Learning: is it really worth it?

[Jurgis]

Yeah, oddball. After I asked you the question, I thought about it for myself a bit and yeah, I see how sales/marketing knowledge would be useful evaluating companies. Maybe more for small cos, but yeah. You can try to figure out TAM, you can try to see if company is good at capturing it, what they are missing, are the things they missing important or not. I guess PCLN way ago (although maybe even now) could be positive example. For harder (?) examples, maybe NKE and UA and LULU. GMCR maybe. On negative side OUTR maybe. But yeah, I see it.

[ScottHall]

I think Nate is so right. I've made a ton of money on stocks others hated because I knew their marketing was working wonders. As I am beginning with some angel investments now, it's pretty much how I evaluate the outlook for each potential investment.

 

I had an investment recently in software start-up. I know very little about software. But it has access to a unique method of customer acquisition that, although software is the product, turns it into a direct response marketing company. Something I know very well.

 

It'll probably fail but I think by understanding marketing, you can rig the deck more in your favor than you'd expect, in some circumstances.

[DooDiligence]

 

I'm not an expert in this, but a quick jaunt down sales lane.  Sales is a process of qualifying prospects, discovering their pain point and showing you have a solution for that.  It isn't selling ice to Eskimos.

 

In sales you want to find out as quick as possible that a person isn't a qualified prospect.  This scares a lot of people.  But you want to find out quickly that a product isn't for someone.  That way you don't waste your time.  This is the same as how I conduct investment research, disqualify an investment quickly and move on.

 

Once someone is qualified, that means they have the problem even if they don't realize it, and they have a budget to pay for a solution you talk to them about the problem.  Maybe they recognize they have a problem but it isn't a big deal at this time.  Move on.  Or maybe they have dealt with this problem but never spent any time trying to solve it.  You explain your solution, how it will solve it, the money it will make/save etc.  Then you ask if they want to buy.  That's it.  Now granted sometimes this process might take 6mo-18mo, but that's the high level. 

 

If someone is looking to buy something you're selling:

1) Return phone calls and emails

2) Continue to follow-up with them.  What is important to you isn't important to them, it's up to you to keep things moving

3) If they're qualified, if they have a pain, if you solve that pain, if they have a budget ask for the deal.  Clients rarely buy on their own, especially high dollar items (thousands to millions).  You need to ask.

 

------------------

 

With all of this you can do it in person OR you can do it in writing.  If you do it in writing you're in ScottHall's ring.  This is what Scott excels at.  He can write a letter that qualifies a prospect, that unearths their pain, and then asks them to buy all at once. There is a skill to this, and most copy sucks, but good copy sells like crazy.

 

So if you've made it this far then I have a seminar you can sign up for on sales for.... I kid, but that's the next logical step for something like this.  If you wrote something long, and someone read the entire thing then they have interest.  You'd take them to the next level whatever that is.  My advice is free, hopefully someone can glean something and use this.  I learned by asking and reading myself.

 

Having an affinity for a particular product or service which solves problems for prospects & selling it with integrity makes for an unstoppable force.

 

I believe that you need to ID yourself as a tangibles or intangibles type of person to make sure you're selling something you believe in (if you're a "things" person, you should be selling things & if you're an "ideas" person, then you should be selling less tangible items - like Scotty?)

 

I sold jewelry for a while & was a miserable failure because I'm more of an ideas guy & I actually felt that the engagement ring biz was bogus (I should stop looking at Lucara Diamonds but damnit precious stones fascinate me even if I still think the biz is based on a fairy tale.)

 

I just realized that I was trying to sell engagement rings & prob should've been selling love & commitment (would have required a move from B2B to B2C? nah, wouldn't have worked for me.)

 

Following oddballs formula is a guarantee of success & helps remove the pain of rejection because you understand it's not a rejection of you (and if you're prospecting effectively, you'll have a lot more doors to knock confidently.)

[John Hjorth]

Great post, DooDiligence,

 

Thank you for sharing your line of thinking.

 

- - - o 0 o - - -

 

Personally, I'm trying to take a break from the market and all the reading of financials right now, while trying to get some kind of structure on my investing, by trying to set up in writing for myself, what it is, I'm actually doing, and why. So far, I have found out, that I suffer from an attraction to B2B conglomerates, and float, i.e. insurance companies and banks.

 

One of the questions I asked myself in that process so far, is: Why have I invested in Investor AB, while at the same time, right now I have no intention to touch Kinnevik AB.

[Poor Charlie]

The conversation is off the rails, let's keep going, this is fascinating.

 

...

 

Oddball, as usual you bring up some great points. 

 

I agree 100%: whether it's a guy running an operating business, someone running money or a musician like your brother, marketing beats out talent.  In fact, I've seen how this works first hand: I grew up in a very wealthy part of the country and over half the people were there because of better marketing—of themselves, their products or during the sale of their business.  If these people had to survive on skill alone, they would have all starved by now.  I also think you see it between the US and Europe: there are a lot European companies that would win on product alone, but they get killed because their US competitors know how to market.

 

But just because marketing works doesn't mean you should always use it.  There's more to life than being the guy with the biggest AUM and the most money—at the end of the day, you need to be able to look at yourself in the mirror.

 

 

 

 

 

[TBW]

This has been fascinating, thats for the thoughts all.

 

I think the biggest evidence of marketing vs skill for investment managers is the often quoted stat that is roughly 'most funds fail to beat their benchmark'.  I think the explanation for this is the focus on marketing.  If you are thinking of running an investment company as a business it is much better from a business pov to be wrong with the crowd then be differentiated and risk underperforming in a bull market.  If all of your peers are down, then its simple to explain to clients 'no one saw this coming'.  You then market yourself on how 'different' you are.  Combine fees with the incentives to be a 'closeted' indexer then you have an almost guarantee that funds will underperform the benchmark.

 

I have witnessed plenty of this behaviour in my career.

 

I think this viewpoint of better marketing vs skill also explains the clustering of hedge fund positions.  If you hear a decent pitch from a well known fund, then perhaps you can't afford to not be involved rather than try to explain to your clients why you underperformed the star fund of recent memory.

 

My two cents on the topic.

[spartansaver]

Oddball any marketing/sales books you would recommend?

[vikx01]

 

This is an unsolicited recommendation, but I found Neil Rackham's book SPIN selling to be useful although it's specific to only a portion of the sales process.

 

 

Nate, Scott, and others, do you guys have any book reco. for copy writing?

 

 

[oddballstocks]

SPIN Selling is good

 

The Ultimate Sales Machine

Pricing with Confidence

Marketing High Technology

Tested Advertising Methods

The Ultimate Book of Phone Scripts - Title is misleading, guy walks you through exactly how to move a sale from prospect to close all on the phone

Ogilvy on Advertising

How To Sell Anything

The Boron Letters - classic, possibly true, possibly fake, don't matter

Ca$hvertising

 

Just finished: Just F*ing Demo and Product Demos that Sell

 

Upcoming:

Pitch Anything

Demonstrating to Win

 

[spartansaver]

Thank you, added to the queue.

[ScottHall]

SPIN Selling is good

 

The Ultimate Sales Machine

Pricing with Confidence

Marketing High Technology

Tested Advertising Methods

The Ultimate Book of Phone Scripts - Title is misleading, guy walks you through exactly how to move a sale from prospect to close all on the phone

Ogilvy on Advertising

How To Sell Anything

The Boron Letters - classic, possibly true, possibly fake, don't matter

Ca$hvertising

 

Just finished: Just F*ing Demo and Product Demos that Sell

 

Upcoming:

Pitch Anything

Demonstrating to Win

 

I like several of these (haven't read all), but wanted to underline Tested Advertising Methods. That book took me from zero to winning a copywriting tournament, and the knowledge continues to pay some very pretty dividends even now...

 

In a very literal sense. :)

[rukawa]

I had always wondered how people were finding these 5x-10x-50x growth stocks that had zero revenue.  There are a few people that can do this.

 

Curious as to both the people and the stocks you are talking about in this category.

[vikx01]

Thanks Scott and Nate.

 

 

I remember Tested Advertising Methods mentioned by Scott before.

 

 

All added to the already-quite-long to-read list.

 

 

[Morgan]

Thank you for the list!

[LR1400]

I feel like I just read my own post!

 

You reference people that only a handful of us have referenced on this site.

[LR1400]

Re. Buffett, didn't he advertise in newspapers that he was looking to buy businesses?

 

That is sales and marketing and he was doing it in a time when it wasn't normal to buy an ad like that. He also wrote articles for fortune, etc.

 

He's a sales machine and like you said ALL business is about sales. You're selling when you look for investors, you're selling when you talk to a broker about real estate, etc.

And Buffett was selling when he presented to local Omaha investors. He's selling when he's at his annual meeting, on tv.....as you noted.

 

You need a little bit of track record or something to sell though. That's a given.

[ScottHall]

Re. Buffett, didn't he advertise in newspapers that he was looking to buy businesses?

 

That is sales and marketing and he was doing it in a time when it wasn't normal to buy an ad like that. He also wrote articles for fortune, etc.

 

He's a sales machine and like you said ALL business is about sales. You're selling when you look for investors, you're selling when you talk to a broker about real estate, etc.

And Buffett was selling when he presented to local Omaha investors. He's selling when he's at his annual meeting, on tv.....as you noted.

 

You need a little bit of track record or something to sell though. That's a given.

 

It's not as much of a given as you might think... :/

[CorpRaider]

Can I use this thread title as the title for my blog?  :o

[Lehrskov]

Can I use this thread title as the title for my blog?  :o

 

Yep :-)