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Ep 5: Chris Lema. Pricing strategies, parenting and pushing entrepreneurs out of their comfort zone

Ep 5: Chris Lema. Pricing strategies, parenting and pushing entrepreneurs out of their comfort zone

Host: Joshua Strebel | Published: September 22, 2019

When it comes to B2B SaaS companies Chris has been around the block more than a few times. He’s performed various roles ranging from product development, strategy & software engineering for Liquid Web, Crowd Favorite, Emphasys, AutoTradeCenter, Integranova, QuantumShift, ICE Wireless, Pagoda and Berkeley Lab. In today’s episode Josh and Chris talk about pricing strategies, dark patterns in pricing presentation, parenting advice when it comes to digital devices, lessons from coaching entrepreneurs at various startup stages, the role of timing in the success of startups, overcoming impostor syndrome and more. Enjoy!

Watch

Show Notes

0:02:51   Welcome and context
0:07:21   How as a parent do you deal with digital devices and media and compete for your child’s attention?
0:08:35   Is Turks and Caicos as beautiful as the brochures make it look?
0:16:11   Explain to me the consistent 70% off pricing strategy of that place
0:17:17   Would you consider that a dark pattern?
0:18:59   Let’s explore pricing shennanigans with air travel…
0:22:27   For agencies: “put a dimple in the bottom of your jar”
0:23:41   Blockbuster was so addicted to their late fees they refused to compete with Netflix
0:27:01   What is the most eggregious pricing strategy you’ve encountered?
0:29:07   MLM strategies no bueno
0:32:23   Let’s talk about your coaching experience: what got you to want to mentor others?
0:34:35   It took you six startups to get over impostor syndrome?
0:36:27   The role of timing in success of a startup?
0:38:45   What is question you get most with the entrepreneurs you are coaching right now?
0:41:11   Your philosophy on when to focus on growth activities vs optimization activities?
0:42:43   What book titles should people be looking at for this question^?
0:45:09   When working with entrepreneurs how do you focus them on a particular segment?
0:48:37   Are you doing some internal business coaching with your children I understand?
0:00:49   Regardless of whether she owns a fortune 500 or works for one she’ll be well-served by these skills

Show Transcript

Joshua: 00:49 Welcome everybody to the podcast today. And I am joined by a consummate professional and my good friend Chris Lema. How are you doing Chris?

Chris: 00:57 I’m good buddy. How are you doing?

Joshua: 00:58 Oh dude, it’s been a quite the fun summer. If you and your family did anything interesting or any a news and announcements going on in the summer you want to share?

Chris: 01:07 We, uh, we went to Turks and Caicos and it was phenomenal. Um, you know, we, we, we’ve normally done when we can do Caribbean, we’d normally do a cruise, but this time we just literally flew there, spent a week there and came back and my wife was very nervous because it looked like it would be high eighties sun, not a lot of shades. She was just anxious about it. There was a light breeze on that water. Um, and it never felt like it got super hot and there were, it was, the property was exquisite and we just hung out and did nothing and played and hung out with the kids. And my kids are about to be 12 and 14. They’re 11 and 13. They still want to hang out with mom and dad. Right. There’s like the 13 year olds getting really close to being like, I just want to go do my own thing. But they’re still in that place of like, can we just go hang out at this pool or go play, you know, pool volleyball over here. And the fact that they’re still in that stage, we made our vacation just fantastic.

Joshua: 02:06 Oh, absolutely. Um, you know, mine are a little younger and some days I wish they would go to the other room, but I imagine when they’re older you begin to kind of miss that. And it’s a rare thing.

Chris: 02:17 Yeah. When they’re at home, you know, my daughter is on Pinterest and she’s on the phone with her boyfriend and blah, blah blah. And my son is on his computer, multiple monitors, Minecraft. And if not there, then he’s on the Xbox or he’s on the PSP. Like they will disappear on a Saturday and we won’t see them for hours because they can entertain themselves. [inaudible]. So you always get the feeling like, Hey, when we go on vacation, are they just to want to be with their digital devices and not hang out? But they, they put those things in a drawer and they were like, let’s go hang out mom and dad. And we just had a great time

Joshua: 02:49 so that the digital devices, like the media, it’s like almost you’re, you’re competing with your own child’s attention at times. Oh,

Chris: 03:00 oh yeah. And if not, let’s be clear. It is not just children, my friends, my wife, right? Like I’ll be like, hey honey, listen, watch this movie. Turn on the movie. And if you’ve ever had the situation where I’m sitting on the couch, so the TV is right in front of me. She’s sitting at the kitchen table behind me and I’m thinking she’s watching a movie and I’m watching the movie, but I’ve already seen the movie. My whole joy is to Wa have her watch the movie. And then I turn around to look and she’s on her phone and I’m like, okay, pause mood. What’s going on? Well, I got this text from a friend and we’re going to try and have coffee tomorrow. And I’m like, oh, I’ll just wait.

Joshua: 03:38 Right. I’ll just wait. Yeah,

Chris: 03:40 it’s, we’re all competing all the time with digital devices and, and what they do for all of them,

Joshua: 03:46 people around us and myself. Right. Have you, uh, enabled the screen time app on any of your idevices yeah. On all the devices. Yeah. Yeah. We, we do that a, for content restrictions for the kids, but also time restrictions. I mean, I mentioned this the other day to another guest. I don’t want to feel like I’m outsourcing my parenting, but the, the content or the screen, what is the, I just said the screentime app on Ios. There we go. Sometimes it gets to be the bad guy. So when it turns itself off, the kids like, oh, I wanted to watch such and such, or can I get five more minutes? And I’m like, sorry, but it just turned off.

Chris: 04:29 Yeah, I get that. Because you’re a super polite dad. I’m Latino, so I can just be like, I am the bad guy all the time. And no 20 minutes with a boyfriend, 30 minutes with a video game, 30 minutes with the shows. But Dad, the shows are 20 minutes long. Great. 30 minutes minus 20 means you have 10 free minutes. But Dad, if I could just get 10 more minutes, I go watch another episode. No, he got 30 that’s what she gets at, you know. And so it just, it just is what it is. And they, during the week, 20 minutes a day with the boyfriend or 30 minutes a day with video game, they each get, I think about 30 minutes with TV. That’s it. That’s what you get. And then it’s off. And they know that if I or their mother called them, Hey Christian, come down or Emily come down, if we call them and we hear the words one sec or hold on a minute or let me just finish this, that, then they lose it for the rest of the week and it’s just that cup.

Chris: 05:26 So the answer is always yes, dad or yes. Mom and my son now, I mean, he’s, he’s 11 about to be 12. He gets off those games in a femtosecond and I excuse just like he hears, Oh yes, honey, he’s off. And other adults and parents are in the house when that happens, you know, I’ll call it and they’ll watch it and they’re like, how do you, how did you do that? And I’m like, well, I’m consistently willing to be the bad guy. And as a result, I don’t actually have to be the bad guy that much. Right. But it’s just, you gotta be willing to go, nope. Sorry. That’s, that’s the end of that one. Right. And you can start again next week and earn the privilege back. Right. So, uh, I, my wife hates it when I say it, but for me, parenting, almost everything I learned about parenting, I learned from first training dogs.

Chris: 06:15 Oh, she hates when I say, but I paid a ridiculous amount of money for a super professional, a dog trainer when I, my first pure bred super expensive German shepherd years ago. And that guy showed up to my house and the dog wasn’t doing something. And he goes, uh, just to be clear, you’re paying me to train you, not the dog. And I was like, I didn’t even think about that. And he goes, yeah, you say to the dog, you say no, and you say off any, you say the dog’s name hasn’t talked. Supposed to know what the heck you mean. Right. And so I, I spent a couple of years developing a certain level of consistency with the dog that then allowed me to leverage that consistency with, with kids. Again, it’s, it’s not the path that everyone takes, but it’s the path I took and it does allow me to be very consistent with the kids.

Joshua: 07:08 Well, you know, I think any parent out there could always use another trick in their handbag. So if, if it comes from the world of dog training, it’s like judges.

Chris: 07:17 Well, hey, so, so going back real quick to [inaudible], I’ve always wanted [inaudible]

Joshua: 07:24 take the family there. Um, they have like, uh, a couple of all inclusive resorts there. Yeah.

Chris: 07:29 Is it as beautiful as the brochures make it look yet. So, so yes, 100%. Yes. So we flew to Orlando and spent a day and half in Orlando just cause I didn’t want to get to Turks and Caicos tired cause I’m coming from California. But we flew to Orlando, got there in the evening, the next day we spent the day in Orlando so they could go to one of the parks wherever. And then the next morning on Sunday morning, we flew down from, from Orlando straight down to Charleston. Kaikos we got there early, so it was like, you know, noon or whatever. So I wasn’t tired. And you, and we went to beaches, which is the family resort right on the water. Um, it’s a massive property. Tons of restaurants and tons of pools and tons of, uh, different kinds of villas. And um, uh, f like every day we would go to a different part of the property, we’d go to different parts of the beach, different pools, um, and it was all inclusive. Right. So you never, you never go to your pocketbook for anything. Uh, we had a fantastic time.

Joshua: 08:33 Nice. All right, well I will add that to the list of recommendations that says, wait, we have to go there. Yeah. Um, this is an interesting segue, but you made me think of it, uh, for, for anybody who doesn’t know, and I’m sure you all know Chris, he’s been a coach of, uh, business leaders and entrepreneurs and a and a product guy for 19 years. He, the man knows this stuff. So here’s question. When I have looked at Turks and cake goes and the beaches resort and, um, you know, trying to look at various villas, you know, retail price MSRP 19, 18, $17,000, but they’re always consistently without fail running like a 65% off deal. Explained to me this pricing strategy, why would you consistently always discount 65, 70% off your prices?

Chris: 09:23 So the thing to understand about this dynamic, which by the way, not only is it curious to me, right? But I went into their sales office for one half day of my entire seven and a half days there to talk with their sales guys because I was like, I would like to buy, we normally buy a vacation like two years in advance. So I was like two years out, I want this one to be, we’re going to go to the one that isn’t beaches, we’re going to, the other one was just adults cause I want to take my wife and I see the, you have a new property in Barbados, but I need to understand this pricing. I need understand how you’re doing it. I want to understand everything about it. And what I discovered about the process, right is, is truly remarkable. So first of all, to answer the core of your question, um, it is very different than all the rest of the things we buy, right?

Chris: 10:14 If you think about when you, even when you, I mean the number of times that you are, I’ve probably looked at buying a car, right? Blue. That car looks interesting. Let me look at that car. We probably, we may look at a car and the price of a car two, three times a year maybe. Right? Um, other people were like, oh dear God, I don’t look at cars that often, but think about a watch or a coat or pair of jeans, and you might do it two, three times a month or two, three times a quarter. But when you’re doing it that often, okay, then the deal, the special has to be special, right? Because we’re looking at all the time. So if someone were always doing 30, 40% off, right, we might go, oh, there’s no urgency tied to that, whatever. I don’t care.

Chris: 10:58 But when we look at an all inclusive beach vacation, we might do that once every year or two. So people to be fair once a decade. Yeah, exactly. The efficacy of that offer, that drives immediacy is incredibly powerful because we don’t go to it often. If you are, I looked at it every week, right? We’d be like, oh, it’s always on sale. Here’s the crazy part, and this is what I discovered when I was talking to these guys. Oh yes. It’s always on sale. It’s not always available. So we bought, we bought a package at this place. We bought it two years in advance or two years ago. Uh, Corey Miller from [inaudible] and, and I think his fame and Lindsey Miller and the Lemmas went to, uh, beaches in Jamaica. And when we spent a week in Jamaica and, and then on that trip we went into the sales office and we booked for two years later, which was this past summer.

Chris: 11:58 We booked this trip, turned out the millers didn’t go this time, but we, we still, we booked it, we went. And when we did, they didn’t tell us all the different options. They just gave us the, here’s the special deal and here’s this. And they put a price tag in front of me and they put a price tag that might be expensive. But given that I had two years to pay it off, it wasn’t ridiculous. It wasn’t crazy. Definitely wasn’t the most expensive vacation I’ve gone on. And then when we got there and when we got there, we discovered that this particular property had extra amenities attached to certain kinds of units. If you got a unit with a butler, then you could get the little, uh, poolside villa, you know, shaded area. But if you didn’t have a unit with a butler, then you couldn’t get that unless you went each morning and requested to see if there was any overflow that you could put.

Chris: 12:50 So I being the kind of guy who likes to be in that little shaded area, I was like, well that’s fine. I’ll just go to the front office and just say, Hey, what’s the cost to upgrade to the Butler villa? And I’ll just just move us. Like, like, how could you not want more of my money? I’m happy to give it to you. And they were like, we have zero availability and you go like zero zero like really zero or is this just a game to upsell me? And like, they’re like, no, look you and you could. In fact, I did. I went on the website to just try and find a pink nothing. Right? So the big promotion, right? The big deal that’s constantly going is constantly going, what’s changing is the capacity, right? It’s the occupancy. And since that’s adjusting, you may get, since we go there, only like we’d go to say, say you going to beaches.com you may only go to there once, once a year, once every two years, once every 10 years.

Chris: 13:46 So the efficacy of that pop up that says, you know, or that, or that banner that says 50% off you go, that’s amazing. But it’s also because there is a not just informative dynamic of like, Hey, we want you to close quickly. It’s a reality that there’s scarcity built into the product because there’s a fixed number of units. So even as you’re picking that 60% off, you may discover that, oh no, there’s no, there’s nothing available that week. But if you’re picking it a year in advanced training or advanced the second week of July versus the third week of July versus the fourth, you just make that adjustment and you don’t mind anymore. Right? But when you get close, it’s not available. Right. So

Joshua: 14:27 that’s pretty fascinating that they have employed this, um, gambit, right? It’s, it’s, it’s partially a pricing gamut, partially a negotiation gambit and whatnot. But

Chris: 14:39 the, the

Joshua: 14:41 pricing is an anchor to some degree. Like out there, their MSRP, it’s $18,000. You get in an $18,000 of value here, but then they have the discount for a little bit of urgency, but then they have the, um, occupancy or the availability,

Chris: 14:56 which driving demand. And here’s another trick they do. If you go, if you go look at the, the website, um, they have a number there that doesn’t say 16, 17, $18,000. They have a number that says $249 and it says two 49 or one 27 or whatever. And then it says PPP in and you go person per night, right? That’s right. But if you didn’t catch it, and actually in some of the cases, the is big enough that you think, hey, that’s not bad. Right? So imagine that it says 1600. Right? And you’re like 1600. Okay. That’s an expensive vacation, but it’s not bad. But you didn’t read the PPPs so you clicked through, right. I’m not saying I did this, et cetera. Let’s be clear. I did this, I saw 1600 and I was like, okay, me and my wife set it up. Okay Click. Okay. And then they get a number and it’s like $40,000 I’m like, I’m not, I’m not doing that. Like I’m not, there’s no way. So then again, you go back in the opposite, you’re like, how’d you get? And they’re like, well that was, you picked the 1600 per person per night and you go, I see how you anchored me on something that I was not ready for it. Right. Like I just bit it just cause you’re like, wait, what happened here? Right. So

Joshua: 16:10 is that what you consider that? A bit of a dark pattern, a bit of a,

Chris: 16:14 that is it. That is what we would call like in the, in the world of calling something, a dark pattern. When you create one expectation for me, and then I’m, I’ve already given you my name, my address, the dates. I want and the property I like and I’ve gone through all this and then I get the price and suddenly it’s dramatically different. The expectation has been missed. It’s what we would call a dark pattern right now. Now, if it, if it’s, if it’s small right at the delta, small, like let’s say you didn’t pick the 6,000 or let’s say you saw $200 per night and then you get to the end and it’s 2000 bucks per person, not what you were doing in your head and you’re like, but if it’s small enough, you might still pull the trigger. I happen to think on the bigger stuff when the delta’s that big, right? You have to be out of your mind to be like, I thought it was going to be a $4,000 week with my wife and it was a $40,000 a week. You’re like, nope, nope, nope. I’m not, you know, let me, let me back this up a little bit.

Joshua: 17:09 You know, let, let’s keep exploring some pricing shenanigans. A one I’ve ran into recently is airfare where depending on where you, where you’re googling or orbiting or hip monkeying your airfare, you know, you’ll get a, a, a nice flat, you’re like, wow, $247 for, you know, SFO to Chicago or something and you’re like, click, click, click, click, okay, yeah, 247 plus taxes plus fees plus bags and all of a sudden, rather than being, you know, 500 round trip, it’s not like 60 a hundred dollars. You’re like, what the heck?

Chris: 17:45 Yup. Yup. So here’s [inaudible] so, so the, the guys who mastered this mastered it decades ago, um, the, there, there is one European company that does pricing, uh, education, pricing, strategy work, and they’re one of the only companies I’ve ever found who do pricing for compare with both competitors, right? So they do pricing analysis and strategy for coke and Pepsi. You’re like, that’s insane. But they’re so good at what they do that both companies are like, I’ll sign the waiver, whatever. I want you to come help me. But they’re the guys that worked with, uh, I think it was Jiffy, but it’s for your peanut butter, right? And the problem right that Jiffy had, or the peanut butter had was they wanted to raise their price, but everybody was anchored on what peanut butter calls, right? Like they just couldn’t get around making the peanut butter more and more expensive. And, and of course they had tried, you know, like the extra creaney and the with extra nuts and bolts, but they just couldn’t move too far. So they, they were struggling and these guys came in and said, don’t change the price.

Chris: 18:52 Okay, you, you may be famous, but you’re not showing it in this meeting because, uh, I told you I want to raise price. And he said, no, no, no, no, no, no, no. I’m put a dimple in the bottom of your peanut butter jar. So if you go right now to a supermarket and you grab any peanut butter jar and you flip it over, there is a dimple and it took, you know, uh, 12% of the, of the volume of the jar out and kept the price the same, right? And now tons of different people do this, right? Um, it’s, it’s what I recommend when, when, you know, if you’re running a digital agency and I go, look, if you want to do it, you know, first of all, don’t give them one price because then the answer’s yes or no. Give him three prices so that it’s, yes, yes, yes or no.

Chris: 19:40 You changed your arms, right? But in the yeses, right? Give them the 80% of of their budget and give them some work to do themselves. That’s the dimple move, right? You’re gonna, you’re gonna say, look, it’s this price, but you’re going to have to do the migration of your site, or you’re going to have to do the whatever, right? Then give them the 110 hundred and 20%, which adds your recommendation, right? Like, oh, we also recommend, here’s something you didn’t ask for, but we think we’re the experts in the space and we think how do this, and then give them the third option, which is the acceleration plan, right? It’s 200% of their budget, but it’ll bring next year’s results into today. Right? And there are certain people who are like, oh, I would pay money for that. And you’d go, right, that’s the option, right?

Chris: 20:20 So there are pricing strategies on how to pull this together. Um, but the peanut butter example, obviously it was the one that for me, I just went, wow, yeah, that’s a completely different way to do it because you change what your pricing and airlines did it. And they said, we’re going to take luggage out of the equation. Luggage used to be included and now you have separate pricing for luggage and we’re going to use luggage as a proxy for the, the gas that we’re going to have to pay and the gas want and prices were going up. And so we’ll split this out. And they did it at a time when gas prices were going up. So they can tell the narrative because the narrative is everything was fuel surcharges. Yup. Yup. And they, and it started with, it’s just, it’s because of the fuel we’re going to have to charge you for luggage. Right. And by telling you that story, you felt like, yeah, I get it. I mean like they’re strike, but nobody ever tracked back to, hey wait, fuel went down. Yeah. Why didn’t these fees disappear? They’re like, no, no. Like we set a new bar, right. This is how it’s now price.

Joshua: 21:22 Yeah. That’s uh, that’s pretty shyster move if you asked me, cause yeah, you don’t win when the barrel oil was 125 bucks. You could kind of reason with them. You can get on their side. But when oil crash is three years later and it’s 30 bucks and everybody’s still charging a fuel surcharge, you’re like, all right, you’re just addicted to the revenue now. Now it’s a line item in your income column instead of an expense.

Chris: 21:46 And that’s when you, when you read the stories on second, yeah. The nature of having smart speakers in their houses, they start talking because they heard Josh say, Sam at Alexa, don’t do it. Don’t tell Alexa, order me a vacation to Turks and Caicos. Yeah, yeah. He’s like, oh, but Chris, you previously put a password on that you don’t even know to stop all purchases. Um, uh, so, um, we were talking about you’ll surcharges you will surcharges and the, Oh, who hasn’t seen this? Go read the story of blockbuster, right? When you read the history of blockbuster and Netflix coming in and whatever, they were so addicted to their late fees that they, that that’s what killed, I mean, yes, there was a competitor, but they hadn’t even created their own online solution and they were growing it. And at the rate they were growing, you could argue that they could have competed successfully with Netflix had they just transfer their audience from the stores to online and kill the late fees. But the execs that they had there, and eventually they brought in a different CEO. They got, so they were like, but that’s 30, that’s 30% of our revenue. Right. And since they couldn’t get, they couldn’t handle killing their late fees, they killed the company. Right. Um, they get very addicted to revenue and then you start going, that’s, I mean that’s right there is my eva and I can’t like I can’t give that away. And you go, yeah, that’s, that’s a problem. So

Joshua: 23:25 there’s still one more blockbuster left like every once in a while and read it. I see it as like an Oregon or Alaska.

Chris: 23:30 I think there was one, but I think it may have closed. I think the last one may have closed down

Joshua: 23:35 the end of an era. Yeah. Um, before we move on, what other, I mean, what is to you the most egregious pricing pricing strategy

Chris: 23:46 or hack that you’ve seen recently? Uh, I think I would always go with the, um, there’s a certain kind of pitch that happens when your friends show up and they want to sell you on a multilevel marketing.

Joshua: 24:05 He needs some essential oils. Chris. Okay.

Chris: 24:07 I didn’t, I didn’t get very far. And you’re already making the noise, so I know that I hit the right mark. Right. Cause here’s the crazy, the egregious part of this is you take a regular person and you give them a script that they have to learn, then you send them out to all their own friends. All of a sudden those friendships turn into business opportunities and the pitches. Well, what would you spend? What you normally spend this on yourself, but now you’re just buying from yourself and then you’re going and then you’d normally buy it and you’re like, timeout. I have never once spent $600 on toilet paper, so I will not spend that much on it. So this amyloid approach doesn’t do anything for me. Well then you’re buying your own deodorant in your own dishwasher and everyone does this, and now what would you do with an extra $300,000? And you’re like, it’s never going to happen. Like that is egregious math. Right? Um, so to me, I don’t think I’ve ever seen anything that on any level that is as bad as that. Um, and I, I keep watching eyes open, but nothing, nothing as bad as that.

Joshua: 25:13 Oh, I am dying over here. You know, your voice kicked up just the notch. You lean forward in your chair. I could see this one. Got You.

Chris: 25:23 Oh, this is like so, so I, I am a owner of uh, timeshares, right? I am in the top 5% of actually top 1% of the Las posadas chain. I’m in the top 5% of the Hilton Grand Vacation Club. We own properties all in lots of places. Um, I love that. But what I love about those two programs is that there is no crazy scheming pitch. Um, I have attended others and you both, there’s a dramatic pressure to close and there’s a lot of fake math that’s involved and grievous stuff, but even those, even timeshares don’t hold anything compared to the, uh, I’m going to come into your house and I’m going to pitch you on, on some of these things because it starts very innocently with I have a great business opportunity. You could work your own hours and it, it prays on the deepest desires we owe. You’ll have more time in your family, like you’re using everything that I want against me in this negotiation. And then on top of that, your math is so bad, but everything about it just, just makes me boil. Right. And I just go, no, stop. Just stop.

Joshua: 26:37 It’s funny coincidence that the interview recorded this morning. We were also talking about MLMs. Uh, my, my, my guest was up in Salt Lake City and Salt Lake City is the MLM capital of the world. If you don’t know. Uh, I didn’t know that. Wow. It’s, it’s a beautiful city. I love it. But um, yeah, a lot of MLMs up there and the, the essential oil thing is really blowing up. And uh, last comment on that. You know, 50 years ago, 60 years ago when Tupperware and Avon first started going, I think, I think it was interesting. It had its place and it was, it was, it probably did help a lot of people. Nowadays, I put it right up there with, you know, snake oil and just the, probably the worst thing you could probably do if business is your goal is to be in an MLM.

Chris: 27:23 Well, here’s, here’s the crazy thing. Um, Amway specifically had to by law because of court cases, had to put at the very bottom of their website a disclosure of what the average revenue was per across all their agents. Right. And it was like $67. Right? Like when a, when a friend would show up to me and be like, I’m just getting my start, I would literally go to my wallet and be like, Here’s 80 bucks. You’re done. Walk away. You will, you will make more. And not just leave my house. Never do this again. Like, I’ll give you the, that’s a whole year of the best, you know, that’s the average revenue because what they’re hearing from their uplines, right, is all this other potential money. And you’re like, just look at the website. Just look at the data that they’ll show you. And what’s most amazing on the Amway side, particularly, it was the people who made the most money, weren’t selling Amway, the people who are making the most money in Amway. We’re selling the tapes and the videos and educational material for all the Emily people because they felt guilty like, well, every single one one would say, well, I could do better if I was more committed, if I was more diligent, if I was more than this, I just need more education. And so they would spend even more money, buy more educational materials and still not to, and you’re like, Nah, this is, this is wrong.

Joshua: 28:47 Typical Gold Rush, right? The people showing the picks and the shovels made all the money and you know, sure, yes, a few people caught a vein of gold, but most people didn’t.

Chris: 28:57 In fact, most of the people that even caught Aveda goal use the money from the vehicle to double down to catch the next one and then didn’t. And that was really painful for review.

Joshua: 29:06 So, uh, to our listeners out there, I don’t know if you notice, but Chris is a really sharp guy, knows this, knows his shit. Um, 19 years you said, um, coaching and I know young people, and I know you worked as a a product guy, you’re very adept at creating, launching, branding, positioning new products. So let’s talk a little bit about your, uh, coaching experience. You know, what got you to want to offer advice and help and mentor, you know, rookies cause 20 years ago, I, I you’re a little older than me, but 20 years ago you’re probably still a rookie too. So,

Chris: 29:42 so the, the, the fortunate thing was, um, bound by 19 year I was [inaudible] so we had, we had spun up a company, built it up for a year and a half, sold it, spun up another company, run it for two years and sold it. And I think it was in the third one, uh, when I felt like, okay, I have, I don’t have every answer to everything, but in this bigger space, I have a couple of answers that’ll help. And then did two or three more of those. Right? And so then you were like, okay, five, six startups in. I experienced enough to really have some, some, uh, advice. And because most of the startups were enterprise oriented, the other thing was you were getting into, and SAS, I was just doing some things that other people hadn’t gotten to yet. So when they got to SAS for the first time, I’m like, been there five times over, been there six times over.

Chris: 30:29 So then you start feeling like, yeah, I can predict what you’re going to hit next. Um, and uh, and so then you’d say things like, listen, you know what, if you haven’t experienced this, then there is no problem. But many of the folks that I’ve seen will start a partnership to do x, y, or z. Like you’re a developer, you’re going to outsource your marketing and that’s going to kill you. Right? Like you’re, you’re going to end up not learning any of the things you need to learn to make your product better, right? So, um, you’d start giving a little bits of advice and people would start sharing that. And, uh, and so then I’d, I’d net customers from that. And, and for most of the time I still was running a full time job. Right. So then you’re like, okay, I’m doing this here, there when I got married, my wife, uh, she is way smarter than me.

Chris: 31:17 She waited until we had our first child and I’m holding my daughter and my arms and then she says, I would like you to stop the startups. And I was like, oh, okay. All right. So I’ll go get, uh, I’ll go get, uh, like a regular job, I guess. Um, and I, I joined a larger company that was pretty focused on entrepreneurial work, right. Building up companies inside of itself. And uh, and so I did that, but I would work from like six to two, maybe six to three in the afternoon. And then I was done. And if you come from working 20 hours a day in a startup world to working eight or nine hours a day, you’re like, this feels like part time work. I have all this free time now. Give me something. [inaudible] yeah. And so then I would, I would start doing some, you know, I, I pushed it a little more into coaching and for a couple years I didn’t even charge and I didn’t charge it all because then it meant it wasn’t a job. Right. I couldn’t, my wife couldn’t be like, you’re still doing it? I’m like, no, no, no. This is just me talking with some friends and helping their business out. Right. Um, eventually got enough that I’m like, okay, I have to,

Joshua: 32:19 I have to actually start charging for that one figure you mentioned that I thought was kind of interesting. You said five to six startups and then you felt comfortable helping your people. So it takes six startups to get over in imposter syndrome. Is that what you’re saying?

Chris: 32:35 Oh, no, it’s worse is, I think I got over imposter syndrome a year ago. So 18 years you’re like, oh, oh, what if I don’t get this right? Um, but you know what, for me, then the insecurity or the nervousness can either overwhelm you or it can feel you just enough to push harder and to learn more in a study. And to caveat correctly. And uh, so I’m never worried about being insecure. I was insecure. I just just learned, let me, let me move this past. And so I might tell you, hey, here’s what happened to blockbuster. I could be wrong applying this metaphor to your situation, but it sounds similar. And they would go, it sounds very similar. And then I go, here’s that, here’s a case study. And then we walk it through and then they go, okay, I’m going to change something. So it wasn’t just my brilliance, right?

Chris: 33:21 It would be some other material. So I felt comfortable talking through learning the stories, understanding the metaphors, knowing when to apply them would be where I was doing it. But amazingly, right, I would watch guys who did one startup, like one startup, and it would be successful, not just because of the actions they took, but because of where they were and what time it was and what was happening with the competition. And I would look at it and I go, you were very successful because all these things. And they would finish their first startup, sell it and be like, I’m ready to coach all the startups now. And I’d be like, wow, oh well, okay, good luck with that. Right. Um, and then, you know, some of these guys would become friends of mine later and I would sit with them and they’d go, yeah, my neck, they would start another company and start a second or third, and then they’d come back the second and the third, both fail quickly and they go, I thought I had a handle on this.

Chris: 34:16 And you go, yeah, well it’s just one of those things you discover. There’s lots of different ways to both succeed and lots of different ways to fail. So even if you know one way to not fail, it doesn’t mean you’ve closed all the other ways that you might fail. So it takes time to figure that out. The luck and the timing are such a big part of it, right? Cause Oh yeah. No matter what, this is idea you have the wrong time or the wrong market conditions, you could very well be destined for failure. Like there will be no way to succeed. If you look at the Pagely history, right? Pagely started with a completely different approach. Let me pick a theme, let me do this other stuff. How the hosting, right? And at that moment people were like, Nah, Nah, I don’t want that.

Chris: 35:05 Right? And then you pivot and adjust and then there’s Paisley, the hosted introduces managed wordpress and you run it that a little bit. Then a whole bunch of market entrance players step in. Then it’s time to pivot again towards a different market areas, space, a segment that you can double it and then you go, oh, now we’ve got a formula and let’s chase it and win, right? But if you think at the beginning that, oh, putting a theme in front and make him choose, that didn’t work. Therefore close the business down. I’m done. Right? Which we see lots of people do it just go, oh, what the lesson I’m going to take from this, right? And this is a misattribution here, right? I’m going to attribute the fact that this didn’t work because of this one thing and there, or there’s no business here when in fact that’s the wrong story. You tell yourself the right story would be, let me pivot and adjust and try something else and then let me pivot and adjust and try something else. And the people who can reimagine the story that they’re in are the ones that can navigate through some of those risks, cross those bridges and get to the other side. If you, if you don’t, if you’re telling yourself that story, this is not, this is a failure. I’ve gotta go, I gotta Sell Insurance, I’ve gotta go get a job. That’ll be the ending.

Joshua: 36:14 You know, uh, I don’t want to dwell on this, but for as long as I’ve known you, you have told our brand story so well. Every time that I just, I just want to give you a big hug. I just think that’s great. But, uh, back to coaching. Um, okay. So what was the number one kind of inks or desire or Chris, can you help me with type question? Were you getting and, and maybe still are like, what’s really burn in and entrepreneurs right now?

Chris: 36:44 I think, uh, I think there’s, I think there’s two dynamics that are constantly at the top of the list, right? Um, number one is how do we tell our story better? How do we do it when we’re on the phone? How do we do it with our salespeople? How do we do it on our website? We, like if you, you know, you just said it, right? Oh, you tell our brand story better than most people and sometimes better than the company itself. Yeah. Um, and, and that is, that’s part of what I bring to the table. So let’s break it down and let’s rework it and let’s find the right way to tell your story. And people often get recommended to me to help them with that, right. When you can call it marketing or product marketing. Uh, but for some companies, that happens even before we build the product, because I work at a company called like a Web, right?

Chris: 37:28 And I got invited to join the company precisely at the time where they’re like, we would like to build some of these products but we don’t know what to build even. And I go, well it all depends on the story you want to tell, but if we have the right story then we’ll back into building the product to tell the story that way. It’s a different approach to product development than just saying let’s build what we think is cool or let’s build what we are guys want to build. Right? So, so part of it is telling the story, right? There are people that just, they know that they don’t have it, right. They know it takes them too many words. They know they have to talk for 12 minutes and then someone asks him a question and then they answer it and then the guy goes, oh, now I get what you do and you’re like 12 minutes in a question in this sucks.

Chris: 38:06 Like it’s my company, I should do this better. So that’s, that’s one part of it. The other is often because most of the companies I’m working with are, they have some amount of internal development or engineering groups. You get into this debate between, um, when should you build things that make your internal business work better and when should you work on customer facing features and how do you deal with that? A priority dilemma of when, when to do what, how much to invest in each one. Right. [inaudible] um, and so we spent a lot of time working through frameworks and formulas for how to make those decisions.

Joshua: 38:44 Yeah. Okay. So those positioning conversations, those, those are quite often what you see a lot. And then that’s an interesting one. I didn’t think about that. There is a conscious, you know, I think we all have it unconsciously as business owners or people running businesses, but there’s conscious discussions happening around when to allocate resources internal versus external, you know, that kind of thing.

Chris: 39:12 The fight, it’s normally a fight between the CEO and the CTO.

Joshua: 39:15 Yeah. Cause you’re essentially facing the innovator’s dilemma, right? Because it’s working. Don’t mess with it. Don’t touch it. Just double down on the marketing. Yeah. But boss like the server rooms on fire or boss, it takes us 500 people to do this task that we could automate down to 20 but don’t mess with the cash cow. Right? So there’s that struggle, right?

Chris: 39:36 Yup. So I call that kind of coaching, right? If I’m, if I’m, if I’m literally on a vehicle with the CTO and the CEO, I call it my version of marriage therapist, right? Cause you’re here like, oh, oh we’re going to get into it now. Cause it, what’s amazing is, and you know this and you’re in your business and in all the businesses you’ve interacted with, the dynamics are not ever just about the specific discussion point and the two people and the specific facts of that, they’re bringing all their own histories, they’re bringing all their own insecurities, they’re bringing the mistakes that companies made in the past. They’re bringing their fears, they’re bringing all this stuff to the table and then masking it like a conversation about should we build integration of MailChimp or not? You’re like, okay, let’s peel the layers back. This is not just about integration of MailChimp.

Chris: 40:21 And then let’s get to the core of it and then let’s talk about a framework so that we can all agree how the decision gets made. And so that it’s not just this one decision, but all the rest of our decisions can work in this framework and we can equally weight these things. Right now of course, my friend Tony Perez who you know from Scooty just last in my general direction, right? Cause he’s like, that’s way too many spreadsheets. That’s waste too much work. He’s like, I just decided what I want to do and I just do it. And then that’s just that. And you’re like, Yep, that is an alternative approach to making those decisions. And the, you can also do that, right? Right. You can be either super smart like he is or super lucky like other people are and you just kind of go, okay. Um, I just prefer a more, a more method driven approach to figuring some of that out

Joshua: 41:10 without necessarily giving away your secret sauce where it could others, you know, what book titles or what not. Should people be looking for to learn about some of these frameworks on, you know, how to break down that conversation or that decision tree on internal versus external focus of your efforts.

Chris: 41:30 I think there’s, I think there’s a lot of great things there. Um, uh, McKinsey developed a, uh, let me, hold on, I got to pull up a browser real quick just to make sure, um, make sure I’m attributing it correctly. But I think it’s, uh,

Joshua: 41:51 cause there’s, so there’s various, there’s various management and leadership approaches like six sigma and what not, but this is very specific.

Chris: 42:02 Yeah. McKinsey created a, um, a framework called the three horizons and, and the three horizons. And reading about the three horizons would potentially, uh, start walking you through or down that dynamic of, uh, how much do you do that is about now and solving the problem today. How much do you do that is related to the future? Um, what’s in the middle of that? And so, uh, I would say if someone wanted to get into figuring some of that out without doing the, the lemme approach to it, um, uh, McKinsey and the three horizons would be a good place to spend some time.

Joshua: 42:42 Gotcha. So, um, when you’re working with entrepreneurs, um, what sort of layers of the onion are you peeling back? You know, cause like you say, a lot of its mast like, oh, I need to figure out how to position my company. But some of it’s like psychotherapy. Well, actually you need to feel comfortable with the idea of you being successful and then we’ll figure out how to get your product out there.

Chris: 43:12 The biggest one that I spend probably the first bit of time with, and it’s the stuff I had to do when I joined liquid. It’s the stuff I do when I work with other companies is invariably I will walk up to you and I had this conversation right when we were talking a long time ago about paging. You go define the segments, just lay out a map of the segments and can you get comfortable leaving parts of the map to someone else? Can you get comfortable saying that’s the cause? If you cannot be really good and service really well, one segment and instead you’re pulled in every direction for every segment, there’s a good chance you will not win, right? And uh, and so getting comfortable as a person you for whatever your background may be, you may be the kind of person who’s like, no, no, no.

Chris: 43:58 I want to, I want to do this for everyone. I want to be a vertical company on all verticals and a horizontal coming. I’m all horizontal and I want to do everything. And you’re like, okay, good luck. And by the way, this is not gonna be a good fit like you and I are not going to work with. Right. But when you can say, okay, here’s one way to slice and dice the world, here’s one way to define the segments. And in this, you know, slice and dice, this is really where, where we want to go. We have the most skills for that. We have the best opportunity for that. It is size the right way. Um, let’s do that. Then the trick is letting go of the rest, letting someone else be really good at something else and not feeling like, oh, we could be good at that. Yeah. I’m just going to have to let that go so I can focus over here and it’ll change the ratios of your staff. It’ll change. The ratios of your profit will change the written, the pricing, like everything changes once you have a sense of your segment. Um, unfortunately most people start with the, we’re for everyone and, and you’re like, okay, we’re, you know, we’re going to have to work that one through.

Joshua: 45:05 Yeah. So there’s a little challenge to the ego there sometimes. So you’ve, you’ve worked a lot with entrepreneurs and, uh, I believe you told me you have some in your own house now, right? Are You doing some coaching with your kids on some new ideas?

Chris: 45:20 I, I’m more than a coach. I’m an investor and a temporary CEO until she’s ready to take it over. But my 13 year old, who’s soon to become 14, and I have bought a, uh, photo booth. Right. It’s a stand with the iPad and the ring, you know, of light and a loss of software that does customization stuff and a whole bunch of props and a green screen and all that. I mean, we’ve bought, invested all of it. Um, so that what I told her was when she gets into high school and she did, uh, she started her freshman year, last year. So this year she just started her sophomore year. And, um, and I said, okay, we’re gonna let you do your regular school the first year, make sure that you get calibrated. Um, but, uh, this year we started in, so in the summer, right before school started, we, we made the investment, bought this stuff and said, okay, we’re gonna start a company where you start as an employee, but its goal is for you to, uh, become the owner of this business and, uh, you’re going to have to do a bunch of work, right.

Chris: 46:26 And, and yet it’s, you know, going to a party and hanging out with a bunch of people and do it. So it is work that she won’t feel is as much that work. But writing those proposals or getting the pricing right or collecting money or scheduling it or creating the custom images that go, you know, the borders and all that other stuff is all prep work before the event. There’s, there’s a lot to it. So, um, she got super excited right away. Then I opened up the, uh, the photo booth in the house this last weekend. We had people over on one there for Labor Day and treat it like an everything up. And, um, by the time the day was over, my wife was like, you know, I could, I could be involved with this. Like I could drive Emily around and I, you know, like, uh, you know, there, there’s, there’s probably some things I could do here and my son was like, I be really good at the prop stand.

Chris: 47:20 Like I, how do I get, like, so suddenly everybody in the family wanted to be an entrepreneur, right? And you’re like, oh, okay, we’ll figure it out. We’ll find ways for all of you to get involved. Um, but I believe that my daughter will be served more effectively in her high school years learning to run a business than being in a bunch of sports and a bunch of clubs. I know that, uh, that is counter-cultural to a lot of things, but, um, she has yet to show a particular kind of prowess that she would suggest that she was going to be a pro NBA basketball player. And so I just let that dream go and just, no, no, no. But the skills, even though she’s never an entrepreneur after this, the skills, um, to run a business and to do the customer service and to do the sales and to do the marketing and to do, uh, the technical work associated with it are all skills I think will prove beneficial. And, um, so that’s my commitment of both kids, right? Starting their sophomore year, I’ll help each of them run a business. And, uh, she was working last night, you know, looking at all the San Diego photo booth companies to read all their websites and understand how to compete against them and find her nation, all that stuff. And we’re like, okay, we’re, we’re getting there, we’re getting ready to start. So it should be a lot of fun.

Joshua: 48:35 Well, even, you know, so entrepreneurs tend to have this idea that their kids will be entrepreneurs, but their kids may have a different passion to want to do something else. But regardless if, whether she works for a fortune 500 or owns of fortune 500 the skills you learn bootstrapping something off the ground from nothing and attracting customers and marketing and inventory management, P and L’s and all these things, they’re going to serve her in either capacity. Right.

Chris: 49:03 Exactly right. In fact, she wants to be like a lawyer or a judge and I’m like, that’s great. But in your high school time, other than she’s in a mock trial thing where she can directly apply the whole, you know, lawyer thing. Other than that, all the extracurriculars are brought down and it is, you’re going to learn how to run a big business. Then at the end of your school time, you could sell the business, close the business, you could leverage the business into a new job. Like you have options. But I think those options are going to be worth more than two to three hours. I mean, I played sports all throughout high school. Um, I also did leadership all through high school. Everyone told us like, these are the things you need to do. And then you move on and you do certain things in college and then you get to the end of it and you’re like, I think everybody like this didn’t do what you all thought it was going to do for me.

Chris: 49:51 And, uh, and so I’m more like, look, it’s, there’s a good chance I’ll be wrong. I don’t care, but I know that you will learn from this. And I would rather you learn these things then being in a sweaty bus, going somewhere and, and you know, working out, not to say that there’s, I mean, there’s, there are people that do that and it’s awesome and it’s good for them. I’m just judging it and saying, no for us. We’re gonna do something different. So a test, she looked at the money, right? She did just back of the envelope cash and she was like, oh, right. Um, years ago, years ago, my wife, we were at a dinner and you know, my buddy’s side bulky, um, SIADH is 20 years younger than me. An incredible successful entrepreneur has, you know, more money. Probably in his house than I will ever own.

Chris: 50:43 And that’s fine. I just, I love him. He’s fantastic. And he happened to be in New York at the same time that my family was in New York. And, uh, he was doing something with the NFL. We were having dinner somewhere and at dinner, my wife says, well, Emily, someday you’ll get old enough to buy a car. It’ll be like a junkie dieter car, but it’ll be your first car. And I went, what? Why, why does it have to be a junky car? She could start a business, run a business, make money, and buy herself a Mercedes. And my wife’s like, no, that’s not. I’m like, just one second. And I texted sad. I’m like, Hey, are you available for dessert? We’re over at this restaurant. So he comes over, um, and I just say, Hey, you know, uh, solve this little debate between me and Melissa. Uh, if Emily wanted to get her first car, does it have to be a beater? And he’s like, no. Why did you that start a company and make some money and you can buy yourself a Mercedes? I’m like, [inaudible]

Joshua: 51:34 imagine that. Well, yeah, and SIADH is probably the perfect guy to call in for that low lifeline, right. Because I think 17, 18, nine 19 years old, the kid was crushing it and so I, I did stack the deck to win my argument and that is not atypical. Well, you know, Chris, thank you so much for joining me. This has been such a pleasant conversation and I can’t wait to see you next week at PressNomics and our friends. I ed will also be joining us there. Absolutely. And hopefully we’ll have this one produced and published before then if not soon thereafter. So if you could let everybody know where to find you online.

Chris: 52:17 Yeah, I have a website at [inaudible] dot com I have another blog over at leader’s dot blog and I’m on Twitter at, at Chris lemme. Uh, I also blog over@liquidweb.com where I work.

Joshua: 52:28 Excellent. Well Hey Chris. Thanks again dude. Man, you’re funny. You’re such a great guy. I just love you to death so we’ll see it. No, Geez. Geez. About eight days. Exactly. Can’t wait. See Ya. All right, later. Thank you. Okay.

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