A lot of companies know that having polite reps who tell the truth makes a good impression. Canadian Mozy certainly understood this.

Johnny listened to my problem and explained, “we used to do what you’re asking for. We see we’ve done it for you several times. But our new policy is that we won’t do it any more.” Interestingly, I was asking for something that had no business implications for Canadian Mozy. It did not require them to spend a penny on my request. It did not expose them to any additional risk, nor did it obligate them to anything in the future. It was free for them to provide, they’d provided it before, and some random mid-level pinheaded bureaucrat decided to retract the policy.

Did I get good service? Johnny provided extremely polite service. He was gracious and dealt with my hissing, booing, and making funny noises into the phone with professional aplomb. But he was powerless to fix the situation.

As a result, I’m pulling tens of thousands of dollars’ worth of business from Canadian Mozy and shifting it to other vendors. Though Canadian Mozy likes to trumpet themselves as a “partner” to the small businessperson, they aren’t. Their reps aren’t allowed to think for themselves, and the managers who set their policies don’t understand a whit about how to evaluate the actual business impact of a policy decision. They eliminated a policy that gave customers great value at no expense to themselves, and never thought about how customers might react.

This brings me to the much misunderstood truth about customer service:

• Good customer service requires good style. Your customer support reps must speak the language of your callers, shouldn’t tell obvious lies, and should be polite, courteous, and trained to deal with irate, irrational customers.
• Good customer service also requires good execution. Your customer support reps must have the training to investigate someone’s problem, and the ability to do something about it, especially when the request is one you’ve honored in the past and which has no downside for you but tremendous upside for your customer.

If you’re missing style or executions, customers get upset. In the language of kindergarten, good support comes down to: be polite and keep your promises.

What’s striking, however, is that none of this pays a cent. Not only does it not pay, but it conditions people to want my content for free. I had the audacity to pose a question to my Twitter subscribers last week, to get some suggestions for an upcoming episode. One happy person responded, “Dude, STOP ASKING US how to get stuff done and START TELLING US how to get it done!” I have hundreds of pages of free articles. I have written close to 500 pages of podcasts, all freely available, and apparently that’s not enough.

The social media promise

The theory is that social media lets people discuss my products and services without my intervention. I can now enter into a dialog with my customers, that will let me optimize my products, respond to my markets, and manage my reputation real time. The magically I’ll be successful and have a thriving business. That sounds really good on paper.

Then I think for a moment. I’ve always been able to read reviews of my products. I’ve always been able to survey my customers. And if I’m at all smart about handling customer queries and support calls, I can even optimize my products and design in solutions for my customers based on their problems. In short, pretty much everything social media can do for me, I could do in a pre-social media world. So what’s the difference?

The social media cost

One big difference is the cost. Maintaining an ongoing social media presence is a huge use of time and effort. If I were a big company, I might hire someone full time to do nothing but tweet, twitter, Yelp, Blorp, and Blubber. But as a one-man shop, I have to do all this myself. Then I have to track the responses and figure out which channels are actually getting attention (that will change in six months, requiring another full round of marketing research), and then generate content content content.

At some point, I’m apparently supposed to develop products and services, which is where I make the money. And by the way, those products and services better contain content I haven’t given away for free in the process of generating all this social media.

My prediction

Where will this go? Based on my own experience, I think social media will continue to be important as a channel for monitoring end consumer needs, wishes, and experiences using products. At the end of the day, it’s a giant gossip network, and your reputation is part of your brand, so you’ll have to manage it.

When it comes to content from businesses to customers, I don’t think it’s sustainable. The free content generation will die down over time, unless there’s a clear return on investment to it. Quality content is hard to produce. Companies that can afford to hire someone to be a web presence will do so. They’ll be able to produce high-quality content on an ongoing basis.

Small businesses and solopreneurs will gradually drop out of the fray, simply because the demands are too great and the returns too small. It takes good education and/or experience to be able to generate huge amounts of quality content, and those things are expensive. How much time should a smart, capable, good person with great writing skills spend giving away their knowledge for free without expecting a return? If there’s a demand for high-quality content (which there may not be), it will mainly be on a subscription model.

The few who manage to attract large followings will do great, of course, but that’s always been the case. And attracting a large following seems to be a function of direct marketing skill, more than high quality content creation skill.

Bottom line: in five years, by 2014, we’ll see the quality of free content dropping as the high-quality content creators turn their attention to activities that actually drive their business. Social media will remain important for reputation management, however, and as a tool for monitoring our customers and what they’re thinking.

My recent theory is that both of these viewpoints are true. Literally, they’re both true. There are psychological mechanisms that make each of these a self-fulfilling prophecy.

Self-interest usually manifests in turning everything into a transaction, monetizing as much as possible, and tracking things closely. It turns out that when you introduce money into a conversation or transaction, literally the brain areas involved in altruism, helping, and asking for help all shut down. So if you expect everyone to treat you as if they only want transactions from you, you’ll mention money or exchanges or act in ways you would act when putting together a transaction. Those actions will then actually trigger the same impulse in others. You mention money and the people you’re dealing with become more self-interested and less likely to be collaborative. So a world view where everyone looks out for themselves and everyone is greedy becomes self-fulfilling to the person who holds it.

Similarly, the social psychology reciprocity principle shows that when you give a gift that someone perceives as freely given, they feel obliged to respond by giving back, often in greater amounts than the original gift. So giving provides a self-fulfilling mechanism such that the person who gives freely and believes others are generous will trigger exactly those impulses in others.

What’s important to note is that this isn’t just psychological blinders, where both people interpret the same events differently. This is literally a self-fulfilling principle that plays out in behavior. If you act as if people are greedy, you’ll do things that prime their greedy impulses. If you act as if people are generous and worthy of help, you’ll actually activate reciprocal behavior on their part.

Be careful the world you wish for. You just might get it.

It’s not his fault his results are trite, however. As discussed at great length in The Halo Effect by Phil Rosenzweig, when you interview someone after-the-fact about why something was successful or a failure, you always get the same answers.

That means, sadly, that such answers are meaningless. If you ask someone who’s a known success how they got that way, they’ll say it was vision, passion, hard work, etc. If you ask their friends, the friends will say vision, passion, hard work, etc. If you ask someone who’s a failure how they got that way, you’ll also get the same stories over and over. Humans seem to have built-in explanations for such things.

Among what’s missing is any interview with people who had vision, passion, and worked hard, and failed. Why? Because those people can’t afford the absurdly high price tag to attend TED, so Richard didn’t interview them. It may be that for every 100 people who have vision, passion, and work hard, 99 of them end up burned out, divorced, and miserable, and only one goes on to be successful. But by selecting only the successful ones to interview, it’s easy to conclude that those traits correlate with success.

A simpler example: every one of the successful TED attendees drank either mother’s milk or formula as a baby. Does that mean that drinking mother’s milk or formula leads to success? Not at all. It just means that pretty much everyone drinks those things as babies.

I know some very rich finance people. Their vision? Nil. Really Nil. Like, no imagination whatsoever. Their passion? To show off and impress the neighbors. Their hard work? Signing checks. It’s tough if it’s not special 24-bond paper made for smooth writing. And then all that waiting and waiting! Years of playing golf, waiting while thousands of people work their butts off so the providers of capital can walk off with the profits (that’s what “capitalism” means–providers of capital get the rewards). In short, I know many example of people who don’t have all those nice, feel-good attributes, and are even more successful than many who do.

Since Richard St. John is giving his talks to high school students, he is in the perfect position to do a real experiment to find out what leads to success. Have half of the students he talks to do the things he recommends. Have them work hard, have vision, and so on. The other half? Have them slack off and meander through life. In twenty year’s we’ll be able to see whether or not there’s a real correlation between his recommendations and subsequent success.

Much to my surprise, he was surprised that I was surprised. But that’s not surprising. It turns out that at his consulting company, they are encouraged to come up with ideas for new products and find new customers. That fits his definition of “entrepreneurial.”

It didn’t fit mine, and I took this as an opportunity to try to define why I had my reaction. Here’s my thinking about what constitutes “entrepreneurial.” Please chime in.

For me, what you’ve described is being given license to propose new product lines. It fits my definition of “new business development,” and it may or may not be entrepreneurial.

In my definition of entrepreneurship, entrepreneurs (a) are free to change their business offerings, (b) have control over their business model, (c) must raise their own resources and enjoy a corresponding participation in the upside, (d) create an organization, organization structure, and its attendant policies and procedures.

Furthermore, often, entrepreneurs operate in unknowable or cutting-edge spaces. They are introducing new products without the knowledge of whether markets exist.

In essence, an entrepreneur’s product is an organization and business model.

If you can go out to Staples and propose a joint venture where you provide flat-rate actuarial consulting to any insurance company that buys more than $1000 worth of office supplies, with you (personally) pocketing 10% of the revenues, that would be entrepreneurial, in my mind.

If you had the ability to acquire smaller consultancies and attempt a “roll-up,” (without needing corporate approval) that would be entrepreneurial.

If you were to discover that restaurant consulting were more lucrative than actuarial consulting and decide to reposition your job to target restaurants based on your theories/dreams/data about the business model, that would be entrepreneurial.

If your business model is limited (e.g. hourly charging with X% overhead charged back to the parent company), if your ability to raise funds and build an organization is limited (e.g. hiring six people with completely different policies, procedures, dress codes, health plan, etc.), and if your upside is limited (e.g. you can’t create a multinational division and then take home the bulk of the profit as your own bonus), then I would consider you to be in a creative business development capacity, but not entrepreneurial.

Similarly, some people consider franchise owners as entrepreneurial. While they take a risk and share in the upside, I would call them “small business people” and not “entrepreneurs.” They generally don’t have control over their processes, capital structure, organizational structure, or brand/marketing/etc. so while they certainly do start a business with their own funds, they’re sufficiently constrained that they’re essentially employees who shoulder the risk and receive a bonus based on profits.

I don’t think there’s any one agreed-upon definition of entrepreneurship, but in the entrepreneurship circles where I travel, resource scarcity and control over structure, process, and business model are key elements separating entrepreneurial environments from corporate environments.

I visited. It turned out to be a long-form sales letter. You know the type: they mix testimonials with sincere-sounding stories and revelations of how the writer was poor, destitute, and reduced to eating their own belt in an attempt to find protein as they lived out of their car. Then suddenly they discovered the secret to everything and now you can have a little bit of their juicy goodness by attending their wonderful seminar for just $X hundred dollars. (Even though they’ve enjoyed a seven figure income for years, they are charging you for the information for your own good, of course.)

Halfway through reading her site, I began to feel the urge to attend the seminar. I realized that I’ve never made seven figures a year. Looking at all the pictures of the people who have attended and now blow their nose into genuine, gold leaf toilet paper made my knees quiver with a mixture of jealousy and painful feelings of inadequacy.

Then I noticed what I was feeling. I noticed the longing to attend her seminar. I noticed the inappropriately intense emotional reaction I was having. I closed the page, added her phone number to my voicemail spam box, and am adding her email newsletter to my spam filter list as well.

Psychologically manipulative long-form sales letters work really well. I highly recommend developing a knee-jerk reaction to them: delete them and consider the seller totally and completely discredited in your mind. If someone has something of value to offer, refuse to listen until they show you in a non-manipulative way. Ask for a sample. Ask for statistics. “How many of your students are now enjoying a 7-figure income? How long did it take them?” Ask for references. “Please give me their phone#s so I may call and verify.”

Anyone who claims to be a multi-gazillionaire who is generously helping you out if you pay them just a few hundred dollars is a scam artist. If you’re rich and want to give back, give. Don’t sell, give. You don’t have to do it as formal philanthropy, just offer your stuff for free. Coach Marshall Goldsmith, one of the most successful and highly paid coaches in the world, gives away everything he does for free at http://www.MarshallGoldsmithLibrary.com. As he once told me, “I have more money than I could ever spend, why should I charge people when what I care about is helping them?”

If you’re using long-form sales letters in your own business, try seeing if you can resort to selling your product on its own merits. If the answer is “No,” improve your product until you can.

It’s important to note, however, that if I send a long form sales letter, you must buy my products, make me a billionaire, pay for mansions for me, lots of  Rolls Royces, and scantily clad models on both arms. I may be outraged, but I’m not stupid…

I’d never heard of Wolfram’s “alpha” before, but the sensationalistic headlines, in my humble opinion, show a total misunderstading of Google’s business model.

Google is in the advertising business, not the search business. Search is one of many distribution channels they have for that advertising. It lets them offer targeted ads, because what people search for can be used to target ads to people who might want to buy a product or service.

They’ve also figured out that if they give away products that involve high information content (mail, word processors, spreadsheets, etc.), targeted ads can be delivered unobtrusively in the margins, deduced from the information a person is working with.

It makes sense for Google to develop better programs in the information-processing space than Microsoft and give them away for free, since that drives eyeballs to Google’s ads. You’ll notice Google isn’t building the G-Box 360; there’s no information content there to be analyzed and monetized.

The Google phone gets you more deeply involved with your Google platform on mobile devices. My guess is that it’s a just-in-case move, anticipating the possibility that mobile devices will develop into a big chunk of the information processing market (and thus advertising eyeballs).

Alpha may be able to answer factual questions directly, but it’s not necessarily even in the same space as Google. Factual questions aren’t likely to be very good at generating enough context to do good ad targeting. If I ask, “what is the tensile strength of steel,” you don’t have much information to use to target ads. You don’t know why I want that information.

When I Google, however, I am typing in words associated with the actual information I need. I type in broader phrases, loaded with context. If I’m searching for “steel for skyscraper construction,” it’s easier for Google to find a host of relevant ads based on the query words and on the content of the top pages matching the query.

It’s the very fuzziness of Google’s search that makes it a good business for monetizing with ads.

And now, the Detroit top brass are showing up to Congress, hats in hand, for mega-billion-dollar cash flow loans that they project will last them … oh, a few months. And they’ll do what, exactly, in those few months? Why in the world should we believe that the same people who willfully ignored their competitive situation for two generations have any relevant skills, abilities or motivation to fix any of the problems? Aren’t they exactly the people we know won’t solve the problem?

Yeah, they’re saying they’ll reduce their salary to $1 until the mess is cleaned up. How generous of them. Are they taking huge stock grants instead (Iacocca did, back when he reduced his salary to $1 when saving Chrysler. That part of the story doesn’t sound as noble, so it’s often glossed over)?

Even if they’re genuinely giving up their compensation, they’ve taken home seven- or eight-figure salaries for years. They’re way, way past the point of needing another dime as long as they live. What a sacrifice, to reduce their salaries. I say they’re not going nearly far enough. How about giving back a big chunk of what they’ve been paid over the last twenty years, since it’s now apparent they did a piss-poor job at CEOing.

Startups can’t afford the luxury of incompetent, overpaid CEOs

In the startup world, we don’t have much money to pay CEOs. So we look for CEOs who are passionately committed to the success of our idea, our customers, and our company. We give them stock options, sure, but honestly, that’s not what we count on to motivate them. We count on them loving what they do enough to go the extra mile. And not in a private jet. In fact, founder-CEOs often put in their own money to fund the company and work for free until the company is proven viable.

So here’s my proposal…

I’m happy to have taxpayers bail out Detroit, but with a condition: we auction off the CEO jobs at Ford, Chrysler, and GM. The highest bidder gets the job. They receive a total compensation package equivalent to a shift supervisor at one of their plants. No stock, no options, and no bonuses. If they want better health insurance, for example, they pay for it themselves. Why would anyone take this job? Simple. It’s the chance of a lifetime to do something that almost no one in the world will ever have the chance to do: reshape an industry.

It’s pretty clear to me that the logic of “pay the CEO big money” isn’t getting competent, committed people into the position. It’s getting incompetent leeches whose main interest seems to be in feeling self-important while relieving the company of the burden of millions of dollars of vaule.

By having people ante up real money to take the position, we would quickly narrow the playing field to people who genuinely care, are excited by the opportunity, and who are being driven by the challenge or the love of the industry, not by personal greed. And remember, this isn’t the string bean industry, it’s the auto industry. There are many superbly successful businesspeople in the world who are passionate about cars as an industry. I’ll bet we would be surprised at the number of excellent candidates who stepped forth.

I’ve had enough with this absurd logic that says, “you can’t motivate people unless you pay them.” That’s bull pucky. It may be true for assembly line workers, because those jobs are mind-and-body-numbingly dehumanizing, but when it comes to C-suite jobs, I’ve met hundreds of people in those jobs whose motivations have everything to do with passion, challenge, creating, and doing a job well-done. Most of them are already rich enough that they don’t need to work, anyway.

In fact, even Warren Buffett acknowledges this. He points out that the CEOs of Berkshire Hathaway subsidiaries are extremely successful, already independently-wealthy people. They don’t need money and aren’t motivated by it. That’s why they do such a good job.

The least we can do is take Buffett’s example and get CEOs motivated by passion, superb skill, and challenge to turn around an industry that’s had none of the above for a long time.

(A Financial Tailspin sucks! Don’t compound it.)

We’re going through some … interesting … times, financially. People feel insecure, established institutions are in desperate need of bailout (funny how attractive socialism becomes when you’re the one who needs the handout) and the world economy seems to be teetering on the brink. Now’s a great time to realize: it’s all in our minds.

I mean this quite literally. Have you seen “Money as Debt?” It’s an excellent 47-minute video on where money comes from. It tells how our current system came to be. It highlights flaws in the system and offers some alternatives, all with a tasty dose of conspiracy theory thrown in here and there(*). You can watch the video here: http://www.SteverRobbins.com/r/moneyasdebt

Money is literally nothing more than an idea. It’s a promise we make to deliver a good, a service, or more money at a later date. Why is Bill Gates a billionaire? Because the rest of us agree that he is. We also agree to give him our stuff if he gives us enough money. But it’s all an agreement. Because it’s an agreement, we take action on it, and it’s our actions that have real-world consequences.

“Don’t worry, be happy.”

Bobby McFerrin’s song, “Don’t Worry, Be Happy” is right on the money. At any given moment, you may or may not be able to control what’s actually happening around you. But you can always choose your attitude about it.

I was in a meeting earlier this year, discussing a key feature of entrepreneurship: the ability to see opportunity where others see problems. Just for jollies, I decided to try spending a week deliberately asking, “Where’s the opportunity here?” every time a problem cropped up. Every single time I asked the question, I was able to find an answer. Often, in mere seconds.

The housing bubble gave many time in an elevated lifestyle

Then I asked, “What’s the upside of the financial crisis?” You know, one answer is this: millions have had the chance to live far beyond their means for many years. While we don’t much care for the consequences, at least they got to enjoy a standard of living they couldn’t have otherwise afforded. I’m serious about this, by the way. Of course it’s natural to be upset when losing your job, your credit, your home, or your car. But being upset won’t change anything. It will just make you feel bad. You can also choose to feel thankful that you had those things to begin with.

Be a Thanksgiving Gratitude Geek

Are there problems in the financial world right now? Yup. And we can live through those problems giving all our attention to the downside or giving all our attention to the opportunities and the upside.

My suggestion to you: spend this Thanksgiving dwelling on the upside. Ask yourself, “what do I have to be thankful for?” and make a big long list. Help everyone around you do the same thing. They say what we need is more optimism in the economy. Optimism isn’t something “out there,” it’s one of the few things we have control over. So let’s exercise that control and see the glass as 10% full, not 90% empty. Because we can’t always change the outside reality, but we can certainly choose our inner reality.

Have a Happy Thanksgiving. Here are some of the things I’m thankful for:

• Friends and community

• Hot running showers
• Democracy
• My four-year-old iPod that still works great
• The chance to teach high school students at an after-school program
• Zipcar
• My podcast
• Friends and community

(*) I love conspiracy theories! I always like to remind myself that just because someone’s paranoid doesn’t mean the conspiracy doesn’t truly exist.

When it comes to something like oil, however, I believe markets are a really bad mechanism. The time horizon for market pricing is far, far shorter than the lifespan of the world’s oil supply. So pricing becomes based at best on marginal cost to produce, rather than on anything relative to the actual value to society. For example, according to the book “The Omnivore’s Dilemma,” about 1/3 of the world’s population only gets fed because we have genetically modified corn that requires special petroleum-based fertilizer. I would suggest that the market price of oil (to the extent that it’s a market and not simply OPEC’s arbitrarily-set price) doesn’t include any component that has to do with the future of the world’s food supply. Most (all?) market players just don’t know enough about the full supply chain of which oil is a part to price it properly.

This, in my mind, is where Government comes in. I consider the role of government to adjust the playing field so prices and practices result in what’s best for overall society long-term. Government is the only entity that can change things around to align the individual incentives (“how do I get rich?”) with the community incentives (“how do we do what’s best for us as a society?”)

Sadly, I’m not sure there’s anyone in Government who thinks that way. As far as I can tell, most politicians in Congress believe their job is to grab as much of the common pie as possible for their constituents, rather than representing their constituents in determining how to spend our community-wide fund on projects to benefit the entire community.