How Black Should Your Box Be?

The Black Box

Magic happens here.

“Why don’t they make the whole plane out of that black box stuff?”
–Stephen Wright

The last company I co-founded was based on open source software. For those of you who are not familiar with software, open source means that anyone can see the actual code that was written to make a given program. If you wanted to see all of the programming behind Apache, the software that is the infrastructure for most of the Internet, for example, all you need to do is download Apache, and you can see if for yourself. Try doing that with, for example, Microsoft Word. You can’t. They are what is called closed source, or proprietary software.

Thus, the conundrum we faced was how can we make money from software where everyone can see the code base? The answer was to provide services based on that software. Anyone could download the software and install it, but getting it to do specifically what they wanted was a different kettle of fish.

We excelled at solving the harder problems, the ones where people threw up their hands and said “I give up.” Once they reached that point, they called us.

Therefore, it was in our best interest to get as many people to install the software and solve the easy problems so that they would get to the hard problems and call us.

But, there was a line that we didn’t want to cross. We didn’t want, as part of our marketing efforts, to solve difficult problems that people would otherwise pay us to solve. Doing so may have increased our credibility, but it would have also cannibalized potential revenues.

In any company that provides a service or a product that is not intuitively simple to solve – in which case, you’re either competing on price or convenience – there is a fine line to walk between making it appear so simple that nobody is willing to pay you for what you offer because it’s perceived to be so simple and obfuscating information with jargon and dense phrases to make you seem like the smartest person on the web. My friend Paula Pant calls this peacocking. Err on the side of peacocking and you risk coming across as either a pompous so-and-so or as such a gearhead that nobody wants to work with you. Neither is a description you want.

How much should you reveal, and how simple do you want to make it appear?

The approach that we took was to demonstrate how to solve general problems, but never to solve someone’s specific problem. We wrote blog posts and spoke at conferences, and my partner even co-authored a book that still provides royalties four years later. We’d address commonly encountered errors and problems and show how to solve them. The presentations and our content demonstrated code snippets at specific, important points – the “a-ha moment” – but would make assumptions and skip steps along the way to that crescendo of solving the problem.

If someone in the audience asked how to solve a specific problem in their own instance, our stock answer was for them to see us afterwards to discuss a consulting engagement on how to solve it, unless the problem was so general in nature that many people would encounter it and could work through the solution without much effort.

In creating content and making presentations, we lived by one motto:

Don’t give away the special sauce

Whatever it is in your business that causes people to hire you rather than hire someone else, that’s what I define as the “special sauce.” That is what you must preserve as sacrosanct, because once you give that away, you’ve provided others with your competitive advantage to use as their own.

However, just because you can’t give away the special sauce doesn’t mean that you can’t demonstrate its effects and outcomes.

  • Case studies. Show how what you did created life-changing results for your clients. Demonstrate this in a quantifiable way. Don’t just say “Susie’s life was better after I used my ‘SuperRelaxant™ MindMeld’ on her.” Instead, give specific results, such as “Susie’s blood pressure dropped 20 points and she ran a marathon 30 minutes faster after I used my ‘SuperRelaxant™ MindMeld’ on her.” The more specific and dramatic the result is, the more you want to focus on it.
  • Testimonials. While I, as a Registered Investment Adviser, am prohibited by the SEC from providing testimonials, that doesn’t mean you shouldn’t use them to their utmost. Blow away clients and then get testimonials from them. Make sure that, in gathering the testimonials, you have their permission to use the testimonial on your marketing literature. Plaster testimonials everywhere. Testimonials build trust. You want your potential customers to see someone else’s story, think “that’s just like me,” and see the results that those happy clients got from working with you or using your product.
  • Perform benchmarking studies. If your product is 73% faster than your competitor’s product, then put them through benchmarking studies and show in an undeniable fashion how yours performs. Highlight the areas where what you have outclasses what your competitors have. Don’t shy away from making comparisons. But, don’t pull such a smoke screen that you don’t acknowledge where the competitor does well too. If the competitor beats you in something, acknowledge it. Even go so far as to tell your potential customer that if they’re looking for a feature where your competitor shines to go to the competitor. It will add credibility to your claims and it will prevent you from having dissatisfied customers.

There’s one other area your communication should focus on.

Solve the “why” but not the “how”

You want your potential customers to understand why they need to use you. They need to see the benefits. Speak to them in terms of emotions and pain, and in eliminating that pain. No matter who the purchaser is, emotions play some role in the buying process. If a potential client doesn’t understand why they need to be taking action, they rarely will.

Communicating why to a potential customer doesn’t mean sugar-coating everything in flowery, syrupy language. It can be as simple as explaining a problem, the solution, and the benefit. But, if you’re not giving your potential customers the reasons why they should commit to buying, they won’t move their image from you as “an expert in [X]” to “an expert in [X] who can help me solve this problem.”

How do you balance establishing authority and not giving away the farm? How do you convince people to pay you rather than assuming everything should be free? Let’s talk about it in the comments below!

This article appeared in the Control Your Cash Carnival of Wealth. Go check it out. Don’t read the bad articles (you’ll understand). Read the good ones. Don’t forget to come back here!

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About Jason Hull

Jason Hull is a Fort Worth financial advisor. Before becoming a Fort Worth financial planner, Jason co-founded, built, and sold a software development company. He is a CFP candidate, has a MBA from the University of Virginia, and a BS from the United States Military Academy at West Point. He is the owner of Fort Worth financial advisor Hull Financial Planning.

Comments

  1. I only take Marketing advice from the master of it: Peter J. Buscemi.

  2. Interesting article. I have a tendency to want to give away most of my code, at least if I think it has broad applicability beyond the customer/application’s specific circumstances. But by and large the code in question is an add-on feature, not a complete product. You didn’t make a distinction but I can imagine having more restraint on an entire product, leaving feature add-ons as an opportunity to prove one’s expertise. On the consulting side of my work I’ve successfully argued for several bits of functionality I developed on-contract to be released. It enables the possibility for the feature to be integrated, improved, and maintained in the mid to long term, instead of the client doing these things. Heck one client right now expressly is paying me to add a new capability to Lucene (LOVE!). Separately from my consulting gigs, my employer pays me part time to make Lucene/Solr spatial better, which is kind of a dream job; though I don’t expect it will continue for long. I know this is an exception to the rule though; many companies don’t necessarily have incentives for that, or many might theoretically but it’s counter to classic/established practice. An example there that comes to mind is the top social networking companies which are competitors collaborating on Apache Giraph. That might be out of bounds of the point of your article, though, which is focused on consultants not product companies. But even there you could argue IBM is a large-scale consulting practice, and it pays several developers to improve Lucene.

    • Hey, David – You straddle the line that a lot of thought leaders struggle with: value capture versus value creation. I have the same issue in financial planning – how do I prove that I know what I’m doing without giving away so much that nobody will pay me to work for them? Ramit Sethi claims to give away 98% of his material for free (see Lesson #4) while reserving the best 2% for paid courses. Your contributions to Lucene, Solr, etc. offer you an opportunity to burnish your reputation as one of the thought leaders in search, meaning that when someone has a particularly hairy problem to solve, you can stake a very credible claim to being able to solve it.

      The IBM point is an interesting one. They certainly pay people to contribute to several open source projects to establish credibility (beyond what inherently comes with being IBM). But, they also have products. The products may be internal products, but they’re products nonetheless. Those products allow an IBM consulting team to do flat fee consulting projects, because those products greatly reduce the amount of man hours necessary to complete the job. IBM will never give those products away because it’s those products (or in this case, probably more like libraries and repositories) that allow them to perform high margin work.

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