you. I'm happy. I thought you were going to say E-mail Addresses of the Rich & Famous, which is a book I'm not proud of, but all the other ones [inaudible 00:05:22].

Eric Ries (00:05:22):
Okay. So I can still remember reading Permission Marketing when I was a young engineer many, many, many years ago. And I think it was the very first book [00:05:30] about marketing that I ever even remotely understood. It was like, "Oh, finally someone is explaining what to me had been such a mysterious and arcane thing in language that I can understand it." And although obviously some elements of that book, for those who have not read it, are a little bit dated. There's a lot about Yahoo and how, if I remember, how to manage, how to invent quizzes and things on Yahoo, things are different today. The core idea that marketing is a form of earning the trust of customers and the permission to speak to them just [00:06:00] that has stuck with me all these years. And so first of all, thank you for that, but it's 25 years later now, can you believe that?

Seth Godin (00:06:07):
Yeah, I actually can. If they cut me open, they'll be able to count a lot of rings. It's interesting, some of the overlap and challenge of building things for the long haul, dealing with agile and minimum viable product combined with trust and it all fits together. And the way it fits together [00:06:30] is this, the attention is a scarce resource, it keeps going up in value because more people want it. Trust is scarce. It keeps going up in value because more people are hustling, going for the short hustle, not hassling their way into make a buck today and disappear tomorrow. So if you earn attention and you get the benefit of the doubt and you're able over time to earn trust, you have an asset, you have an asset that few [00:07:00] organizations or brands can possibly attain. And so it's not interrupt people and ask permission later or ask forgiveness later, it's earn permission. It's build an actual asset over time where people, when they're not sure, trust you. And I think that is reserved for folks who are willing to take a longer term view of the world.

Eric Ries (00:07:25):
It's music to my ears obviously, but one of the things I really remember from that [00:07:30] book was you had a hierarchy of permission, and I don't now remember all the stages, but it was on the lowest end, the advertiser who you grudgingly allowed to interrupt you during your favorite show who you have basically a feeling of annoyance towards, level by level by level. All the way up to your doctor who you would say, I trust you so much, you can put me under general anesthetic and do what you will, and I hope it will turn out for the best. And of course one of the ideas from the book is that you can earn your way up that hierarchy. So just talk about the hierarchy and how do [00:08:00] you earn your way up it?

Seth Godin (00:08:01):
Well, one of the things I foreshadowed in that book, in addition to helping to invent a $50 billion a year industry in email marketing, is that there's something called intravenous permission. And I'm getting this out of the foggy parts of my brain, but intravenous permission is what happens if I give you my credit card and I subscribe. And at the time, there were no subscriptions on the internet, there were none. And we've seen entire industries built around this idea, [00:08:30] I trust you so much that every month I'd like you to mail me something or I trust you so much that every month you should charge me for your software. And you don't get there with a Facebook ad that instantly turns someone into a customer. You get there drip by drip by drip, to the point where people would miss you if you were gone. And that is what we are seeking to earn, the idea that we are adding enough value that we would create a vacuum if we weren't there.

Eric Ries (00:08:58):
So the reason I wanted to have you on [00:09:00] for this episode is not... obviously we have lots and lots and lots of things to talk about. But the precipitating event, you've been writing a lot about trust and that's such a critical topic that I've been interested in. I feel like I work with so many companies now and they have not yet learned to quantify and treat trust like an asset. So they squander it. And you wrote this essay called Trading Trust that we were corresponding about, that's how we wound up having this conversation. And the thing that really hit me... And I don't know if you feel the same way but I'm really [00:09:30] curious. When I was reading that, the article was about the ways in which companies trade on their trust for short-term benefit. And it struck me that this is the refutation of the whole OKR system that we are teaching companies, and a whole generation of entrepreneurs have been raised on this idea that you assign objective and key results, one to each individual person that they're responsible for. And your post hit me like a bolt of lightning that the whole system is [00:10:00] bogus because any individual person at any time can boost their own OKRs by trading against the company's trustworthiness. And why wouldn't they?

Seth Godin (00:10:11):
Yeah. Well, so we should go back 50 years to the fraud that is Milton Friedman, and the articles that he wrote for Newsweek, et cetera, that he said that the only job of a corporation is to maximize shareholder value, particularly in the short run. This is nonsense, there wasn't any history [00:10:30] that it was based on. And it was embraced by top executives who wanted to increase their pay by creating a false proxy that would be easy to demonstrate, and now it is filtered through the entire organization.

(00:10:44):
And so what we end up with is a company like Amazon that spent decades earning the benefit of the doubt, becoming one of the most trusted brands in the history of tracking this, and now to make the stock price go up left and right, up and down, they're willing to trade that trust [00:11:00] for a short-term boost. It's too expensive to deliver the package. We'll just pretend it's going to be late and we'll deliver it. And there are people in the organization who are proud that they made this choice because it made the stock price go up.

(00:11:16):
The year that I worked at Yahoo, I would walk into the sales office, there'd be 50 people there and 48 of them were checking the stock price on Yahoo. All day long, boom, boom, boom, because they were making an extra 5, 10, $20,000 in one [00:11:30] day from the stock going up. Well, when we hook people up to that sort of intravenous of, "Oh look, I can do this." Why are we surprised that they get hooked onto false proxies? And what it creates is an opportunity, and the opportunity is to act in private like you would behave if you were in public and to build something for more than tomorrow. Because over time that trust is going to be very [00:12:00] highly valued, it's simply undervalued in the short run. And if we are giving the people who work for us a false proxy, don't be surprised if they work to optimize the wrong thing.

Eric Ries (00:12:10):
So talk a little bit about what makes a false proxy and what you would give people instead if you're managing them.

Seth Godin (00:12:16):
So let's talk about obvious false proxies. When we are voting for the president in this country, the United States, one of the false proxies is height. If we looked at a graph of height compared to votes, it goes up and [00:12:30] to the right. Tall people get votes.

Eric Ries (00:12:32):
Get votes, absolutely.

Seth Godin (00:12:33):
I think we can agree that there should be no correlation between how tall you are and whether you did a good job as president, because there isn't one. In the workforce, there are many false proxies about what is your skin color, where did you grow up, where did you go to college, do you have a stutter, are there any other sorts of challenges you deal with physically? These are false proxies that we invented along the way because it was easier to screen people than it was to get deep into whether they're good. Many hard [00:13:00] skills are false proxies. How many words per minute can you type? Well, tell me why I need to type.

(00:13:07):
So then we get into work itself. What is a false proxy? Well, it might be how long did each person last on the phone call with you in the customer service department? Because most CFOs measure time per call and push their employees to make it shorter. The late Tony Hsieh at Zappos said, "You know what I'm going to do? I'm going to do the opposite and [00:13:30] I'm going to reward people for keeping folks on the phone a long time." The record is I believe 10 hours for one call. And why would he do that? Well, it turns out he built a billion dollar shoe store on trust. And where that trust comes from is you would call them and they would take care of your problem no matter how long it took. All he sold was shoes, but he sold the company for a billion dollars because the asset he sold wasn't the inventory of pumps, it was trust.

(00:13:59):
So if we [00:14:00] get to the heart of it, it's not even the weirdly and easily gained net promoter score, it's beyond that. It's what metrics can we use to figure out whether that person we interacted with, are they a valuable customer - valuable either because their net present value is very high or because they talk a lot. If that person ends up more satisfied after they bought our last product or whatever, we did a good job. And that's not an [00:14:30] easy measure, but it's an important measure. And your whole career is about helping people wake up to the fact that we might want to do important things, not easy ones.

Eric Ries (00:14:40):
Wow, thank you for that. Yeah, that's certainly my belief. I've spent a lot of years now trying to convince people to run their businesses this way, and I've learned how hard it is because we're pushing up against this old and very dominant idea. But let me give you one of the bits of pushback that I get quite often, which is that this sounds great but [00:15:00] it's not practical. Trust is vague, it's intangible. We need to run our business in a discipline way to be execution focused. We didn't focus on things on that can be measured and you may as well be telling us to measure the fairy dust and rainbows, whatever. And I feel like that's such a dodge. But on the other hand, that's what our... people are advocating for that in companies are up against that, that question. So how do you answer when people say that to you?

Seth Godin (00:15:26):
Okay, so it's a marketing question, it is not actually a debate [00:15:30] that someone is having with you. The subtext of what they're saying is, I'm afraid of change. I would prefer to have a safe sinecure and I would like to point to my boss and my competitors, so I'm off the hook. That's what they're actually saying. So answering their objection with rational thought doesn't get us anywhere.

Eric Ries (00:15:48):
Tell me about it.

Seth Godin (00:15:49):
What we traffic in actually is stories. And so if we think about what Michael Lewis wrote about in Moneyball, when Billy Beane was trying to persuade the scouts [00:16:00] to change the proxy they were using to recruit players, they pushed back hard. They didn't push back hard because they cared one way or the other about whether the A's won because the A's were already losing, what they cared about was, "What will I tell my friends? What will I tell the other scouts? What will I tell my peers? What will happen to my self-esteem and my status if I announce my judgment is no longer important?"

Eric Ries (00:16:25):
It would ruin their career, yeah.

Seth Godin (00:16:27):
And what's interesting is after the A's did so well, lots [00:16:30] of teams copied it. They didn't copy it because he proved he was right, they copied it because it was embarrassing to not copy it. And that what people care about, in everything, in all marketing, is status, affiliation and fear. Fear; will I get in trouble, what will I tell the others? Affiliation; what is everybody else doing, am I in sync? And status; will this help me move up or move down? And so when somebody shows up a competitor doing [00:17:00] this sort of cycle and it makes you look uninformed or dumb or whatever, you are going to switch, not because they're right, but because you don't want to deal with that emotion.

(00:17:10):
And so if we think about the VC industry, when Andreessen showed up and started writing very, very, very big checks, it made the other VCs feel small. And so where the epidemic of unicorns came from is trying to keep up with the Joneses, not that there was an economic rationale [00:17:30] for it. And so if I'm talking to someone who says, "Well yeah, trust is hard to measure." My answer is, "Yeah, it is. But that person over there is doing it and that person over there is doing it and your board's going to ask you why you're not doing it. Can I help you get ready for that board meeting?"

Eric Ries (00:17:45):
Who are the exemplars that you point to when you're doing that?

Seth Godin (00:17:47):
Well, I think the more specific industry-wide, the better. Because part of the problem of Apple computer is there has to be an Apple computer just like there has to be a [00:18:00] Beatles, but it's probably not going to be us. So just, and Apple isn't a great example on the trust thing, but just because Apple did it doesn't mean I have to do it. I can't, because they made the most successful consumer product of all time, so don't count them. But if I'm in the plumbing business and you want to tell me about that HVAC company that has a different way that's causing them to close twice as many sales, now I have to pay attention. Because the more it's analogous to my organization, [00:18:30] the more likely it is that I'm going to embrace it. And then to just shift sideways just a little bit, how did the whole idea of Lean spread, it didn't spread from CEO to CEO, for sure.

Eric Ries (00:18:42):
For sure.

Seth Godin (00:18:43):
It spread because a low status engineer realized they could raise their status by bringing a methodology to other engineers, build affiliation with them, et cetera. And the more contagious it got horizontally, the better their life got. Same with [00:19:00] Slack, that's how Slack spread. Slack didn't spread because Stewart showed up and proved it was more effective at communication. It's because someone deep in the bowels of IT project management decided their life would get better if their peers used it too.

Eric Ries (00:19:17):
That's very perceptive. And I can remember when Lean was going through that spreading phase. I remember actually that happened at Amazon, I remember somebody took one of my blog posts and took it to their boss and said, "Hey, I think we should do this." [00:19:30] Next thing you know is he's presenting it to Jeff and the executive committee of Amazon. And Jeff was like, "Yeah, this sounds like a good idea. Anyone who doesn't think this is a good idea shouldn't work at Amazon." And all of a sudden all these executives thought it was a real good idea real quick. And all of them, they're doing pilots and tests and stuff and it was really cool. But that's exactly right. It started off very much as a grassroots movement of individual engineers who saw the wisdom of it.

(00:19:52):
How do we start a movement for trustworthiness in the same way? I think a lot... this is one of the most common calls I get now, even more than people [00:20:00] want to talk to me about Lean Startup. They want to talk to me about how can I make my company trustworthy? How do I resist having what happened to the social media era companies, for example, happened to me. And yet they struggle for language, they struggle for a sense of community and a lot of them are in a defensive crouch about it. Like, "Oh I'm so sorry, I'm not as profitable as I could be because I'm trying to be trustworthy." And I'm always like, "You have it exactly backwards. This is a huge competitive advantage. Your competitors are going to cry when they find out that your customers actually love you." So how do we spread that [00:20:30] meme out into companies to get them to change?

Seth Godin (00:20:32):
So there are two approaches that I'm going to describe, neither one of which is right on the nose, but either one could help a little bit. What is a brand's value? A brand's value is how much extra will someone pay for yours instead of the commodity version. And so there are lots of people who say, "I have a valuable brand and a loyal customer base." Really? How many people flying on Delta are paying extra compared to United?

Eric Ries (00:21:00):
[00:21:00] Right.

Seth Godin (00:21:01):
The answer is zero. The brand value of Delta is very close to zero because the alternative flights are the same price. So it's very hard to explain to many people at Delta why they should spend a lot more money on things that they think of as marketing, like advertising, because it's not going to get people to pay more money. So if we can demonstrate which brands are able to charge a premium because they're [00:21:30] trusted, we can go to that part of the brain and that part of the organization to explain earned trust has a value.

(00:21:41):
The second thing, getting to the status and affiliation part, is when someone shows up like US News did with colleges and ranks them, their behavior changes. And this happened in the 50 Best Places to Work, and we can go down a long list. So when someone shows up in an [00:22:00] industry and says, "This is the 10 most trusted brands in this industry and the 10 least trusted brands," every one of those brands is going to see the ranking. And if you then say, "Here are the steps needed to move up the ranking," many of these organizations will engage in the steps. Because no one wants to go to their boss and say, "Yeah, I saw we were in the bottom 4% and I'm not doing anything about it."

Eric Ries (00:22:23):
Yeah, it's definitely somebody's job to not have you be on the worst list. And you've now created a problem for them [00:22:30] by making the ranking.

Seth Godin (00:22:31):
Right. Change always creates tension. If you don't want to create tension, you cannot make change happen.

Eric Ries (00:22:37):
Totally. It's interesting because a friend of mine was telling me about recent business school graduates who have been taught that this more enlightened way of running business is better, but they have inadvertently, I think, been teaching students that it is the way that it is. So they go out into the real world and they're not equipped to handle the real politic and the cultural stuff of these companies, that are run in these really incompetent [00:23:00] ways, and they wind up disillusioned. And it hit me that we're not teaching business leaders that they need to be change agents. They've developed a sense of entitlement that things are supposed to already be changed in this way, rather than seeing that no, you have to be the agent of change because that is the way that you're going to be competitively successful in a market-based economy.

Seth Godin (00:23:20):
So I'm pretty harsh about business schools. I've run alternative business schools, I don't anymore, but I know it is possible to teach people to do extraordinary things. [00:23:30] Business schools don't teach people to be leaders. They sort of teach them to be managers, they mostly teach them to look good and follow instructions. And do not underestimate the power of culture. When someone shows up in an organization... and most of the people who are graduating from elite institutions are going to places where they make the maximum amount of money, not the maximum amount of difference. When they discover what it's like around here, it doesn't take them very long to shift [00:24:00] gears and do the things that are like around here because they're not leaders. And what it means to be a leader is to do something that might not work and to earn voluntary enrollment, to have people eagerly choose to follow you.

(00:24:17):
I went to business school. I didn't know better but to start leading when I got my first job. And my peers thought I was nuts because I started leading the day I got there, the first [00:24:30] day. Try to imagine a world before voicemail or email. There was a Fellowes brand carousel... It's a plastic thing, it's a foot across, it has 40 slots in it. You spin it around, you see your name, while you were out, messages are there. Right? So I got to work at nine o'clock, I get back from lunch at noon and I walk over to the desk and there's the spinning thing. I'm the 30th employee, so there's 30 names in the thing. And I realized that [00:25:00] A, they're in the order that you were hired, not alphabetically. And B, I'm going to have to spin this thing several times every day to find my name. So I think I'm doing a public service, I grab a paperclip and I put it on top of my name. Because now I'll be able to find mine, but also if you know you're two away from my paperclip, you'll find yours too. Well within three hours it was festooned with colored paperclips. In fact everyone said, "What have we been waiting for? The company's a year old, why didn't anyone do this before he did?" It [00:25:30] never occurred to me that I wasn't supposed to do that.

(00:25:33):
Well multiply that times a thousand, multiply that times 10,000. We are not going... Your Jeff Bezos story is heartening except it doesn't depend on the CEO, at almost any organization. It depends on someone who's not the CEO doing a small thing, giving away credit, taking the blame if it doesn't work, and then doing it again. And earning trust can be done in an afternoon with three customers. [00:26:00] And the question then is, and then what? If you have a customer who ordered a custom thing from you and it didn't work out, what happens if instead of sending a forum email, you call that person? Does that change anything? If it does change anything, can you publish your results internally and can you start that cycle about how we're going to deal with our mistakes?

(00:26:24):
And I think this is all doable, and my friend Tom Peters [00:26:30] has been ranting about this for 45 years.

Eric Ries (00:26:32):
Oh my God.

Seth Godin (00:26:33):
And we're afraid to do it.

Eric Ries (00:26:34):
So what I love about your advice is how practical it is. Even when we're talking about these lofty topics. I'm going to quote you something that you wrote. I don't know if you even remember all these little details, but this is a great one, I love this one. You said the two key choices a brand makes to be trusted in the long run. One, you will postpone profit taking, and two, you'll do things that are difficult. And I thought that is so unbelievably clear. Tell me about that.

Seth Godin (00:26:59):
Okay, so [00:27:00] you've hinted a couple of times that earning trust might be profitable in the long run, but it might be expensive in the short run. I'm not sure that's the case. I think you can charge enough extra if you are creating trust value that it's profitable in the short run too. But it's difficult, because the easiest thing to say is you can pick anyone, and we're anyone but $5 cheaper. That is the mantra of just about any organization that's racing [00:27:30] to the bottom. One that is floundering is you can pick anyone, we're anyone, and it's a tie, maybe I'll get some SEO and you'll buy from me instead. But the opportunity to say you'll pay a lot, but you'll get more than you pay for is how you find your smallest viable audience. The people who are willing to pay a lot but get more than they paid for, will increase your profit. But it's difficult because then you have to prove, justify, that it's what they need and if they walk away, [00:28:00] you've got real trouble.

(00:28:01):
So you can't do that and also be the same as everybody else. You have to figure out how to earn the premium. And all you have to do is take a look at the hotel business to understand that this can be done and can be done beautifully. All hotel rooms are dark and most are quiet. So when the Four Seasons or the Ritz sells me a hotel room, it's as dark and as quiet as the Motel 6. So what is the extra $400 for? [00:28:30] And the answer is, because I trust you to make things right, because I trust you to make me feel welcome, because I trust you to not screw up. And they're very clear about what they do. They don't say we charge extra because our rooms are darker or quieter, they say we charge extra because we are ladies and gentlemen welcoming ladies and gentlemen. And if that sounds like the kind of place you want to stay, that's what we have here.

Eric Ries (00:28:55):
So I've been surprised, especially when I work with large organizations, and travel around [00:29:00] as I have now as a consultant for many years, how few companies seem like they're actually trying to generate price premium. They've been so... I'll never forget, I was sitting with a team once in an industrial manufacturing company and they were obsessed with taking cost out of production. So it was like, "You launch a product. If it's at all successful, the first step is you start taking cost out." That's the mantra. And I remember asking them, "Isn't the purpose of taking cost out to make margin?" And they said, "Sure." And I said, "Well, isn't margin a two-sided [00:29:30] equation? Couldn't we also increase margin by increasing value?" And they looked at me like I was speaking a foreign language. Like, "Well that's not... We're the production department, we're in charge of engineering."

(00:29:41):
And they didn't even conceive of the idea that they could do it on the other side, and therefore the company was structured so that cost removal is a continuous process that's always happening and people are always being promoted for. And value improvement is a sporadic process that happens only when you can get a big enough budget to justify doing [00:30:00] some project that takes forever. And so guess which one wins out? The continuous process completely defeats the sporadic process.

(00:30:07):
And if the ideology of capitalism was really about competition and winning, this wouldn't be true. This really makes no... These companies are destroying themselves with this behavior. So what's going on?

Seth Godin (00:30:17):
Well, first, this is a brilliant insight and I think you should write a book about it. I think continuous versus sporadic and the idea... I'm a trained mechanical engineer, though I didn't really go to class. [00:30:30] That the production people have this false proxy of you're doing a good job if you take take out cost. That carries a lot. There's a lot in what you just said. I would argue that the physics of it is that value creation is a quantum experience. That if you figure out how to gradually increase the quality of the alloy over five years, maybe [00:31:00] you've added some value for the end user, but mostly it's this quantum experience of going from version one to version two of increasing utility, et cetera. So I could see why someone who is averse to go/no-go decisions, averse to "you failed" would prefer the micro process of tiny little improvements, but I also believe it is possible to create quantum improvements through continuous [00:31:30] effort. And I think we can train ourselves and each other to do that.

(00:31:37):
We see this, for example, if you want to become a better novelist, you don't write a novel and then just wait until you have a brilliant novel. You start working on your second novel and keep rewriting it and editing it and improving it, until it becomes a brilliant novel. You're just not shipping in between. And I think that that is totally possible with software development, it's totally possible with [00:32:00] what color are the eyeglasses you sell and everything in between.

Eric Ries (00:32:03):
Of course. That's interesting. You see that lines up with something else that I've noticed, which is so people always complain, when I come in and I tell them that you should be more trustworthy or about anything that we're talking about, they always say, "Oh man, business is already hard enough. Now I have to do extra and it's going to make it even harder." And it took me years to realize that I could reply by saying, "Interesting you say that. Maybe the reason business is so effing hard for you is that nobody trusts anything that you say. You tell [00:32:30] your employees to do something but they don't believe you. Your customers don't believe your share... Nobody believes you. If they believed you, maybe it would be easier."

(00:32:35):
And it wasn't until I started to meet companies that have that culture internally where they really are powered by trust and love. They're the only companies I meet where the executives never complain about the difficulty of communicating with their employees. Because if the thing is lined up with what people want to do in their heart, it's very easy to communicate, people are dying to do it. Those people do not complain to me about talent retention. They don't complain about recruiting. They don't complain about the difficulty [00:33:00] of raising money and they don't complain about being commoditized as competition. And first time I met a company like that, I thought I was in product Nirvana. And I thought well I could tell the companies about it, they'll all copy. But it's been-

Seth Godin (00:33:12):
Yeah, it's when you race to the bottom, you create something that's brittle, because you have to create shortcuts in order to beat someone who is creating shortcuts. And when you race to the top, you have to do a different sort of thing. So I'll give you a very [00:33:30] mechanical example of this. Because again, we have to be careful not that trustworthiness doesn't mean give everyone a hug and give away stuff. That's not what we're talking about. So imagine that you're somebody who is a contractor doing commercial construction, and the kind of people you're working for have a lot at stake, and they can't afford to hire a contractor they don't trust, and they can't afford to hire a contractor that's [00:34:00] going to mess up.

(00:34:01):
Well, what if your reputation is such that it's very clear that what you do is you set up WiFi cameras at the job site from the first day and your clients can watch from their office, 24/7, your entire team working at all times. Well, if your competitors don't do that, they got a lot of explaining to do. And when you do that, your team is going to act differently because they're always on camera. [00:34:30] Now, they're not on camera because you don't trust them, they're on camera because you are earning... So if they act like people on camera who are trusted, people are going to stop checking the cameras. The point is, this is not tactical advice. This is to give you this idea that it is possible to say we're going to build a resilient organization that can hold up to inspection, as opposed to building a brittle one that has to sneak around.

Eric Ries (00:34:59):
I never thought of the [00:35:00] connection between the brittleness of it, [inaudible 00:35:02] the short-termism does lead to that brittleness, but the connection between that and earning trust, that's such a great connection. That's really interesting.

(00:35:10):
So the other thing that that makes me think about... and it's interesting because people always talk about you as a marketing guru, which certainly if I had marketing advice, needed market advice, I certainly would ask you, and you can see already that your knack for storytelling and these aphorisms, you've been honing that craft for many years. So of course I appreciate it. But what's funny is I never really [00:35:30] think of you as a marketing person. Personally-

Seth Godin (00:35:32):
Neither do I.

Eric Ries (00:35:33):
Because I have found that the issues that you raised to me are issues that I used to, when I was younger, I would see them. There was engineering, my background is in engineering, and then I learned product and then I learned marketing as these separate disciplines. But not being sacrilegious to say it's a bit like the holy trinity, where those are three different things, but they're all actually the same thing. And certainly from the customer's perspective, one of the things I learned, is that if the [00:36:00] customer experiences it, then it is the product no matter what you call it.

(00:36:04):
So I'm curious, do you buy into that? I worry about when you say that these things are all the same, maybe some people will conclude from that, "Oh, therefore I don't need specialized people. I shouldn't revere the skills of people who've honed their craft in these different disciplines." So how do you navigate that factor? How do you avoid being pigeonholed, not just you personally, but the people that follow you as marketers or as product people? When trustworthiness, trust as an asset, thinking long-term, these are attributes of the [00:36:30] holistic enterprise. They're not really the responsibility of some sub-function.

Seth Godin (00:36:35):
So around 1990, marketing, as we used to know it for a hundred years, died. Because it hit its peak with the final episode of Mash or an episode of Friends or the Super Bowl. You make average product for average people; you advertise it a lot, you make enough money to advertise it some more, you get shelf space, you win. And it was very simple. That's how we got BanAids, it's how we got Desitin, it's how we got [00:37:00] Heinz Ketchup.

(00:37:02):
But in 1990 it died because the long tail showed up, because you can't reach everyone no matter how much you spend ever again. And I was lucky enough to be able to narrate that shift. So I got to decide what marketing is, and I decided that what marketing is, is anything that touches the market. So if I'm in charge of marketing, that's my answer. I don't think of myself as a marketer [00:37:30] and more than half of my books aren't "marketing books." Way more than half my blog posts aren't marketing blogs, what I write about is, how do humans interact? What stories do we tell ourselves? What do we want? What's worth doing? All the stuff we've been talking about, I call all of that, if you want me to, marketing, because it touches the market. And what is the market? The market is the place where people freely exchange goods and services to solve their problems.

(00:37:59):
So if someone [00:38:00] is a monopoly, they don't have to do marketing because you have no choice. But everybody else has to show up in a way that people will exchange attention and money to get a problem solved. And we do that, not by doing a careful engineering P&L statement, but by telling ourselves a story.

Eric Ries (00:38:20):
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(00:39:27):
I can't help but think about that in the context of the hype [00:39:30] wave we're living through about AI. Everyone wants to talk about AI all the time, 24/7. My life has been very much about AI of late, working with AI companies, talking to companies about how to handle AI. And you've written a lot about the AI shift. I think you even likened it, in one of your posts, to getting to be alive when Henry Ford invents the model T. And-

Seth Godin (00:39:50):
Yeah, I didn't say that, but I said it's the biggest shift since electricity, I think.

Eric Ries (00:39:55):
Yeah, so that's very profound, and [00:40:00] from an opportunity perspective means that there's a whole new set of institutions to be built. For just to start with, what are you excited about? What are you fearful about? What are the opportunities and risks that are currently on your mind from AI?

Seth Godin (00:40:12):
So I think that LLMs that sort of speak English that you can argue with, is a little bit of a sideshow. I still spend time arguing with Claude and with ChatGPT, mostly ChatGPT because I find it annoying and a liar. But [00:40:30] I don't think that's the big thing to think about. I think, first of all, it's always on and always present and we haven't - you as someone who thinks about continuous a lot - haven't thought about that. Why should you go to a therapist for an hour a week when you can have a therapist in your earbuds one minute every hour? The idea that there is situational awareness and there's a system that is ready to be there for you [00:41:00] whenever you need it, that's a fundamental shift in how human beings are going to be in the world. The second thing is it can do mediocre work better and faster than a human, which means that if you do mediocre work, you are in trouble. So if you need mediocre copywriting, don't hire a copywriter ever again.

Eric Ries (00:41:23):
So good at that, yeah.

Seth Godin (00:41:24):
Because you can get mediocre copywriting for free from ChatGPT. The third thing [00:41:30] is it has a much broader awareness than people do. So you can say to it right now, you can say to Claude - I did this - "Here's a 40-page business plan, it was written over the course of a year by nine people. Please review it, find the contradictions, find the inconsistencies and let me know." And in less than 10 seconds, it wrote me a one-page memo that an MBA would've had trouble doing better than; it was magnificent. [00:42:00] Well, now what happens if instead of just reading my 40-page business plan, it reads a thousand 40-page business plans.

Eric Ries (00:42:08):
All of them that have ever been written.

Seth Godin (00:42:08):
No human can do that. So there's all of these things that we're going to take for granted the minute they start happening, that cannot be done today. So I think the idea of pulling out your phone and asking it, "What year did Jimmy Carter win the World Middleweight boxing Championship?" That's a fun stunt, but that's not the point. The point is [00:42:30] the means of production have now changed forever.

Eric Ries (00:42:33):
Obviously, a lot of discussion about ethics and responsibility as it relates to AI. And actually I've noticed in the tech industry there's been this really interesting spillover effect, where because the responsibility issues are so obvious with AI, it's made non-AI founders, who are also working on very transformative technologies, way more interested in their responsibilities and thinking about the ways in which their technology can go wrong. To me, the AI companies seem [00:43:00] to me to have really missed your lesson about trust, because to me, the vendors in this space that are not trusted have no commercial prospects whatsoever. This is such a sensitive and difficult technology. People are so worried about it, there's so many ways it can go wrong. You just saw that Air Canada story about the customer service bot that went off the rails and they already got sued already, just instantaneous disaster from a very minor deployment of AI. Seems to me like the AI companies really should be far more focused on how do they make themselves trustworthy counterparties.

(00:43:29):
What's your thought about [00:43:30] what they ought to be doing?

Seth Godin (00:43:31):
I'm a little bit more cynical. I think that the race to the bottom in AI is well paved. First of all, the bigger the promises you make, the more money you're going to raise.

Eric Ries (00:43:45):
Unfortunately.

Seth Godin (00:43:46):
And once you raise that money, then there's going to be pressure to come up with something of value as soon as possible, and to build a network effect into it. And the network effect is irresistible even when [00:44:00] people don't approve. So when they started pumping oil out of the ground and it was dirty and killing people and clearly unhealthy, that didn't stop people from switching to gas trucks because if they didn't, they were out of business. So I worked with Isaac Asimov, I worked with Arthur C. Clark, I've been reading science fiction my whole life. It's very easy for me to tell you a doomsday scenario. And I can tell you that no doomsday scenario [00:44:30] is going to be avoided because a few Silicon Valley executives were more careful. That's not going to happen.

Eric Ries (00:44:36):
No, it's not sufficient to the forces at work, yeah.

Seth Godin (00:44:39):
So there's going to be this sprint to say, "Can we put in enough stakes in the ground to cause a network effect to happen?" But then there's going to be a moment, which many CEOs stare at and blink, when they will have the resources to race up instead of down. [00:45:00] And let's compare Satya Nadella to Steve Ballmer. Steve Ballmer raced to the bottom from the first day he got there and was one of the worst performing CEOs of his generation. Satya says, "Look, the company's not going to go out of business. What can I do that would engage my employees, my constituencies, my customers, and that I'm proud of?" And that is a lot to put on one or two or five [00:45:30] people, but that's what we're going to need if this network's going to bend in the right direction.

(00:45:35):
So when I think about that key moment when Mark and Sheryl said, "We're going to take political money and run ads on Facebook," they changed the culture of the whole place and they raced it to the bottom. And what they could have done is say, "Look, we can live without it. Let's figure out how to make this thing additive, generative, something we're proud of and more trustworthy, instead of figuring out how to make a little bit more money in four weeks." [00:46:00] And it's a shame when that happens, it's avoidable. That I think is something we have to keep announcing we need to have happen. But as a cynic watching from the outside, it feels unregulatable to me, to say, "We can't let an AI go out into the world that's not going to spam people or scam people, et cetera." Because it's going to, it's too late for that.

Eric Ries (00:46:22):
But let me push back on one thing, because it seems like to me maybe a little bit of a contradiction between what you're saying, that the race to the bottom is inevitable... maybe so, I know it's a more [00:46:30] cynical view. But if it's true that the things you've been advocating for, about thinking long-term and acting in a more trustworthy way, taking Mark and Cheryl, if they'd taken the better path, that would've been an advantage they would've had.

Seth Godin (00:46:41):
Yeah.

Eric Ries (00:46:41):
So how do I reconcile those two things? The race to the bottom, is it inevitable or is there an opportunity to have a race to the top?

Seth Godin (00:46:47):
Well, so what we're trying to do, especially you, is change the culture so that you can't be proud of what you did just because you made a lot of money.

Eric Ries (00:46:59):
Amen to that.

Seth Godin (00:47:00):
[00:47:00] So back to status and affiliation. Don't brag to me as a VC that you put in and got a 100x out, but also produced something terrible. That we're trying to undo the Milton Friedman mindset. And we're trying to say, "Among people of privilege who aren't struggling to feed their family, this is the way things are around here." That what gets you invited to the stage, to the talk show, to whatever it is, is you ratcheted things up, and we're going to aim [00:47:30] our disgust at people, who when they had the option, chose to race to the bottom.

Eric Ries (00:47:37):
Yeah, they could have had the legacy of greatness and chose mediocrity instead.

Seth Godin (00:47:41):
Yeah.

Eric Ries (00:47:42):
Yeah. Yeah, I really find it extremely offensive when people wrap up this kind of mediocrity in the language of greatness and say, "Well, you got to hand it to them. At least they made a lot of money." It's like, "No, I don't got to hand it to them. Making money in an exploitative way is the easiest thing in the world. That's not praiseworthy." I am not going to have my heroes be people who did that.

(00:47:59):
And I [00:48:00] think that's true. I think people who are listening to this right now, do not realize that power that they have to attach their attention and approbation to the people who actually live their values. And if you think that billionaires don't want your approval, ask yourself why they spend so much time buying media outlets and writing books and doing all this stuff, to try to get you to tell you what a great guy they were. Well, if they had everything they already want, they were perfectly happy, they wouldn't waste their time with that.

Seth Godin (00:48:25):
Yeah, most people listening to this have not been on stage a public speaker. But I can [00:48:30] tell you, when you're on stage as a public speaker, and you're looking at the faces of the audience, you know with every cell of your being when it's not working.

Eric Ries (00:48:39):
I can attest, oh my God.

Seth Godin (00:48:42):
When a CEO gets 50 phone calls or when a brand manager gets 80 letters, they pay attention. That if a hundred people write a letter to Unilever about palm oil, a meeting is going to happen, and if it happens five days in a row that they get letters like that, [00:49:00] a policy is going to change. Because they're going to get paid either way, so just do something to make the letters go away, do something to move up in the appreciation scale. There's always going to be gangsters who want to race to the bottom, but we don't have to applaud them.

Eric Ries (00:49:16):
I want to go back to the Milton Friedman point, because it's such a key one, and lots of writers over the years have taken him out to the woodshed - including you, you've done it very eloquently - and yet the idea persists, it's very popular. [00:49:30] And I just want to quote you something you wrote because this one I really thought was just so scintillating. Because you were asking in one of your essays, why did this idea catch on when it's so manifestly bad. And you said, "Because it's simple, because it diminishes responsibility, and because it comes with prizes and warm chocolate cookies for those in charge." And I thought, oh God, that is so right on. But why? For God's sake, why?

Seth Godin (00:50:00):
[00:50:00] Why did I mention the warm chocolate cookies or why [inaudible 00:50:03].

Eric Ries (00:50:04):
That's what made it sticky, and absolutely made it totally memorable. But in all seriousness, I'm curious what your view is, this idea has so taken over our society, yet has [inaudible 00:50:14].

Seth Godin (00:50:13):
Yeah well, back to status and affiliation. I have a friend who used to work at a very famous media company, and they would get called to a meeting in the general counsel's office. And the general counsel had a private chef, and the meeting would take place [00:50:30] right after lunch, and he'd be sitting there eating his warm chocolate cookie and wouldn't offer one to the people who came to the room. Right? It's like turtles all the way down.

Eric Ries (00:50:40):
All the way-

Seth Godin (00:50:40):
Who's up and who's not. And what this did was it took a system that already had scorekeeping in place. Right? That the P&L was already present, and it said the P&L is going to be elevated, the P&L is directly related to the stock price, and the people who are going to benefit the most [00:51:00] are the people highest in status in the organization. Well, those are also the people who get to decide what's important. So human nature, they decided what was important is that they got warm chocolate cookies.

Eric Ries (00:51:12):
All right, can we do a quick lightning round?

Seth Godin (00:51:14):
I'll do my best.

Eric Ries (00:51:15):
Right? Because you have so many aphorisms and so many sayings that are just... There's no way we could do them all in one episode, it would take all day to do them. But I just wrote down, jot out a couple of my favorites, and you can just give me your reaction. [00:51:30] Just tell me what it means to you.

Seth Godin (00:51:32):
I'll do my best, yes.

Eric Ries (00:51:33):
Some of these are great. Okay, first thing, because I thought of it just actually on the theme you were just talking about, you said that things can either be optimized or maximized. What does that mean?

Seth Godin (00:51:43):
Okay, so we maximize something when we make it go up as much as we possibly can. We optimize something when we find that spot on the curve where the trade-offs are in balance. And engineers learn early [00:52:00] on that maximization is a trap. If you build the biggest airplane in the world, it will not fly. That's what Howard Hughes discovered or something close to that. Whereas the optimal airplane would be the right balance of safety, efficiency and payload. Harder to do because there's multiple variables.

Eric Ries (00:52:20):
Hundred percent. Okay, here's one that comes with an exclamation point. "You can't shrink your way to greatness!"

Seth Godin (00:52:25):
Stole that from Tom Peters.

Eric Ries (00:52:27):
Yeah.

Seth Godin (00:52:28):
So what Tom was arguing [00:52:30] about, this is after In Search of Excellence, is people like Chainsaw Al Dunlap figured out that they could make a lot of money by coming in as a CEO and just slashing all sorts of divisions and personnel. And in the short run, your profit will go up if you do that, because that person who did that important thing, no one's going to notice it for six months. But then when they do, you're in really big trouble. And I don't have any insight about what's [00:53:00] going on at Boeing, but my hunch is there were some people there who tried to shrink their way to greatness, they probably would've been better off making better planes.

Eric Ries (00:53:09):
Unequivocally true. Well, that's actually right on with the next one I was going to ask you. "The short-term capitalist is betting that someone else will clean it up."

Seth Godin (00:53:18):
Yeah. As soon as you go public, what you've done is you've sold your company to people with a very short attention span who are particularly greedy, and [00:53:30] you didn't get to pick them. And what these people will do is, when the stock price goes up enough, they will sell. Now they're not your owners anymore, the next person is. And they try to time it so that the next person is left with the mess. They were just there for the ride on the way up. And please understand that those are the people who own your company. You don't have to listen to them, but that's who they are.

Eric Ries (00:53:53):
Yeah. The speculators versus the investors, or the tourists versus the citizens of the republic, is a metaphor I've used for a long time.

Seth Godin (00:53:59):
Yeah, exactly.

Eric Ries (00:54:00):
[00:54:00] Okay, you had a great post about politics versus governance. And governance is one of my hobbyhorse topics I spend a lot of time working on, and you said something I just thought was so great. "Governance is the serious business of taking responsibility for leadership."

Seth Godin (00:54:15):
Thank you, yeah. And politics is the art of arguing and you're not supposed to talk about politics. I don't disagree because who wants to have an argument? But we have to talk about governance all the time. We have to all the time say, "Are [00:54:30] we doing the right thing in the right way, for the right reason, with the right resources, for the right people?" And if we're not, we need to keep talking about it until we are.

Eric Ries (00:54:38):
This is one I think Tom Peters would approve of this one too. "When we assume that everyone is a volunteer and that all power is transient, it's easier to become the person we're proud to be." That one hit me.

Seth Godin (00:54:51):
Yeah. Management has a bad history. "How do I extract enough power from a system to tell [00:55:00] other people what to do even when they don't want to?" And you could probably get away with that in a place that's impoverished, where you are the only one with a machine. But it's very hard to get away with that if you're hiring knowledge workers who have a choice. And so if we just assume that people could go somewhere else tomorrow, then we will create the conditions for them to want to come here.

Eric Ries (00:55:26):
"Instead of wondering when your next vacation is, you ought to set up a life you [00:55:30] don't need to escape from."

Seth Godin (00:55:31):
This has been sort of misinterpreted, it's the first chapter of Linchpin. It's based on a true story. It was five o'clock in the morning and I was in the only room at the hotel that had WiFi. And I was in the lobby checking my email, and two people walked by and one said... they'd probably been out all night drinking. One said to the other, "Look at that poor man, he has to be at work." And I realized in that moment, I had plenty of options right then, no [00:56:00] one was waiting for me to do this thing. I was doing this thing because I wanted to do this thing, not out of fear, but out of joy. And there are many jobs, they're not necessarily fancy jobs with unlimited free espresso, there are many jobs where people might choose to do them as a hobby because they could. And every once in a while we might get lucky enough to find one of those jobs or to create one of those jobs for other people.

(00:56:27):
So I spent a year organizing the Carbon Almanac [00:56:30] with 300 other people. All of us, including me, were volunteers. 300 people. I worked on it 70 hours a week, but plenty of people worked on it for a lot. And not one person got paid. And I couldn't tell anyone what to do because they were volunteers. What kind of project could you organize like that? Because we have the tools to do it that we never used to have before.

Eric Ries (00:56:51):
Yeah. Speaking of change in the means of production, it's truly accessible to absolutely every person, or close to it, and getting more so every day.

Seth Godin (00:56:59):
Exactly.

Eric Ries (00:57:00):
[00:57:00] That's a great story.

(00:57:01):
Okay, last one. Two more. Do two more, you got time?

Seth Godin (00:57:05):
Yes. Two more. Ready to go.

Eric Ries (00:57:07):
Two more. All right. "We are all homeschooled."

Seth Godin (00:57:11):
Yes. So what I mean by that is public school is a miracle. Public school is important, public school builds culture, public school builds a chance for kids to connect with each other; but it only lasts seven hours a day and there are 24 hours in a day. So at least 17 hours left for kids to be [00:57:30] with their parents, and hopefully their parents aren't overworked with the short end of the stick, unable to spend time with them. And what are we doing in those hours? How are we creating situations and expectations? The first five years, there is no school. So we aren't spending nearly enough time talking about and supporting this idea that everyone is homeschooled, and parents who have been rejected because of systems of caste or [00:58:00] educational inequities are being pushed to have their kids have the same problem. And what we need to do is give people support so that the homeschooling is as good as it can be.

Eric Ries (00:58:14):
There's too many good things I want to ask you about. It's so hard. It's so hard to choose. Okay. You said the sequence of questions worth answering... this one's a little longer. But this one, I love this, and I feel like so many leaders I talk to, if they would just do this one exercise it would have such an effect on the quality [00:58:30] of work that their team would do. So I'll read this a little longer if you don't mind.

Seth Godin (00:58:33):
Okay.

Eric Ries (00:58:34):
"For everyone on the team, here are the questions worth answering. Do you care enough to do great work? Can we agree on what great work looks like? When the world changes, do we have a process to redefine great work?" That's so good. "And do you have the tools you need to reach your goals? How could we create a system where great work is easier to do?" And it was that last bit that really did it for me to see that when people are not doing great work, it's not that they lack greatness in some inherent way, but that the system [00:59:00] around them is inhibiting or making it harder to do great work than mediocre work. Tell me about this [inaudible 00:59:06].

Seth Godin (00:59:05):
You nailed it. And I think that this is at the core of your contribution. How do we build a system that creates the conditions for great work to more easily occur? And I have seen it happen at fast food restaurants, I have seen it happen at hospitals. Just go look up the Aravind Eye Hospital in India. There are more people who have their eyesight restored than [00:59:30] the sum total population of Los Angeles and Chicago, because of this one doctor and one hospital, that figured out that they could create the conditions for this to happen. And so it's not that India has better cataract surgeons than some other country, it's that the conditions were created. So if you want to take credit as a CEO, as an organizer, as an engineer, that is what we need to do, is build these generative systems, [01:00:00] not manage our way out of it, because it's really hard to manage your way out of anything these days.

Eric Ries (01:00:05):
I can't add anything to that. So much of your work, it's nominally about business, but it has this spiritual dimension to it, and I feel like you weave it in sometimes a little bit esoterically. I think you had a post recently about... you said, "Instead of holding on for dear life, we should let go for dear life." And I wonder, I feel like some people think it's ridiculous to talk about business as a spiritual pursuit, [01:00:30] but I read it between the lines of so much of what you're written, and I'm curious what you think about that.

Seth Godin (01:00:37):
Every person on this call is richer than the last King of France was. Every person who's listening to this is going to have dinner tonight. And to build this world where we get to play like this, we wreck the planet and who knows how much longer we've got. So if you're spending 8 or 10 or 12 hours a day doing something that isn't spiritual, please tell me why? Because [01:01:00] it's not to feed your family because there's lots of things you can do to feed your family that have less drama. It's our only day, we only get today once. Why are you living it like you're going to get it over with.

Eric Ries (01:01:11):
What an incredible note to end on. Seth, the inimitable Seth Godin, I really appreciate taking the time. This is just full of so many practical tips and such deep wisdom. Thank you for all you have done for me in my career over the many years, and for so many of us. So I [inaudible 01:01:27] conversation.

Seth Godin (01:01:26):
An absolute pleasure. Go make a ruckus Eric, good to talk to you.

Eric Ries (01:01:30):
[01:01:30] Yes sir. Thanks sir.

(01:01:32):
You've been listening to the Eric Ries Show. Special thanks to the sponsors for this episode, DigitalOcean, Mercury and Neo4j. The Eric Ries show is produced by Jordan Bernstein and Kiki Garthwaite, researched by Tom White and Melanie Bijack. Visual designed by Reform Collective. Title theme by DP Music.

(01:01:53):
I'm your host, Eric Ries. Thanks for listening and watching. See you next time.

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