Every business owner should make a point to stay up with Seth Godin’s blog. His style is usually very short and always razor sharp; and his points are even sharper than his style. Read at least one of his books too. My choice, if you read only one of those books, would be All Marketers are Liars.

I’m mentioning that today in particular because Seth’s post yesterday was a lot longer than most of his posts, and it contained a serious lesson in pricing in an analysis of the significance of Groupon and similar new-wave social shopping sites. Talking about high margin items, he says:

One of the challenges of selling to new customers cheap is that you might end up with a price shopper, someone who is always cheap, someone who will never convert into the kind of customer your high margin business needs to survive.

Maybe that’s why expensive restaurants don’t appear in the local 2-for-1 coupon books. Seth explains how Priceline get’s around that problem:

The reason the original Priceline was so incredibly difficult to use (with blind reverse auctions, etc.) was that they wanted it that way. Anyone who was willing to go through that hassle and anxiety to save $100 bucks for a ticket on Delta was clearly not someone Delta was going to have an easy time selling a regular ticket to. The alternative to Priceline was a bus ticket or no travel at all… And Delta was fine with offloading excess seats to them, because they didn’t have to worry about alienating their core customer.

That’s one of those insights that seems obvious only after you see it. Seth has said what he does is put labels on things you already know. In yesterday’s post he goes on to highlight a new marketing phenomenon:

Groupon is a very different thing. Here, it’s not a hassle, it’s the fun factor. .. As a result, many Groupon customers in fact do convert to becoming long time patrons of the place they tried, because they’re not inherently cheap shoppers. If you offer an astonishing product and great service after they try you, they may convert into shopping with you for the long haul, not because you’re a Groupon replacement, but because you bring them more than the alternatives.

Which takes Seth to the following conclusion:

The net, once again, is making it easier to find and organize tribes of people, even for short durations. When you intersect these aligned groups with high-margin products, you can create fascinating commerce opportunities.

That makes sense to me, although it still takes creativity and implementation to make it work for any specific business case. Can you think of how to make it work for your business?

I like this a lot: Seth Godin on How can you do it? First he quotes a question he’s received …

“It’s like, how does anyone start their own business? How is it even possible? How do they deal with the crippling fear and harsh economic realities?”

And he answers:

The people who successfully start independent businesses (franchises, I think are a different thing) do it because we have no real choice in the matter. The voice in our heads won’t shut up until we discover if we’re right, if we can do it, if we can make something happen. This is an art, our art, and to leave it bottled up is a crime.

I guess the real question is, “How can you not do it?”

To be honest, Seth’s description doesn’t exactly match my specific experience, but it’s close; and the difference doesn’t matter. It’s a thought worth sharing.

But then I also get that other nagging thought: what about the people who have that voice, and they move ahead to discover whether or not they’re right, and then they’re wrong? Who speaks for that side of reality? Not as much fun, not nearly as inspiring, but also true.

I hate to be predictable, but: don’t trust that voice all by itself. Do a business plan first. Some of those voices are wrong, or ill-advised, or over simplifying.

I like this story of how a business app came together even better than I like the app itself. And I do like the app, called NonLinear. I called it A Cool New Tool For Presenting Slides on the Ipad in my positive review on Small Business Trends. But I like the story better.

It started last February with Seth Godin’s The iPad App of my Dreams:

It’s a very simple concept: a collection of pages (slides, images, type, let’s call them pages) that are easy to navigate in a non-linear way. Instead of it being linear (like Powerpoint or Keynote), the pages are arranged in a grid or checkerboard. From any page, then, I can go back, forward, up or down, and the four diagonals as well. So depending on the conversation I’m having with my audience, my ‘next’ page can be any of eight. In addition, the app supports an external monitor.

I’d missed that post, but last week I saw his Killer apps now shipping:

Nonlinear lets you import a PDF or PPT file and then jump around. It’s not for building slides, it’s for navigating them, and even includes a way to drive an external monitor in a clever way.

I went from there to the apps store to buy the app, which, as you see if you read the review, I like.

Keetsy Corp. built the app, and now it’s selling it. Here is that company’s retelling of the story:

On February 6, 2010, Seth Godin posted on his blog an entry titled “iPad app of my dreams: the digital talking pad.” The world was a-buzz. Could this app be created? Who would actually build this app? Was it as amazing as he promised it could be?

As a follow-up to the post, Seth started a wiki so that people who might want to make this idea a reality could share ideas on putting it together. Many people joined and contributed ideas.

There was a whirl of activity, of postings, of diagrams, of mock-ups — a storm of creativity. And then, within months, the conversation had died down to a faint drip and distant echo.

On June 14, 2010, Seth let out a sigh. No one had built his first dream app. That’s when Keetsy had had enough — it decided to make this app a reality.

And aside from that, this story is a great illustration of how products happen. There’s the idea and then the code, the company and the marketing. It was nice of Seth to post his second post about it, after it started shipping. And you’ll notice that he’s making no claim on the idea. He put it out there, and you or I could have built a product around it if we wanted to, and if we had the resources. And somebody else can do that still. The idea is out there.

I’m hoping to be able to do this more often in the future. I tend to put blog posts I like on Twitter, but I’m trying to keep track of them better, so I can also share them with readers of this blog. These are recent posts and columns, three of the five either my posts or quoting me, two others very interesting, that I wanted to share.

1. “Why Plan Your Business? Look At This Data”
   I’m not big on research, but this data is compelling. It shows clearly that people who finished business plans were more likely to achieve related goals than those who didn’t.
2. Seth’s Blog: “Goodbye to the office”
   I’m fascinated with tearing down physical location as part of the normal formula for accountability, but I do think it means a different kind of accountability–with planning, regular review and metrics–is necessary.
3. “Writing a Business Plan: 5 Things You Need to Know”
   Charlotte Jensen interviewed me for this post, and I think she did a great job. She says: “Think about it: Without constant course corrections and change, you end up driving in the wrong direction (and perhaps even over a cliff).”
4. “Business Plans for Bootstrappers”
   My monthly column here on Entrepreneur.com might be of interest to my Up and Running readers. It’s looking at business planning specifically for bootstrapping, instead of the mythological business plan for raising money or getting a loan.
5. “How to Find Your Angel Investor’
   Also on Entrepreneur.com, Joanna Krotz does a great job of summarizing the standard ways people connect with angel investors for funding their startups.

There was an industrial revolution that created industry. Now we’re in an entrepreneurial revolution, which will create, what? This is a nice thought piece, in less than five minutes, a talk with Seth Godin.

Some quotes:

Our economy now is evolving around individuals who do work that matters, and people who choose to make a difference. The really good news is that the people who are most qualified to do that are entrepreneurs and small business, because they’re close to the customers.

The challenge that entrepreneurs have is to stop looking for someone with a rule book, stop looking for some franchise or how-to book or dummies guide to say ‘send me this money, do this, and you will succeed,’ because that’s not where growth comes from. That’s being a pawn in somebody else’s game.  What I’m arguing for is doing the hard work of being an original.

No one ever got rewarded for something they were thinking about. No one ever got noticed for something they had written down in a little book. The challenge of our economy is: Did you ship? Did you get it out the door? Did you extend yourself? Did you put it into the market? If it’s something you’re thinking about, I don’t care. If it’s something you’re shipping, then I applaud you.

If you don’t see the video here, you can click here for the original.

Here’s a nice reminder: What Seth Godin is recommending in his blog post today, as alternative financing for a small business, is what we actually did. And it worked for us.

Seth’s post is called Debt, equity and a third thing that might work better.

It works like this: You have an idea, a fledgling business or a new market to enter. You find an amateur investor (a wealthy dentist, a retired executive) and raise the money to bring it to market. And in return? The investor gets $xx for every unit you sell. From the first one until forever.

This is instead of the classic either-or: You get new money to finance a new business by getting either bank loans or new investment. The problem, of course, is that both of those are hard to secure, at best, and impossible for the vast majority of new businesses.

It turns out that back in 1994, when we were first trying to build Business Plan Pro, we contracted programming help for a fee plus a percent of future revenue. My wife and I didn’t want outside investors; we’d already mortgaged ourselves up to the hilt. But we really wanted to do the new product.

That actually worked for us. Business Plan Pro came out early the next year, and the company grew. The developers ended up making good money, too. Everybody wins.

Seth adds:

My general bias for entrepreneurs starting out is to bootstrap their business, because raising money is so hard and so distracting. But if you’ve set out to do something that needs cash you can’t raise any other way, this is worth exploring. Tell a story to an investor that wants to hear it, and create a cash-flow scenario that makes the investment worth it for both of you.

I agree with that. Good suggestion.

(Photo credit: dedek/Shutterstock)

With all the talk surrounding the landmark book Free by Chris Anderson, I want to recommend Steve King‘s post “Free isn’t a Business Model, But it is a Business Strategy” on his Small Business Labs blog.

I’ve followed the Free controversy myself, and posted about it here on this blog, and  here on the Huffington Post, when two of my favorite authors, Malcolm Gladwell and Seth Godin, squared off about it a few months ago. Gladwell essentially hated the idea, and Godin declared it here whether we like it or not.

If I had to choose one short description of the basic idea, it would be this paragraph from Anderson’s 2008 story in Wired:

Once a marketing gimmick, free has emerged as a full-fledged economy. Offering free music proved successful for Radiohead, Trent Reznor of Nine Inch Nails and a swarm of other bands on MySpace that grasped the audience-building merits of zero. The fastest-growing parts of the gaming industry are ad-supported casual games online and free-to-try massively multi-player online games. Virtually everything Google does is free to consumers, from Gmail to Picasa to GOOG-411.

King has a gift for summary. He says in his post:

Free has been used effectively as a business strategy and marketing tactic for pretty much as long as businesses have existed. Given how widespread and successful free is and has been, I don’t see how you challenge the concept.

The only place I see room for criticism is if you think Anderson is suggesting that free is a complete business model. Obviously, if free means no source of revenue then it is destined for failure. But I don’t think this is what Anderson is suggesting.

King goes on to point out several examples. He also points out that it could be tactic, strategy or something else. And it’s not that new an idea, either (Chris Anderson would agree with all three).

Are you looking at using a free offer as part of a business plan? You’ll have good company. I do hope, though, that you define for yourself the specific business objectives (traffic, visibility, whatever) and put in some metrics so you can measure results.

(Image credit: from Wired.com, Free! Why $0.00 Is the Future of Business)

There are long-term needs and wants, and then there is fashion, and there is changing technology as well. Does the recession mean markets are falling apart? Is technology making some markets fall into disorder? Does that make this a good time to start something new in those same markets? Maybe.

Seth Godin suggested this the other day, in Crowded at the Top:

The very best time to launch a new product or service is when the market appears exhausted or depleted. There’s more room at the top and fewer people in a hurry to get there.

He cites four specific markets that seem to fit this general pattern:

The next golden age of journalism, of communications, of fashion, of car design–those are being established now, in a moment when it’s not so crowded at the top.

That makes sense in general, but you have to be careful. Sometimes markets crumble because something else replaces them, or the need dies, or fashions change forever. Think about buggy whips, telegrams, cassette tapes or hula hoops. The underlying needs are still there, but the actual markets have died where they were and been reborn somewhere else.

(Photo credit: Vibrant Image Studio, Dean Pennala/Shutterstock)

I admit it: Business development (bizdev) seemed to me like an internet catch-all job with little definition, little standardization and–all too frequently–little meaning. And I say “admit” it and “seemed to me” because I know that’s a very negative generalization, often plain wrong. But there was a time when every next person in those awkward networking sessions was in “bizdev.”

It seemed at one point that business development was the title businesses gave to people who worked in marketing but didn’t have a clear job description.

However, as I look at it today, bizdev, done well, is an essential part of our business at Palo Alto Software. It really helped us grow. And some of our best people have carried that title. And my biased, old-fashioned view is really off base.  Business development has grown up.

I was delighted to see Seth Godin’s Blog: Understanding business development yesterday, because Godin takes a brief pause from his normal fare to go into a thorough and practical explanation of how important business development is, and what it does.

That includes six concrete examples of business development in the real world and 12 tips on how to do it better.

I had a long talk yesterday with a good friend at the back end of a bad business experience. Call it recession-related, banking, credit cards and a website that might be valuable someday–good information, nice interface–but was taking too long.

We had a talk about web apps, trends and the long-term problem of free. My friend is safe, thanks; he’ll be fine while what he’s been working on falls apart through no fault of his own.

But free? Are you ready for free? If you’re looking at a web business or information or expert business, you’ll probably have to deal with this. People on the web–you included–expect free.

Unless you’ve been hiding under a rock, you already know about the dustup between Malcolm Gladwell, Chris Anderson and Seth Godin . . .

Anderson’s book, FREE, came out a few weeks back, arguing in part that the distribution costs of any intellectual property that can be boiled down to digital format, be it a song, a book, a video or a game, have become so low that you should essentially round down to zero and accept that if you don’t make it available for free, someone else will.

So, rather than fight it, just suck it up and give it all away.

That’s from Jonathon Fields’ post last week: Why I Hope the Free Brigade Got It Wrong. He adds:

Because if the Free Brigade are right, if we who create information, performances, music, writings, recordings and any other electronic “commoditized” form of our work are required to give our creations away whenever they appear in digital form, that effectively shuts down one of the most powerful and lucrative ways to scale a small business built around creative or strategic output.

Which brings me back to my conversation with my friend from the besieged website. Somebody has to make payroll.