His idea is to PAY YOU to listen to podcasts…
So of course I clicked on that article from Entrepreneur magazine, when it popped up in my Google News. (I’ll share the link at the end of this article.)
I listen to enough podcasts that I might consider it. (Spoiler alert, I’m not actually going to use his app.)
At the very least, I thought it would be interesting to read the article, to learn about his business model.
And, I thought there were two really big lessons in it.
One is an observation of some really dumb behavior that goes on in business, and especially in Silicon Valley and the broader tech sector.
The other lesson is, I think, truly valuable for all marketers and business-builders to understand — and will help you become a better marketer and creator of products and services.
First, the business itself…
The business is called Podcoin.
And the idea is that you earn podcoins by listening to podcast. For every 10 minutes spent listening, you get one podcoin. You build up podcoins, which you can later cash out for gift cards to places like Amazon and Starbucks, or in the form of a charitable donation. The value is about one and a half cents to four cents per podcoin. So not a ton, but it does add up.
Intrigued, I kept reading. I was wondering what the revenue model was.
And — shocker — it turns out there’s not one! There’s an idea that in the future maybe some podcasts may pay to have their content worth more podcoins per minute, as a way of featuring themselves. But in the meantime, this business is steadily increasing the amount of money they now OWE users.
I kept reading. Apparently the company is backed by another company the founder launched, called The Meet Group. And interestingly, the article from Entrepreneur cited one financial stat about The Meet Group… That they’ve spent $400 MILLION in acquiring users to their various services.
No sales quoted. No profits. Just a $400 million expense.
Now, they’re actually a public company. So I decided to look them up.
And over the last four years, their net profit is… Can you guess?
Some years they have actually come out ahead. But according to Yahoo! Finance, they actually lost $64 million in 2017.
Now I didn’t go too deep into this and it could be because they acquired another company and it shows up as a loss on their income statement.
We get to lesson #1: Really dumb business ideas appear to work right now…
Now you’ll note that I say “appear to work.” Not just “work.”
Because right now there’s an ample supply of cheap credit. Not only that, during the last financial crisis there was a ton of dumb financial risk-taking that got bailed out, so people in finance are more willing to take risks.
Sure, that cheap credit is not going to everyone equally. But there are people in the marketplace who have access to a ton of cheap money, and they’re looking for even long shots that will work.
And so they invest in any business idea that feels good to them. Knowing they’re borrowing someone else’s money, and if everything blows up in their face they can probably just dust themselves off and walk away.
And so you get a business where its entire business model right now is to bribe people into using their platform — on the hope that someday maybe they can make the eyeballs pay off.
This is scarily reminiscent of what was going on in the late 1990s with Silicon Valley stocks. Eyeballs on a website were being used as a valuation metric — revenue and profit be damned.
When someone else is paying the bills, this can work for a while.
Entrepreneur cited Podcoin’s 15% per week user growth as proof of “success.”
But remember the One Big Idea from Ready, Fire, Aim — specifically the part about launching your business. You don’t really have a BUSINESS until you’re able to make sales and generate revenue at a profit.
Until you have that figured out, you have a hobby you’re throwing money at.
Maybe you have a lot of money to throw at your hobby. And maybe a lot of people like to see you doing your hobby. But it’s still a hobby until it generates a profit.
On the other hand, there was one really profound lesson in the article…
Here’s lesson #2: Humans have been motivated by the same core desires since ancient times…
The lesson came from Reid Hoffman of LinkedIn, who mentioned that successful startups tend to correspond with one of the seven deadly sins. He said Facebook fed vanity, and LinkedIn fed greed, and that was why they worked. Podcoin’s founder emphasized that you can add appeal to your product or service by also making it an outlet for the seven heavenly virtues.
I’ll share both lists in a minute, but here’s the thing about these…
Since ancient times, humans have recognized that we are drawn to certain behaviors and motivations. Things like sex and greed are ancient desires. And they’re just as powerful today as they ever have been.
If you provide an outlet or a way to fulfill those desires (in line with your own morals and values, of course), you are aligning yourself with the core drives and desires of your prospects.
And since we know people always only do things for their own reasons (see The #1 Rule of Persuasion), know that this is the ONLY way that you can truly achieve success.
Now about the seven deadly sins, and the seven heavenly virtues…
Each item, on each list, corresponds to an item on the other list.
They are the ends of a spectrum. The light and dark side of a deeper desire.
So I’ll list them here…
With the sin followed by the virtue…
Lust — Chastity
Gluttony — Temperance
Greed — Charity
Sloth — Diligence
Wrath — Patience
Envy — Kindness
Pride — Humility
What I thought was particularly interesting was the founder of Podcoin recognized that he built his service to serve both greed and charity. Greed, through the accumulation of podcoins and what you can get for free. Charity because you can choose to redirect some or all of your earnings toward nonprofits.
Both tap into a desire to accumulate wealth and resources. One for purely personal gain, the other to benefit others.
What about you? What about your product or service? What desire does your product fulfill? How is that applicable to a deadly sin? To a heavenly virtue?
How can you capture the emotion of these in your marketing?
It’s at least worth considering. You may find a breakthrough there…
Yours for bigger breakthroughs,
PS: Here’s the article from Entrepreneur Magazine: This Entrepreneur Built a Business That Pays You to Listen to Podcasts. Here Are His 4 Tips for a Successful Business Idea.