One of my favourite stories James, and I’d love to share this, and I hate stories about Apple, but I’ll do it, an exception and so the CEO, Tim Cook, who has gone on stage with the investor meeting. I don’t know if you’ve heard this but, he’s on stage, and he’s got a table in front of him. it’s a table maybe about four to five feet wide. And at the table he has the Macbook air, the Mac Mini, the Desktop, an iPad and I think maybe one more.
He said, “We’re the world’s most successful company by having all the products that you see on this table.” And I didn’t just f*^$in blew my mind when my friend told me. I said this quote like maybe ten times now. And I think the real take away was; well for myself was, you don’t have to do a lot of things, right, but just do a few things really well.
If they can be the world’s most successful company with just like five or less than ten products, think about your own business.
James: That’s kind of a Warren Buffett philosophy too isn’t it.
Noah: What did he say?
James: Well he’s basically like a buy and hold; he’s got very minimal stock (diversity). He doesn’t like diversifications so much. Because I think he can spread his strengths too far. And that actually averages out and the wins.
Where Noah got his skills
That’s one thing I’ve noticed. I actually made a few little notes about what I think you do well, and from the amount of people that I come into contact with. You’re quite rare in this. You’re actually quite the generalist.
Coz I’ve heard you talk about research, I’ve heard you talk about sales copy, I’ve heard you talk about design, I know you’re a strategic, you definitely do testing, you’re very good at communicating, and networking, you definitely do outsourcing and team. Plus you have the data management side of things. The less is more, and your analytics. So where did you get all these skills from?
Noah: I have a very good answer for that. The short answer is actually from my parents a little bit. So my step father is like a programmer engineer, my real father was a sales person. He was an entrepreneur with his own copier business.
So I kind of came out the bi-sexual… by-product of these two people. My career was like I’ve always mentioned I wanted to make my own business. I think a lot of people always say that and that’s how I felt too.
And then I got excited about the internet. I was like oh my god I don’t have to have inventory, and I don’t deal with people in real life. And the different attributes just came out through experience.
What I love about sharing my stuff is I’m hoping I’m saving people time and money. So they can skip ahead and get to the stuff that actually matters. So I did sales at OfferMax for two years, I did sales at Macy’s, I read a lot of books like Jeffrey Gitomer, an amazing author about sales. Chet Holmes, Ultimate Sales Machine.
And I think a lot of it was like filling in where I needed it filled in. I do think if I did something it’s like getting it done and then maybe marketing.
Well I learned programming because I was at Facebook. Well I took two years of programming at Berkley. But when I was at Facebook, I kept asking the developers, like hey can you get this done? Can you get this done? And they were like, no.
I was like alright well I’m going to learn programming and start doing it myself. And you kind of just fill in the gaps where you need it. And I think for me that is what I ended up and a lot of it was also through failure and just experimentation.
Do you really need to track that?
So with analytics, you always hear, oh install analytics, you need to track this shit. You know my previous business we tracked everything. And you know what we did with all that? Nothing. It was just really pretty.
It was like oh look at this data this is so cool. But oh you couldn’t do shit with it.
Fortunately my partner Chad was amazing. What we’ve done with AppSumo is that, and so that was a learning experience, and so with AppSumo we only tracked things that are actionable. If it’s not actionable, it is not tracked.
And even though it’s cool, it’s like you would actually know what’s your retention number, I mean I don’t know, I don’t care. It’s like I can’t do shit with it. Or this is not our focus right now. I have a kind of mind-set now that I’m sort of like a composer where I got to go find the best musicians to make this really great song and I like the orchestration of it.
So I just kind of filled the gaps for the things that I don’t know. And also realizing what I don’t want to know. Like I’m okay at programming but I’m at point where I don’t want to know.
And there’s this, f*^$in annoying man, you know this is the only business when you go out there, so I’m going to learn these codes so I can… you’re like should you really use your time? Are you going to focus and dedicate yourself to be really great at that? Like the Apple store so just pick one.
So I’d say mine will probably be marketing and sales, but I guess I just compliment that so I understand the parts of the business.
James: Yeah I recognize many of those traits because I think we have a lot of parallels.
Noah: Yeah you oversee your own business right?
James: Yeah, I have almost the mirror image, it’s in the family. I do think that probably a lot of the things that we do later on in life were instilled when we were kids.
Noah: What did your parents do?
James: Well my mum used to speak at schools for Red Cross and my dad was a chemical engineer, so he was like the scientific guy who has a huge general knowledge, and my mum was the communicator and very empathetic. You know helping people all the time. Solving problems.
Noah: That’s really cool.
James: Yes. She was like the most amazing marketer you could ever meet. Like she would go to a bunch of strangers and within minutes she’ll have rapport with all of them.
Noah: That is great.
On giving refunds
James: So I’m just curious. I want to get your angle on risk reversal because that’s a big part of AppSumo, is that you know you’ve got this very generous refund policy. Do you ever get bothered by people putting in you know frivolous refund requests? Does it get under your skin or you just know that’s part of the business.
Noah: You’re hitting my soft spot. James, you’re hitting where it hurts.
James: Because you know, I have a certain stance on refunds. And so I look at that and I think I just wonder about that, I wonder how do you just ignore it? Do you get taken advantage of or is it, it really does increase sales so much more that it’s worth doing.
Noah: So, there’s a book Predictably Irrational by Dan Ariely says it and I think it’s really fascinating. I think it’s that book. When you actually don’t have a refund policy, purchases that people make, they enjoy more.
This is counter intuitive but the idea there is that, when you have to make a decision and you know it’s final, you’re going to accept that this is the best decision for you. When you have that open ended like return whenever, like Costco in America, you’re going to be like oh what the f*^$ I’m going to return It whenever or you’re like REI you know camping store you’ll be like oh I’ll return it whenever. But on the other hand that open and return policy theoretically should increase your conversion rates so that more will buy.
And part of the problem now though is that those refund policies, everyone does a refund policy. Refunds forever! Refunds until the storm comes or until the reawakening of some famous person. I was going to say something religious but I don’t want to offend people.
Anyway the point being is that you can do either way right. So the way it did bother me, what happened was, one guy I got an email Friday night, I’m out drinking with some friends, it was like eight PM, I got an email and it was like. Hey I’m returning two thousand dollars ($2000) worth of stuff because I just want to make my money back.
He wants to make his money back from us. And my immediate reaction was like… what a b&%#h, right. And Derek Sivers had a great post one time where it’s like, it’s called signs. And in his post like they put up signs in restaurants and stores, and then one person messes it up but you shouldn’t ruin the 99% because the 1% sucked.
So what I did was, I kind of pulled the top hundred returners on AppSumo and I looked at what was the outcome of that. Was it negative in terms of the overall profit or is it positive? And it was positive. And these are the top hundred, right, so like thousands of dollars.
So it kind of hurts and I don’t know if they realize but we have to pay salaries, for the office and then for the servers, and we had to pay our partners. If it was an honest return I’d gladly return it. Like I actually like people returning things and I love returns. I love when you return if it ain’t working right. That’s fine.
But I think others out there who take advantage of like they use all the products, they like take totally advantage of it. And then they return them. You know they have to live with that. And at the end of the day they net was still positive for us.
But I think returns are a good chance to make a great experience to a lifetime customer. Because if you go and return something and the company stands by it and treat you well. “Oh cool yeah, just get anything you want to buy from us” and that’s how I feel about REI and Costco. That’s why I’m ok with the return policy where we are today.
James: That’s a great answer. Okay I want to ask you one more slightly off the wall question. You must get a lot of people saying Noah’s doing well, he’s got AppSumo, I’m just going to come up with like AppClonesSumo. How do you feel about that and what sort of challenges have you had as a company protecting your space?
Noah: The two pieces of that, it’s always interesting about perception versus reality because I don’t really feel successful. Like after you make a certain amount of money, supposedly I think in America you make 60 – 75 thousand dollars for your salary. The amount of money above that isn’t really going to change how much you work or how you feel. Once you get passed half a million or something like that.
So, I’m always passing through and people are saying oh you’re successful and I’m like I guess… I don’t know. I think we each have our own internal barometer of what that looks like. So there’s a fair amount of competitors and I actually don’t see many real competitors. And the reason that is, is that it’s very easy to know what something wants.
But I think the two pieces that are missing are one, the why, like why do you do it? And my why is very strong. Like my calling in life is to help people start their businesses, improve their careers.
I didn’t notice until this year that I always try to get people that I hardly know into their jobs that they really want to be doing. Even if they work for someone else but if that’s what they really want, I love that. That makes my drive curves very strong, well as someone else at the first speed bump they quit.
The second thing is like; frankly we take it more seriously. There have been a lot of competitors. Some are still around, some are doing okay and some are failing. We play for keeps and I think a lot of your people are like that.
They’re there to make money, and they try it out and see how it goes. If it doesn’t work or it does work a little bit and they’re not just going to stick with it and keep going. And then third, we’re not a daily deal, we’re not a rip on a block. We’re actually a store for professionals.
So we’re trying to be this destination, like the massive thing for the world. I think people have different perception of what they’re doing. Most of our competitors they’re like oh we’re daily deals for like ever.
In fact the daily deals stuff is just a medium. That’s just a medium of sale. That’s just how you sell whatever your business is. And I think they kind of miss that which affects their business.
Yeah so, I actually wish we had more competition. I compete will people talking on the street. They don’t even know they’re listening to me, I just walk pass them. Yeah that’s really awkward. I just can’t help myself.
James: Winning (laugh)
Noah: No seriously, even when I’m on the stairs, or I’m jogging, I pick one person and I’m like I’m going to spew you. And so I actually prefer that there are more people playing really hard to get this. And I think it’ll push us to be a lot better. Coz there isn’t as much intense direct pressure on it right now.
Like when I was at Facebook, I swear to god we talk about MySpace a lot. We’re like look at those A$$holes in Los Angeles, they’re f*^#in killing us. We got to push harder. I mean if it wasn’t for MySpace we wouldn’t have been as big. Right?
James: Yeah well you know when I was working with Mercedes-Benz; every second word was BMW in the corporate meetings. So they’re just obsessed with each other.
Noah: You’re exactly right. That’s exactly the point.
James: And I was watching Ed and Sander video and he was obsessed with beating LA and Pros that was it. That was his sole mission. It was just to be number one.
Noah: Yeah and you know I’ve learned about myself and I don’t know about other listeners and yourself too James is that I just work really well with goals. Right, so it’s a lot easier if you’re like we’re going to be number one. Being number one, well you can look at it both ways but I think it’s the worse position to be in. Coz all you can do is go down.
When you’re number two you’ve got nothing to lose, you can go as crazy as you want. And you know exactly what number one is doing and what has worked and has not. When you’re number one, I don’t think people realize this but it’s very easy to get complacent.
It’s very easy to be like, hey we’re a billion dollar company with a billion people. Let’s just take it easy. And I think the companies that stay on top are the companies that keep revolving and so forth. And so I think being number one is much harder.
James: Okay, I’m going to ask you one last question.
Noah: Man, those are good questions dude. You could say I liked it.