01 Jun June 7, 2019 – Ask and Choose Ryan Levesque and Laughing Guides Isaac Prilleltensky
Ryan Levesque – Founder & CEO of The Ask Method Company and Author of Choose: The Single Most Important Decision Before Starting Your Business – Read interview highlights here
Look to find an opportunity where the competition is succeeding
in spite of themselves.
Ryan Levesque is the Founder & CEO of The Ask Method Company, ranked on the INC 500 at #462. It was also ranked as the #7 Fastest Growing Company in Austin, TX. He has been featured in Wall Street Journal, INC. Magazine, Entrepreneur, Forbes, Los Angeles Times, USAToday. They teach entrepreneurs how to launch and grow their business online using the AskMethod through online training, coaching programs, professional certification programs, and live workshops. Ryan is also the Co-Founder & Investor in Bucket.io.
Isaac Prilleltensky – Vice Provost for Institutional Culture, Professor, University of Miami and Author of The Laughing Guide Books
You have to be open to learn from people better than you.
Isaac Prilleltensky is an award-winning humor and academic writer. He was born in Argentina and has lived and worked in Israel, Canada, Australia, and the United States. He has published numerous books and over one hundred and thirty scholarly papers and book chapters. You can follow his humor blog at http://www.thelaughingguide.com/blog/ and his academic blog at http://wwwprofessorisaac.com/mattering/. Isaac is the former dean of the School of Education and Human Development at the University of Miami, where he is currently professor of educational and psychological studies and vice provost for institutional culture. He is the author of ten books and the recipient of awards by the National Newspaper Association for his humor writing; and from the division of community and counseling psychology from the American Psychological Association for his scholarly work.
Highlights from Ryan’s Interview
What I found is this most entrepreneurs, and most of the conventional wisdom out there is all about focusing on answering the question of what should I build? What should I create? What should I sell? But the reality is the question that you want to be asking yourself is not what, it’s who? Who should you serve? Who is your market? Who is your niche? Who is your ideal customer? And the biggest mistake that people make is asking the wrong question, just focusing on what before they figured out who.
They find something that they fall in love with, and they try to sell it when the reality is, you don’t have a business. People say, “What is the first thing you need that defines whether or not you have a business?” It’s not a business license, it’s not an office, it’s not an employee, it’s a customer. You do not have a business until you have a customer. And so that’s where you want to start. You want to start with the market, you want to start with your who. You want to find out first, who they are. And then once you’ve chosen who you’re going to focus on, the next step is to ask the right questions to figure out what that market needs, wants and desires. So that way, you can go and build it, create it or sell it.
There’s a reason why the failure rate of small businesses, at least in America, is what it is. And one of the things that I was really curious about after I published my first book, as it had gotten into the hands of literally hundreds of thousands of people around the world, is when you write a book like that–and you probably experienced this with your book–you get letters from people who say the book changed their life. But you also get letters from people who read the book and say, “It didn’t work. I tried what you teach, and it didn’t work.” And when you get a letter like that from someone, it’s kind of like a sucker punch in the gut. And it leads you to question yourself. Maybe I missed something, maybe I made a mistake. And I became obsessed with this question of why was it that some people were having success following the methodology that I was teaching, and yet some people were totally failing. All signs pointing to the same thing. The people who are failing were choosing bad markets.
I became obsessed over the last three years to define that. What does it need to be in a good market versus a bad market? And what I identified is, we went into 23 different niches over the last 10 years ourselves in our business. So I looked at those businesses, and looked at which ones were most successful versus which ones were not. I looked at our students, our readers, our clients, our customers. And what we ended up finding over the last three years is that there are seven factors that you want to be looking for that separate what we call a green light market. It doesn’t matter how good your ginger beer tastes, a green light market versus a red light market. And the key is putting yourself in a market that checks those boxes off.
There’s a multi-step process. Let’s talk about one of them. One of the tests that I take people through in the book is around market size. This is a big thing that people always ask about; how big should my market be? Should I be in a bigger market? Should I be in a smaller market? What’s the right size market?
The classic situation is someone has a product that they love, their neighbor, their buddy, their cousin, their brother in law loves the product as well. Their friends all love the product, and they think they’re going to get rich selling the product.
But the reality is, you need to put yourself in a market that’s the right size. So I began looking at this question, right? What’s the right size market? What we did, we looked at the keyword search volume. The number of people every single month who go on to Google online, searching for that particular thing. And we looked at that number for each of our businesses, each of our client businesses, each of our students’ businesses. And what we found is that there is a sweet spot, a sweet spot that we call the market size sweet spot that represents the right size you want to be looking for now.
When we discovered this, we basically had this decision. Do we want to reveal our most successful keywords and our most successful businesses? Because that’s effectively what we’re talking about. And so for months, my team and I were debating do we share this? Do we not share this? And what we decided is in the book, we have revealed what those key words are, so that anybody, whether your idea’s about making the next ginger beer, whether your idea is about launching a new clothing line, whatever it may be, you can take your idea, your keyword, and you can compare it against these reference benchmark keywords and see, is your business idea too big? Is the market too big? Is it outside the sweet spot? Is it too small, not enough opportunity, or if it’s inside the market size, sweet spot. Now, if you’re outside the sweet spot, that’s a red light right there.
If you are outside that market, and the framework that we teach, that means that you either need to niche down or niche up, you need to expand your audience. If you’re outside of the sweet spot, what that means is it’s actually a red light. And what I mean by that is, you don’t want to proceed, you either want to find a way to expand your market, so niche up, or shrink your market, niche down so you can be more specific. So that is a step in the process that tells you with clarity, should you proceed, green light, proceed with caution, yellow light, or turn around and make a pivot, red light.
And that’s the step that leads you to the next phase in the process, which is actually competition, looking at how much competition you have in your market, because competition is a really interesting double-edged sword that you want to be looking at before you launch that ginger beer, whatever business you’re thinking about.
If you think about it, you can imagine an x-y axis, where market size is the horizontal line, and market competition is the vertical line. What you’re looking for is to be on the bullseye; you want to be right where those two lines intersect.
Competition, just like size, there is a right amount of competition, and you want to be looking for it. One of the things I hear all the time is people will have an idea, and one of two things happen. They have an idea for this ginger beer or whatever, and they do one of two things. They go online, they do a little research and they say, “Ah, honey,” none of you can hear the thunder in the background. “Honey, somebody else is already doing it.” And they kill the idea. Or they do the opposite. They come up with this crazy, awesome business idea. They do some research, they go online, and nobody’s doing it. And they say, “Oh my gosh, we’re going to get rich. There’s nobody else doing it.” Both of those situations are problematic for different reasons.
One of the things that one of my business mentors taught me, he said, “You know, Ryan,” early in my career, he said, “Ryan, you’ve got to remember this. Pioneers get shot, settlers get rich.” And what he meant by that is, if you look at the most iconic companies of our generation, you look at companies like Google, you look at Facebook, you look at Apple, none of those companies was the first to market.
Google was not the first search engine. Facebook was not the first social media platform, Apple was not the first to sell smartphones or mp3 players. They all found a market that was proven, that somebody else had pioneered. They either built a better mousetrap, or they did better marketing, or they did a combination. And so that’s what you’re looking for, the sweet spot. The thing I always tell people is, this is what you’re looking for, you’re looking to find an opportunity where the competition is succeeding in spite of themselves. Like, they are making money doing the thing that you’re thinking of doing, and yet they’re making four or five, six big blunders, or mistakes or things that you can see immediately, that you can improve upon.
I’ll share one more. It’s something that I call the five market must-haves. I don’t know if you’re familiar with the work of Jim Collins. Good to Great, Great by Choice, those books. I’m a huge fan of Jim Collins and if you’re not familiar with Jim Collins, his work, he’s studying publicly traded companies, and looks at what it is that separates the most successful companies, that stand the test of time, and are successful for decades, from those that are successful for a season and then either go bankrupt, they go out of business, or they never really take off. He’s looking at the factors that differentiate them. I was similarly interested to see if there were any common factors that separated the most successful markets and businesses that we went into and our clients and students went into from those that weren’t as successful. And what we found is five factors, we call them the five market must-haves. The five market must-haves are as follows. Number one, you want to put yourself in an evergreen market. What I mean by that is a market that’s relevant, was relevant 10 years ago, and will be relevant 10 years from now. I learned this the hard way.
The first business I went into turned out to be a fad. It was the Scrabble tile jewelry business. And you might be laughing at me. I didn’t have the experience or wisdom at the time. I went into that. But I learned the hard way. When our income literally fell off a cliff, we started that business, we’re making a couple hundred dollars a month, a couple thousand a month, $8,000 a month. And then the next month, the business just went to zero. I learned the hard way, it was just a fad. Like Beanie Babies or fidget spinners or any one of these things was just a fad. And so the next market I went into, I wanted to make sure that it wasn’t going to go away.
It is unlikely that any of us listening to this right now–I’ll certainly put myself in this category–is going to build the next Facebook, build the next Microsoft. There’s a reason why so many businesses have a high failure rate. And what I’ve learned along the way is the chance of striking it big on a brief window of opportunity is very rare.
Technology, the medium is always going to change. Right? Just yesterday, it might be virtual reality tomorrow, but the topic that you heard of entrepreneurialism, the spirit of striking out on your own to do something new. And I don’t see that going away anytime soon. The American Dream is baked into making a better life for yourself, and for many of us, it’s that dream of doing your own thing, becoming your own boss. From that perspective, I would argue that the niche, the market that you’ve chosen, is evergreen. Your podcast, who knows what’s going to happen with podcasts, right? We might, five years from now, be having a virtual reality experience where you and I are in the same room in hologram format. And your School for Startups Radio interview show is just going to be a virtual reality version. I can’t predict that, none of us can predict that. We’d actually have to get dressed, it’d be a tough day for us. The point is that subject matter is so important. Evergreen is not the only factor them.
The next must-have is you want to put yourself in an enthusiast market. It’s not enough to be in an evergreen market, you want to be in what’s called an enthusiast market. What that means is, in contrast to a problem solution market, you want to be in a market where you can sell to the same customer over and over again for years. Now, a classic problem solution market will be something like wart removal. If you have a wart, you want to remove it, and you never want to think about the darn thing ever again, right? You’re not signing up for any clubs. You’re not signing up for any Facebook groups or email newsletters around wart removal, you’ve solved the problem. It’s an embarrassing problem, you want to deal with it and move on. And it’s a tough business to be in, because you constantly have to chase after new customers. You are never able to acquire a customer, and sell to them over and over and over again. Now an enthusiasts market example would be something like dog training.
There’s a subculture of everything. Look at dog owners. For example, if you have a dog, then you know, you signed up for the next, you know, 10 to 15 years of your life, that you are going to be a consumer in that space. And many dog owners are consumers in that space for life, they have dogs their entire lives. So that’s a great example of an enthusiast market where you can sell to the same customer multiple products, time and time again, year after year.
It’s not enough to be in an evergreen and enthusiast market. We discovered you also need number three, which is solving an urgent problem in the context of that evergreen enthusiast market. If you take the dog example, for instance, you can’t go into that market and expect to strike it big, if your entire business plan is predicated on selling doggie mugs, or a doggy rug, or something like that. The reason for that is it’s very challenging to sell something that isn’t a bleeding neck problem.
Compare that to selling something like potty training. If you bring a new puppy into your house, and the puppy is making a mess everywhere, making a mess on the carpet, making a mess on the sofa, on the bed, on the laundry, on the floor, it becomes a problem that you turn to your spouse and you say, “Honey, we got to solve this now; we’re going to deal with this today.”
When you find a problem like that, people are not price sensitive, they’re not going to shop around online to try to save five or 10%, they are going to go online to solve the problem, because there’s an urgency to it. And that’s what you’re looking for, an urgent problem in that enthusiast market.
When you solve that urgent problem, it sets you up for market must-have number four, which is solving future problems. When you solve something for someone in that area of their life, you have the opportunity to become their trusted source, their trusted advisor. If you help someone potty train their puppy, well, the next thing they might want help with is how do I get my dog to stop biting, stop barking, or to teach them tricks, or to come when they’re called, or walk on a leash, all the things that a dog owner needs to take their young dog through. You want to find a market where there are other problems that you can help people solve after you’ve successfully helped them with the first one. That’s number four.
Number five, and this is a big one. Number five is, you want a market filled with players with money. People forget that you can’t sell to broke people. If people can’t put a roof over their head or food on the table, they’re not gonna have money, buy your product or service, no matter how good it is. So you want not necessarily a market filled with millionaires and billionaires. That’s not what this is about. You want a market where people have demonstrated to spend a disproportionate amount of their income in that area of their life. Dog owners perfect example. Right? You’ve seen dog owners spend crazy amounts of money on things like doggie spa days and doggie vacations and you know, pet insurance and surgeries and all the multitude of things that you can spend money on as a dog owner. Those are the five market must-haves.
We wanted to do something super special for your listeners, and we’re going to make it a no-brainer. I wanted to have a limited number of physical hardcover copies of the book, and I’d love to get a copy of the book in anybody’s hands who’s interested for free. All I ask is that you pay a small shipping and handling charges to ship it to you anywhere in the world. And when you do that, I’m also going to hook you up with $200 in free bonuses, including the audiobook. So if you’re in your car right now, you’re listening to this you like to listen to audiobooks, I’m gonna hook you up with that for free. I’m going to hook you up with the list of my 25 niches that I would be going into right now in 2019. If I had the time to check off all those boxes that I talked about in the book that you want to be looking for in your business. And number three, I’m gonna hook you up with a business mindset course on how to overcome all the stuff that holds us back, fear of failure, analysis paralysis, self confidence. Go to choosethebook.com/SFS, which stands for school for startups.