Episode 59:Pig 5 Syndrome
How do you deal with crowded markets, and how do you fine-tune systems in the long run?
Summary
Nick and Kai open with a joke about ‘make money online’ drowning in Google results, then use it to work through why a crowded market is a good sign and what to look for when sizing one up. The second half is about refining a product after launch: what questions to ask customers, how to avoid chasing problems that don’t exist, and how to win back churned subscribers by fixing what they actually complained about.
Highlights
- Kai’s read on crowded markets: two to five competitors already in a space means demand is confirmed and you can study what worked and what didn’t before spending a dollar.
- Nick breaks market assessment into three things: market size, market willingness, and the expense of the problem. A customer thrilled to pay $2 is useless.
- Nick built Revise Weekly by adapting Kurt Elster’s paid exclusive newsletter model to A-B testing content. Same format, different subject, different audience. He credits Elster by name and doesn’t call it a ripoff.
- Kai’s ‘do few things well’ principle: find the two or three things that are working and execute on them consistently, even when other strategies look attractive and especially when the current one still produces results.
- Kai recommends launching a product when the price is slightly ahead of the value, then using buyer feedback to close the gap. Customers tell you the one thing that actually matters, so you don’t build the five others nobody mentioned.
- Nick names the habit of chasing nonexistent problems ‘Pig Five syndrome,’ after the prank where pigs are numbered 1-2-3-4-6 and administrators run themselves ragged hunting for a pig that was never released.
- Kai’s preferred feedback question for at-risk or churned subscribers: ‘what was the number one annoyance in the last month that prevented you from getting value?’ He fixes the most common answers, then reaches back out to people who canceled and tells them specifically what changed.
Read the transcript
Actually, I don’t know if you noticed this. I went to the website www. google. com recently. Pretty good website, pretty useful, very clean. Spare layout. Recommended. Pick of the week. It’s good. But I went there and it basically allows you to search for stuff on the Internet. And I typed in the name of our podcast, thinking that would be the first thing that pops up. ‘Cause that’s I mean, we have legions of fans and tons and tons of and and actually I have some really bad news for you, Kai. I uh there are a lot of results for the phrase make money online on google. com.
There really are.
There are, I mean, Dev. Are you on there right now? I’m on there. We’re looking at this, right?
Yeah.
And they’re not really similar to what we do. It’s It’s kind of grim, right? So, what do we what do we do with this? What do we do we murder them? Is there like a Highlander battle thing that we have to do?
Oh, I yes, A, yes, B, uh. Okay. Yes, this is a problem. We’re going to have to alert people about this.
I think we’re recording right now, aren’t we?
We really are.
So we’re yeah, we’re definitely recording this podcast right now. And so okay, so we’re letting everybody know eventually when they get this episode. I’m going to let my assistant know, and I’m going to get her to expense a scimitar on the company Amex, and we’re just going to Just slash and burn. We’re going to have to do something about this.
A little unasked for advice when you get the scimitar. Keep in mind that you require the full outfit to the scimitar. And as I understand it, the recommended outfit is a bathrobe loosely fastened. With pajama pants underneath and scimitar through bathrobe belt. Make very, very sure on that. That way you get the quick draw, but you also have the relaxed, comfortable. Attitude of a man wearing a bathrobe and gym pants or pajama pants.
It’s pretty off-brand for me. I’m not going to, I’m going to. I’ll have my assistant do it. Okay.
Yeah. I think she could handle this.
She’s got a bathrobe probably. Mostly. I mean, if not, I can just wash the guest room’s bathrobe and and FedEx that or something. But if any of you get a lot of statements that this is out of scope for our engagement, it’s gonna get weird. It’s gonna get really quickly, really weird.
Nowhere in our statement of work does it mention the following. Scimitars, bathrobes. List continues on page two.
It’s actually a scroll and it like bounces across the room when it drops down like hello the first a few
points of feedback just a few minor things but article the first of seventeen But but but you bring this up because from from one perspective from Google search perspective. We are in a very crowded marketplace. Now, I don’t necessarily think crowded marketplaces are a Bad thing. As an entrepreneur, as a business owner, as a product creator, I am happy when I see a crowded marketplace because I don’t believe it means There is no opportunity in the marketplace, or the market is tapped. Rather, I view it as a robust marketplace. If there’s 20 competitors or 20 people there, It’s not going to be as difficult as I imagine it is to become number 18 on that list of 20 or number 15 on that list of 20. I am in favor of crowded marketplaces, but When we do a Google search for make money online, we’re seeing one facet of a crowded marketplace. And with this one, say, Entry point. Somebody searches make money online. They want to find some content. They find our podcast. Well, it’s crowded. Lots of people are optimizing for this. And we’re somewhere down on the page. So, I take it as a good sign that people are searching for Make Money Online and a lot of people are ranking for it. Hey, people want to learn about this topic. I take it as a slightly bad sign because. Are we necessarily teaching people about how to make money online? Is somebody who searches Make Money Online an ideal listener for our podcast? So, in that case, while we’re appearing in a crowded marketplace, it’s not necessarily a marketplace where we want to make an impact. So, we could look at this and say, oh, it’s a thing. But it’s a low priority thing. Changing this won’t necessarily have an impact or have the impact we’re looking for on the podcast or what the podcast begets.
What I’m kind of hearing here is that there’s a sweet spot of marketplace crowdedness, right? Like you don’t want a completely untapped market because that’s probably a negative sign that the market doesn’t exist or that it’s poorly validated or that it’s not going to actually result in good business value for yourself. You also don’t want a marketplace that’s just gaga bonkers crowded, right? Like you don’t want something that has a million competitors and you’re trying to, you know, you’re having a hard time differentiating yourself. That’s kind of a curse of the generalist, right? So you end up, you know, I mean, we can go recommend that you go and specialize a little bit more. And I think that is actually helpful, valuable advice. that you’ve heard twenty five other times on this podcast. But like more importantly, how do you assess what that sweet spot looks like? For a market, right? Like, how do you assess? Okay, well, there may be one or two competitors. What do we do with that? How do we assess whether the market is growing and what that trajectory looks like? How do we understand a untapped opportunity within a broader market, right? I think of this is terribly cliche, but you think of something like the iPhone. The iPhone entered a crowded market and did something differently. There was an untapped opportunity within that market. The same with DraftRevise. I cannot believe I’m comparing my stupid productized consulting service to the iPhone, but bear with me. There were people doing A-B testing before draft revise. I came up with an interesting model on retainer engagement that does it a little bit differently. And found people that made a little bit more sense. Now I’m selling to three customers, and you know, the zombie Steve Jobs is serving as many billions as he possibly can. So there’s obviously differences there. But I do think there’s something to say for, okay, well, A-B testing’s a thing. Why is it a thing? What can I do with this thing? How does it gel with what I’m doing? And then you start to ask these questions and think, okay, well, what if I want to design retainer engagement? Well, that works well for A-B testing. Okay, how? And that is an example of finding a good untapped market that was relatively it was a safe bet. Like you know that A B testing is the hotness. You don’t have to go and teach people, this is what AB testing is. I very rarely, I think I’ve once in the past year had to go on a podcast and go through the spiel of like You give 50% to other people and da da da da da, and measure which one works. And I don’t have to do that anymore. You know what it is. People who come on podcasts know what it is. And that’s. it’s a sign that the market is mature. So I’m dancing around the contours of this a lot to just kind of like outline what I want to talk about in this episode because I think that I can cite that example, but also like You know, more generally, how do you assess what are the parameters of assessing a market?
Let’s start there. That’s a good question. I think part of it is Part of it is the demand assessment. As we alluded to earlier, being the first mover in a marketplace isn’t necessarily, or the first mover in a market isn’t necessarily the best for your business because it’s untested waters. I feel A lot more comfortable launching a service offering if I could look around, or even launching a business, if I could look around and see two, five, more other people already serving that market. Because my fundamental assumption is. There is some way I could stand out either by being top tier in the market, I want to be the premium entry, or by addressing some problem that they are not. There are always Problems in delivery or execution that other providers have that I could solve and stand out that way. So, I think the first thing to look for is: is there actually demand for this thing? In the case of A-B testing, You knew ahead of time, hey, there was demand for this thing. Moving further along with your example, what I think worked well for you in the marketplace Is you took this known quantity, people will pay for A-B testing. You took the second known quantity. People enjoy, and I as a consultant enjoy retainer engagement because it allows us to work for A longer period of time to focus on the results and gives us a sort of a quantifiable monthly, like, hey, you’re putting $1,000, $2,000, $3,000 into the machine. Is this producing a return on investment for you? If so, Well, here’s a strong argument for continuing. If not, hey, maybe we should discontinue this engagement so you could spend your money on something with a higher ROI and I could find a client where the service works. So I think there’s first assessing to make sure there’s demand. And then figuring out, well, what can I do that’s slightly different or interesting or stands out from my competitors
Yeah, so you’re you’re kind of assessing market size, market willingness, and The expense of the problem, right? Like the degree to which the problem is expensive. Because if I’m solving something that’s worth $12 to you, you’re going to pay me two bucks and it’s going to be stupid. But if I’m solving something that’s worth twenty five thousand dollars to you, you can charge commensurately higher rate, which is really great. Right. So I mean, that’s the like obvious conceit of value-based pricing, and that’s all well and good. But the three things that I think you need to be worrying about in this situation are market size, market willingness, and it’s kind of enthusiasm. It’s very qualitative. We’ll talk about ways to assess that. And then the actual expense of the problem. Because somebody’s super excited to give you $2. Well, I hope you’re making that up in volume. Right.
There’s that famous Phil Hartman Saturday Night Live short. Have you ever seen this, the bank that only gives change? No, no. Oh, we’ll link it into the show notes. It’s a good one. The crux of it is: somebody asks Phil, how exactly do you make money if all you’re doing is giving change? And he says, well, it’s very simple. We make it up on volume.
We make it up on volume. Right.
But jumping back, Ethereum, I think you’re right. You want to assess there’s market willingness, that there’s demand, that it’s an expensive problem, that it’s something that actually solves a need that People have. And I don’t know if all of those parse true, and you’re still looking at a crowded marketplace where there’s a number of people providing a service. I take that as further validation. I take that as a good thing. Again, I want to enter a market where there are already established people so I could see what have they tried already? What haven’t they tried? What apparently is working? What is not working? And that gives me at least the start of a playbook to improvise on, to copy, to riff on, to figure out: okay, these six things worked, but it looks like they tried these things in the past or nobody’s doing these things. Well, Those are future testing opportunities, but I can see these things definitively work. Let me start with those first.
Yeah, there’s very much a standing on the shoulders of giants thing. So, let me tell you an example of this, right? I ripped off the idea of Revise Weekly near wholesale from Kurt Elster’s Shopify Hacks Weekly, right? And okay, well, what was the model of Kurt’s thing? I record a little video screencast of one dope thing that you can do to improve conversion on your Shopify storefront every week, and you pay me, I don’t know how much money, probably too little. Charge more. And he did that. I was like, wow, why aren’t I doing that? I write all the time and I write about A-B testing all the time. So, how did I munge that into my model? Well, I already write lessons about A-B testing and I send them out to my full mailing list of thousands of people. What if instead of doing it for the mailing list of thousands of people, I just did it for like fifty people who each paid me a certain amount of money a month? And then I get two things out of it, right? I get to serialize my next course, which is the A-B testing manual. And I also get. Monthly recurring revenue to write about AB testing every week. And I’ve been doing that for the past how long? I don’t know. I’ve managed to replace a draft revised client successfully based on this, right? It’s great. And that’s as of probably it’ll have happened after this weekend. So it’s not quite yet, but like all of the trials are coming up. at once in like two days. And unless absolutely everyone hated everything that I did over the past month, it’s pretty likely that most of them are going to convert. So anyway, anyway, so I have a model. It works well for what I do, writing, A B testing. providing more educational content, like very obviously step-by-step lesson how-to type stuff and within my specific range of positioning. I doubt there are a whole lot of people on Revise Weekly who are also subscribed to or even really know about Shopify Hacks Weekly, the thing that Kurt does, right? They don’t have to know that. I got business inspiration from the way that that worked and said, okay, well, having an exclusive mailing list works. And it’s worked well for Kurt. It seems like a reasonable like 200-level technique for consultants, and we’ve talked about this in a previous episode. So I took that and I wasn’t ripping off Kurt. I don’t think Kurt is going to sue me for the idea. And if you do, please don’t. But I took that and said, okay, well. I’m changing the rules a little bit. I’m trying something that’s safe. I know that it was successful for Kurt. It will probably be successful for me. Now I need to build a system to continue juicing that as much as possible. One of my biggest priorities in 2017 is to get more people to subscribe to Revise Weekly.
Right. That’s it. This connects in sort of a sideway to a phrase that popped into my head last night, and I wrote on the first page of a new notebook. Do few things well. And I think it stands true that for something like Revise weekly for something like our continued business focuses. There’s a strength in looking around the marketplace, looking around at what colleagues, competitors, semi-competitors, other people, non-competitors marketing to the same. Target market, you are and saying, well, what are they doing? And what seems to be working well? And how do I test it? And then, if the test is a success, Double down on it. Like you said, the question now becomes, how do you juice Revise Weekly? How do you get it to the next level? How do you get it to replacing two clients, three clients, five clients? Eventually, Revise Weekly producing enough recurring revenue where you’re like, I can optionally take on a client. And I think you get to that point by identifying: A, the few things you’re going to do. B, if you could do them well. C, consistently doing those few things well. It’s too easy to be distracted by. There’s a hundred different growth strategies I could use here too. Get more monthly recurring revenue, get more traffic, get more subscribers, get on more podcasts. But it comes down to saying, well, these are the three things I’m going to do very, very well, or one thing I’m going to do very, very well. And relentlessly executing on that singular thing, even when it comes down to saying, like, wow, you know, colleagues and associates are having luck with these new strategies, but If your existing strategy is working really well, if your existing means is working really well, why change? There’s a famous caveat in copywriting where You have an ad. The way copywriting tests usually work with print media is you have an ad, you run the ad, that becomes the control ad. We know, oh, 10% of people respond to this ad. And then, similar to A-B testing, exactly like A-B testing, you start running variants against it and see: well, can we beat the control? And I think that parallels really, really well. We learn what works well. But we don’t necessarily need to test new things against it. We could just focus on the ad that’s working really well. There’s a temptation. After you’ve run the same ad for three, five, ten years, and it’s still beating the variants to say, well, we’ve run this ad for so long, the customers must be blind to it already. But if you’re still making good money off of it, if it’s beating those variants, why change a thing? So I think looping back to consulting, when you find something that works well to either attract clients, service those clients, or generate revenue. Keep on doing it until it doesn’t work anymore. Even if it feels like, well, this is year seven of doing revised weekly, people must be bored of it already. But if you have a thousand subscribers, obviously people aren’t bored of it, and so keep on doing that thing really, really well.
Oh, people carpet bomb me with email every Monday. Yeah, right. Like, I get questions from people that are like, I’m having this problem. And sometimes it’s just totally unrelated. It’s like Why is Chrome converting horribly in my browser? Please advise. Like, I don’t know. I’m not. You’re not my client. Let’s figure it out together. And that’s what you get: access to me. So that makes a lot of sense. And I Towards the one thing well philosophy, I actually just pasted this. There’s like one or a few things well. There’s something that this came out of software development in like the 60s or 70s called the Unix philosophy, where programs should do one thing and do it well. Well, and so, I mean, if you think about like crappy Unix programs that have been around for like 50 years, you know, like the manual command on terminal or Pine or something like that. Right. Yeah, man. Yeah. Figlet. You remember Figlet? Ha ha! ASCII art, yeah. So those all do one thing well, right? So it works out really, really well for Unix. And I think about like, okay, well, there’s, you know, every tool has a purpose, right? Yes. And okay, in the kitchen, my chef’s knife does one thing well. It chops things. That’s it. And it doesn’t even do chopping things. It chops a specific range of things and I have to have a sense of what those things are, right? Or I’m going to get my cleaver and my pairing knife. The same with any other implement in my kitchen. The same with the way that Draft operates in a lot of ways. Like I do A-B testing, I do it well. you know, and I am a basically an A-B testing person. And then it turns into a business consultant design researcher person eventually. You come in the door learning about AB testing, and then you ask me about A-B testing, and then I do a teardown focused on A-B testing, and then you ask me to run A-B tests, and then I run AB tests, and then other stuff happens, but that’s not important yet. Right. So I mean, that’s part of the specificity angle. While you’re doing this, and to bring this back to your previous comment, you are fundamentally building You’re building a system and fine-tuning it, right? When I started having, when I did Revise Weekly and I launched it, very few people signed up. Fine. So then I launched the A B testing manual and I put in a trial for Revise Weekly. There were a few things in that that I needed to tweak significantly to make sure that people were understanding well what they were getting for one, but also To ensure that they’re getting value throughout the course of the trials. Now you get custom slotted into this own drip campaign that’s its own fancy thing before you even get into the general mailing list. And if you want access to all the other lessons, I can give that to you. But like most people, you have to actually out and ask. And that increased the conversion rate from trial for Revised Weekly. So I looked at that. I know this is just two data points, and I’ve got I’m thinking long time scale here. But what I did was I built the system. It was revised weekly. I found places in which I could possibly deliver more value to people in a way that was something they wanted. And then I made those changes and I optimized it. And that was it. That was what I did. It was not. Terribly, and people are like, wow, that’s amazing. You replaced a client. Oh my God, you’re doing so well right now. I’m like, well, yeah, but like, a lot of it was just common sense. Like, it’s not making money. How do we make it make money? Common sense. Right. Yeah. And you’re just applying effort in this way that is pushing the lever on it. And it’s not like, oh, I’m getting the money button and manipulating people. It’s I’m getting the money because I’m providing value to people in a way that resonates with what they want.
Right, this connects to something I’ve long thought about products, be it a consulting product, service, or an educational product, is that Once you launch, the key question becomes: how do I increase the value that is apparent to a subscriber or a buyer in this product? And then, and it might be like adding a couple additional things, having a better onboarding sequence like you added for Revise Weekly. There’s dozens of different optimizations, but Focus on driving up the apparent value until it greatly exceeds what you’re charging, and then raise the price for new subscribers. Because if you’ve done it correctly, what before somebody might look at it and say, Oh, that’s worth $40 a month. I’ll gladly pay $30 for it. You’ve raised the value, and people are like, this is worth $80 a month. Yeah, I’ll happily pay $60 for it. And so, as you increase the value inherent in the product or service, You give yourself a surplus to work with, and now you’re able to charge more for that same product or service. And everybody wins. You’re delivering a better product. People are happier, and you’re able to charge more money for it.
Man, I do the wrong thing here. I just start high and then I increase the value to match it. And if you’re like an early adopter, then great.
I think that’s a fine, fine strategy. I mean, I yeah. I mean, like, okay, I enjoy launching products. At this sort of like, I don’t have a term for it, but it’s almost this pinch point where I think the product might not quite be worth the price I’m charging for it. Value is less than price. But I want to launch at that point because I will never understand my customer as well as my customer understands themselves. And so if I launch this product, then I’m like, I know it’s missing five important things. Let’s see what people say. And a bunch of people might write back and say, it’s missing thing one, and they never mention things two through four. Well, I just saved myself a shit ton of time because I don’t have to do two through four yet or two through five yet. I could just focus on one. And so launching at that point where you are overpriced compared to value, there are extremes. You don’t want to be charging $10,000 for something that only delivers $10 in value. But you might launch at $100 a month and be like, This is probably worth like 60 bucks a month. Let’s see what happens. Some people will subscribe. Some people will cancel. You’ll ask people for feedback. People will write in and say, hey, if you added A, B, and C. This would really be worth it to me. And you collect all of those answers, and you’re like, wow, A is really standing out as the thing people want. I could add A in like a two-hour sprint. Let me add A and announce it. Hey, new exciting thing. A is now part of the product. And you’ve just increased the value, but it becomes, and I think this connects a lot to the research you do for your A-B testing. It’s research driven in my mind. It’s feedback driven. It’s by having conversations with customers, actual buyers, that we learn what we need to add. Otherwise, we’re sitting in the dark guessing, throwing things against the wall, and saying, like, maybe it’s a good enough product now. Let’s launch and see. better to launch, get the feedback and iterate until it is a good and then great product.
Right. So I’m going to go back to one thing that you were talking about before, which is how feedback can often make you focus on one thing and you end up worrying about all of the other things that are not broken. I call that Pig Five syndrome. Have you ever heard of the thing where if you want to prank a high school, you let five pigs out in the high school and you paint numbers on their backs and they go one, two, three, four, six? And then the administrators and janitors and police and whomever are whomever whomever retrieves pigs in high school, they’re all left wondering where the fuck Pig Five is hiding. And so they run themselves ragged freaking out about Pig Five. Don’t do that. You are spending too much effort. Focusing on things that may not even exist. I mean, PIG 5 doesn’t exist, right? So, but if you’re focusing on, if you know PIG 1 is here, catch PIG 1. Okay. Okay, now you’ve caught pig one. Ah, okay, you found pig six. Great, there’s pig six. There could be only two pigs. You don’t know. You don’t know if you’re being messed with. And there’s no playbook for this. So it’s not necessarily clear what you’re supposed to be doing. So I think towards that end, in terms of optimizing the system, you need to just Be thinking about what works and what doesn’t. Like somebody who canceled a revised weekly subscription recently was like, it would have been better if I had gotten this, this, and this during the trial. I’m like, great. Kelly, change it. I’m like, that he can’t be alone over here, right? Like And yeah, like that’s that’s definitely something that that’s insanely valuable. And just need to focus on that. And there’s probably a billion other things that are broken, busted with. I don’t care. Because I don’t have to yet. I care about a million other things.
The big one is right in front of me. And oftentimes, I found that one of the most important questions to ask is. Asking somebody who canceled or is on the verge of canceling, what annoyances are getting in the way of you enjoying this product, this service, this course, whatever it may be. And Those I send this out regularly as a feedback survey for courses I run, for courses I consult on. And I like it because it’s not asking for explicit negative feedback. What do you think sucks about this thing? Which. You aren’t going to get good data out of that. But by saying, hey, what are the annoyances? What are the small things that are preventing you from enjoying this? You get back tons of tiny details. And I think of these as Tiny paper cuts. And if one person says, like, hey, I keep getting a paper cut with this thing. Well, there’s probably 10 other people that didn’t respond with that, but are also experiencing that issue. So by soliciting these Common annoyances that are preventing them from getting the maximum value out of the product, you suddenly have that punch list, those number one most important things to focus on improving. If you start to see the same one come up again and again, it just validates like this is the most important thing to focus on. But I really love the framing of the language of What’s the number one annoyance in the last month that’s prevented you from enjoying this or getting value out of this? Because of those answers, those answers are gold. Because if you fix them, You’re eliminating annoyances that will prevent future people from canceling or churning, and if you fix them now, you have a great chance at rescuing people who are canceling or churning. I’ve even used it to interview people who have canceled. Implement those changes, reach back out and say, Hey, you said A, B, and C were broken and giving you issues. We have just fixed A, B, and C, and this is what we did. Would you like to reactivate your subscription? And it’s worked pretty well because people are like, whoa, this is super responsive and you fixed the things that were annoying me. Sure, let’s give it another go. Sometimes it works, sometimes it doesn’t, but by having that feedback loop, by getting actual feedback from actual paying customers, it tells you what to focus on.
And that’s how you deal with crowded markets.