Espresso - Seth Godin - WATCH OUT! The Hidden Cost of Commodity Thinking

0:04I think the first two steps are what's the change we're trying to make and who are we trying to change? Sure. Who's it for and what's it for? Sure. Okay. So what Starbucks has found every single time Howard Schultz has tried something else, he keeps coming back to two things. One, don't make lousy coffee. Every time the coffee quality goes down, they realize they have to recalibrate and make it go back up. It doesn't mean they have to make the best coffee, but they bought Slayer. Not Slayer. They bought that other company that made a really expensive coffee machine. I can't remember what it was.

0:41They tried to get into instant coffee each time trying to raise the standard of coffee. And the second thing they try to do is build the third place. Free Wi-Fi, comfortable place to sit, clean bathroom. No one's going to ask you to leave. It's like a pub, except they don't serve beer, right? Those are the two things that are at the heart of their story. blank street and i'll confess i don't drink coffee and i haven't been to a blank street but i've walked past it many times blank street seems to say please come here and take your coffee and leave they don't look like they're trying to build a warm hospitable large place for you to hang out with your friends for three hours this place is you're gonna get an espresso it's gonna be delicious, cheaper than Starbucks.

1:29See ya tomorrow. And they can buy, they can rent smaller places, have higher turnover, and compete with Starbucks without any of the costs that Starbucks has. That seems like an interesting game to play. The challenge you have is most people think they care about coffee quality, but past a certain level, they can't tell the difference. and that means that blank has to create enough momentum that people get hooked on the process of buying coffee from them because in a blind taste test they probably cannot taste the difference and is that is that where the time element comes into this is is it the literal time with the consume is that where you're going with that that's not what i mean by time time would you Like the forest idea is this.

2:21The first month of Nespresso's P &L was terrible. Sure. It took five, ten years. When I was at Yahoo, Yahoo had the chance to buy Google for$10 million. The whole company. Because it wasn't worth anything for the first year. They had zero revenue. They were planting seeds. So what are you doing today that you will be really glad a year from now that you did? And so if we think about peanut butter, which in my country is mostly a commodity, what would you have to invest today so that three years from now, it's paying off 100 times? right and that's not an easy question to answer if it was the people at nestle's would have already figured it out but the food business tends to have moments of inspiration followed by long stretches of commodity and i promise if you're a small food entrepreneur and you get into the commodity mindset you will lose but by commodity mindset unpack that a little bit more a commodity means that you can buy this if you want this, but there's one over there that's just like it.

3:42You only make a commodity if you think you're making a commodity. Do you think there's a commodification of strategy and storytelling in that almost a founder is looking in the same field as every other tree that's being planted and thinking, I want to be a bit like that. And that's where you're kind of trying to choose the same customer. Does that make sense? You're trying to say - A little bit. I guess what I'm getting at is this. If someone offered me cell phone service like I have now for half the price, I would switch instantly. AT &T has no brand. Verizon has no brand, etc., etc. They're all the same.

4:21Just give me the cheapest one. And anytime I have four hours just to waste, I could go buy a cheaper cell phone alternative, right? What I'm talking about is some customers will cross the street for a better jar of peanut butter. Most of them will not, but some will. What makes it better? That is the key question, right? Because it's probably not in a blind taste test. the journal of wine economists has shown that sommeliers and other people who are fancy prefer hundred dollar wine over ten dollar wine unless it's a blind taste test in which case they prefer ten dollar wine over a hundred dollar wine so what are you buying when you buy a hundred dollar bottle of wine you're buying the story of a hundred dollar bottle of wine not what it tastes like so the challenge you got here is you need to build a story that people who want a story will pay for love the bruce lee quotes um be like water and i try to embody that whereas we just kind of move with with things but in your illustrious career in marketing like i'd love to know what's been the biggest unforeseen change like cataclysmic change and how did you adapt like water to that so let's talk about what i mean by the current i live i can see out my window the hudson river the hudson river is a tidal estuary means 12 hours it goes one direction 12 hours it goes the other and how does that work it's a few it goes with the tide sure sure sure sure but when you look at it from a distance it looks like a lake there are no waves on it the difference between a lake and a river is there's a current.

6:09On a lake, it doesn't matter which way you go because the water's just sitting there. But if there's a current, it's totally different to paddle your canoe upstream than downstream. So what makes someone a good surfer is they pick good waves. That's it. That's the key, picking good waves. So in my career, I have been buffeted by my unwillingness to see waves when I should see them. The most expensive moment was when I wrote one of the first five books about the internet. In that moment, I had enough resources and skill. I could have built Yahoo. But instead of building a search engine, I wrote a book about the internet.

7:01and the book ended up selling 12 ,000 copies or something. And Yahoo went off to be worth$80 billion. So I have this t-shirt that I sit right over there to remind me that doing what I think I'm supposed to do is not my job. My job is to see what is going to happen next. Where is the current flowing? And it's very easy to dismiss things that are happening and saying that's not real, like AI. but it's also easy to get caught up and say nfts nfts nfts when they're junk right so it's not easy to tell where the current is flowing but it flows and if we can see it and dance with it the wind is at our back as opposed to fighting to insist to the world that we are right thank you so much for listening to that espresso i hope you enjoyed your morning coffee and are ready for the day.

7:57Let's be having you, boy. And please do subscribe, follow the podcast, share this espresso on WhatsApp if you liked it. And also there's a link to our newsletter in the show description. I spend 15 hours toiling and writing this bad boy. It's full of wonderful wisdom from the biggest names in food and drink. You're not going to get these in a business book, so please subscribe and thank me later. Two months free. Yeah, that's what espresso sponsors at Unleashed are offering. They are supply chain gurus and offer inventory management that talks to your e-com and accounting software. It's helped Ireland's cut admin time in half, get granular clarity on your margins, know where your stock is, don't miss availability.

8:42Brands like Candy Kittens, Tarquin's Gin, Minor Figures and Trip all use Unleashed and I reckon you should too. As I said, two months free in the show notes. Click there and you're gonna get two months for free.