What Most Business Owners Get Wrong About Marketing
Shawn Busse writes that the Marketing Industrial Complex encourages businesses to fixate on tactics that can end up costing a lot of money.
Good Morning!
Here are today’s highlights:
Gene Marks says the four-day workweek needs a rebrand.
A lawsuit will determine if a venture capital firm can invest in Black women only.
In communist Cuba, private businesses are providing a lifeline.
MARKETING
Shawn Busse thinks a lot of the time and energy that business owners put into marketing is misguided: “In marketing, there are four P's: Product (or service), Price, Placement, Promotion. Here's the thing: Most all of marketing in the small business space is fixated on ... Promotion. This looks like: running pay-per-click ads, crafting hundreds of blog posts for SEO, social media firehosing. While all of these tactics are valid (or were, at one time), they often suffer from tremendous friction and unnecessary expense.”
“What if the thing you're paying to promote is priced in a confusing way? Or what if your offering is great, but the way it's messaged fails to capture the product's awesomeness? What if the market isn't ready to buy because you're innovative and need to educate potential customers?”
“You see where I'm headed. Friction. Expense. Spending more to get less. Every year, business owners throw billions of dollars at digital advertising and marketing. They do this unknowingly, of course, because the marketing ecosystem is wired and biased towards ... PROMOTION.”
“So, what to do?” READ MORE
HUMAN RESOURCES
Gene Marks isn’t buying the four-day workweek—except maybe if it gets a rebranding: “I spend my life working with small and mid-sized businesses and I know a PR stunt when I see one. Hey, good for them. In these times of tight labor — it’s a great marketing campaign. ‘People! Come work for us except you don’t have to do as much work and we’ll still pay you the same!’ Now that’s a company I want to work for. But ask any business owner about the four-day workweek and you’ll get the eye-roll. No employer who’s currently paying a worker $1,000 a week for 40 hours is going to agree to pay that same worker the same amount for a 32-hour week.”
“My firm has 600 clients. These companies slit paper, coat films, design strip malls, buy and sell auto parts online, mow lawns and repair roofs. They’re mostly owned by people who wake up at 5am and work till 7pm. They don’t have enough people to do the work needed. They don’t have enough money to pay for good health insurance, let alone a robot. Their parking lots need resurfacing, their internet needs upgrading and their coffee pots need to be replaced by Keurigs.”
“These businesses — like most their size — suffer when a single person calls out sick. Their owners are battling customers who don’t pay, suppliers who don’t deliver and services that don’t function. My little subset of clients — who represent a tiny sliver of the country’s 30m businesses — can’t fathom a four-day workweek. To them, this is a fairytale, a dream, a misguided workplace concept driven by media interest that is so unrealistic that few even pay attention to the stories about it.”
“But that doesn’t mean there isn’t a place for the four-day workweek. All this idea needs is a little bit of rebranding. If you’re an advocate of the four-day workweek you’re going about this all wrong. Instead of working fewer hours for the same pay — which, again let me confirm, is never going to happen — you should be pushing for changes in work schedules. Many industries — like health care, home services, and retail — allow flexibility in scheduling so that workers put in four 10-hour days and then have three days off.” READ MORE
LITIGATION
Can an investment firm invest only in Black women? “They might be courtroom adversaries, but Arian Simone swears she and the man suing her venture capital firm want the same thing: an America where race does not matter. The difference is that Simone believes race-specific initiatives like the Fearless Fund are essential to achieving that ideal. Given that Black-owned start-ups secured less than 1 percent of the nation’s VC spending last year, she said, ‘I can’t stop.’ But the conservative activist driving the lawsuit, Edward Blum, says racial equity is not one-sided. That’s why he insists that the fund’s grant program for Black women is discriminatory, in one of the most-watched civil rights cases since he was on the winning side of the landmark Supreme Court decision that overturned race-conscious college admissions.”
“In the coming months, a panel on the U.S. Court of Appeals for the 11th Circuit in Florida will decide whether to block the Atlanta-based Fearless Fund from awarding $20,000 grants to Black female-owned businesses while the case is litigated in trial court. The stakes could not be higher, as evidenced by the legal firepower lining up on both sides and the swarm of amicus briefs, illustrating the vastly different interpretations of the nature of discrimination, the role of history in shaping public policy and how civil rights should work in America.”
“The VC fund may face long odds: Two of the three judges on the panel are Donald Trump appointees who, during a Jan. 31 hearing, appeared skeptical of the fund’s argument that the grant program is a form of “charitable giving” protected by the First Amendment. Should Blum’s American Alliance for Equal Rights prevail, the case could have sweeping implications for any race-based initiative in the private sector, particularly grant programs, scholarships and other efforts with monetary benefits, according to observers on both sides of the issue.”
“Simone emphasized that the Fearless Fund’s portfolio — the women-owned businesses it has invested in — is ‘extremely healthy.’ The startups in the top quarter of the portfolio, she said, are expected to reach ‘unicorn status,’ meaning a $1 billion valuation.” READ MORE
SMALLBIZ TECH
It’s gotten harder to make a restaurant reservation in New York City: “Since the pandemic, tough reservations have gotten even tougher. To sidestep the reservation scrum, particularly at a hundred and fifty of the city’s buzziest restaurants, a new squad of businesses, tech impresarios, and digital legmen has sprung up, offering to help diners cut through the reservation red tape, for a price. In the new world order, desirable reservations are like currency; booking confirmations for 4 Charles Prime Rib, a clubby West Village steakhouse, have recently been spotted on Hinge and Tinder profiles.”
“Ben Leventhal, who co-founded the reservation site Resy, in 2014, agreed to meet me for dinner to fill me in on the new restaurant-booking landscape. He left Resy four years ago, after American Express bought the company, and he has since created a customer-loyalty app called Blackbird, which doesn’t make bookings but rewards customers with the restaurant equivalent of frequent-flyer points. Earlier, he’d told me, ‘The average diner in New York City is massively disadvantaged, and they don’t even know it. It’s as if they’re bringing a knife to a gunfight.’”
“His list of possible approaches went like this: phone call, e-mail, Instagram D.M., in-person (‘Before you leave a place, you could make another reservation. It’s a great way to get one’), texting someone you know (the maître d’, a chef, even servers and line cooks), hotel concierges (some residential buildings—432 Park Avenue, 15 Hudson Yards—have their own), élite credit-card partners (‘Chase has tables, Amex has tables’), membership reservation clubs like Dorsia, new apps (TableOne claims to show every available publicly listed reservation at the most in-demand restaurants, in real time), secondary marketplaces (in the manner of ticket scalpers, websites like Cita Marketplace and Appointment Trader will sell you a reservation, often procured by a bot, usually made in someone else’s name), the restaurant’s web site, and online-reservation systems (OpenTable, Resy, Tock, Yelp).” READ MORE
FEATURE
In communist Cuba, privately owned businesses are supplying a desperately needed economic lifeline: “A modern grocery store whose shelves are packed with everything from pasta to wine fills a spot in central Havana once occupied by a drab state-owned flower shop, its ceilings and walls repaired and repainted. A former state glass company in a Havana suburb now houses a showroom for a private business selling Cuban-made furniture. And at the Cuban capital’s port, forklifts carefully unload American eggs from a refrigerated container. The eggs are bound for an online private supermarket that, much like Amazon Fresh, provides home delivery.”
“Today, Cuba is confronting its worst financial crisis in decades, driven by government inefficiency and mismanagement and a decades-long U.S. economic embargo that has led to a collapse in domestic production, rising inflation, constant power outages and shortages of fuel, meat and other necessities. So the island’s communist leaders are turning back the clock and embracing private entrepreneurs, a class of people they once vilified as ‘filthy’ capitalists.”
“Many are taking advantage of regulations introduced in 2021 granting Cubans the legal right to set up their own enterprises, which are limited to 100 employees. Across Havana, new delis and cafes are appearing, while entire office floors are leasing space to young entrepreneurs bursting with business plans and products, from construction and software to clothes and furniture.”
“Still, many business owners said the Cuban government could do more to build the private sector. Cuba’s state-owned banks do not allow account holders to access deposits in dollars to pay importers because of the government’s lack of foreign currency to pay its own bills. U.S. sanctions also prohibit direct banking between the United States and Cuba.” READ MORE
THE 21 HATS PODCAST
How Do You Make Innovation Happen? The wrong way to make innovation happen, Ty Hagler says in this week’s special bonus episode, is to have a great idea and then go all-in trying to create it. That, he says, is a really expensive way to find out if your idea works. The right way to pursue innovation, he says, is to take your idea to customers so you can assess the pain points and opportunity spaces before proceeding. Hagler, who is founder and CEO of Trig, an innovation and design firm in North Carolina, also says he’s learned that the problem with focus groups is that the more people you have in the room, the less valuable the conversation tends to be. In fact, he says, one-on-one is best.
He also says that brainstorming remotely can actually work better than brainstorming in-person. Oh, and by the way, if your Mom tells you she loves your idea and will definitely buy your product as soon as it’s available, she’s probably lying.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren