Seth Godin interview: Meatball Sundae

Seth Godin Meatball SundaeSeth Godin is a bestselling author, entrepreneur and agent of change.

Godin is author of seven books that have been bestsellers around the world and changed the way people think about marketing, change and work. The titles of these books are: Permission Marketing, Unleashing the Ideavirus, The Big Red Fez, Survival is Not Enough, Purple Cow, Free Prize Inside, and All Marketers are Liars, Small is the New Big, The Dip, and his latest book Meatball Sundae.

Seth is a renowned speaker as well. He was recently chosen as one of 21 Speakers for the Next Century by Successful Meetings and is consistently rated among the very best speakers by the audiences he addresses.

Seth was founder and CEO of Yoyodyne, the industry’s leading interactive direct marketing company, which Yahoo! acquired in late 1998.

He holds an MBA from Stanford, and was called “the Ultimate Entrepreneur for the Information Age” by Business Week.

Godin is founder and original squid at Squidoo in his spare time.

Eric previously interviewed Seth about Squidoo back on June 20, 2007.

Interview Transcript

Eric Enge: You have a new book, it’s called Meatball Sundae, and it’s also the topic matter of your session at SES Chicago. So, what is a Meatball Sundae?

Seth Godin: Let’s break it into pieces. A meatball is a commodity, an average product for average people; something that we need, something that is made in volume where we try to drive the price low and we use mass marketing, to sell it to the largest possible number of people. Meatball’s paid the bills for our parents; meatballs are what our community has been built on.

The problem with meatballs is, it makes it really hard to grow, because now everybody who is in the market has just about everything they need. New marketing is the topping to sundae, the whipped cream, the cherry, the sprinkles. The new marketing; it’s MySpace, and Facebook, and Blogs, and YouTube and everything else. It’s really tempting for meatball makers, who have plenty of money and are used to spending money on advertising to turn around and say to their marketing people get me some of that new marketing magic, because we want to grow just like Google.

Inevitably when you do that, you end up not with something tasty, but with a mess. Because, toppings don’t go with meatballs; and being inconsistent, trying to force new marketing to work with your old marketing product and your old marketing organization, doesn’t change new marketing nor does it change the market. All it does is make you frustrated.

Eric Enge: Right. Is it a matter of being able to look at the stuff you sell and find out what is that could potentially work for your business without being blinded by the glitz?

Seth Godin: Actually, it’s about how do we build a business that works with new marketing, because the fact is most people work for companies that were built around old marketing. Old marketing came first, the idea that you could advertise average products to average people. And then, people invented companies to go with it, not the other way round.

The argument of my book is that we are in the very beginning of yet another industrial revolution. We had several of them; the last one was the mass marketing industrial revolution. Procter & Gamble, Clorox, Maxwell House, all those guys could not have existed in the era before mass marketing. They organized themselves around mass marketing. Well, now there is a new era. Why do the people at P&G think that they can bend it to their will?

Eric Enge: Right, so the new marketing is powerful enough that you have to model your business to take advantage of it.

Seth Godin: If you don’t you can still do fine, but not with the new marketing. The new marketing would just ignore you. My foster child of the week is Bud TV, which Budweiser spent forty million dollars on so far. Their website gets less traffic than a sheet rubber business website. The people at Budweiser probably said “we advertise on the Super Bowl, and we will build the site we want. The market place said never mind, we’re going to YouTube.

Eric Enge: Right, indeed. It’s not something that the market was interested in, so it got ignored.

Seth Godin: Right. And, that was impossible in the days of TV.

Eric Enge: Right. Yes indeed, because in those days advertisers pumped the commercials in front of people, but when you can choose to go to a website or not, it’s completely different. So, what are the challenges that dealing with the Meatball Sundae presents for businesses?

Seth Godin: I think that the biggest challenge is that there is a bottoms-up phenomenon. Most businesses don’t have the CEO saying let’s reorganize this company around new marketing principles. Instead what they have is pressure on hardworking, well meaning folks lower down the organization who are told make this new stuff work with our older organization. The reason I wrote the book is so that those people have ammunition to go to their bosses and say “no, I won’t do that; and I’ll not waste my valuable time. I’ll not spend three years working at this organization building Meatball Sundaes that are going to fail”. My goal is that people will use the expression Meatball Sundae in meetings and stop themselves from doing something stupid.

Eric Enge: Right, by recognizing the mismatch between their business and the proposed strategy.

Seth Godin: Exactly.

Eric Enge: Well, you went at length into 14 trends in the market. One of those was the fact that the consumer has the ability to interact and learn from other consumers today. Can you talk about that a little bit?

Seth Godin: What I did in the book is I spent 20% of it talking about this new industrial revolution, and how past industrial revolutions have created new winners. Then, I spent the rest of the book talking not about the Meatball Sundae, but about what the new marketing is. And, I believe there are dozens of trends, but I picked fourteen of them, and I spent a little bit of time on each of the fourteen trends. The reason I do that is because you can build an organization around any one of them, but if you are smart you might build it around a bunch of them. If you build it around a trend that’s moving in the right direction, the wind is at your back.

It becomes easier to grow. One interesting thing is that with no exceptions, of every consumer brand that has grown from nothing in the last ten years, not one of them has been built on the back of television. In 1978 or 1968 it was a 100%, and now it’s 0%. We see that the Starbucks and the Amazons and the Zappos of the world growing by other means. I describe some of these things at work, and one of them is that it used to be consumers consumed and we were generally silent. Word of mouth was not worth much because it was fairly unusual and of limited power, and once a while when it worked people noticed it.

What’s going on now is every consumer is incredibly powerful; every consumer has his own platform which gives him or her unlimited access to a different page of Google. If I have a miserable experience with a Dell computer, guess what type Dell computer and it shows up. If I have a Comcast installer fall asleep on the couch of my house, millions of people watch the video on YouTube.

This is not a little sideshow, I believe that this is the beginning of the future, because there is no reason that I can think of why our children and certainly our grandchildren will sit down and tune into CBS and watch something. It’s just not going to happen that when everyone has their own TV channel, the TV channels to get watched are different than the ones that existed when there were only three channels to choose from.

Eric Enge: So the consumer has a lot more power, and they can tune into things when they want. They can tune them out when they want, and as I am fond of saying they are greatly attention challenged.

Seth Godin: They also have the power to have their own channel. They have the power to broadcast, not just receive. And, what that means as a marketer is if you get caught, or if someone doesn’t like you they are going to tell everybody. That’s not word of mouth, that’s something else.

Eric Enge: Right, that’s a one to many communication with a lot of power in it. Alright, you also talked a little bit about the need to be authentic as one of your fourteen items. Can you talk about that a little more?

Seth Godin: Sure. There used to be a big distinction between onstage and offstage, between on-the-air and off-the-air; between what you showed people and what you had. And, it also used to be quite possible to tell whole different stories to different people at different times. And, what happens in a world where consumers can rat you out is that that’s not true anymore. George Allen was in his preparation to run for President, but he said one thing in front of certain audiences and something else, unfortunately for him, in front of the camera, and soon enough it was shown to the world via YouTube and his candidacy was over.

What we see is that the restaurant can claim really friendly service, but if it’s not true; if it’s not authentic then the word gets out regardless of what kind of ads they run. It doesn’t matter what they say, it matters what they do.

Eric Enge: It is too easy for someone the truth to come out and be exposed. Even really good businesses have consumers who are complainers. A video of some cable guy sleeping on your couch, well that’s hard to debate, right? When you can just put that information up there in a very visible way to the public, everyone can see if for themselves.

Seth Godin: The other thing about complainers is the new transparency doesn’t punish people who treat complainers honestly and forthrightly meaning that you can say to a customer quite respectfully I am sorry, we don’t want you to be our customer anymore. The rest of the market will defend you when you do that. When you try to annoy a customer to get him to go away, or mistreat a customer to get him go away, that’s when you get punished. There is no requirement on organizations to turn every single person who is a potential critic into a raving fan. Every once in a while they need to say to the somebody we can’t make you happy, so here’s the phone number of our competition.

Eric Enge: Right. And, you give them their money back and, call it a day. Right, that’s a healthy part about this whole trend, because when you just think about the whole potential exposure thing you can get concerned about mob hysteria. But, it seems that if the company is genuine in their response that can be actually a very effective technique for them.

Seth Godin: That’s exactly right. I tell the story in the book of a restaurant owner in Canada who I know, who kept a “no-list”. If people came to his restaurant and hotel and misbehaved, he just quietly put their name on the no-list. And, for the rest of their life if they called up for a reservation, there was no room. It became clear to people after a while that you had to earn the right to be in his business.

Eric Enge: Right. That’s a very intriguing thing, having to earn the right to do business with him. It really says it’s a two-way street.

Seth Godin: That’s exactly right.

Eric Enge: That sounds like it’s all for the good. So, another thing that you talked about was the need to reach the right people rather than worrying about reaching hoards of people. Your phrase was “Who versus how many”?

Seth Godin: Mass marketers have several generations of DNA, all about figuring out how many people they can reach. The number one magazine was the one with the biggest circulation, which has the easiest time selling out. Why should it be that the TV show they all want to be on is the Super Bowl, because it has the most viewers. The billboard they want to buy is the one on the busiest street, that’s been a mindset of marketing for a really long time. Hence, the phrase cost per thousand – “I am buying by the head, give me as many as I can afford”.

It turns out that that’s ridiculous, because paying money to reach somebody who just bought a new car when you are selling cars is silly. Paying money to reach somebody who is doing their best to ignore you is silly. What the web teaches us, Google in particular, is that there is a huge benefit to worrying about who is reading this? Why are they reading it, and in what frame of mind are they when they are reading it? Guess what, now we can measure that. I would much rather be in front of ten people who are the right people than ten thousand people who aren’t. Smart marketers are already getting their arms around that.

Eric Enge: Right. Of course they didn’t have the tools to do those kinds of measurements in the past. With TV advertising, it was really hard to get a grasp on what sort of return you were getting on that investment.

Seth Godin: And, they liked it, this is the thing that most marketers online have missed except for Yahoo. First of all let’s understand that if you are buying TV ads you are probably not the owner of the company. The vast majority of people who buy ads are big companies, and the people in big companies who are buying the ads aren’t the CEO. So, if you are not the CEO, and you are busy buying millions of dollars with ads, guess what you want? You want ads that can’t be measured, because if they can’t be measured, you can’t get blamed if they don’t work.

Yahoo did brilliantly for a decade by selling un-measurable internet advertising. If you worked at a big company, it was a perfect ad to buy. Google changed that equation by going to smaller companies and selling totally measurable ads for a nickel. You could pay a nickel a click, and then the competition site was willing to pay a dime. And then, actually it’s a dollar, and now some ads are hundred dollars a click all because of the measurability.

Eric Enge: Right. So, is that causing the bigger companies to begin turning the aircraft carrier to look for measurability as well?

Seth Godin: Exactly. It’s just a little bit of a hint of the carrier turning. It may become a stampede in the next six months or two years I believe.

Eric Enge: Right. For search marketers one of the things to be concerned about if they are working in supporting a lot of smaller businesses is that it will become a lot more competitive. The prices for those search related ads will go up more and more.

Seth Godin: That’s right. Because, marketers with big money to spend are not going to realize it’s worth eighty dollars a click for the right person. So, if you’ve been busy spending sixty dollars and pocketing the twenty dollars, you better watch out, because someone is going to shop and start spending eighty dollars.

Eric Enge: They may not even care if they are running breakeven.

Seth Godin: In fact that’s what they inevitably will do, because, microeconomic theory says marginal cost equals marginal benefit.

Eric Enge: Right. We’ve also seen a big shift in the make up of the gatekeepers in our society. That’s another one of your fourteen points. How has that changed?

Seth Godin: The old gatekeepers were people like Rupert Murdock, Sumner Redstone or the owner of Clear Channel. One nod from such a very powerful person got you in; if you knew the right reporter at the New York Times, or had enough money to buy a PR firm to get in there, you had access. That gave you leverage; the leverage made you more money, and you could buy more access. What’s happened is that we get rid of gatekeepers as fast as we could. But, we are also inventing new gatekeepers, so a guy like Mike Arrington (TechCrunch)who I never heard of three years ago, is now one of the most powerful people in new media.

If he likes you and says three things nice about you several weeks in a row, you can triple the valuation of your company. So we’ve got (1) this world where there aren’t a hundred important gatekeepers, but ten thousand which for a lot of people means none; as if there aren’t any gatekeepers. And, (2) we have a whole new roster of gatekeepers, most of gatekeepers. Most of them aren’t influenced at all by the people who used to do hiring, and the people who used to do leveraging. What that means is that the traditional flow of information has fundamentally changed.

Eric Enge: Right. So, if you are a business and you are trying to make your way in this new web environment, chances are that there aren’t just one or two gatekeepers you need to reach but many to get your business out there.

Seth Godin: And, the way you reach them is different. For example, as a blogger, I get between ten pieces and a hundred pieces of spam a day. Now, I am not counting the spam everybody else gets, I get special spam. This is spam from someone who pretends to know me, and pretends that they have a right to interrupt my day, because they are in the PR business. It pretends that I should care about what they are doing, because their client paid them a lot of money.

That might work at the New York Times, I don’t know it does, but it appears to. But, it doesn’t work with me, and it doesn’t work with plenty of people like me. Because, I don’t want to hear from strangers about stuff I am not interested in, and I just hit the delete button; and it takes an eighth of a second. So, the model, that says you can build a company by hiring a PR firm at the last minute, is broken.

Eric Enge: What should businesses do instead?

Seth Godin: They need to find the thirty bloggers matter, and months before they need them, give to them. Post comments, link to them, talk to them, engage them as a member of the community, and then when they roll something out those bloggers trust you. An example is Boing Boing, which is one of the three most popular blogs in the world, and there is a piece of software that just came out that helps you track appointments and stuff like that.

Cory Doctorow wrote a rave review of it yesterday on Boing Boing. Why did he do that? Because they showed up an hour ahead in time and begged him? No, because he’s known the founder for a long time, and the founder actually asked him a lot of advice about how to make the software better, and he gave it to them. So, he has a sense of relationship and ownership, so when the software comes out, of course he is going to say something about it. That time investment, and that respect is an asset that people at a traditional company might not have earned.

Eric Enge: The way I usually express it when I sit down with one of the clients we work with is that it’s a business development situation. You are building a relationship and it can take many, many months. What it comes down to as you give and give and give and give, is that you create an environment where they trust you and they are willing to at least hear what you have to say. And, if they like what you have to offer, than they will give back.

Seth Godin: Exactly.

Eric Enge: It’s a very interesting and different frame of mind, and I think you made reference to the top thirty bloggers in the space, and hopefully you can get a few of them to be believers. And then, you should be in reasonably good shape.

Seth Godin: Yes, because you are part of their community, not because you are doing something to them.

Eric Enge: You also talked about noise in the market. Can you talk about what you meant when you were talking about noise in the market, and how that affects online businesses?

Seth Godin: First let’s talk about the post consumption consumer. For a hundred years we consumed as much as we could, as fast as we could. We made it as fast as we could, and promoted it as much as we could, and we bought more of it. There are whole hundred thousand square foot buildings devoted to selling us as much as we can buy, as cheap as we can pay. Now, something interesting has happened, which is we have everything now. We can’t buy another vacation house, because we are no time to go there. We can’t buy anymore CDs, because we haven’t even listened to all the ones we own.

It doesn’t matter that there are all these books for sale, because we haven’t finished the ones we already bought. The post consumption consumer still wants something. They want attention, they want time; they want the privilege of choosing again. So, creating more noise, adding more clutter isn’t solving anybody’s problem, and it’s not working particularly well. Into this world we threw the web, the most cluttered medium of all time. It’s a giant haystack, and your product and your service on your website is a real tiny needle.

The mistake I think that many people make is that they want that needle to get sharper. That just isn’t going to work, because the haystack is too big. Instead what we have to do is understand exactly how noisy it is, it’s really noisy; and realize that we are not going to win by yelling louder than everybody else. We have to figure out someway to put the noise to work for us, and to work with our audience, so that they can spread the word instead of us forcing the word out.

Eric Enge: Right. We didn’t have a hundred different flavors of water twenty years ago. In fact there really wasn’t that much in the way of selling bottled water twenty years ago. We also didn’t have coffee places like Starbucks and Peete’s that offer different types of coffees or teas where you’ve got to have to write down everything that’s in the name, because it’s just too hard to follow.

Now, we have all this demand for variations, it seems like that’s another outcome of this “we have everything” phenomenon. We are going to be more and more selective about what we go for.

Seth Godin: This is where the long tail kicks in, and Chris Anderson’s book (titled “The Long Tail”) is ten times better than anything I could ever write. The long tail says “given that I am only going to get to choose one article of clothing this year, because I have so much, I want exactly the one I want. I don’t want the one that’s for the masses, I want the one that’s for me”, and that’s why Starbucks has nineteen thousand varieties of beverages, because I only get to drink one thing today. I don’t want my half cafe cappuccino latte with milk in it, I want it with Soya in it, because I can have anything I want, and that’s what I want.

You can fight that, you can insist that that’s not fair, or right, or you can embrace it. What we see is that everybody who goes down the long tail does better than the people who don’t. The number one bestselling beer in America is now officially “other”. Nobody has more than half the market. Coca Cola makes far, far more varieties than they did twenty years ago, and every time they add a new variety, they do better. And, so the long tail keeps getting longer.

Eric Enge: That’s a very interesting trend, so related to this I think is this notion of the death of bundling. What’s driving that and what does it mean for businesses?

Seth Godin: I think this really important. When we were locked into a physical world, you got everything in a bundle. The magazine came with the articles you wanted, the articles you didn’t want; the authors you heard of, the authors you didn’t, ads you wanted to read, and ads that just came along for a ride. That bundle, sold to you by subscription, you had to get a whole years worth, made a profit for the publisher. Now, you can just read the one article you want and be done with everything else. When you went out to buy a cell phone, the bundle which was available only at your local retailer came with the charger, and the two other pieces that you needed. And, if you needed a new charger, you are asking them to un-bundle, and that costs thirty bucks.

Now, you can buy a new charger on Amazon for four cents, I know because I have. When you un-bundle things, all of sudden things need to be priced based on that thing as opposed to the value of the entire bundle. That changes the way things are marketed, the way the things are priced, the way the things are sold. People who relied on using one part of the bundle to subsidize the other parts are discovering that in an unbundled world, they can’t do that anymore. They get hurt on the subsidized part, and they can’t sell the other part.

Eric Enge: Right. If you are not willing to offer it the way that the consumer wants it, the competitor standing next to you will be.

Seth Godin: That’s right. There isn’t this ability to say that I am the only game in town, so buy my bundle or take a walk. There is an unlimited number of competitors, so someone will always be willing to un-bundle for you.

Eric Enge: Any other thoughts that you want to add about the Meatball Sundae before we wrap up that part of the conversation?

Seth Godin: The thing that’s going to be hard for a lot of people is it represents a shift in power, that the reason most people become marketers is because it is fun to be in charge. It’s fun to put on a show; it is fun to have influence that comes from money. What we are seeing in the new marketing is that the opposite is true. People who are succeeding tend to be the ones with no money, because having no money makes you humble and being humble makes you work with the marketplace better.

Eric Enge: Right. You are uncluttered by your self opinion or your expectations based on past behavior.

Seth Godin: That’s right.

Eric Enge: Right. I’ve also seen that you’ve been critical of SEO in the past and wanted to find out if that was true, and also what was at the root of the criticism?

Seth Godin: Actually, I have never been one to be critical of SEO. I have frequently been critical of SEO clients, because SEO clients are looking for a shortcut. They are saying I am not willing to do the hard work to build unique, and useful, and updated stuff online that organically makes its way up. I am just going to spend money, because I am a marketer hiring some guy to wave a magic wand to make something happen. And then, when the SEO people comeback and say here are ten recommendations, eight of which are about better stuff and two of which are about magic words and secret hyper-tags, all they do is take the other two, and leave the eight important ones off.

What I’ve been saying to people and mostly people who read my work or other clients is pretend it doesn’t exist. Do everything you can before you call on the SEO wizards to do the last part. Because, if you are not willing to do the first part, if you are not willing to put in the effort, it doesn’t matter how good they are, it’s not going to work. Somebody else who is doing the first eight steps will do better even if they don’t do the last two.

Eric Enge: Right. I think of SEO as participating in the broader marketing vision that relates to a number of other things that we have talked about here. Basically, helping the company match their products or potential products with right kind of market, so that may not sound like SEO, but if you don’t participate in that, then you can’t understand how and where to promote it. Make sure that the right things are happening for a website to be successful; and without visibility from the market as a whole all the technical SEO in terms of fussing with site structures, it isn’t going to do a damn thing.

Seth Godin: Exactly.

Eric Enge: Fair enough. Just like anything else in the world, I think it’s fair to say that there are good SEOs and there are bad ones.

Seth Godin: It’s funny, if you look at science from the 1700s and 1800s, there are all these examples of people who went for years down roads thinking that there was some life force or ether or mysterious element in one thing or another. Because, the human brain rushes for explanation when it can’t find something; and a lot of SEO has been about ascribing explanations to things that might not be explainable. It maybe that search engines are irrational, and heretic, and unpredictable, but if you are an SEO person you can’t say that. And so, I think that there are plenty of people who are happy to pronounce something, because their client needs them to. Well, in fact the right answer might be beats me, I don’t know.

Eric Enge: Yeah. We’ve worked with clients for a long time and let’s say we’ve got them to rank in the number two slot in the search engine for their most popular term or number one or number five, whatever it is. And then, one day it drops down five spots and you get a call from the CEO and it’s “what happened?”

I often say that I have no clue, it’s not that simple. But, we tell people that you can’t get fixated on one single point. You have to look at the bigger picture and you can’t think in terms of a single ranking for a single search term. We strive to get people to do things that are compatible with the strategic goals of the search engines, and trying to use an approach that we refer to as an algorithm agnostic approach. If the algorithms change, you aren’t flopped all over the place or thrown about like a top in a hurricane.

You’ve got to keep your focus on that big picture, and then SEO can play a role in that, but it’s just a component.

Seth Godin: Bingo! You should write a book.

Eric Enge: Sure. Obviously you have become very, very well-known for the books you have written and the speaking and presentations you have done. What would you say has been the most enjoyable part of all that?

Seth Godin: What I enjoy the most is talking to people and having conversations like this one. If I couldn’t do that I wouldn’t write the books.

Eric Enge: So, just the ability to sit down with people and talk about the way stuff works.

Seth Godin: Yes, I think that the really smart engaged people on this planet are in the minority. If my books can help move more people into that group that’s great, and if I get to talk to people in that group that’s even better.

Eric Enge: Right. Well excellent. Thanks!

Seth Godin: Well, this is super, I had fun.

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