Tracy gives an insight into one of the talks she gave at a City Summit event in Salt Lake City. With innovation becoming the buzzword for this day and age, we can’t help but get too caught up in just investing i
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Rather than doing an episode where I’m talking straight with you, I’m going to give you an insight into one of the talks I gave at a City Summit event in Salt Lake City. For those of you who have never heard of the City Gala or the City Summit, although I may have spoken about it before, you may have read about it in my column for Inc. City Summit and City Gala are the events where they raise funds to help seed nonprofit, social good companies. I’ve been involved in the organization for a couple of years now. Sometimes they let me preview who’s going to be their big celebrity headliner. It was Ashton Kutcher. John Travolta and Halle Berry before that. It’s always interesting. The idea is that they bring celebrities together for a cause to try to help move that forward and help raise funds to seed a nonprofit and get it going and started, which is difficult. At least for those of us who were in the product inventing world, we have a product. We have an asset at the end of the day. We have market proofs. There are sales. There is revenue. It’s a little more direct of a return on investment.
When you’re doing a social good project and you don’t have a lot of that proof early on, it’s hard to get investors to come in at the early stage with you because it seems more a donation and not necessarily an investment. This company helps to do that. Ryan Long and Dale Godboldo, those are two of the founders of it and who make this happen every year. They’ve been doing this executive and entrepreneurial education program around the country. They may be in your area and you should check them out. CitySummit.co is their website. You can see if they’ve got an event coming in your area. The one thing that I want you to consider is that while I was giving a talk to people thinking about investing in innovation, I was also coached in the process that you could be looking at this from whether or not it’s worth your time. It’s the same thing. Whether you’re investing your time or investing your money, you need to think carefully about how you’re going to invest in innovation. Specifically, I was looking at the difference between disruptive and market-making innovation. I’d love to hear your thoughts about whether or not you’re in a disruptive or market-making venture yourself.
Many of you has asked me what I do and this is not what I do on a daily basis, but this is what I wanted to bring you because I don’t like to give the same talk twice. I get bored easily. This is a combination of something that would be valuable to you because the number one thing is I get approached by authors, speakers, brand builders and inventors. The inventors come out of the woodwork when they find out that I have 37 patents. They want to tell me their story of their products. They want to pitch me because I write for Inc. We get this all the time and this is the thing that I tell them all the time, “Are you worth it? Are you investible? How do we figure that out?”
What I’m going to give you is thinking about this, investible innovation. This is whether or not you should invest your time. If you’re not an investor, you invest your money into things. If you’re going to invest your time in something and your time is extremely valuable, I believe it’s more valuable than my money. How do I decide what I’m going to spend my time on? This is what I want to bring to you, disruptive versus market making. We hear this term all the time because I write about disruptive technology. We hear this term, it’s a disruptive company. It’s going to change the world. Autonomous cars are going to get rid of taxi companies and vehicles and everything is going to go away. Nobody’s going to have garages anymore or nobody’s going to have parking lots. What’s going to happen with all of this stuff?
We start thinking about these things, but how often do we see something that’s truly disruptive versus something that truly created a new market. There is a difference in terminology. Harvard Business Review, you wrote a big expose about the difference between your disruptive companies and market making companies. I wanted to challenge you because it’s a lot easier to be a market maker than it is to be a disruptor. Let’s think about whether or not we have these two characteristics and what we should invest our time in. Tesla is truly a disruptor. Why? They went for a high-end part of the market, not the low-end part of the market and they said, “We think that these people will buy electric vehicles because we think billionaires and those would make a lot of money care about the environment.” That was a pretty big leap for the auto industry. That was not what people thought. I read a statistic or something that they have outsold BMW, Mercedes and Audi put together here in the US. That’s a pretty astounding number. They have truly not created a market, but they disrupted the current auto industry sales process. They truly are.Whether you're investing your time or money, you need to think carefully about how you're going to invest in innovation. Click To Tweet
Apple, how many mobile phones do we have? They started that. We have them to thank. Netflix, a disruptor, but not because they went into it. They didn’t go after the low-end. They didn’t go after directly to compete with Blockbuster. They went into going after and say, “We think there are a lot of people rather have it. They don’t care if it’s like a new version. They want convenience to watch a movie in their home that they heard everybody watched, but they’re three months behind everybody else. They don’t care to be first. What happened was digital media came about and help disrupt the market for them. They were like what Brian Smith was describing. They were the Reebok. They were the Nike. They got to go along with the flow and disrupt a market. That’s what happened to them.
When we look at Amazon, Airbnb and Uber and they are not disruptors, although they’re described that way in the press all the time. Why is that? Because Uber didn’t disrupt the taxi industry. They didn’t go underpricing taxis. That’s not how it happened. They went after a market that was like, “I’ll switch.” They didn’t go after and treat an underserved part of that market. They went after people went, “That sounds more fun. That sounds more convenient.” All of a sudden it was. Amazon is the same thing. I started buying books in 1998. I am like one of their first customers. There’s a joke running because I have a friend who works for them that I was the model they created the Amazon Fire phone for. I was the profile that was called Tracy. I am their profile customer.
How does that happen that they come in and they disrupt retail? They didn’t disrupt it. They created a whole new market and online happened. They went along with that. That’s market making. They create that opportunity. Let’s get the success rate. You have a 6% chance of being the disruptor in the market, 6% chance of being success, but you have a 28% chance of success of being a market maker because you’re watching the signs. You’re seeing indicators. You’re going along with it. You’re building a market within something that’s already happening and already going on. You up your odds already. We want to be market makers. It’s better odds. We have a better chance of success.
How do you know if it is worth investing in? How do you know if it is? How do you get it? Tom and I have been working in product design and development for 27 years. We know all the time that we work on different products, we work on different things and 3D printing came about. Tom bugged me. I was having my third child. We had gotten stiffed by a consulting client. I was pissed off and he kept bringing out, make magazine and saying, “These 3D printers are only $3,000. We could make products in our office and we could sell them. We could use this for our clients even though we had a model shop in China. We had tons of resources to make models.” I was like, “I don’t know why we would want to do that.” I’m very grumpy. I said, “Forget it. We’re not doing that. Why would we invest in that? There’s not a market for it.”
He reminded me of the one thing that I always say, “It’s our job to decide and help our customers and our clients evaluate whether or not there is a market for something. If we don’t experience it, how will we know?” I was like, “You got me with my own words.” We bought a 3D printer and it took us nine months to make something that was Instagrammable. It’s a neck tie he wears to all the events and he takes great photos of it. I looked at it still and I said, “I still have so many questions. Is this the market? Is it worth buying? Are retailers going to stop stocking them? Where is this market for it?” I said, “How am I going to go out there and figure that out? We can do some market research, we could do some various things, but the best way is to figure out if somebody will plunk down dollars for it.” We built a podcast. This is almost several years ago. We built a podcast about 3D printing and we started talking to people.
As we started talking to people, we started to figure out if there was a market for it. The podcast is WTFFF and FFF stands for Fuse Filament Fabrication. It is not a swear word. There are almost 550 episodes or more that we have. We’ve had that our whole time and it ended up not being viable. When I talk about 3D printing as a disruptive technology, it ended up not being viable, but we have an authority site. It makes us money every single day. That podcast makes us money every single day. All they do is record things and record interviews with people. It wasn’t worth investing in. Here’s my criteria for investing. Credibility, for some people this is character. Does the team, does the inventor or do the people who are going to this, do they have credibility? Can they do what they say they’re going to do? It goes that same way with the technology. Can the technology do what it says it’s going do? What are the barriers for that? Does it have credibility? Is it above board? Sometimes we look at things like Bitcoin and we wonder is it going to get squashed by regulation? We look at that as a risk factor.If we don’t experience it, how will we know? Click To Tweet
The other thing we look at is concept proof. I do 100 talks on market proof a year. This is the one I cannot talk enough about. You should have a market proof whether you have a service business or a product business or whatever that is, proof matters most. Collateral IP, is it going to give you something that is valuable at the end of the day that somebody else wants to invest in or buy out from you? That’s what we think about. As I mentioned, concept proof is the most important because upping the odds of somebody wanting this is whether or not the dogs eat the dog food. More importantly whether or not the owners will buy it? I care where the dollars are spent because if you match the product market fit, you up your odds by 56%.
Product market fit is the number one and two failure. We can go, “I have a great product, but I don’t have the right market or I don’t know what the market is. I don’t know how to reach that market or I have a great market, but I have no idea what to make for them.” It can go either way. When you have a mismatch there, it is not the team. It’s not money. It is not all of those typical things that people think cause startup failure or launch failure. It is product market fit that is absolute. That makes the biggest difference. If you can get a match in that, you can have a success rate. I’ve done 250 products for mass market retail. You buy products that I designed every single day at Costco, Walmart, Target, Amazon all the time. The difference is that I have an 86% success rate. It is because we don’t go into making a product that we don’t know is going to sell. We already know it’s going to sell either because we know the channel and market or we know that the product itself has that market.
Technology That’s Late For The Game
Let’s talk about some technology that you might be a little late to the game. You might be a little late to the game in autonomous cars. It’s pretty far gone. It doesn’t mean it’s too late, but it’s a different investing when you get onboard at this stage. You’re not an early stage investor. You don’t do the high returns on investment. Space colonization, clean energy, does it mean it’s not worth investing in? No. If you care about it and you’re passionate, there are some great companies out there working in these industries. These industries that come far enough along that they’re mature enough to succeed. It’s a matter of evaluating that credibility and that team and whether or not they have a concept that is going to work. These are good things. This is CRISPR medical tech. I don’t work in medical tech, but this is a good field. If you’re looking at stuff like DNA splicing and other things like that, you want to look at that and say, “Does this fit my trust factor too though?” Is this in the ethical side of what I believe is okay in the world?
These are ones that you should still consider, but you’ve got to consider companies that are at a different stage in what they’re doing. They must have a higher per stage. You’re not going to get them at the seed stage. Listen about ARVR and mixed reality like people are like, “That’s done.” I can tell you, I wrote twelve articles this past year on ARVR and mixed reality alone. The biggest areas where they’re having the biggest impact is in advertising. Some of the companies are doing some amazing things. I don’t know if any of you seen Facebook put out a new filter that you can take a photo of and it does 3D. It basically has like you’d be in the foreground and all those people are in the background and it looks pretty dimensional. It’s pretty cool. It’s a form of what they’re going to roll out and this is why they invested in virtual reality. It’s coming.
These are things that it’s still not too late. There are some amazing companies. I’ve met three or four. There’s a great company doing some architectural walkthroughs. They’re doing virtual real estate. You can imagine this commercial space and what it’s going to look like and what it would look like as an event. You can do that already without ever being there. You can imagine it as yours. There are a lot of good things going on there. This is definitely a technology worth investing still. AR has a much higher conversion rate. Conversion rate because it’s getting into your head, through your eyes and through your seeing it, but giving you deeper dive information that you believe you’re a part of it. VR does that. It helps people heal. If you’re afraid to get on an airplane, they can get you over your fear of flying without ever getting on a plane, which no one would safely allow you on the plane to learn how to do this.
You can get over that because you believe that it’s happening to you and when you believe that it’s happening to you, you believe that it belongs to you. If you’re talking about buying conversions, it’s very high. 3D printing, I had talked about that briefly before. Do I think that there would be 3D print products in the world? It gets far from that. There are tons that’s really great, but do I think consumers want to do this? No. The reason why is because not a single company in the five years that I’ve been covering 3D printing and that I’ve been to that 560 episodes that I’ve talked about it, not one company has invested in content. You remember when iTunes came out, there were songs on there. It wasn’t garage band stuff. It was like professional stuff.If there are no women in the process of creating products, we end up with bad products. Click To Tweet
You cannot create products in your garage that easily. You can create products in your garage as 14-year-old boys creating products. It’s the Handyman who’s great at it, but nobody wants to buy that. If you want quality products that you want to buy, you need to get women involved. You need to have a different scope of things. Is that happening? No, because nobody has invested in professional content. It’s why it’s failing. It’s why we did do it because nobody would invest the dollars necessary to build a catalog that was so amazing. That’s why it hasn’t taken off in that world, but it’s taking off in aeronautics, in robotics, in an underwater ROVs. There are some amazing places or things 3D printed that you don’t even know about.
Every single product that we bring to market that can be 3D printed and passed it before we tool for it. We do that. We sell stuff on Amazon that you don’t know is 3D printed when we’re testing out whether or not some people will buy it. It’s enabled us to make runs for thousands of dollars instead of tens or hundreds of thousands of dollars. There are a lot of viable things going on there. It’s a matter of finding the right companies, the right projects and the right interesting information. This is my favorite one, AI because it’s so controversial. People are always asking you, artificial intelligence, it’s so scary but you’re seeing it already. AIs in our IoT, internet of things, in our voice or Alexa’s. We’re seeing machine learning. If there’s machine learning involved, we’ve got some amount of AI going on in there.
This is what I truly believe. I truly believe that my job here on Earth is to be an originator. I’m supposed to be original. I am supposed to be that person. If the mundane tasks, if the research, if the finding stuff is getting in the way of me being able to do that, then why shouldn’t I create a program to do that for me? Why shouldn’t I have Alexa search through the Amazon catalog instead of me spending an hour trying to figure out what soap is top ranked? Why should I do that? This is where I have high indicators of everything going well. Is it overhyped? Yes. IoT is overhyped because how many of us want our dishwasher to reorder its dishwashing detergent. It’s a little overdone, but voice is killing it. Voice is the future right now.
Google, Blogs, And Podcast
Google has invested a tremendous amount of money and competing against Alexa with voice. Alexa wins every time because Amazon has a higher trust factor, but Google owns the keys to the castle. I mentioned I had an authority site. The reason my authority site does better is that I can speak 6,000 words in 30 minutes. Can you write a blog post in 6,000 words? How long would it take you? I can get to the top rank on Google because Google is rewarding me because its voice recognized pattern of language. What they call NLP but not the NLP you all speakers or authors know. It’s NLP, natural language pattern. The natural language pattern is being rewarded. It’s been being rewarded for years now as they’ve been testing it out. It’s why the sites that we have and we have a partner who has a thousand revenue generating authority sites and all the sites that we have podcasts, they turn into blog posts. They are all outranking because Google is rewarding this. They’re going autonomous. They opened the Google podcast app too.
Blockchain, some of you guys approached me about blockchain. My new favorite thing to write about. We’re starting a new podcast in December. I’m starting with a woman named Monika Proffitt. It’s Proffitt and Hazzard. We’re going to talk about the benefits and the risks. The reason I love blockchain is that it rewards originators. There are some great things going on here. This is early stuff. If you want to talk about early age like 1995, ‘96, ’97, “Don’t you wish you got yourname.com? What if you could get your .block right now?” There’s a new company, NASGO. I interviewed Eric Tippetts, the founder. They are the GoDaddy of blockchain. Wouldn’t that be cool if you could get that right now? Wouldn’t it be even better if you could get it for a few hundred bucks? What’s the risk if blockchain goes, which it should. I don’t see any reason because of what it’s doing. Wouldn’t it be cool if you could do that? I’m hot on that, not on the cryptocurrency side. I would say there’s still a little high-risk in regulations. Media disruption, this is a little of a catchall for me, but you see what’s going on with YouTube and Facebook. These companies becoming media companies without even realizing it. All their dollars are coming in ads, but lack of trust is happening here. There’s a lot of that, but then look at the influencers that are popping out of nowhere. You too can become an influencer. You too can become an authority. You can become all of those things.
The thing is that you’ve got to learn how to do it. You’ve got to figure out what works and what doesn’t. However, if you can figure out that formula or if you can become a part of a done for you service that does all of that, then you can get in on the ground floor. I’m hot on podcasting as you all have probably already heard and figured out from now, but I’m going to tell you why. Podcasting is old technology to some people. It’s been around ten years. John Lee Dumas has had his podcast for eight. It’s old to some people, but the reality is that Spotify just got on the top 100. They are number 98 of the top search websites. Where are you going to be found? There are only about 150,000 active podcasts. People who are continually making new episodes, 1.4 billion or more websites on Google, but you can be found in a podcast easily.
I can tell you from experience. I have a company. It’s called Podetize. Podetize is a podcast production platform, but it’s also a done-for-you service that does everything. Wouldn’t it be great if all you did was do this talk right here? Get it recorded, have it transcribed, have it put in your website for you, have a podcast made for it, have a video made and have it put up on YouTube. Do all of those things and you don’t have to do anything else. That’s the service models that are coming out. These kinds of businesses. This is what I want you to take away. I want you to take away that I have a business that generates a tremendous amount of cashflow. It’s a fantastic business and I get investors coming up to me and asking me literally, how much do you want for me to have a piece of it because I have proof, proof of concept.
I have 125 clients including Kevin Harrington and Josh Martin. I also have doctors, entrepreneurs, thought leaders, speakers, authors, First Publications, Esquire, OH! Magazine, all of them we are the engine behind it. The reason we’re going to grow fast next year and I’m excited about it, is because we’re partnering with marketing agencies and we’re doing it for them. When you’ve got a company that’s like that, that is built so we can automate and move forward but your proof of concept is solid, then it’s worth investing your time and energy in building those systems in. When your proof of concept from the beginning and you’re not sure and you build all this stuff and then you go, “I’m ready to sell it.” You waited too long. Test it from the beginning.
- City Summit
- Ashton Kutcher – Inc. Article on City Summit
- Eric Tippetts – Inc. Article