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PROFESSOR: Recap last night
and give you-- remember

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what we had for an overview.

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The first part was that it's
not about the business plan,

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it's about planning.

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00:00:34,040 --> 00:00:36,960
That was the first
point I hope you got.

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The second one is that planning
is not a static process.

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It's dynamic.

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And therefore, your plan
is going to be dynamic.

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00:00:45,520 --> 00:00:49,180
However you write it
down, or put it in slides.

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00:00:49,180 --> 00:00:51,870
That's the first set of points.

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00:00:51,870 --> 00:00:56,240
The second is the
three Ys-- or sorry,

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00:00:56,240 --> 00:01:00,000
the second is your goals and
tasks in this whole process.

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It's to create value.

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00:01:02,630 --> 00:01:06,400
And the second goal is to
harvest some of the value.

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And as we pointed out,
those are easy to say

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and it's increasingly
hard to do.

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00:01:12,160 --> 00:01:13,910
The rest of the course
will be telling you

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00:01:13,910 --> 00:01:16,820
try to how to do those things.

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00:01:16,820 --> 00:01:20,150
The questions that investors
are going to be asking

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00:01:20,150 --> 00:01:22,190
are the 3 Whys.

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00:01:22,190 --> 00:01:22,860
Why this?

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00:01:22,860 --> 00:01:25,380
Why is this something important?

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00:01:25,380 --> 00:01:26,400
Why now?

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00:01:26,400 --> 00:01:28,920
Why is now the
right time to do it?

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And why this team?

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00:01:30,190 --> 00:01:32,895
Why is this group of
people the right people?

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And if they get through
those, the fourth one

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00:01:34,770 --> 00:01:37,610
is why won't it work?

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00:01:37,610 --> 00:01:40,400
Now, I said that that's
what investors ask,

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and that's probably what
you ought to be asking.

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00:01:42,620 --> 00:01:45,800
Because the final point is,
the most scarce resource is not

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00:01:45,800 --> 00:01:48,240
money, it's your time.

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00:01:48,240 --> 00:01:50,050
So if you're not happy
with those answers

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00:01:50,050 --> 00:01:51,880
to those questions,
then you ought

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00:01:51,880 --> 00:01:55,980
to iterate and find some new
questions-- a new approach

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00:01:55,980 --> 00:01:56,480
to those.

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00:01:56,480 --> 00:01:59,330
In fact, tonight our
speaker Bob is probably

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00:01:59,330 --> 00:02:02,040
going to talk about how you've
iterated [INAUDIBLE] things

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00:02:02,040 --> 00:02:02,980
on that score.

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00:02:02,980 --> 00:02:05,670
OK, so tonight
we're starting down

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00:02:05,670 --> 00:02:08,039
the path of filling
in the business plan.

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00:02:08,039 --> 00:02:11,160
The first thing we said if
you've got to create value.

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And one of the ways
you can create value

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00:02:12,970 --> 00:02:14,980
is to find a customer.

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00:02:14,980 --> 00:02:18,920
And Bob Jones, who's one of
our highly paid volunteers,

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once again tripling your income.

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Bob is-- was a classmate
of mine at Sloan.

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People in the
audience from Sloan,

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do you know about
the C-function?

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00:02:30,530 --> 00:02:31,230
Still going on?

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00:02:31,230 --> 00:02:32,940
You like that?

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00:02:32,940 --> 00:02:33,510
That's Bob.

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00:02:33,510 --> 00:02:36,790
He's the guy that organized
the first C-function.

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In addition to being a serial
entrepreneur-- for those of you

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who are not from the
Sloan side of campus,

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the C-Function is consumption
function in economics.

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And you can picture what might
be consumed at a Friday night

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consumption function.

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So we'll leave it with that.

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Bob's a serial
entrepreneur, still at it.

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Like a lot of the speakers
that we're going to hear from,

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they're actually
doing the very things

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they're talking to you about.

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So this isn't just an
academic exercise for them.

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Bob's other claim to fame is he
plays pretty good blues guitar

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and he has a blues band.

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But I'll let him
decide whether he

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wants to say anything
more about that.

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And with that, Bob, the
clicker is yours, sir.

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BOB JONES: Thanks, Joe.

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So good evening, everybody.

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I'd like to congratulate you
on the good sense required

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to sign up for one
of the best courses

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that the Institute offers.

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It's not the first
course here you'll

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take here that has you
drinking from a fire hose.

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But this one's pretty
valuable stuff.

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How many of you are
in this because you're

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thinking of competing
in the 100K competition?

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Good.

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How many of you
are contemplating

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making your living
in entrepreneurship

90
00:04:01,500 --> 00:04:04,130
when you get out of here?

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00:04:04,130 --> 00:04:07,480
Oh dear, you poor things.

92
00:04:07,480 --> 00:04:12,540
How many of you actually have
something going right now?

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00:04:12,540 --> 00:04:13,700
Wow.

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00:04:13,700 --> 00:04:18,339
Well there's therapy available
for you guys, and medication.

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00:04:18,339 --> 00:04:21,120
This is a little bit
like chronic illness,

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00:04:21,120 --> 00:04:23,410
you might be able to
tamp it down for a while

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00:04:23,410 --> 00:04:25,374
and then it'll pop up again.

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00:04:25,374 --> 00:04:26,790
You won't be able
to get rid of it

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00:04:26,790 --> 00:04:29,750
once you're infected
and afflicted.

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00:04:29,750 --> 00:04:32,950
I'd love some sense of what
you guys are working on,

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00:04:32,950 --> 00:04:36,520
just some sense of the spectrum
of who's doing what here.

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00:04:36,520 --> 00:04:38,700
Do you have a dog
walking service

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00:04:38,700 --> 00:04:42,020
for two-income
families, or do you

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00:04:42,020 --> 00:04:45,950
have something that detects
the need for insulin

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00:04:45,950 --> 00:04:47,396
in a patient with diabetes?

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00:04:47,396 --> 00:04:49,020
So somebody raise
your hand and give me

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some sense of what it is
you're working on, please.

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00:04:52,380 --> 00:04:52,880
Yes, sir.

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00:04:53,832 --> 00:04:56,886
AUDIENCE: Business systems
for small- and medium-sized

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00:04:56,886 --> 00:04:58,385
BOB JONES: I'm
sorry, business what?

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00:04:58,385 --> 00:05:00,260
AUDIENCE: Business
systems, IT systems,

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00:05:00,260 --> 00:05:06,990
for small- and medium-sized
businesses [INAUDIBLE]

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00:05:06,990 --> 00:05:07,590
BOB JONES: OK.

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00:05:07,590 --> 00:05:09,828
What's broke that you fix?

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00:05:09,828 --> 00:05:13,812
AUDIENCE: They don't have
large enough IT organizations.

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00:05:13,812 --> 00:05:16,800
They can't afford to have
[INAUDIBLE] like more

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00:05:16,800 --> 00:05:18,292
large organizations do.

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[INAUDIBLE]

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BOB JONES: All right so you're
sort of an outsourcing service.

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00:05:25,475 --> 00:05:27,650
AUDIENCE: Correct.

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00:05:27,650 --> 00:05:30,471
BOB JONES: Rent an expert.

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Good.

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00:05:30,970 --> 00:05:31,820
Who else?

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00:05:31,820 --> 00:05:34,080
Who else is working
on something?

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00:05:34,080 --> 00:05:35,550
You can't all be IT people.

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00:05:35,550 --> 00:05:36,976
Yes, sir.

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00:05:36,976 --> 00:05:38,750
AUDIENCE: Personalized
cancer treatment.

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00:05:38,750 --> 00:05:39,885
BOB JONES: I'm sorry,
say that again.

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00:05:39,885 --> 00:05:41,735
AUDIENCE: Personalized
cancer treatment.

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00:05:42,579 --> 00:05:43,620
BOB JONES: Personalized--

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00:05:43,620 --> 00:05:44,745
AUDIENCE: Cancer treatment.

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00:05:47,910 --> 00:05:50,150
BOB JONES: Oh.

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00:05:50,150 --> 00:05:52,414
Well, tell us a little
more about that.

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AUDIENCE: [INAUDIBLE]

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BOB JONES: I know that cancer is
actually a family of disorders

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00:06:01,100 --> 00:06:02,788
it's not--

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00:06:02,788 --> 00:06:07,778
AUDIENCE: For one cancer, there
are about 20 [INAUDIBLE] drugs.

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00:06:07,778 --> 00:06:13,766
[INAUDIBLE] And they
are not the same.

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00:06:13,766 --> 00:06:17,270
You have to choose
the right one.

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00:06:17,270 --> 00:06:20,310
BOB JONES: So do you have a set
of molecular diagnostic tests

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00:06:20,310 --> 00:06:23,250
which help determine
which form they have

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00:06:23,250 --> 00:06:25,766
and therefore which
therapy they should get?

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00:06:25,766 --> 00:06:37,922
AUDIENCE: [INAUDIBLE]
--personalized drugs.

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00:06:37,922 --> 00:06:39,630
BOB JONES: And who
will be your customer?

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00:06:39,630 --> 00:06:43,149
Who will write you a check,
the patient, the hospital,

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00:06:43,149 --> 00:06:44,065
the insurance company?

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00:06:44,065 --> 00:06:52,425
AUDIENCE: [INAUDIBLE] the
insurance company [INAUDIBLE]

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00:06:52,425 --> 00:06:53,860
the patient [INAUDIBLE]

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00:06:53,860 --> 00:06:56,068
BOB JONES: How many of you
are thinking about working

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00:06:56,068 --> 00:06:58,004
in the medical arena?

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00:06:58,004 --> 00:06:59,300
Yeah, OK.

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00:06:59,300 --> 00:07:04,020
You know then that there's a
sort of a cluster of customers

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00:07:04,020 --> 00:07:05,270
that you have to work with.

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00:07:05,270 --> 00:07:07,420
The doctor has to
request it, then

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00:07:07,420 --> 00:07:10,450
you have to go arm wrestle
with the purchasing

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00:07:10,450 --> 00:07:12,740
agent, or the formulary
committee, or whatever.

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00:07:12,740 --> 00:07:15,180
It's really quite convoluted.

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00:07:15,180 --> 00:07:20,100
OK, well that gives me at
least some idea of how eclectic

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00:07:20,100 --> 00:07:21,410
you guys are.

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00:07:21,410 --> 00:07:25,150
So what I'm going
to try to do-- Joe,

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00:07:25,150 --> 00:07:26,840
tell me how to make
this gizmo work.

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00:07:26,840 --> 00:07:28,650
PROFESSOR: Turn the
switch on the side.

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00:07:28,650 --> 00:07:32,240
BOB JONES: Oh, God, turn it on?

164
00:07:32,240 --> 00:07:33,680
Really demanding.

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00:07:33,680 --> 00:07:34,596
OK.

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00:07:34,596 --> 00:07:36,220
I like to learn a
little bit about you.

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00:07:36,220 --> 00:07:37,374
I think we've covered that.

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00:07:37,374 --> 00:07:39,290
I'm going to try and
provide you with a couple

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00:07:39,290 --> 00:07:42,280
of hot tips in the course
of this 90 minutes.

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00:07:42,280 --> 00:07:44,206
I have the sort of
quaint notion that if I'm

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00:07:44,206 --> 00:07:45,580
going to ask you
to pay attention

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00:07:45,580 --> 00:07:47,079
to me for an hour
and a half I ought

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00:07:47,079 --> 00:07:50,180
to try to give you something
of value in return.

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00:07:50,180 --> 00:07:51,960
I realize that's
sort of old school,

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00:07:51,960 --> 00:07:55,520
but I hope to help you
find some customers

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00:07:55,520 --> 00:07:57,100
and succeed with
your businesses.

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00:07:57,100 --> 00:07:59,960
And I'm going to do that
using a couple of product

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00:07:59,960 --> 00:08:03,384
launches that I
was involved with.

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00:08:03,384 --> 00:08:05,050
There are times when
people speak to you

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00:08:05,050 --> 00:08:07,860
and they say, well, there's
been 20 clinical trials done

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00:08:07,860 --> 00:08:09,870
and the results are
almost indisputable.

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00:08:09,870 --> 00:08:10,980
This is not one of those.

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00:08:10,980 --> 00:08:12,310
This is anecdotal.

184
00:08:12,310 --> 00:08:14,870
You're not going to be
hearing the voice of God.

185
00:08:14,870 --> 00:08:19,032
You're hearing my opinions, and
they may be wrong, disclaimer.

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00:08:19,032 --> 00:08:21,240
But I'm going to walk you
through a couple of product

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00:08:21,240 --> 00:08:24,430
launches and some lessons
that maybe you'll learn.

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00:08:24,430 --> 00:08:29,780
And there may be an opportunity
for equal opportunity

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00:08:29,780 --> 00:08:32,640
embarrassment in the
course of this evening.

190
00:08:32,640 --> 00:08:35,140
I will fulfill the
responsibilities of leadership

191
00:08:35,140 --> 00:08:38,070
by embarrassing myself
first, and then I'll

192
00:08:38,070 --> 00:08:40,390
offer you the
chance to follow on.

193
00:08:40,390 --> 00:08:46,410
So I went to a couple schools,
I had a couple normal jobs,

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00:08:46,410 --> 00:08:49,000
and then I realized there
was something wrong with me.

195
00:08:49,000 --> 00:08:51,310
And left and went
off and started up

196
00:08:51,310 --> 00:08:54,040
three different medical
companies in a row.

197
00:08:54,040 --> 00:08:57,100
And took a break
from entrepreneurship

198
00:08:57,100 --> 00:08:59,460
to serve as CEO of
a soy foods company.

199
00:08:59,460 --> 00:09:00,550
It was turnaround.

200
00:09:00,550 --> 00:09:03,360
The company was a dreadful
mess and took a couple years

201
00:09:03,360 --> 00:09:04,510
to fix it.

202
00:09:04,510 --> 00:09:07,130
Had to fire 75 people
in the process,

203
00:09:07,130 --> 00:09:09,470
so it was a lot of, sort
of, block and tackle work.

204
00:09:09,470 --> 00:09:11,780
And I thought it
would be kind of fun

205
00:09:11,780 --> 00:09:14,480
and relaxing to join a
boutique consulting firm,

206
00:09:14,480 --> 00:09:16,990
helping people do what I did.

207
00:09:16,990 --> 00:09:19,640
And it was fun
for a couple years

208
00:09:19,640 --> 00:09:22,090
and then it got bored--
boring, and I left

209
00:09:22,090 --> 00:09:24,270
and started another company.

210
00:09:24,270 --> 00:09:26,760
Which I'll tell you
about, maybe a little bit,

211
00:09:26,760 --> 00:09:29,624
in the course of the evening.

212
00:09:29,624 --> 00:09:31,540
So a couple years ago,
The Wall Street Journal

213
00:09:31,540 --> 00:09:36,180
did a study, during the last
recession, of who succeeded

214
00:09:36,180 --> 00:09:37,650
and who failed.

215
00:09:37,650 --> 00:09:40,730
And did the people who
succeeded aggregate

216
00:09:40,730 --> 00:09:43,050
around any particular plans?

217
00:09:43,050 --> 00:09:44,130
And they did.

218
00:09:44,130 --> 00:09:46,540
One group turned out
to be cost leaders.

219
00:09:46,540 --> 00:09:48,980
They aggressively
cut their costs.

220
00:09:48,980 --> 00:09:50,550
And that was their
differentiator.

221
00:09:50,550 --> 00:09:53,140
That's not you.

222
00:09:53,140 --> 00:09:54,900
The other group were
innovators and they

223
00:09:54,900 --> 00:09:56,930
focused on building brands.

224
00:09:56,930 --> 00:09:58,580
That might be you.

225
00:09:58,580 --> 00:10:00,130
But there was a
fundamental question

226
00:10:00,130 --> 00:10:01,980
that the successful
ones asked, which

227
00:10:01,980 --> 00:10:04,640
is how is your end
user dissatisfied?

228
00:10:04,640 --> 00:10:07,710
Because that's where
the opportunity lies.

229
00:10:07,710 --> 00:10:10,750
And at an august
institution like this one,

230
00:10:10,750 --> 00:10:13,550
it's often thought that
the answer is technology,

231
00:10:13,550 --> 00:10:15,850
but it doesn't have to be.

232
00:10:15,850 --> 00:10:18,950
If there's 50 kids in
town that want a bicycle,

233
00:10:18,950 --> 00:10:22,480
and there's no bicycle shop,
that could be your opportunity.

234
00:10:27,520 --> 00:10:30,050
So I'm going to make an
assertion right up front, which

235
00:10:30,050 --> 00:10:32,080
is your business
might survive, but it

236
00:10:32,080 --> 00:10:37,667
won't prosper until you know
what are you really selling.

237
00:10:37,667 --> 00:10:39,250
And there'll be a
couple times tonight

238
00:10:39,250 --> 00:10:42,780
when I may interrogate you
ruthlessly on this point.

239
00:10:42,780 --> 00:10:44,180
Who wants it?

240
00:10:44,180 --> 00:10:47,260
So, literally, who cares?

241
00:10:47,260 --> 00:10:48,340
And how do you find them?

242
00:10:51,620 --> 00:10:54,170
And I know that our friend
Steve talked to you a little bit

243
00:10:54,170 --> 00:10:55,860
last night about
raising capital,

244
00:10:55,860 --> 00:10:59,290
but it's kind of a dirty
secret amongst investors

245
00:10:59,290 --> 00:11:02,980
that most of them
really live in terror.

246
00:11:02,980 --> 00:11:08,250
Because they know that if
they invest and 10 of you

247
00:11:08,250 --> 00:11:12,320
guys-- eight of you
are going to fail.

248
00:11:12,320 --> 00:11:14,460
You're all smart, good
looking, charming.

249
00:11:14,460 --> 00:11:17,100
I'm sure you're good to your
parents and all of that,

250
00:11:17,100 --> 00:11:19,430
but you are going to fail.

251
00:11:19,430 --> 00:11:22,950
Which means their investment
is gonna evaporate.

252
00:11:22,950 --> 00:11:26,800
And investors, venture
capitalists in particular,

253
00:11:26,800 --> 00:11:28,050
raise money themselves.

254
00:11:28,050 --> 00:11:30,250
They go around to pension
funds and say, please

255
00:11:30,250 --> 00:11:31,820
contribute to our fund.

256
00:11:31,820 --> 00:11:35,620
And if you lose
their money they are

257
00:11:35,620 --> 00:11:39,080
unable to raise a fund next time
and find themselves unemployed.

258
00:11:39,080 --> 00:11:42,390
So, oops, the emperor is
not wearing any clothes.

259
00:11:42,390 --> 00:11:45,020
So when they look at
you, they want to try

260
00:11:45,020 --> 00:11:47,170
and figure out do you have
a chance of succeeding

261
00:11:47,170 --> 00:11:48,960
with your business.

262
00:11:48,960 --> 00:11:50,900
And the experienced ones
know, there's really

263
00:11:50,900 --> 00:11:53,100
one non-negotiable requirement.

264
00:11:53,100 --> 00:11:56,600
And that's you have
to have customers.

265
00:11:56,600 --> 00:11:58,680
You don't need to be smart.

266
00:11:58,680 --> 00:12:00,600
You don't need to
be good looking.

267
00:12:00,600 --> 00:12:02,870
You don't need to get rich.

268
00:12:02,870 --> 00:12:07,100
If you have customers, people
will think you're smart,

269
00:12:07,100 --> 00:12:09,320
you will make money, and
if you make enough money,

270
00:12:09,320 --> 00:12:10,736
they'll think
you're good looking.

271
00:12:16,330 --> 00:12:19,700
So they want to know, do
you have any customers?

272
00:12:19,700 --> 00:12:20,610
Will you have any?

273
00:12:20,610 --> 00:12:22,980
Do you even know you need them?

274
00:12:22,980 --> 00:12:25,370
And by the way, have
you done some homework?

275
00:12:25,370 --> 00:12:26,565
How are you gonna find them?

276
00:12:26,565 --> 00:12:27,870
And how much are they worth?

277
00:12:27,870 --> 00:12:30,590
Are you going to spend $5
to acquire a customer whose

278
00:12:30,590 --> 00:12:32,180
lifetime value is $3?

279
00:12:32,180 --> 00:12:34,824
Whoops, probably
not a good idea.

280
00:12:34,824 --> 00:12:36,740
How long is it going to
take you to get there?

281
00:12:36,740 --> 00:12:41,650
How many do you need in
order to reach prosperity?

282
00:12:41,650 --> 00:12:43,780
I think there's two
descriptors that you want.

283
00:12:43,780 --> 00:12:46,880
You'd like to be important
and you'd like to be unique.

284
00:12:46,880 --> 00:12:49,700
And, of course, the sweet
spot is when you're both.

285
00:12:49,700 --> 00:12:53,690
So I think you can make pretty
good argument that air is

286
00:12:53,690 --> 00:12:57,730
important arguably, not unique.

287
00:12:57,730 --> 00:13:00,410
And I don't want to
traumatize any of you,

288
00:13:00,410 --> 00:13:05,140
but some would argue that MIT
decals are unique but possibly

289
00:13:05,140 --> 00:13:09,790
not important, possibly.

290
00:13:09,790 --> 00:13:12,020
So can you make
a decent business

291
00:13:12,020 --> 00:13:13,150
selling either of these?

292
00:13:15,880 --> 00:13:19,544
Well, yes, no?

293
00:13:19,544 --> 00:13:20,870
AUDIENCE: People do.

294
00:13:20,870 --> 00:13:22,670
BOB JONES: People do.

295
00:13:22,670 --> 00:13:23,270
People do.

296
00:13:23,270 --> 00:13:26,915
Give me an example of an
opportunity to sell air.

297
00:13:26,915 --> 00:13:28,280
AUDIENCE: Chem labs.

298
00:13:28,280 --> 00:13:30,920
BOB JONES: Chem labs,
OK, that's a bit exotic.

299
00:13:30,920 --> 00:13:34,410
You guys scuba dive?

300
00:13:34,410 --> 00:13:38,100
I did my check out dive off
Catalina Island in California.

301
00:13:38,100 --> 00:13:42,460
I was about 100 feet down
in the kelp beds, ooh,

302
00:13:42,460 --> 00:13:45,500
I've got about 15 minutes left.

303
00:13:45,500 --> 00:13:49,310
I would have paid
a lot for some air.

304
00:13:49,310 --> 00:13:51,726
You know those packages that
have all those little bubbles

305
00:13:51,726 --> 00:13:54,733
in them and you get really
neurotic and pop them all?

306
00:13:54,733 --> 00:13:57,830
You know what that
companies called?

307
00:13:57,830 --> 00:14:01,150
Sealed Air Corporation,
six billion.

308
00:14:05,470 --> 00:14:07,260
And of course the
opportunity for--

309
00:14:07,260 --> 00:14:12,700
to take $0.15 worth of material
and sell it for $4 or $5,

310
00:14:12,700 --> 00:14:15,670
obviously, is picking
the right positioning

311
00:14:15,670 --> 00:14:16,940
and the right opportunity.

312
00:14:16,940 --> 00:14:19,190
So I'm being a little tongue
in cheek here, obviously,

313
00:14:19,190 --> 00:14:21,820
but the point is
to figure out who

314
00:14:21,820 --> 00:14:25,100
is going to find your
offering unique and important.

315
00:14:25,100 --> 00:14:27,110
So rather than start
with how fabulous

316
00:14:27,110 --> 00:14:28,850
your product is, who cares?

317
00:14:28,850 --> 00:14:30,580
Who actually thinks it's unique?

318
00:14:30,580 --> 00:14:32,710
Who's important?

319
00:14:32,710 --> 00:14:34,960
Figure out how you're going
to find them and tell them

320
00:14:34,960 --> 00:14:38,350
about what you've got,
and then take their money.

321
00:14:41,100 --> 00:14:43,240
Now, simple is not
the same as easy.

322
00:14:43,240 --> 00:14:46,630
This is simple, it's
not necessarily easy.

323
00:14:46,630 --> 00:14:51,580
But what happens if you can't
meet those two requirements?

324
00:14:51,580 --> 00:14:54,425
I'll give you a hint,
what kind of fish is that?

325
00:14:57,610 --> 00:15:00,380
Right, that's what's
going to happen to you.

326
00:15:00,380 --> 00:15:02,990
You will flounder.

327
00:15:02,990 --> 00:15:04,810
So let me give you an example.

328
00:15:04,810 --> 00:15:06,370
This was back in the day.

329
00:15:10,550 --> 00:15:12,205
I joined a company
in California.

330
00:15:12,205 --> 00:15:15,250
It had been 200 million
in annual revenue

331
00:15:15,250 --> 00:15:20,250
for 12 straight years,
arguably a sleepy business.

332
00:15:20,250 --> 00:15:22,630
And they got bought
by an entrepreneur,

333
00:15:22,630 --> 00:15:25,950
took them private,
leveraged buyout.

334
00:15:25,950 --> 00:15:29,280
So I want to kick up the
sales of this outfit 50%

335
00:15:29,280 --> 00:15:32,060
in three years and
take it public.

336
00:15:32,060 --> 00:15:33,840
So we fired the senior
management team,

337
00:15:33,840 --> 00:15:39,110
brought in a bunch of ostensibly
energetic entrepreneurs,

338
00:15:39,110 --> 00:15:40,790
and gave everybody some stock.

339
00:15:40,790 --> 00:15:43,290
So here's some stock for you,
and here's some stock for you,

340
00:15:43,290 --> 00:15:46,820
and here's some stock for
you, and let's not argue.

341
00:15:46,820 --> 00:15:48,800
Let's make this worth something.

342
00:15:48,800 --> 00:15:50,090
Really, very good idea.

343
00:15:50,090 --> 00:15:51,900
It was highly motivating.

344
00:15:51,900 --> 00:15:53,590
I was running the
clinical nutrition

345
00:15:53,590 --> 00:15:56,240
division, really profitable.

346
00:15:56,240 --> 00:16:00,840
We would make a liter of
solution, IV fluid, for $3,

347
00:16:00,840 --> 00:16:02,539
sell it for 70.

348
00:16:02,539 --> 00:16:03,080
Nice margins.

349
00:16:05,970 --> 00:16:08,564
But I had a bad habit of
going out in the marketplace.

350
00:16:08,564 --> 00:16:10,480
And I did, and I discovered
that this business

351
00:16:10,480 --> 00:16:13,060
was going to go away.

352
00:16:13,060 --> 00:16:15,950
Managed care was coming,
changes in reimbursement

353
00:16:15,950 --> 00:16:17,820
structures, et cetera.

354
00:16:17,820 --> 00:16:20,770
And it was going to
go away before we

355
00:16:20,770 --> 00:16:22,840
had a chance to go public.

356
00:16:22,840 --> 00:16:25,640
This was bad news.

357
00:16:25,640 --> 00:16:29,244
I needed to find
a new opportunity.

358
00:16:29,244 --> 00:16:30,160
So I thought about it.

359
00:16:30,160 --> 00:16:32,510
And I thought, well, if
this science of nutrition

360
00:16:32,510 --> 00:16:34,927
is so awesome for people who
are in the intensive care

361
00:16:34,927 --> 00:16:37,010
unit it ought to be pretty
good for people who are

362
00:16:37,010 --> 00:16:40,500
just out walking on the street.

363
00:16:40,500 --> 00:16:44,540
Maybe we could reposition this,
go for a much broader market.

364
00:16:44,540 --> 00:16:45,970
Nobody had done it.

365
00:16:45,970 --> 00:16:49,430
Power bar didn't exist, none
of those things happened.

366
00:16:49,430 --> 00:16:54,000
But, like most entrepreneurs,
it was a triumph

367
00:16:54,000 --> 00:16:55,510
of energy over good sense.

368
00:16:55,510 --> 00:16:58,730
I said, let's try that, even
though no model for success

369
00:16:58,730 --> 00:17:00,130
existed.

370
00:17:00,130 --> 00:17:02,400
I had spent some time at
Baxter and I knew something

371
00:17:02,400 --> 00:17:06,720
about the market for people
who have kidney failure.

372
00:17:06,720 --> 00:17:08,950
At the time, there were
400,000, the market

373
00:17:08,950 --> 00:17:10,240
was growing like crazy.

374
00:17:10,240 --> 00:17:13,800
And every one of the
patients who was on dialysis

375
00:17:13,800 --> 00:17:17,609
went three times a week to
one of 300 dialysis centers

376
00:17:17,609 --> 00:17:19,520
in the country, all of
which are identified

377
00:17:19,520 --> 00:17:21,089
in a federal document.

378
00:17:21,089 --> 00:17:22,740
So I knew where to find them.

379
00:17:22,740 --> 00:17:25,280
I knew literally where they
would be on Tuesday, Thursday,

380
00:17:25,280 --> 00:17:28,210
Saturday.

381
00:17:28,210 --> 00:17:32,600
Now, when your kidneys fail
you can't casually do something

382
00:17:32,600 --> 00:17:39,080
that so many of us do,
which is have a drink,

383
00:17:39,080 --> 00:17:42,560
because you're unable
to eliminate the fluids.

384
00:17:42,560 --> 00:17:45,100
So it's not uncommon
for a dialysis patient

385
00:17:45,100 --> 00:17:49,400
to gain eight to ten pounds
between Monday and Wednesday.

386
00:17:49,400 --> 00:17:53,490
Part of what dialysis does is
it wrings out that extra fluid.

387
00:17:53,490 --> 00:17:56,600
So these patients
are fluid restricted.

388
00:17:56,600 --> 00:17:59,380
For-- due to other things
that your kidneys do for you,

389
00:17:59,380 --> 00:18:02,620
many of them are
clinically malnourished.

390
00:18:02,620 --> 00:18:05,360
And the only nutrition
supplements that were available

391
00:18:05,360 --> 00:18:08,890
were liquids, Ensure,
things like that.

392
00:18:08,890 --> 00:18:10,320
I said, well, duh.

393
00:18:10,320 --> 00:18:13,120
What's wrong with that?

394
00:18:13,120 --> 00:18:15,850
Why don't we make a supplement
that's high in the stuff

395
00:18:15,850 --> 00:18:18,960
they need, doesn't have
the stuff they don't need,

396
00:18:18,960 --> 00:18:20,190
doesn't have any fluids.

397
00:18:20,190 --> 00:18:23,180
Let's make a nutrition bar.

398
00:18:23,180 --> 00:18:25,760
We had the technology to do it.

399
00:18:25,760 --> 00:18:27,500
We created something
we called Regain.

400
00:18:30,699 --> 00:18:32,490
We weren't required to
do a clinical trial,

401
00:18:32,490 --> 00:18:33,890
it was just food, but we did.

402
00:18:33,890 --> 00:18:38,060
Kaiser Permanente, for those
of you who live in California.

403
00:18:38,060 --> 00:18:38,930
Stuff worked.

404
00:18:38,930 --> 00:18:41,570
Got the results
published in the Archives

405
00:18:41,570 --> 00:18:43,190
of the National
Kidney Foundation,

406
00:18:43,190 --> 00:18:44,760
peer-reviewed journal.

407
00:18:44,760 --> 00:18:47,300
Good scientific support,
all the biomarkers

408
00:18:47,300 --> 00:18:49,800
improved, patients got better.

409
00:18:49,800 --> 00:18:52,770
We said, well, we
know how to do this.

410
00:18:52,770 --> 00:18:54,080
We know where to find them.

411
00:18:54,080 --> 00:18:56,050
We know how to find
the market leaders.

412
00:18:56,050 --> 00:18:59,290
Let's call the renal physicians.

413
00:18:59,290 --> 00:19:03,110
Let's call the
dietitians, say we've

414
00:19:03,110 --> 00:19:07,530
developed something that's high
in what your kidney failure

415
00:19:07,530 --> 00:19:10,420
patients ought to have and
doesn't have any fluids in it.

416
00:19:10,420 --> 00:19:12,370
And, what do you think?

417
00:19:12,370 --> 00:19:18,310
The typical reaction was I
wish I had thought of that.

418
00:19:18,310 --> 00:19:21,400
So, well, how many
of your patients

419
00:19:21,400 --> 00:19:24,890
do you think this
would be suitable for?

420
00:19:24,890 --> 00:19:28,120
They'd say, well, all of them.

421
00:19:28,120 --> 00:19:31,500
How many days a week
would you recommend this?

422
00:19:31,500 --> 00:19:34,160
Seven.

423
00:19:34,160 --> 00:19:38,950
Say what, how do you
feel about $3 a bar?

424
00:19:38,950 --> 00:19:40,600
Sounds right to us.

425
00:19:40,600 --> 00:19:46,410
We said, this is a pretty
good little business here.

426
00:19:46,410 --> 00:19:48,522
Let's do it.

427
00:19:48,522 --> 00:19:50,480
We said, how do you feel
about the competition?

428
00:19:50,480 --> 00:19:51,900
They said, well, yours
is the only one that

429
00:19:51,900 --> 00:19:53,150
doesn't have any liquid in it.

430
00:19:53,150 --> 00:19:55,680
It's obviously going to have
a stranglehold on this market.

431
00:19:55,680 --> 00:19:57,000
It's perfect.

432
00:19:57,000 --> 00:19:59,150
So we said, well, that's
a pretty good opportunity

433
00:19:59,150 --> 00:20:00,899
for the corporation,
it's going to replace

434
00:20:00,899 --> 00:20:02,010
some of the revenues.

435
00:20:02,010 --> 00:20:03,510
Let's make a whole bunch of it.

436
00:20:03,510 --> 00:20:05,950
Let's take the beauty shots
and make the brochures.

437
00:20:05,950 --> 00:20:08,750
Let's haul in the sales force,
set up a commission plan,

438
00:20:08,750 --> 00:20:11,414
train them on how to do it,
give them some incentives

439
00:20:11,414 --> 00:20:12,580
to go out there and sell it.

440
00:20:12,580 --> 00:20:14,640
And let's launch, which we did.

441
00:20:17,210 --> 00:20:24,770
It was a complete disaster,
just an absolute failure.

442
00:20:24,770 --> 00:20:28,860
Revenues came in at less than
10% of what we forecasted.

443
00:20:28,860 --> 00:20:30,730
And, to make matters
worse, I was part

444
00:20:30,730 --> 00:20:32,040
of the senior management team.

445
00:20:32,040 --> 00:20:36,680
And we would meet once a
week, conference room--

446
00:20:36,680 --> 00:20:40,810
once a month we would go over
how our business was doing.

447
00:20:40,810 --> 00:20:44,200
So I'd have to stand up in
front of my peers and say,

448
00:20:44,200 --> 00:20:47,312
well our forecast for
this month was $400,000

449
00:20:47,312 --> 00:20:51,386
and we came in at 32.

450
00:20:51,386 --> 00:20:53,260
They'd say, Bob, didn't
quite understand you.

451
00:20:53,260 --> 00:20:54,386
What was that number?

452
00:20:54,386 --> 00:20:54,885
32.

453
00:20:58,020 --> 00:21:00,070
So what did I do wrong?

454
00:21:00,070 --> 00:21:01,340
Tell me why.

455
00:21:01,340 --> 00:21:02,253
Yes, sir.

456
00:21:02,253 --> 00:21:04,930
AUDIENCE: Your customers
didn't like it.

457
00:21:04,930 --> 00:21:07,690
BOB JONES: My customers
didn't like it.

458
00:21:07,690 --> 00:21:10,260
Tell me more about that.

459
00:21:10,260 --> 00:21:11,855
What didn't they like?

460
00:21:11,855 --> 00:21:14,180
AUDIENCE: They didn't
like the Regain.

461
00:21:14,180 --> 00:21:16,950
They were happy with
the liquid product.

462
00:21:16,950 --> 00:21:19,200
BOB JONES: They were happy
with the liquid supplement.

463
00:21:19,200 --> 00:21:21,010
That's a perfectly
plausible answer,

464
00:21:21,010 --> 00:21:22,715
but it's not the right one.

465
00:21:22,715 --> 00:21:25,837
It's a very good speculation,
happens not to be the problem.

466
00:21:25,837 --> 00:21:26,420
Go ahead, sir.

467
00:21:26,420 --> 00:21:27,450
AUDIENCE: Taste?

468
00:21:27,450 --> 00:21:29,830
BOB JONES: Taste, well
that was a factor.

469
00:21:29,830 --> 00:21:31,380
We thought it
tasted pretty good.

470
00:21:31,380 --> 00:21:34,200
But it turns out when your
kidneys fail, something shifts

471
00:21:34,200 --> 00:21:39,190
in your palate and protein
tastes like spoiled meat.

472
00:21:39,190 --> 00:21:42,470
Oops, that was an issue.

473
00:21:42,470 --> 00:21:44,240
What was the big issue?

474
00:21:44,240 --> 00:21:48,540
What was the fundamental flaw,
the most obvious thing that I

475
00:21:48,540 --> 00:21:50,060
did wrong, in retrospect?

476
00:21:50,060 --> 00:21:51,051
Go ahead, sir.

477
00:21:51,051 --> 00:21:53,310
AUDIENCE: I have a question,
who paid for the product?

478
00:21:53,310 --> 00:21:55,440
BOB JONES: OK, that's
a pretty good question,

479
00:21:55,440 --> 00:21:57,100
who paid for the product?

480
00:21:57,100 --> 00:22:01,090
We're closing in on the issue.

481
00:22:01,090 --> 00:22:03,865
OK, here's a hint, what's
the title of my talk tonight?

482
00:22:07,260 --> 00:22:08,450
That was a clue.

483
00:22:08,450 --> 00:22:09,850
OK, so what did I do wrong?

484
00:22:09,850 --> 00:22:10,592
Yes, sir.

485
00:22:10,592 --> 00:22:12,300
AUDIENCE: You
misidentified the customer.

486
00:22:12,300 --> 00:22:14,550
BOB JONES: I
misidentified my customer.

487
00:22:14,550 --> 00:22:18,260
You may be exempted from the
rest of the course, that's

488
00:22:18,260 --> 00:22:19,150
exactly right.

489
00:22:19,150 --> 00:22:20,640
Who did I survey?

490
00:22:20,640 --> 00:22:22,710
I surveyed the clinicians.

491
00:22:22,710 --> 00:22:25,570
But they don't buy it, and they
don't put it in their mouth

492
00:22:25,570 --> 00:22:27,220
and eat it.

493
00:22:27,220 --> 00:22:28,590
Oops.

494
00:22:28,590 --> 00:22:31,360
Perfectly logical, in
the pharmaceutical world

495
00:22:31,360 --> 00:22:33,960
you call in the doc, the
doc writes a prescription.

496
00:22:33,960 --> 00:22:36,960
Doesn't matter whether
you like it or not.

497
00:22:36,960 --> 00:22:37,940
You got an ear ache.

498
00:22:37,940 --> 00:22:40,360
Take this stuff for five
days, your ear ache goes away.

499
00:22:40,360 --> 00:22:42,810
Too bad for you if it
doesn't taste good.

500
00:22:42,810 --> 00:22:46,400
If I get her to write the
prescription I'm done.

501
00:22:46,400 --> 00:22:48,090
Not in this business.

502
00:22:48,090 --> 00:22:51,740
In this business, they have
to go to the store themselves,

503
00:22:51,740 --> 00:22:54,660
pay for it with their
own money, but it,

504
00:22:54,660 --> 00:23:00,170
eat it, like it,
and buy it again.

505
00:23:00,170 --> 00:23:03,990
Well, when we finally talked
to them, they didn't want it.

506
00:23:03,990 --> 00:23:05,480
And they couldn't afford it.

507
00:23:05,480 --> 00:23:09,910
OK, who gets end-stage
renal disease?

508
00:23:09,910 --> 00:23:12,050
Well, it turns out
that 33% of them

509
00:23:12,050 --> 00:23:15,540
get there from a lifetime of
mismanaging their diabetes,

510
00:23:15,540 --> 00:23:19,060
and 44% of them get there
from a lifetime of mismanaging

511
00:23:19,060 --> 00:23:20,800
their high blood pressure.

512
00:23:20,800 --> 00:23:24,200
So 3/4 of my target
customers have not

513
00:23:24,200 --> 00:23:26,810
taken care of themselves
for their entire life.

514
00:23:26,810 --> 00:23:30,540
Why would they start now?

515
00:23:30,540 --> 00:23:33,940
Furthermore, once
your kidneys fail

516
00:23:33,940 --> 00:23:38,090
and you end up on dialysis,
a well-intended social worker

517
00:23:38,090 --> 00:23:41,890
sort will say,
well, Bob, you got

518
00:23:41,890 --> 00:23:44,740
to be in here tethered to this
machine three days a week.

519
00:23:44,740 --> 00:23:47,930
Obviously you can't work, so
I'll put you on public aid.

520
00:23:47,930 --> 00:23:50,140
Well, now you don't
have any money.

521
00:23:50,140 --> 00:23:52,290
If you do have $5,
you're going to spend it

522
00:23:52,290 --> 00:23:54,355
on beer and cigarettes,
not on my product.

523
00:23:56,890 --> 00:23:58,680
There's one final issue.

524
00:23:58,680 --> 00:24:02,870
What was our sales channel
at the IV nutrition company?

525
00:24:02,870 --> 00:24:05,060
We sold to hospitals.

526
00:24:05,060 --> 00:24:08,590
With this business, we had
to sell to retail pharmacies

527
00:24:08,590 --> 00:24:12,120
and they wouldn't carry it.

528
00:24:12,120 --> 00:24:14,270
Well, let's talk about
that for a minute,

529
00:24:14,270 --> 00:24:15,728
because that's kind
of fundamental.

530
00:24:18,210 --> 00:24:24,060
If you ever want to have a
laugh on a Saturday afternoon,

531
00:24:24,060 --> 00:24:27,180
walk up to the pharmacist
in your local Walgreens

532
00:24:27,180 --> 00:24:31,090
or CVS and say, I've got
a product you've never

533
00:24:31,090 --> 00:24:34,150
heard of from a company you've
never done business with,

534
00:24:34,150 --> 00:24:37,980
and I'd like you carry it.

535
00:24:37,980 --> 00:24:40,060
And watch as he falls on
the floor and hysterics.

536
00:24:43,210 --> 00:24:43,710
Why?

537
00:24:46,540 --> 00:24:48,720
Well I wasn't
familiar with this.

538
00:24:48,720 --> 00:24:50,540
I'd never had any
exposure to this world

539
00:24:50,540 --> 00:24:52,410
and finally, one
day, one of them

540
00:24:52,410 --> 00:24:58,540
kinda put his arm around me
and said, Bob, come here.

541
00:24:58,540 --> 00:25:01,660
See this foot of shelf space?

542
00:25:01,660 --> 00:25:02,990
It's a linear foot, right?

543
00:25:02,990 --> 00:25:06,150
I have Crest toothpaste on
that foot of shelf space.

544
00:25:06,150 --> 00:25:08,610
I have all these
complex algorithms

545
00:25:08,610 --> 00:25:10,770
that are going to tell
me, within a couple

546
00:25:10,770 --> 00:25:14,130
of dollars, how much revenue
this for a shelf space

547
00:25:14,130 --> 00:25:16,640
is going to generate
for me each month.

548
00:25:16,640 --> 00:25:18,550
Now, if I make room
for your product

549
00:25:18,550 --> 00:25:23,140
and push Crest off there,
put your product on.

550
00:25:23,140 --> 00:25:25,910
I don't want to lose any money.

551
00:25:25,910 --> 00:25:31,880
So, don't go to any trouble,
just write me a check.

552
00:25:31,880 --> 00:25:34,640
They call it slotting fees,
you might call it extortion.

553
00:25:37,750 --> 00:25:42,988
With most of the major pharmacy
chains this tab is $1 million

554
00:25:42,988 --> 00:25:46,810
a quarter, plus 6%
of your top line

555
00:25:46,810 --> 00:25:49,830
revenues, plus
guaranteed resale,

556
00:25:49,830 --> 00:25:52,620
so if it doesn't sell to ship
it back to you for full credit,

557
00:25:52,620 --> 00:25:57,780
and you put one SKU in
each of their stores

558
00:25:57,780 --> 00:26:00,600
and fill the entire
pipeline for free.

559
00:26:00,600 --> 00:26:03,620
They'll pay you, if
anybody reorders.

560
00:26:03,620 --> 00:26:05,680
It's pretty expensive.

561
00:26:05,680 --> 00:26:07,090
Well, we couldn't afford that.

562
00:26:07,090 --> 00:26:09,650
So, we had a few problems
with this business model

563
00:26:09,650 --> 00:26:11,240
that we'd put together.

564
00:26:11,240 --> 00:26:13,970
And we were trying
to show Wall Street

565
00:26:13,970 --> 00:26:16,450
we were good candidate
for a public offering.

566
00:26:16,450 --> 00:26:18,150
And if we had our
public offering

567
00:26:18,150 --> 00:26:20,750
the stock that we handed out
was going to be worth something.

568
00:26:20,750 --> 00:26:25,770
My failure was jeopardizing
our ability to do that.

569
00:26:25,770 --> 00:26:28,990
Which meant not only was I'm
the doghouse with my boss

570
00:26:28,990 --> 00:26:30,155
but also with my peers.

571
00:26:35,840 --> 00:26:37,540
And each month I
would say, well,

572
00:26:37,540 --> 00:26:39,920
you know it's taken a
little longer to take off

573
00:26:39,920 --> 00:26:40,820
than we thought.

574
00:26:40,820 --> 00:26:44,130
Give us a while to keep
moving with the sales force.

575
00:26:44,130 --> 00:26:48,500
And each month it continued
to be a train wreck

576
00:26:48,500 --> 00:26:51,836
and it went on for
an entire year.

577
00:26:51,836 --> 00:26:55,080
It ruined a year
of my life because,

578
00:26:55,080 --> 00:26:57,180
as this gentleman
said over here,

579
00:26:57,180 --> 00:26:58,975
I misidentified my customer.

580
00:27:02,680 --> 00:27:05,800
So, what did we do about it?

581
00:27:05,800 --> 00:27:07,400
Well, we learned
about inside sales.

582
00:27:07,400 --> 00:27:10,870
We said, 25% of these people
take care of themselves.

583
00:27:10,870 --> 00:27:14,230
We ought to be
able to find them.

584
00:27:14,230 --> 00:27:17,400
Furthermore, somebody
ought to pay for this.

585
00:27:17,400 --> 00:27:18,600
Let's try Medicaid.

586
00:27:18,600 --> 00:27:22,480
Now, you may or may not know
that Medicare covers you

587
00:27:22,480 --> 00:27:24,850
if you're old, it's
a federal program.

588
00:27:24,850 --> 00:27:27,830
Medicaid covers you if you're
broke, it's a state program.

589
00:27:27,830 --> 00:27:29,880
What do you think
are the chances

590
00:27:29,880 --> 00:27:35,060
that Illinois and Indiana
have the same program?

591
00:27:35,060 --> 00:27:36,470
Real slim.

592
00:27:36,470 --> 00:27:38,590
We got it reimbursed
in 40 states.

593
00:27:38,590 --> 00:27:43,520
It was almost as fun as 40
consecutive dental extractions.

594
00:27:46,580 --> 00:27:48,330
I said, this is
just a god-awful way

595
00:27:48,330 --> 00:27:50,930
to make a living,
sold the business.

596
00:27:54,530 --> 00:27:56,820
Parenthetically, yes,
we did well enough

597
00:27:56,820 --> 00:27:59,160
in our group with
our other products

598
00:27:59,160 --> 00:28:02,780
that we compensated for
the shortfall with this.

599
00:28:02,780 --> 00:28:05,510
And when we sold the business,
we didn't make any money

600
00:28:05,510 --> 00:28:07,110
but we recouped our investment.

601
00:28:07,110 --> 00:28:12,640
So I escaped financially
intact, spiritually

602
00:28:12,640 --> 00:28:17,730
battered and abused, much
wiser, but considerably sadder.

603
00:28:20,360 --> 00:28:21,970
But let's fast-forward
a couple years.

604
00:28:21,970 --> 00:28:25,120
I did two more of these
things and got better at it

605
00:28:25,120 --> 00:28:27,970
and after a while got
recruited by a group of docs

606
00:28:27,970 --> 00:28:29,680
at Harvard Med School.

607
00:28:29,680 --> 00:28:32,490
And they hauled me
in from California,

608
00:28:32,490 --> 00:28:34,940
tough sales pitch to my family.

609
00:28:34,940 --> 00:28:36,840
Because we were in
Southern California.

610
00:28:36,840 --> 00:28:39,955
They said, it snows
in New England, right?

611
00:28:39,955 --> 00:28:40,860
It does.

612
00:28:43,550 --> 00:28:45,560
So we launched a new
company with these guys.

613
00:28:45,560 --> 00:28:49,010
We looked over all the stuff
that they were working on,

614
00:28:49,010 --> 00:28:51,300
figured out none of
it was going to come

615
00:28:51,300 --> 00:28:54,060
to market before we
ran out of money,

616
00:28:54,060 --> 00:28:58,240
said well how you guys
feel about diabetes?

617
00:28:58,240 --> 00:29:00,450
The answer was, well,
we like diabetes.

618
00:29:03,680 --> 00:29:08,290
OK, well, we need to be in
a field that's big enough

619
00:29:08,290 --> 00:29:09,930
to get us noticed
and a need that's

620
00:29:09,930 --> 00:29:12,710
small enough that we can handle
it with one poor underpaid

621
00:29:12,710 --> 00:29:14,430
employee.

622
00:29:14,430 --> 00:29:17,260
So I had tuition that
there was something they

623
00:29:17,260 --> 00:29:20,500
needed and weren't getting.

624
00:29:20,500 --> 00:29:23,200
Statistics, at the time
there were 10 million people

625
00:29:23,200 --> 00:29:28,720
diagnosed with diabetes, 4
million of them used insulin.

626
00:29:28,720 --> 00:29:30,430
You have diabetes and
you eat something,

627
00:29:30,430 --> 00:29:33,790
your blood glucose goes
up and it stays up,

628
00:29:33,790 --> 00:29:36,980
because insulin incorporates
it into the cells

629
00:29:36,980 --> 00:29:38,390
and brings it back down.

630
00:29:38,390 --> 00:29:40,280
And if your body stops
generating insulin,

631
00:29:40,280 --> 00:29:42,770
or if you stop being
sensitive to insulin,

632
00:29:42,770 --> 00:29:46,090
then it stays up and causes
all manner of problems.

633
00:29:46,090 --> 00:29:48,040
4 million of these
10 million people

634
00:29:48,040 --> 00:29:50,050
injected insulin to
lower their blood sugar.

635
00:29:50,050 --> 00:29:55,210
And if you get it wrong your
blood sugar goes too low.

636
00:29:55,210 --> 00:29:58,510
Well, most of the publicity
for the damage that's

637
00:29:58,510 --> 00:30:01,190
done from diabetes comes
from it being too high.

638
00:30:01,190 --> 00:30:04,380
It's a leading cause of
blindness, kidney failure,

639
00:30:04,380 --> 00:30:06,250
and peripheral amputations.

640
00:30:06,250 --> 00:30:07,125
So it's catastrophic.

641
00:30:09,730 --> 00:30:12,790
Introducing tight control--
that's three meals a day,

642
00:30:12,790 --> 00:30:16,030
three small snacks a day,
regular injections of insulin,

643
00:30:16,030 --> 00:30:17,870
restricts the
bandwidth, good thing

644
00:30:17,870 --> 00:30:23,200
to do-- triples the incidence
of low blood glucose.

645
00:30:23,200 --> 00:30:28,190
And it must be treated right
away, because you faint,

646
00:30:28,190 --> 00:30:32,340
which is bad if you're
stuck in a traffic jam.

647
00:30:32,340 --> 00:30:36,800
And it's particularly bad if it
hits you while you're asleep.

648
00:30:36,800 --> 00:30:39,644
If you're awake, you start
feeling clammy and tremulous,

649
00:30:39,644 --> 00:30:41,310
and you know you've
got a couple minutes

650
00:30:41,310 --> 00:30:43,930
to go drink some orange juice,
or eat a candy, or whatever,

651
00:30:43,930 --> 00:30:46,440
and elevate your
blood glucose again.

652
00:30:46,440 --> 00:30:51,680
But if you're asleep
you may not wake up.

653
00:30:51,680 --> 00:30:54,250
OK so what do they do about it?

654
00:30:54,250 --> 00:30:57,940
Well, typically, big injection
of insulin, big nighttime

655
00:30:57,940 --> 00:31:00,460
snack, the hope, that the
two will balance each other

656
00:31:00,460 --> 00:31:02,960
in the course of the evening.

657
00:31:02,960 --> 00:31:06,440
Unfortunately it doesn't
work because everything

658
00:31:06,440 --> 00:31:09,430
in the nighttime snack turns
into glucose at the same time.

659
00:31:09,430 --> 00:31:12,490
So the spike is higher,
but the duration no longer.

660
00:31:12,490 --> 00:31:17,250
Translation, grossly
oversimplified,

661
00:31:17,250 --> 00:31:19,710
is that the food runs out at
about 2:00 in the morning,

662
00:31:19,710 --> 00:31:21,150
and the insulin
is still working,

663
00:31:21,150 --> 00:31:23,870
and from 2:00 am until you
get up is the danger zone.

664
00:31:27,220 --> 00:31:30,540
We had a bunch of focus groups.

665
00:31:30,540 --> 00:31:34,220
I lost control of myself, threw
the moderator out of the room,

666
00:31:34,220 --> 00:31:37,280
walked in, and said,
well, now that we've

667
00:31:37,280 --> 00:31:39,890
explained this stuff
to you, tell me

668
00:31:39,890 --> 00:31:41,660
what your greatest
fear really is.

669
00:31:41,660 --> 00:31:43,980
What do you actually
worry about?

670
00:31:43,980 --> 00:31:46,600
And they all sort
of said, well, I'm

671
00:31:46,600 --> 00:31:48,810
afraid I'll die in my sleep.

672
00:31:48,810 --> 00:31:51,610
I sleep in that La-Z-Boy
in my living room,

673
00:31:51,610 --> 00:31:54,590
or I have alarm clock goes
off every hour or two,

674
00:31:54,590 --> 00:31:57,655
just to make sure I don't have
a good night's sleep, ever.

675
00:31:57,655 --> 00:32:00,520
I thought, well,
that's gripping.

676
00:32:00,520 --> 00:32:04,160
And the parents of
kids who had diabetes

677
00:32:04,160 --> 00:32:06,450
say, every night I
worry about my daughter.

678
00:32:06,450 --> 00:32:11,130
I go and I check on Jessica
at 2:00 in the morning.

679
00:32:11,130 --> 00:32:14,890
My wife and I stand there
and say, is she awake?

680
00:32:14,890 --> 00:32:17,672
I mean, is she asleep,
or is she in a coma?

681
00:32:17,672 --> 00:32:18,490
Well I don't know.

682
00:32:18,490 --> 00:32:21,355
We say, Jessica, wake up.

683
00:32:21,355 --> 00:32:22,300
What, what?

684
00:32:22,300 --> 00:32:22,950
You all right?

685
00:32:22,950 --> 00:32:23,741
Yeah, I was asleep.

686
00:32:23,741 --> 00:32:25,570
Good, go back to sleep.

687
00:32:25,570 --> 00:32:28,640
It sounds comical but
it's quite gripping.

688
00:32:28,640 --> 00:32:32,330
We said, well, we've identified
something emotional here.

689
00:32:32,330 --> 00:32:35,950
So we put together a
combination of nutrients

690
00:32:35,950 --> 00:32:40,170
that turned into
glucose consecutively,

691
00:32:40,170 --> 00:32:44,154
sucrose, protein,
uncooked cornstarch.

692
00:32:44,154 --> 00:32:46,070
Being fundamentally a
marketing guy, of course

693
00:32:46,070 --> 00:32:48,760
I dubbed it
timed-release glucose.

694
00:32:48,760 --> 00:32:53,297
And those ingredients
are in a birthday cake.

695
00:32:53,297 --> 00:32:55,130
But we managed to get
a patent on it anyway.

696
00:32:58,080 --> 00:33:02,050
Because if you use those
ingredients in conjunction

697
00:33:02,050 --> 00:33:03,760
with materials
that say diabetes,

698
00:33:03,760 --> 00:33:04,945
you're violating my patent.

699
00:33:04,945 --> 00:33:07,690
How about that?

700
00:33:07,690 --> 00:33:10,270
Novel and non-obvious to
a person of ordinary skill

701
00:33:10,270 --> 00:33:13,680
in the art, and you have one
of the great experts as one

702
00:33:13,680 --> 00:33:16,600
of your resources, that's
your host, Joe Hadzima.

703
00:33:16,600 --> 00:33:19,810
I hope you'll talk
about this a bit later.

704
00:33:19,810 --> 00:33:26,620
So we did make it taste good,
tasted sort of like fudge.

705
00:33:29,140 --> 00:33:31,250
And we gave it a
non-medical name.

706
00:33:31,250 --> 00:33:32,700
Would anybody care to guess why?

707
00:33:36,430 --> 00:33:39,290
I heard a murmur, but
I don't see a hand.

708
00:33:39,290 --> 00:33:40,860
Yes ma'am.

709
00:33:40,860 --> 00:33:41,850
AUDIENCE: [INAUDIBLE]

710
00:33:45,320 --> 00:33:48,030
BOB JONES: That is true but
that was not the explanation.

711
00:33:48,030 --> 00:33:48,938
Sir?

712
00:33:48,938 --> 00:33:50,672
AUDIENCE: Bypass FDA?

713
00:33:50,672 --> 00:33:51,380
BOB JONES: Again?

714
00:33:51,380 --> 00:33:54,550
AUDIENCE: Does that mean you
do not have to go through FDA?

715
00:33:54,550 --> 00:33:56,670
BOB JONES: Well, we
didn't have to go to FDA

716
00:33:56,670 --> 00:33:59,630
but that's not why we gave
it a non-medical name.

717
00:33:59,630 --> 00:34:00,150
Sir?

718
00:34:00,150 --> 00:34:02,108
AUDIENCE: Because you're
trying to reduce fear?

719
00:34:04,340 --> 00:34:07,590
BOB JONES: Yes, but
perhaps not the fear

720
00:34:07,590 --> 00:34:10,850
that our audience would think.

721
00:34:10,850 --> 00:34:13,500
We talked to our
patients, our customers,

722
00:34:13,500 --> 00:34:15,520
something I'm going to
encourage you to do.

723
00:34:15,520 --> 00:34:19,060
And they said, Bob,
I'm not a diabetic.

724
00:34:19,060 --> 00:34:21,150
I'm a person who has diabetes.

725
00:34:21,150 --> 00:34:22,739
I'm a lawyer.

726
00:34:22,739 --> 00:34:24,620
I'm a banker.

727
00:34:24,620 --> 00:34:25,949
I'm a professional.

728
00:34:25,949 --> 00:34:28,170
I have a condition,
but I manage it,

729
00:34:28,170 --> 00:34:31,280
just like you might have a
headache, but you manage it.

730
00:34:31,280 --> 00:34:34,630
It's nobody's damn business
whether or not I have diabetes.

731
00:34:34,630 --> 00:34:37,219
And if I end up in a meeting
that lasts half the night,

732
00:34:37,219 --> 00:34:39,630
and I have to
consume your product,

733
00:34:39,630 --> 00:34:42,179
I don't want the other people
around the conference table

734
00:34:42,179 --> 00:34:43,783
knowing I'm medicating.

735
00:34:43,783 --> 00:34:44,949
It's none of their business.

736
00:34:49,350 --> 00:34:52,110
Thank you.

737
00:34:52,110 --> 00:34:55,290
Furthermore, I had been
arm wrestling with the FDA

738
00:34:55,290 --> 00:34:59,200
because I wanted to put "for
diabetes" on the package.

739
00:34:59,200 --> 00:35:01,970
And what our customers told
me was, if you do that,

740
00:35:01,970 --> 00:35:04,590
I won't buy the product.

741
00:35:04,590 --> 00:35:07,970
So I was trying very hard to
do the one thing that would

742
00:35:07,970 --> 00:35:10,260
have scuttled the business.

743
00:35:10,260 --> 00:35:14,530
Fortunately, our customers
advised us and we listened.

744
00:35:14,530 --> 00:35:18,010
And they said, our
kids have sleepovers,

745
00:35:18,010 --> 00:35:21,170
and they have to do
one of these at night.

746
00:35:21,170 --> 00:35:24,260
And they would rather
eat worms than be

747
00:35:24,260 --> 00:35:25,940
different from their peers.

748
00:35:25,940 --> 00:35:27,420
So make it look
like something they

749
00:35:27,420 --> 00:35:30,240
can offer their friends,
like an energy bar.

750
00:35:30,240 --> 00:35:32,700
Timed-release glucose, ooh.

751
00:35:32,700 --> 00:35:34,760
Hey, guys, you want one?

752
00:35:34,760 --> 00:35:37,565
So I said, OK, we're bringing
some consumer marketing

753
00:35:37,565 --> 00:35:40,700
in to all this science.

754
00:35:40,700 --> 00:35:43,760
So this time around instead
of just talking to clinicians,

755
00:35:43,760 --> 00:35:46,410
they were important but
they were not sufficient,

756
00:35:46,410 --> 00:35:49,610
we talked to parents,
we talked to patients.

757
00:35:49,610 --> 00:35:52,140
We went to all these things
at elementary schools

758
00:35:52,140 --> 00:35:54,930
that parents of kids with
diabetes would attend.

759
00:35:54,930 --> 00:35:56,760
And you know those
little, bitty chairs?

760
00:35:56,760 --> 00:35:58,780
Sat there with our knees
banging against things

761
00:35:58,780 --> 00:36:01,250
and took lots of moms to lunch.

762
00:36:01,250 --> 00:36:04,160
We learned an awful
lot about this.

763
00:36:04,160 --> 00:36:06,230
How many of you know
someone who has diabetes?

764
00:36:10,220 --> 00:36:13,610
It's really important to go
have these conversations.

765
00:36:13,610 --> 00:36:17,610
And finally, I said, well,
what kind of advertising

766
00:36:17,610 --> 00:36:18,730
do these people see?

767
00:36:18,730 --> 00:36:22,060
There are all sorts of
diabetes magazines out there.

768
00:36:22,060 --> 00:36:23,930
So I bought a half
a dozen of them.

769
00:36:23,930 --> 00:36:28,140
And the typical ad was on the
back cover, a full page blow

770
00:36:28,140 --> 00:36:32,030
up, of a hypodermic needle.

771
00:36:32,030 --> 00:36:35,030
Just the thing to make you
feel warm and resonant, right?

772
00:36:35,030 --> 00:36:36,530
I mean the copy
would say, my needle

773
00:36:36,530 --> 00:36:37,760
is sharper than his needle.

774
00:36:37,760 --> 00:36:41,440
It doesn't hurt
as much, buy mine.

775
00:36:41,440 --> 00:36:43,610
I said, ew!

776
00:36:43,610 --> 00:36:45,810
So we put together an
ad with this agency

777
00:36:45,810 --> 00:36:48,240
that had flying pigs.

778
00:36:48,240 --> 00:36:51,380
It was just so ludicrously
out of place in this magazine,

779
00:36:51,380 --> 00:36:53,450
nobody turned the page.

780
00:36:53,450 --> 00:36:57,400
And there was some kind of
lame copy about sleep perchance

781
00:36:57,400 --> 00:36:59,150
to dream, et cetera, right?

782
00:36:59,150 --> 00:37:01,100
Everybody read it.

783
00:37:01,100 --> 00:37:04,250
We ran a little violator
across the corner of the ad.

784
00:37:04,250 --> 00:37:07,850
It says, for a free sample
call 1-800 and our number.

785
00:37:10,380 --> 00:37:12,790
Stuff started happening.

786
00:37:12,790 --> 00:37:16,190
We were at 238 Main
Street, up above

787
00:37:16,190 --> 00:37:20,996
what was, at the time, a barber
shop, in a little ratty office.

788
00:37:20,996 --> 00:37:24,250
When we started getting
100 calls a day,

789
00:37:24,250 --> 00:37:26,390
we needed more phones.

790
00:37:26,390 --> 00:37:29,060
200 calls a day, we
said, jeez, we better

791
00:37:29,060 --> 00:37:31,640
get some people to
answer the phone.

792
00:37:31,640 --> 00:37:33,890
Kendall Square, of
course, has more geniuses

793
00:37:33,890 --> 00:37:35,730
per square foot
than most places.

794
00:37:35,730 --> 00:37:38,930
So we basically just went
downstairs with a mirror,

795
00:37:38,930 --> 00:37:40,534
and we held it under
people's noses,

796
00:37:40,534 --> 00:37:42,450
and if it fogged up we
said, would like a job?

797
00:37:45,660 --> 00:37:47,190
And filled the office.

798
00:37:47,190 --> 00:37:49,880
300 calls a day,
we said, God, we

799
00:37:49,880 --> 00:37:51,900
can't keep track of these
people on index cards,

800
00:37:51,900 --> 00:37:53,470
we better install a database.

801
00:37:53,470 --> 00:37:55,520
500 calls a day.

802
00:37:55,520 --> 00:37:59,750
500 calls a day, we went off
and rented some of these tables

803
00:37:59,750 --> 00:38:01,934
and stuck like three
computers on the table.

804
00:38:01,934 --> 00:38:04,350
And we got all these people
sitting there, elbow to elbow.

805
00:38:04,350 --> 00:38:08,450
We said, I think
we're onto something.

806
00:38:08,450 --> 00:38:10,400
I'm going to fast-forward
to something here.

807
00:38:10,400 --> 00:38:13,740
We ended up in all of
the major pharmacy chains

808
00:38:13,740 --> 00:38:15,760
and all of the
major wholesalers,

809
00:38:15,760 --> 00:38:17,800
I'll tell you about
that, and the amount

810
00:38:17,800 --> 00:38:22,780
we paid for slotting
fees was zero.

811
00:38:22,780 --> 00:38:26,470
Unprecedented, in our field.

812
00:38:26,470 --> 00:38:30,040
I think the lesson is that
understanding our customer, as

813
00:38:30,040 --> 00:38:34,090
opposed to with Regain-- thank
you for your observation--

814
00:38:34,090 --> 00:38:38,170
helped us build a better product
and a successful business.

815
00:38:38,170 --> 00:38:39,400
So how did we reach them?

816
00:38:39,400 --> 00:38:43,620
Well, we said, who
influences them?

817
00:38:43,620 --> 00:38:44,910
Who's our customer?

818
00:38:44,910 --> 00:38:46,560
Who's their influencer?

819
00:38:46,560 --> 00:38:48,220
How do we reach the influencer?

820
00:38:48,220 --> 00:38:50,680
Where do they spend their money?

821
00:38:50,680 --> 00:38:54,455
And we discovered--
all right back up.

822
00:38:54,455 --> 00:38:56,520
I hate to be crude but
there are some people

823
00:38:56,520 --> 00:38:58,300
who have diabetes who
are just determined

824
00:38:58,300 --> 00:39:01,220
not to take care of themselves.

825
00:39:01,220 --> 00:39:04,320
So should we spend time and
effort trying to reach them?

826
00:39:07,990 --> 00:39:10,697
So how do we find the ones
who do take care of themselves

827
00:39:10,697 --> 00:39:12,280
and, furthermore,
are willing to spend

828
00:39:12,280 --> 00:39:13,520
a little money on their care?

829
00:39:13,520 --> 00:39:15,540
Answer, they're
seeing a clinician.

830
00:39:15,540 --> 00:39:18,700
The clinician is called a
Certified Diabetes Educator.

831
00:39:18,700 --> 00:39:21,530
And their association, I
know this will astonish you,

832
00:39:21,530 --> 00:39:25,710
is the American Association
of Diabetes Educators.

833
00:39:25,710 --> 00:39:27,360
And if you go on
their website, there's

834
00:39:27,360 --> 00:39:30,820
little tab, locate an educator.

835
00:39:30,820 --> 00:39:34,370
You put in 02142 out
comes a list, names,

836
00:39:34,370 --> 00:39:35,940
contact information, et cetera.

837
00:39:35,940 --> 00:39:41,797
We said, well, what do
the educators worry about?

838
00:39:41,797 --> 00:39:43,380
We know what the
patients worry about.

839
00:39:43,380 --> 00:39:45,550
Patients worry they're
going to die in their sleep.

840
00:39:45,550 --> 00:39:49,520
They go see an educator, what
does the educator worry about?

841
00:39:49,520 --> 00:39:51,630
Who would care to speculate?

842
00:39:51,630 --> 00:39:54,230
What do the diabetes
educators worry about

843
00:39:54,230 --> 00:39:58,875
that we could hook
onto in a phone call?

844
00:39:58,875 --> 00:40:01,350
AUDIENCE: That their patients
are gonna die in their sleep?

845
00:40:01,350 --> 00:40:02,766
BOB JONES: Well
that's one, they'd

846
00:40:02,766 --> 00:40:04,550
like to know that
what you have works.

847
00:40:04,550 --> 00:40:05,900
Thank you.

848
00:40:05,900 --> 00:40:07,370
What else?

849
00:40:07,370 --> 00:40:09,790
When I ask them,
what's your greatest

850
00:40:09,790 --> 00:40:13,280
professional frustration?

851
00:40:13,280 --> 00:40:15,190
Anybody care to guess
what their answer was?

852
00:40:19,200 --> 00:40:20,032
Yes, sir.

853
00:40:20,032 --> 00:40:21,390
AUDIENCE: People weren't
following the advice?

854
00:40:21,390 --> 00:40:23,360
BOB JONES: Oh my god,
that's absolutely right.

855
00:40:23,360 --> 00:40:26,090
I tell them what to do,
and they don't do it!

856
00:40:26,090 --> 00:40:28,220
Drives me crazy.

857
00:40:28,220 --> 00:40:30,680
We hear it over and over
again, single greatest

858
00:40:30,680 --> 00:40:33,615
professional frustration,
the medical term, of course,

859
00:40:33,615 --> 00:40:35,450
is compliance.

860
00:40:35,450 --> 00:40:38,190
They don't comply.

861
00:40:38,190 --> 00:40:45,330
So we said, well, we need to
figure out how to address that.

862
00:40:45,330 --> 00:40:49,840
So we'd call them up, having
located and-- by the way,

863
00:40:49,840 --> 00:40:53,570
I know these days an
increasing number of people

864
00:40:53,570 --> 00:40:55,700
are terribly uncomfortable
picking up the phone

865
00:40:55,700 --> 00:40:58,500
and calling someone
without five emails

866
00:40:58,500 --> 00:41:02,050
to set up the appointment first.

867
00:41:02,050 --> 00:41:06,800
So this may strike you as
emotionally difficult to just

868
00:41:06,800 --> 00:41:11,980
make cold calls, but we did.

869
00:41:11,980 --> 00:41:15,377
And when they'd answer
the phone, we'd say,

870
00:41:15,377 --> 00:41:17,710
our company's worked with a
group of docs out of Harvard

871
00:41:17,710 --> 00:41:20,030
Med School and
we've invented what

872
00:41:20,030 --> 00:41:22,840
looks like a candy
bar for addressing

873
00:41:22,840 --> 00:41:25,290
nocturnal hypoglycemia.

874
00:41:25,290 --> 00:41:28,550
And the patients love it.

875
00:41:28,550 --> 00:41:30,242
Do you have 30 seconds?

876
00:41:34,310 --> 00:41:36,540
Say again?

877
00:41:36,540 --> 00:41:37,830
And we'd talk to them.

878
00:41:37,830 --> 00:41:40,190
The last thing we would
say in the conversation

879
00:41:40,190 --> 00:41:44,082
is, who else that you
know should we call?

880
00:41:44,082 --> 00:41:46,290
Oh, you've got to call my
friend, Susie Cream-cheese,

881
00:41:46,290 --> 00:41:48,260
she would absolutely love this.

882
00:41:48,260 --> 00:41:50,150
So we'd call Susie
Cream-cheese and we'd say,

883
00:41:50,150 --> 00:41:52,810
Susie, Janet says we
ought to call you.

884
00:41:52,810 --> 00:41:54,160
Oh, well, how's Janet?

885
00:41:54,160 --> 00:41:56,920
Well, you know, her
dog's got a hip problem,

886
00:41:56,920 --> 00:41:59,260
going to go in for surgery,
but other than that Jan--

887
00:41:59,260 --> 00:42:00,820
Oh, she loves that dog.

888
00:42:00,820 --> 00:42:01,860
Yeah, she does.

889
00:42:01,860 --> 00:42:04,200
Anyway, she said we should call.

890
00:42:04,200 --> 00:42:05,690
Building relationships, right?

891
00:42:05,690 --> 00:42:07,290
So we started doing this stuff.

892
00:42:07,290 --> 00:42:11,080
Pretty soon we ended up
with several thousand,

893
00:42:11,080 --> 00:42:14,750
highly trained clinicians
talking about our product

894
00:42:14,750 --> 00:42:16,590
on our behalf.

895
00:42:16,590 --> 00:42:19,070
And their reward
was not financial.

896
00:42:19,070 --> 00:42:22,186
Their reward was that their
patients came back to see them

897
00:42:22,186 --> 00:42:23,980
and said this stuff's awesome.

898
00:42:23,980 --> 00:42:26,109
And they complied.

899
00:42:26,109 --> 00:42:27,400
So we built a little flowchart.

900
00:42:27,400 --> 00:42:30,030
We said, we have a
sales force, and we're

901
00:42:30,030 --> 00:42:31,950
calling on the educators.

902
00:42:31,950 --> 00:42:33,710
The educators, if
we do this right,

903
00:42:33,710 --> 00:42:36,560
will tell their patients.

904
00:42:36,560 --> 00:42:40,120
The patients will call
us and buy the product.

905
00:42:40,120 --> 00:42:42,950
Well that's attractive,
but it's not

906
00:42:42,950 --> 00:42:47,050
the path to financial heaven,
because there's this group out

907
00:42:47,050 --> 00:42:49,440
there called retailers.

908
00:42:49,440 --> 00:42:52,650
How do we get into
the retailers?

909
00:42:52,650 --> 00:42:55,910
Maybe we could have the
educators call the retailers.

910
00:42:55,910 --> 00:42:58,540
Maybe we could have the
patients call the retailers.

911
00:42:58,540 --> 00:43:01,120
Maybe then we could
call the retailers

912
00:43:01,120 --> 00:43:03,177
and we'd make more money.

913
00:43:05,860 --> 00:43:10,600
Well, this weekend, if
you have the opportunity,

914
00:43:10,600 --> 00:43:12,760
stand in a pharmacy and
watch the pharmacist

915
00:43:12,760 --> 00:43:14,710
when they answer the phone.

916
00:43:14,710 --> 00:43:19,179
They've got this phone tucked
in their ear, pharmacy?

917
00:43:19,179 --> 00:43:19,970
You got 12 seconds.

918
00:43:28,130 --> 00:43:32,520
So how did we address this?

919
00:43:32,520 --> 00:43:36,987
Well people would call, we'd
send them a free sample.

920
00:43:36,987 --> 00:43:38,820
By the way, we had to
put in some questions,

921
00:43:38,820 --> 00:43:41,270
because we made it under
one of these web pages that

922
00:43:41,270 --> 00:43:45,534
said this outfit's
giving away free fudge.

923
00:43:45,534 --> 00:43:47,950
So we got plenty of phone calls
from people who were never

924
00:43:47,950 --> 00:43:49,990
going to be our customer.

925
00:43:49,990 --> 00:43:51,690
So once we figured
that out we had

926
00:43:51,690 --> 00:43:54,220
start asking some
qualified questions,

927
00:43:54,220 --> 00:43:56,480
tell us what brand of insulin
you're typically using.

928
00:43:56,480 --> 00:43:58,570
If we heard, uh,
oh, I'm sorry, we

929
00:43:58,570 --> 00:44:00,050
don't have anything
for you, next.

930
00:44:00,050 --> 00:44:00,580
Right?

931
00:44:00,580 --> 00:44:05,040
But we'd send them a
sample, we'd follow it up.

932
00:44:05,040 --> 00:44:06,230
Did you get our product?

933
00:44:06,230 --> 00:44:06,730
Yes.

934
00:44:06,730 --> 00:44:08,370
Did you wake up dead?

935
00:44:08,370 --> 00:44:09,070
No.

936
00:44:09,070 --> 00:44:11,870
Must have worked.

937
00:44:11,870 --> 00:44:12,810
Guys, that was a joke.

938
00:44:19,710 --> 00:44:22,590
We're providing free shipping
if you care to order.

939
00:44:22,590 --> 00:44:23,660
OK, love it.

940
00:44:23,660 --> 00:44:25,960
We'd take their order,
we'd track it carefully,

941
00:44:25,960 --> 00:44:27,840
we'd call back and say,
aren't you about out?

942
00:44:27,840 --> 00:44:28,881
Don't you need some more?

943
00:44:28,881 --> 00:44:31,940
Why, yes.

944
00:44:31,940 --> 00:44:33,750
Then one day, we'd
say, you know,

945
00:44:33,750 --> 00:44:36,662
this free shipping
is coming to a close.

946
00:44:36,662 --> 00:44:38,870
And we're going to have to
start charging you for it.

947
00:44:38,870 --> 00:44:40,870
And I know you go someplace
to buy your insulin,

948
00:44:40,870 --> 00:44:42,940
wouldn't it be more
convenient to buy

949
00:44:42,940 --> 00:44:45,140
the stuff at the same
place you buy your insulin?

950
00:44:45,140 --> 00:44:46,630
Well, yeah it would.

951
00:44:46,630 --> 00:44:47,765
OK, we did some homework.

952
00:44:51,280 --> 00:44:53,760
There was about 3% of the
people in the country,

953
00:44:53,760 --> 00:44:55,680
at the time, that had diabetes.

954
00:44:55,680 --> 00:45:00,210
And they were worth about 24%
of retail pharmacy purchases.

955
00:45:00,210 --> 00:45:03,600
Because you go in and buy
toothpaste and a greeting card,

956
00:45:03,600 --> 00:45:07,750
they go in and buy a blood
glucose monitor, strips, right?

957
00:45:07,750 --> 00:45:09,720
And they're worth
a lot of money.

958
00:45:09,720 --> 00:45:13,300
So we'd say, well,
why don't we set up

959
00:45:13,300 --> 00:45:16,840
so you can pick it up wherever
it is you buy your insulin?

960
00:45:16,840 --> 00:45:17,740
Where is that?

961
00:45:17,740 --> 00:45:19,712
And they'd say, oh,
Jost's Pharmacy.

962
00:45:19,712 --> 00:45:21,420
We'd say, would you
mind if we call Jost?

963
00:45:21,420 --> 00:45:22,430
No, no, no.

964
00:45:22,430 --> 00:45:25,250
You tell that turkey that
Mabel wants to buy this stuff.

965
00:45:25,250 --> 00:45:26,950
I've been buying
from him for years.

966
00:45:26,950 --> 00:45:30,220
Well hold on a second, let
me get you his phone number.

967
00:45:30,220 --> 00:45:34,790
Right, so, Jost would answer
the phone, we'd say, Jost,

968
00:45:34,790 --> 00:45:36,380
we've just been
selling our product

969
00:45:36,380 --> 00:45:38,930
to five of your customers
that have diabetes.

970
00:45:38,930 --> 00:45:42,070
They want to buy it from
you, and you don't have it.

971
00:45:42,070 --> 00:45:43,320
What?

972
00:45:43,320 --> 00:45:45,000
Who is this?

973
00:45:45,000 --> 00:45:46,590
OK, let me back up, Jost.

974
00:45:46,590 --> 00:45:48,930
And I'd walk him through,
here's the five customers.

975
00:45:48,930 --> 00:45:51,081
So what can we do about that?

976
00:45:51,081 --> 00:45:53,580
Jost would say, well, you know,
we probably ought to have it

977
00:45:53,580 --> 00:45:56,170
but I can't possibly buy this
without corporate approval.

978
00:45:56,170 --> 00:45:58,020
I mean, we're just
one Walgreens, right?

979
00:45:58,020 --> 00:45:59,603
I mean, you've got
to go to Deerfield,

980
00:45:59,603 --> 00:46:01,850
to corporate headquarters.

981
00:46:01,850 --> 00:46:03,660
Jost, we know that.

982
00:46:03,660 --> 00:46:07,650
But we also know that there's
a level below which you can

983
00:46:07,650 --> 00:46:09,320
buy without corporate approval.

984
00:46:09,320 --> 00:46:10,690
That number's probably $100.

985
00:46:10,690 --> 00:46:13,350
Well, yes, it is.

986
00:46:13,350 --> 00:46:16,340
Well, you'll be pleased to know
that our initial starter pack

987
00:46:16,340 --> 00:46:20,070
costs $99.95.

988
00:46:20,070 --> 00:46:21,972
And I can take your
purchase order right now.

989
00:46:21,972 --> 00:46:23,430
And by the way, if
it doesn't sell,

990
00:46:23,430 --> 00:46:25,650
you don't need to ship it
back to us for a refund.

991
00:46:25,650 --> 00:46:26,816
We'll take your word for it.

992
00:46:26,816 --> 00:46:27,900
Throw it in the trash.

993
00:46:27,900 --> 00:46:30,430
We'll send you back the money.

994
00:46:30,430 --> 00:46:35,120
OK, nobody ever
mentioned slotting fees.

995
00:46:35,120 --> 00:46:36,740
Why not?

996
00:46:36,740 --> 00:46:39,060
What did we have that
gave us the ability

997
00:46:39,060 --> 00:46:40,900
to trample all over
that convention?

998
00:46:40,900 --> 00:46:43,150
AUDIENCE: Customers?

999
00:46:43,150 --> 00:46:45,580
BOB JONES: Who said customers?

1000
00:46:45,580 --> 00:46:46,996
Excuse me.

1001
00:46:46,996 --> 00:46:48,890
While my heart beats.

1002
00:46:48,890 --> 00:46:51,170
That's exactly right.

1003
00:46:51,170 --> 00:46:58,560
So, we've talked
about this a bit

1004
00:46:58,560 --> 00:47:00,760
Oh, you know, there was
a neat thing we did.

1005
00:47:00,760 --> 00:47:02,740
A lot of these educators
would have a class

1006
00:47:02,740 --> 00:47:04,400
on Saturdays, one
Saturday a month,

1007
00:47:04,400 --> 00:47:05,950
they'd bring in all
of their people,

1008
00:47:05,950 --> 00:47:09,829
talk about new developments
in diabetes care.

1009
00:47:09,829 --> 00:47:11,370
And like everybody
who's got to write

1010
00:47:11,370 --> 00:47:14,050
a monthly column, or
a blog, or whatever,

1011
00:47:14,050 --> 00:47:15,900
it's hard to come
up with content.

1012
00:47:15,900 --> 00:47:18,690
So we'd say, well, when's
your next one of these?

1013
00:47:18,690 --> 00:47:20,342
Oh, it's a week and a half.

1014
00:47:20,342 --> 00:47:22,050
Do you have your whole
agenda set up yet?

1015
00:47:22,050 --> 00:47:22,902
No.

1016
00:47:22,902 --> 00:47:24,860
If you like this, would
this be something worth

1017
00:47:24,860 --> 00:47:28,190
talking about to your
patient population?

1018
00:47:28,190 --> 00:47:30,160
Well, yeah, actually.

1019
00:47:30,160 --> 00:47:32,970
Well we'll send you the stuff,
we'll send you the literature,

1020
00:47:32,970 --> 00:47:35,960
but let's suppose
they do like it.

1021
00:47:35,960 --> 00:47:39,570
They're going to ask you
three questions, how's

1022
00:47:39,570 --> 00:47:45,222
it taste, how much does it
cost, where can I get it?

1023
00:47:45,222 --> 00:47:46,912
It tastes like
chocolate fudge, you'll

1024
00:47:46,912 --> 00:47:48,120
figure that out for yourself.

1025
00:47:48,120 --> 00:47:49,380
It's $1 a bar.

1026
00:47:49,380 --> 00:47:52,020
How do we answer
the third question?

1027
00:47:52,020 --> 00:47:59,420
Oh, man, there's a ShopRite
I send all of my people to.

1028
00:47:59,420 --> 00:48:02,856
Well, can we call him and
tell him that a week from now

1029
00:48:02,856 --> 00:48:04,730
you're going-- or a week
and a half from now,

1030
00:48:04,730 --> 00:48:05,940
you're going to be
sending some people?

1031
00:48:05,940 --> 00:48:07,249
No, we can do better than that.

1032
00:48:07,249 --> 00:48:09,540
Tell that bone head to get
in here on Saturday morning,

1033
00:48:09,540 --> 00:48:11,400
he can stand up and
talk to them him self.

1034
00:48:11,400 --> 00:48:14,980
And he can see what we're doing,
and he'll stock the product.

1035
00:48:14,980 --> 00:48:16,210
Very cool.

1036
00:48:16,210 --> 00:48:20,860
Pharmacists would agree, nobody
ever mentioned slotting fees.

1037
00:48:20,860 --> 00:48:23,655
And I bet, you know why not.

1038
00:48:26,570 --> 00:48:29,990
So this was good, now we
were in with the retailers.

1039
00:48:32,540 --> 00:48:35,630
But, one day, we
discovered retailers really

1040
00:48:35,630 --> 00:48:38,020
didn't want to deal with us.

1041
00:48:38,020 --> 00:48:40,520
They want to deal
with wholesalers.

1042
00:48:40,520 --> 00:48:42,320
Why not?

1043
00:48:42,320 --> 00:48:47,690
Well, there's about
5,000 different items

1044
00:48:47,690 --> 00:48:49,410
in even a small
drugstore, and they

1045
00:48:49,410 --> 00:48:51,280
don't want to be
sending out 5,000--

1046
00:48:51,280 --> 00:48:55,090
taking in 5,000 invoices and
sending out 5,000 checks.

1047
00:48:55,090 --> 00:48:56,610
So the wholesaler
consolidates all

1048
00:48:56,610 --> 00:48:58,340
that, the truck comes,
brings them a bin,

1049
00:48:58,340 --> 00:49:00,590
sends them one bill.

1050
00:49:00,590 --> 00:49:03,219
Now if you think getting
into a retailer is difficult,

1051
00:49:03,219 --> 00:49:04,010
try the wholesaler.

1052
00:49:07,280 --> 00:49:14,630
So we said, well, if we could
do this, oh my goodness, we'd

1053
00:49:14,630 --> 00:49:19,030
just need wheelbarrows to
carry out all the money.

1054
00:49:19,030 --> 00:49:20,640
How do we do it?

1055
00:49:20,640 --> 00:49:25,570
We said, well, what do the
wholesalers care about?

1056
00:49:25,570 --> 00:49:27,510
The wholesalers want
to know that there's

1057
00:49:27,510 --> 00:49:31,570
an order already there, this
is going to be painless.

1058
00:49:31,570 --> 00:49:35,850
They're fundamentally lazy,
make it easy for them.

1059
00:49:35,850 --> 00:49:40,734
We said, OK, what can we do?

1060
00:49:40,734 --> 00:49:42,650
We looked about and
realized there was a trade

1061
00:49:42,650 --> 00:49:44,580
show coming up in New Orleans.

1062
00:49:44,580 --> 00:49:47,710
We hadn't planned to go,
but we said we ought to go.

1063
00:49:47,710 --> 00:49:50,120
And let's find
the 25 drugstores,

1064
00:49:50,120 --> 00:49:55,350
I think it was Walgreen's,
that are surrounding the area.

1065
00:49:55,350 --> 00:49:58,490
And let's tell them that
we're going to be at the show,

1066
00:49:58,490 --> 00:50:00,520
we're going to be meeting
with the educators,

1067
00:50:00,520 --> 00:50:05,580
and we're going to be pimping,
excuse me, selling our product,

1068
00:50:05,580 --> 00:50:07,370
and that they should stock it.

1069
00:50:07,370 --> 00:50:10,090
And, in fact, they
should pre-order it.

1070
00:50:10,090 --> 00:50:11,430
Which we did.

1071
00:50:11,430 --> 00:50:14,950
They took the orders, or, pardon
me, they gave us their orders.

1072
00:50:14,950 --> 00:50:16,950
And then we called
the wholesaler

1073
00:50:16,950 --> 00:50:20,940
that Walgreen's used and
said, you don't know me,

1074
00:50:20,940 --> 00:50:22,850
but I've sold a
bunch of this product

1075
00:50:22,850 --> 00:50:25,866
and I've built in
a margin for you.

1076
00:50:25,866 --> 00:50:28,350
You don't have to do anything.

1077
00:50:28,350 --> 00:50:30,530
I'm going to take
their order, I'm

1078
00:50:30,530 --> 00:50:32,610
going to ship their
product, I'm going

1079
00:50:32,610 --> 00:50:35,620
to send you the money that you
would have earned if you've

1080
00:50:35,620 --> 00:50:37,495
done this, even though
you haven't earned it,

1081
00:50:37,495 --> 00:50:39,380
and you haven't done anything.

1082
00:50:39,380 --> 00:50:43,900
What I want is for you
to put us in your system.

1083
00:50:43,900 --> 00:50:46,210
Just key us in the system.

1084
00:50:46,210 --> 00:50:48,900
So if they reorder,
they can call you.

1085
00:50:48,900 --> 00:50:50,555
And I've built a
business for you.

1086
00:50:53,410 --> 00:50:54,260
Tell me that again.

1087
00:50:57,169 --> 00:50:59,710
But I want to be able to say to
the Walgreens when they said,

1088
00:50:59,710 --> 00:51:01,584
jeez we've sold all that
stuff, we could say,

1089
00:51:01,584 --> 00:51:02,950
great call your wholesaler.

1090
00:51:02,950 --> 00:51:04,070
He's got it.

1091
00:51:04,070 --> 00:51:06,520
Of course, he didn't,
but he was in the system.

1092
00:51:06,520 --> 00:51:09,820
Wholesaler called us, poof.

1093
00:51:09,820 --> 00:51:11,300
Off it went.

1094
00:51:11,300 --> 00:51:17,170
One last example, we
got a letter one day,

1095
00:51:17,170 --> 00:51:20,020
sitting in the office, from
a major retail pharmacy

1096
00:51:20,020 --> 00:51:23,480
chain headquartered in
Clearwater, Florida.

1097
00:51:23,480 --> 00:51:26,390
We're drawing up our
planogram for the coming year.

1098
00:51:26,390 --> 00:51:28,100
Who can tell us
what a planogram is?

1099
00:51:30,620 --> 00:51:31,998
Sir.

1100
00:51:31,998 --> 00:51:33,495
AUDIENCE: Layout of the store.

1101
00:51:33,495 --> 00:51:35,432
[INAUDIBLE]

1102
00:51:35,432 --> 00:51:36,765
BOB JONES: That's exactly right.

1103
00:51:39,950 --> 00:51:43,690
When you walk in, and you
see all these products

1104
00:51:43,690 --> 00:51:47,550
in different places, they've got
that laid out like a blueprint.

1105
00:51:47,550 --> 00:51:49,920
And many places, in
fact, have a room

1106
00:51:49,920 --> 00:51:52,666
somewhere near their corporate
headquarters with shelves.

1107
00:51:52,666 --> 00:51:55,040
And they put stuff on it, and
they step back, look at it,

1108
00:51:55,040 --> 00:51:56,350
and they photograph it.

1109
00:51:56,350 --> 00:51:58,190
There's a lot of analysis.

1110
00:51:58,190 --> 00:52:00,820
We're putting together our
planogram for the coming year.

1111
00:52:00,820 --> 00:52:02,450
If you'd like to
be a part of it,

1112
00:52:02,450 --> 00:52:05,120
you have to come to
Clearwater, Florida,

1113
00:52:05,120 --> 00:52:06,500
for a 15-minute meeting.

1114
00:52:10,262 --> 00:52:12,720
We didn't solicit this letter,
it just, sort of, washed in.

1115
00:52:12,720 --> 00:52:15,540
They, evidently,
had heard about us.

1116
00:52:15,540 --> 00:52:21,630
So I said, who
runs this meeting?

1117
00:52:21,630 --> 00:52:23,160
Well, it's a guy named Jeff.

1118
00:52:23,160 --> 00:52:25,100
I called a few people
I knew in the industry

1119
00:52:25,100 --> 00:52:29,650
and said, how is Jeff
rewarded for this?

1120
00:52:29,650 --> 00:52:32,420
And they said, Jeff
spends a whole week

1121
00:52:32,420 --> 00:52:34,730
having one 15-minute
conversation

1122
00:52:34,730 --> 00:52:38,660
after another, all day
long, five straight days.

1123
00:52:38,660 --> 00:52:40,290
Oh my god, this
sounds like something

1124
00:52:40,290 --> 00:52:42,160
out of Dante's
Inferno or something.

1125
00:52:42,160 --> 00:52:43,950
This is terrible.

1126
00:52:43,950 --> 00:52:47,520
But he's rewarded by the
amount of slotting fees

1127
00:52:47,520 --> 00:52:52,330
but he can extort from
these eager vendors.

1128
00:52:52,330 --> 00:53:00,410
I said, well, we don't have any
money, but let's do it anyway.

1129
00:53:00,410 --> 00:53:03,729
So we went down there, and we're
sitting in this huge lobby.

1130
00:53:03,729 --> 00:53:06,270
And there are all these people
with these poster boards, that

1131
00:53:06,270 --> 00:53:09,140
look like in end caps and
briefcases that open out

1132
00:53:09,140 --> 00:53:11,640
to be these fabulous displays.

1133
00:53:11,640 --> 00:53:14,880
And they're all like,
god, can I walk your dog?

1134
00:53:14,880 --> 00:53:16,600
Can I pick up your dry cleaning?

1135
00:53:16,600 --> 00:53:19,360
Please put me on your shelves.

1136
00:53:19,360 --> 00:53:22,370
There were two of us there,
and we were empty handed other

1137
00:53:22,370 --> 00:53:25,454
than one little portfolio.

1138
00:53:25,454 --> 00:53:26,870
We came in and we
said, Jeff, this

1139
00:53:26,870 --> 00:53:29,220
isn't going to be like your
other 15-minute meetings

1140
00:53:29,220 --> 00:53:32,350
this week, because we're a start
up, we don't have any money,

1141
00:53:32,350 --> 00:53:35,740
we're not going to
give you a nickel.

1142
00:53:35,740 --> 00:53:39,030
But we propose to spend five
minutes telling you who we are,

1143
00:53:39,030 --> 00:53:41,580
five minutes telling
you what our product is,

1144
00:53:41,580 --> 00:53:44,220
and five minutes telling you
why you want us on your shelves

1145
00:53:44,220 --> 00:53:46,410
anyway.

1146
00:53:46,410 --> 00:53:48,625
And he sort of kicked
back in his chair

1147
00:53:48,625 --> 00:53:52,660
and he said, well, it's
your fifteen minutes, sport,

1148
00:53:52,660 --> 00:53:56,180
whatever you want to do.

1149
00:53:56,180 --> 00:53:58,790
So we've spent the
first ten minutes

1150
00:53:58,790 --> 00:54:01,865
saying, we're so fabulous,
as you would expect.

1151
00:54:04,670 --> 00:54:09,980
And the last five minutes,
we said, Jeff, this printout

1152
00:54:09,980 --> 00:54:14,180
is of the people
with diabetes that

1153
00:54:14,180 --> 00:54:19,750
have contacted us in the
states where you have stores.

1154
00:54:19,750 --> 00:54:23,150
There's 10,000 of them.

1155
00:54:23,150 --> 00:54:25,740
All of us are asking
us the same question,

1156
00:54:25,740 --> 00:54:28,892
where can I go to
buy your product?

1157
00:54:28,892 --> 00:54:30,850
How would you like us to
answer their question?

1158
00:54:34,630 --> 00:54:41,470
He sat there, and he looked
at us for almost a minute.

1159
00:54:41,470 --> 00:54:43,720
Which is like, hold your
breath for a minute sometime,

1160
00:54:43,720 --> 00:54:44,345
it's agonizing.

1161
00:54:48,021 --> 00:54:50,395
And then he started grinning,
and he said, OK, you're in.

1162
00:54:53,260 --> 00:54:55,670
So we said, well, we
want to stage this.

1163
00:54:55,670 --> 00:54:57,610
We'll go in where
we built the demand,

1164
00:54:57,610 --> 00:55:00,200
I hate returns, and et cetera.

1165
00:55:00,200 --> 00:55:04,180
But nary a word
about slotting fees.

1166
00:55:04,180 --> 00:55:07,580
I bet you can guess the next
thing that's going to pop up.

1167
00:55:07,580 --> 00:55:08,150
Why no?

1168
00:55:08,150 --> 00:55:10,450
What gave us that
negotiating power?

1169
00:55:10,450 --> 00:55:11,220
We had--

1170
00:55:11,220 --> 00:55:12,600
AUDIENCE: Customers.

1171
00:55:12,600 --> 00:55:14,670
BOB JONES: Thank you.

1172
00:55:14,670 --> 00:55:17,790
It wasn't for being smart, or
charming, or anything else.

1173
00:55:17,790 --> 00:55:19,770
It was just good,
old, hard work.

1174
00:55:19,770 --> 00:55:24,030
But we came in there
and essentially said,

1175
00:55:24,030 --> 00:55:27,510
you're not generating
the demand, we are.

1176
00:55:27,510 --> 00:55:30,238
So we're not paying you for it,
we're bringing you business.

1177
00:55:33,050 --> 00:55:37,270
So, impressive growth in
sales, real high reorder rate,

1178
00:55:37,270 --> 00:55:38,550
a lot of good publicity.

1179
00:55:38,550 --> 00:55:41,900
Ended up selling the business to
a billion-dollar pharmaceutical

1180
00:55:41,900 --> 00:55:43,398
firm.

1181
00:55:43,398 --> 00:55:44,231
Everybody was happy.

1182
00:55:47,177 --> 00:55:59,050
So, I was 10 years older
at the end of two years,

1183
00:55:59,050 --> 00:56:01,760
but I learned a lot.

1184
00:56:01,760 --> 00:56:07,275
So tell me, what should
I have learned from this?

1185
00:56:07,275 --> 00:56:09,400
What might you have learned,
given that many of you

1186
00:56:09,400 --> 00:56:11,050
raised your hands
when you said you

1187
00:56:11,050 --> 00:56:13,650
were in the process of
doing all this stuff?

1188
00:56:13,650 --> 00:56:15,560
What should I have learned?

1189
00:56:15,560 --> 00:56:17,320
What should you have
learned that will

1190
00:56:17,320 --> 00:56:20,930
help facilitate your
progress with your business

1191
00:56:20,930 --> 00:56:23,080
and my current venture?

1192
00:56:23,080 --> 00:56:24,290
So let's have some hands.

1193
00:56:24,290 --> 00:56:27,530
Tell me what I should
have learned from this,

1194
00:56:27,530 --> 00:56:29,470
and which, maybe,
can have gleaned.

1195
00:56:29,470 --> 00:56:31,520
What mistakes should
I avoid going forward?

1196
00:56:31,520 --> 00:56:33,680
What things should I
do that were right?

1197
00:56:33,680 --> 00:56:36,310
Help me out.

1198
00:56:36,310 --> 00:56:37,210
In the back, yes.

1199
00:56:41,769 --> 00:56:42,644
AUDIENCE: [INAUDIBLE]

1200
00:56:55,000 --> 00:56:56,856
BOB JONES: Did
everybody hear that?

1201
00:56:56,856 --> 00:56:58,980
OK, let me paraphrase.

1202
00:56:58,980 --> 00:57:01,240
With the first
one, the disaster,

1203
00:57:01,240 --> 00:57:03,310
I did focus on some
of the stakeholders,

1204
00:57:03,310 --> 00:57:05,980
but not the key ones,
not the customers who

1205
00:57:05,980 --> 00:57:07,360
are actually going to buy it.

1206
00:57:07,360 --> 00:57:09,000
It's important to
know, and I think

1207
00:57:09,000 --> 00:57:10,810
I asked this question
of one of you, who's

1208
00:57:10,810 --> 00:57:12,950
going to write the check.

1209
00:57:12,950 --> 00:57:14,730
Who's actually going
to put their money

1210
00:57:14,730 --> 00:57:16,500
on the table for this?

1211
00:57:16,500 --> 00:57:19,070
And then who influences them?

1212
00:57:19,070 --> 00:57:24,380
So that's certainly one of
the more painful, but crucial,

1213
00:57:24,380 --> 00:57:25,810
lessons.

1214
00:57:25,810 --> 00:57:27,750
Anything else?

1215
00:57:27,750 --> 00:57:29,360
That's fundamentally
it, by the way,

1216
00:57:29,360 --> 00:57:32,040
but if you've got nothing
else, listen to that.

1217
00:57:32,040 --> 00:57:32,657
Yes, sir.

1218
00:57:32,657 --> 00:57:33,532
AUDIENCE: [INAUDIBLE]

1219
00:57:39,490 --> 00:57:42,680
BOB JONES: Well,
we certainly tried.

1220
00:57:42,680 --> 00:57:45,430
This gentleman said we made it
almost impossible for everyone

1221
00:57:45,430 --> 00:57:47,300
we contacted to say no.

1222
00:57:47,300 --> 00:57:48,430
How did we do that?

1223
00:57:52,280 --> 00:57:52,880
Go ahead, sir.

1224
00:57:52,880 --> 00:57:54,130
AUDIENCE: You built up demand.

1225
00:57:54,130 --> 00:57:56,120
BOB JONES: That was part
of it, but each time I

1226
00:57:56,120 --> 00:57:58,470
called somebody
that didn't know me,

1227
00:57:58,470 --> 00:58:00,867
what homework did I do first?

1228
00:58:00,867 --> 00:58:01,742
AUDIENCE: [INAUDIBLE]

1229
00:58:01,742 --> 00:58:02,616
BOB JONES: Pardon me?

1230
00:58:02,616 --> 00:58:03,850
AUDIENCE: [INAUDIBLE]

1231
00:58:03,850 --> 00:58:05,900
BOB JONES: Finding out
what motivates them.

1232
00:58:05,900 --> 00:58:09,340
What do they care about?

1233
00:58:09,340 --> 00:58:14,610
People think of selling as
this, sort of, tainted activity,

1234
00:58:14,610 --> 00:58:17,070
and it can be.

1235
00:58:17,070 --> 00:58:19,220
But a hugely important
component of it

1236
00:58:19,220 --> 00:58:23,470
is just finding out
what people want.

1237
00:58:23,470 --> 00:58:27,630
OK, I think you need to know
what they're really buying.

1238
00:58:27,630 --> 00:58:30,260
And I think you have to
have some positioning.

1239
00:58:30,260 --> 00:58:32,420
I think if you have a
product that's for everyone,

1240
00:58:32,420 --> 00:58:34,040
I'm sorry to tell
you this, but it's

1241
00:58:34,040 --> 00:58:36,580
my opinion that it's
not actually for anyone,

1242
00:58:36,580 --> 00:58:39,690
you need some focus.

1243
00:58:39,690 --> 00:58:41,830
And I am also sorry to
tell you, nobody actually

1244
00:58:41,830 --> 00:58:43,190
needs you product.

1245
00:58:43,190 --> 00:58:44,400
They might need the benefits.

1246
00:58:44,400 --> 00:58:47,680
I actually don't
need these glasses,

1247
00:58:47,680 --> 00:58:49,090
what I need is to see better.

1248
00:58:52,070 --> 00:58:55,270
So I hired, in the
consumer sense of the term,

1249
00:58:55,270 --> 00:58:57,080
I hired glasses.

1250
00:58:57,080 --> 00:58:59,960
Some of you hired
contact lenses.

1251
00:58:59,960 --> 00:59:02,200
Some of you I'm willing
to bet, hired the surgeon

1252
00:59:02,200 --> 00:59:04,630
to do the little
laser procedure.

1253
00:59:04,630 --> 00:59:06,720
But all of us had the
same fundamental need,

1254
00:59:06,720 --> 00:59:09,370
we wanted to see better, we
just took different routes

1255
00:59:09,370 --> 00:59:11,660
to get there.

1256
00:59:11,660 --> 00:59:13,810
So sell the benefits first.

1257
00:59:13,810 --> 00:59:17,590
And I'm a huge believer
in market segmentation.

1258
00:59:17,590 --> 00:59:19,609
I don't think everybody
on the market is equal,

1259
00:59:19,609 --> 00:59:21,150
and I think there's
a lot of them who

1260
00:59:21,150 --> 00:59:22,525
aren't going to
be your customer,

1261
00:59:22,525 --> 00:59:28,580
and I like to segment them by
motivation to buy what I have.

1262
00:59:28,580 --> 00:59:32,250
I think there's a small group at
the top feeling the pain right

1263
00:59:32,250 --> 00:59:34,110
now.

1264
00:59:34,110 --> 00:59:36,340
Underneath that, I
don't know, let's say

1265
00:59:36,340 --> 00:59:40,390
I have something that reduces
the likelihood of heart

1266
00:59:40,390 --> 00:59:41,670
attacks.

1267
00:59:41,670 --> 00:59:43,910
So if you had a heart
attack yesterday,

1268
00:59:43,910 --> 00:59:46,090
and you're still
alive, you could

1269
00:59:46,090 --> 00:59:47,440
be a good customer for me.

1270
00:59:47,440 --> 00:59:48,940
If you're not
alive, I'm sorry, we

1271
00:59:48,940 --> 00:59:52,380
won't do any business together.

1272
00:59:52,380 --> 00:59:56,120
His immediate family,
they're in the second tier.

1273
00:59:56,120 --> 00:59:56,910
They're worried.

1274
00:59:56,910 --> 00:59:58,900
Sheesh, maybe we should
pay attention to this.

1275
00:59:58,900 --> 01:00:01,390
Down below that, people
who are kind of vigilant.

1276
01:00:01,390 --> 01:00:03,560
And then there's a huge
bunch of people that's

1277
01:00:03,560 --> 01:00:05,200
just a graveyard for you.

1278
01:00:05,200 --> 01:00:07,150
Don't go there.

1279
01:00:07,150 --> 01:00:09,310
Start at the top.

1280
01:00:09,310 --> 01:00:11,950
Couple reasons, if you can't
build a business there,

1281
01:00:11,950 --> 01:00:15,200
time for your next idea.

1282
01:00:15,200 --> 01:00:18,330
Think of yourself as a jockey.

1283
01:00:18,330 --> 01:00:21,510
Not as a horse.

1284
01:00:21,510 --> 01:00:24,270
If you start at the
top and you fail,

1285
01:00:24,270 --> 01:00:26,190
you might be a very
good jockey you just

1286
01:00:26,190 --> 01:00:28,480
picked the wrong horse.

1287
01:00:28,480 --> 01:00:29,450
Pick another horse.

1288
01:00:32,080 --> 01:00:34,420
Also, by the way,
if you're thinking

1289
01:00:34,420 --> 01:00:37,930
one day you might
sell your venture,

1290
01:00:37,930 --> 01:00:42,250
you can go to big company
X, Johnson & Johnson,

1291
01:00:42,250 --> 01:00:46,370
and say, guys I spent
$1.98 and penetrated

1292
01:00:46,370 --> 01:00:48,480
that block at the top.

1293
01:00:48,480 --> 01:00:52,650
You have a million dollars,
you can take it further down,

1294
01:00:52,650 --> 01:00:55,584
you can do the math, let's talk
about the discounted value,

1295
01:00:55,584 --> 01:00:57,750
future earnings, and pull
together a little purchase

1296
01:00:57,750 --> 01:00:58,830
package.

1297
01:00:58,830 --> 01:01:00,100
Right?

1298
01:01:00,100 --> 01:01:04,400
If you can't succeed at the
top, you don't have a story.

1299
01:01:04,400 --> 01:01:06,770
But if you want to
change your buying habits

1300
01:01:06,770 --> 01:01:09,210
it requires a lot of motivation.

1301
01:01:09,210 --> 01:01:12,470
And I'm sorry if this sounds
manipulative, it's just blunt.

1302
01:01:12,470 --> 01:01:15,190
I think pain is
very motivational.

1303
01:01:15,190 --> 01:01:19,660
Fear, greed, vanity,
these are-- I'm

1304
01:01:19,660 --> 01:01:23,510
not trying to list the
seven deadly sins here.

1305
01:01:23,510 --> 01:01:26,310
But ask yourself,
what would cause

1306
01:01:26,310 --> 01:01:28,860
people to stop doing
what they're doing now

1307
01:01:28,860 --> 01:01:31,410
and buy what you have.

1308
01:01:31,410 --> 01:01:35,260
Are they dissatisfied with
their current cancer care?

1309
01:01:35,260 --> 01:01:38,230
Are they dissatisfied with
something that you've got?

1310
01:01:38,230 --> 01:01:41,530
What's going to motivate them
to change their buying habits?

1311
01:01:41,530 --> 01:01:45,060
And, I gotta tell you,
virtue is a tough sell.

1312
01:01:48,270 --> 01:01:53,750
Buy my vitamins because 20
years from now the antioxidants

1313
01:01:53,750 --> 01:01:57,470
will have caused you
to have fewer mutations

1314
01:01:57,470 --> 01:02:00,310
at the end of your chromosomes.

1315
01:02:00,310 --> 01:02:02,920
[WHISTLES]

1316
01:02:02,920 --> 01:02:05,730
I don't think so.

1317
01:02:05,730 --> 01:02:09,540
So, with that as a context,
what was I really selling

1318
01:02:09,540 --> 01:02:11,980
with the one that failed?

1319
01:02:11,980 --> 01:02:14,320
I was selling virtue.

1320
01:02:14,320 --> 01:02:17,275
Take this stuff and your
bio markers will improve.

1321
01:02:20,080 --> 01:02:23,810
What was I really selling
with NiteBite By the way,

1322
01:02:23,810 --> 01:02:25,380
answer that question for me.

1323
01:02:25,380 --> 01:02:29,200
What was I really
selling with NiteBite?

1324
01:02:29,200 --> 01:02:29,741
Sir?

1325
01:02:29,741 --> 01:02:30,740
AUDIENCE: Peace of mind.

1326
01:02:30,740 --> 01:02:32,390
BOB JONES: Peace of mind.

1327
01:02:32,390 --> 01:02:33,530
That's exactly right.

1328
01:02:33,530 --> 01:02:37,450
In fact, once we figured that
out, all the lights went on

1329
01:02:37,450 --> 01:02:39,900
and the ad copy wrote itself.

1330
01:02:39,900 --> 01:02:43,850
It was corny, one bite
and the rest is easy.

1331
01:02:43,850 --> 01:02:49,270
But we got it, that's
exactly what we were selling.

1332
01:02:49,270 --> 01:02:53,240
So with no disrespect
whatsoever,

1333
01:02:53,240 --> 01:02:54,697
you have a question?

1334
01:02:54,697 --> 01:02:56,905
AUDIENCE: Going back to
dealing with the wholesalers,

1335
01:02:56,905 --> 01:02:59,827
how do you know that
the slotting fees wasn't

1336
01:02:59,827 --> 01:03:03,560
a big part of their
revenue and not

1337
01:03:03,560 --> 01:03:07,620
having them would be a no-go?

1338
01:03:07,620 --> 01:03:10,900
BOB JONES: Well I knew, in
fact, that slotting fees were

1339
01:03:10,900 --> 01:03:13,760
a big part of the revenue,
and not having them,

1340
01:03:13,760 --> 01:03:16,270
normally, would
make for a no-go.

1341
01:03:16,270 --> 01:03:20,570
But what I produced for them
was a pretty, nearly guaranteed

1342
01:03:20,570 --> 01:03:25,510
income stream which exceeded
the value of the slotting fees.

1343
01:03:25,510 --> 01:03:29,880
I also introduced the
topic of competition.

1344
01:03:29,880 --> 01:03:34,910
I said, our customers
have mentioned you

1345
01:03:34,910 --> 01:03:40,430
as their favorite pharmacy, or
our customers, the pharmacists,

1346
01:03:40,430 --> 01:03:42,860
have mentioned that the
wholesaler they most like

1347
01:03:42,860 --> 01:03:44,880
to do business with is you.

1348
01:03:44,880 --> 01:03:47,020
They have, of course,
other wholesalers.

1349
01:03:47,020 --> 01:03:49,380
They don't concentrate all
of their eggs in one basket.

1350
01:03:49,380 --> 01:03:52,690
I'm hopeful that we can do
business, because otherwise I

1351
01:03:52,690 --> 01:03:54,470
will have to go to number two.

1352
01:03:54,470 --> 01:03:57,130
So how would you like me to
handle their need, can we

1353
01:03:57,130 --> 01:03:57,760
work together?

1354
01:04:01,750 --> 01:04:05,850
Don't get me wrong, we did
get told no from time to time.

1355
01:04:05,850 --> 01:04:08,101
And, in fact, if you're
going to be an entrepreneur,

1356
01:04:08,101 --> 01:04:10,350
I hate to tell you this, you
will kiss a few frogs out

1357
01:04:10,350 --> 01:04:12,060
there.

1358
01:04:12,060 --> 01:04:14,160
Nature of the beast, right?

1359
01:04:14,160 --> 01:04:16,820
OK as I started to
say, some of you

1360
01:04:16,820 --> 01:04:21,430
are taking MBA courses that
are focused on marketing.

1361
01:04:21,430 --> 01:04:24,380
I'm going to give
you an entire year

1362
01:04:24,380 --> 01:04:27,965
of business-school-level
marketing in two bullet points.

1363
01:04:31,450 --> 01:04:37,320
Find out what your customers
want give it to them.

1364
01:04:37,320 --> 01:04:39,505
End of lecture.

1365
01:04:39,505 --> 01:04:43,480
Now, there's all manner of
sophisticated regression

1366
01:04:43,480 --> 01:04:45,220
analyses, et cetera,
et cetera, that

1367
01:04:45,220 --> 01:04:46,890
can be employed to do this.

1368
01:04:46,890 --> 01:04:49,680
But if you lose track of
these two fundamental points,

1369
01:04:49,680 --> 01:04:53,000
you've missed the point.

1370
01:04:53,000 --> 01:04:54,504
So, focus.

1371
01:04:57,490 --> 01:05:00,820
And I hated the boss I had,
that said this to me, because I

1372
01:05:00,820 --> 01:05:03,995
could never get it out of
my head, drove me nuts,

1373
01:05:03,995 --> 01:05:05,570
it was so corny.

1374
01:05:05,570 --> 01:05:08,940
He'd say, Jones, there
is no hocus-pocus

1375
01:05:08,940 --> 01:05:10,530
that takes the place of focus.

1376
01:05:10,530 --> 01:05:14,220
I'd think, you're killing me.

1377
01:05:14,220 --> 01:05:15,180
But it's true.

1378
01:05:18,060 --> 01:05:20,550
So a different way of looking
at this, it's not sales,

1379
01:05:20,550 --> 01:05:23,920
it's detective work.

1380
01:05:23,920 --> 01:05:27,410
If you are to succeed,
do some detective work.

1381
01:05:27,410 --> 01:05:31,530
Find your customer rather
than promote your product,

1382
01:05:31,530 --> 01:05:33,400
because your customers
hire these things

1383
01:05:33,400 --> 01:05:34,840
to do a specific job.

1384
01:05:34,840 --> 01:05:36,940
Design your product
to do the job

1385
01:05:36,940 --> 01:05:39,030
they want for a
specific customer.

1386
01:05:39,030 --> 01:05:41,200
Go find them, and if
you've done this right,

1387
01:05:41,200 --> 01:05:44,740
the selling will be easy.

1388
01:05:44,740 --> 01:05:45,550
How do you do it?

1389
01:05:45,550 --> 01:05:47,090
Talk with them.

1390
01:05:47,090 --> 01:05:50,120
Cold calls, oh god.

1391
01:05:50,120 --> 01:05:51,420
Literally, phone calls.

1392
01:05:51,420 --> 01:05:54,350
Emails are helpful, but
they're not adequate.

1393
01:05:54,350 --> 01:05:55,320
Talk to them.

1394
01:05:55,320 --> 01:05:58,520
Surveys are helpful,
they are not adequate.

1395
01:05:58,520 --> 01:06:01,680
Talk to them.

1396
01:06:01,680 --> 01:06:04,170
Some years ago, I
wanted to do a deal

1397
01:06:04,170 --> 01:06:07,080
with a group in Finland that
had invented a margarine that

1398
01:06:07,080 --> 01:06:08,490
lowered cholesterol.

1399
01:06:08,490 --> 01:06:10,210
And I was intrigued.

1400
01:06:10,210 --> 01:06:13,070
Johnson & Johnson offered them
a huge sack full of money,

1401
01:06:13,070 --> 01:06:17,380
our startup couldn't
compete, we lost.

1402
01:06:17,380 --> 01:06:23,180
But I watched what
J&J did, and I went

1403
01:06:23,180 --> 01:06:24,760
into a number of supermarkets.

1404
01:06:24,760 --> 01:06:26,290
It actually didn't take long.

1405
01:06:26,290 --> 01:06:31,810
I stood off to the side near
where people had the margarine,

1406
01:06:31,810 --> 01:06:34,270
and I would watch
customers come in.

1407
01:06:34,270 --> 01:06:36,920
The stuff that J&J had
was about eight times

1408
01:06:36,920 --> 01:06:39,810
as expensive as
traditional margarine.

1409
01:06:39,810 --> 01:06:41,440
Margarine shoppers
would come in,

1410
01:06:41,440 --> 01:06:47,760
and they'd look and
say, $1.19, $1.39, $8,

1411
01:06:47,760 --> 01:06:53,760
$1.4-- $1.4-- I'll
take the $1.39.

1412
01:06:53,760 --> 01:06:57,110
So I would stop these
people and say, excuse me,

1413
01:06:57,110 --> 01:06:59,110
I was thinking of
buying this $8 stuff,

1414
01:06:59,110 --> 01:07:00,480
and I noticed you didn't.

1415
01:07:00,480 --> 01:07:02,010
How come you didn't?

1416
01:07:02,010 --> 01:07:03,620
Oh man, I got all
manner of other ways

1417
01:07:03,620 --> 01:07:07,950
to take care of my cholesterol,
and besides I don't feel bad.

1418
01:07:07,950 --> 01:07:10,180
So talk to them.

1419
01:07:10,180 --> 01:07:11,410
Know them.

1420
01:07:11,410 --> 01:07:12,810
How do they view their problem?

1421
01:07:12,810 --> 01:07:15,450
And think about your
service and ask yourself,

1422
01:07:15,450 --> 01:07:17,080
how are they solving
the problem now.

1423
01:07:17,080 --> 01:07:20,980
More importantly, what are they
spending their money on now

1424
01:07:20,980 --> 01:07:22,011
to solve this problem?

1425
01:07:25,380 --> 01:07:29,427
And there's a great quote
attributed to Henry Ford.

1426
01:07:29,427 --> 01:07:32,010
We said, Henry, do you ever ask
your customers what they want?

1427
01:07:32,010 --> 01:07:33,765
And Henry said, oh
hell, if I'd asked them

1428
01:07:33,765 --> 01:07:35,765
what they wanted they'd
have said faster horses.

1429
01:07:39,700 --> 01:07:41,830
So understanding
what's behind that

1430
01:07:41,830 --> 01:07:43,990
was part of Henry's genius.

1431
01:07:43,990 --> 01:07:45,223
You do have competition.

1432
01:07:49,570 --> 01:07:53,930
OK, my Regain customers
needed my product.

1433
01:07:53,930 --> 01:07:56,980
They didn't want it,
I couldn't sell it.

1434
01:07:56,980 --> 01:08:01,350
So what matters is
finding people who want it

1435
01:08:01,350 --> 01:08:04,330
and figuring out how to
communicate the benefits

1436
01:08:04,330 --> 01:08:06,340
in just 30 seconds.

1437
01:08:06,340 --> 01:08:10,300
And this is harder
than you think,

1438
01:08:10,300 --> 01:08:12,170
because if you don't
really understand

1439
01:08:12,170 --> 01:08:14,180
the benefits good
luck trying to put it

1440
01:08:14,180 --> 01:08:16,770
into collateral material,
put it on your website,

1441
01:08:16,770 --> 01:08:18,987
any of that stuff.

1442
01:08:18,987 --> 01:08:21,195
And, of course, as Steve
probably told you yesterday,

1443
01:08:21,195 --> 01:08:22,970
you are unlikely to raise money.

1444
01:08:22,970 --> 01:08:25,160
Customers buy benefits.

1445
01:08:25,160 --> 01:08:29,620
So, some of the questions,
what's broken we fix?

1446
01:08:29,620 --> 01:08:31,700
Who cares?

1447
01:08:31,700 --> 01:08:34,479
Do they have any money?

1448
01:08:34,479 --> 01:08:36,580
As a working musician
I know that it's just

1449
01:08:36,580 --> 01:08:38,920
futile try to make
something for that market.

1450
01:08:38,920 --> 01:08:41,700
Guitar players are all starving.

1451
01:08:41,700 --> 01:08:42,790
How do you find them?

1452
01:08:42,790 --> 01:08:43,950
How are they solving it?

1453
01:08:43,950 --> 01:08:46,700
Why is what we have better?

1454
01:08:46,700 --> 01:08:49,770
I'm going to zap through
a couple of these.

1455
01:08:52,592 --> 01:08:54,300
I want to spend a
second on this, though,

1456
01:08:54,300 --> 01:08:55,049
is this all right?

1457
01:08:55,049 --> 01:09:02,550
All right, something that we're
doing with our little outfit,

1458
01:09:02,550 --> 01:09:05,630
we said-- we're not the only
ones doing this, mind you,

1459
01:09:05,630 --> 01:09:06,880
but we are applying this.

1460
01:09:06,880 --> 01:09:10,880
Start with the ideas, identify
some unmet needs, et cetera,

1461
01:09:10,880 --> 01:09:13,540
go interview people who
might want it, and then

1462
01:09:13,540 --> 01:09:16,899
make a bare bones
version of the product.

1463
01:09:16,899 --> 01:09:18,939
We're making a
2.5 ounce beverage

1464
01:09:18,939 --> 01:09:20,520
that helps you sleep at night.

1465
01:09:20,520 --> 01:09:23,450
And we made a little
prototype, and it looks bad,

1466
01:09:23,450 --> 01:09:27,189
it tastes bad, and you
can't get the cap off.

1467
01:09:27,189 --> 01:09:30,640
Arguably, this is not a good
profile for a retail product.

1468
01:09:30,640 --> 01:09:34,170
But we had one primary
concern, does it work?

1469
01:09:34,170 --> 01:09:36,830
We give it to 30 people
and nobody goes to sleep,

1470
01:09:36,830 --> 01:09:38,319
well then we stop right there.

1471
01:09:38,319 --> 01:09:41,020
Silly to have spent any
time making it look good.

1472
01:09:41,020 --> 01:09:43,760
So go out there
and see if you can

1473
01:09:43,760 --> 01:09:46,080
identify customers for launch.

1474
01:09:46,080 --> 01:09:48,770
And, in fact, the first group
of customers that we thought

1475
01:09:48,770 --> 01:09:50,710
would be suitable for
our business turned out

1476
01:09:50,710 --> 01:09:51,540
to be wrong.

1477
01:09:51,540 --> 01:09:53,990
I had a really bad five
or six weeks where I got

1478
01:09:53,990 --> 01:09:59,470
told no, all day, every day,
for five or six straight weeks.

1479
01:09:59,470 --> 01:10:01,750
Finally figured out,
they don't want it.

1480
01:10:01,750 --> 01:10:05,990
They might need it,
but, time to iterate.

1481
01:10:05,990 --> 01:10:07,630
Once you get it
right, then you can

1482
01:10:07,630 --> 01:10:09,710
get about the business
of doing your branding

1483
01:10:09,710 --> 01:10:11,645
and packaging more formally.

1484
01:10:11,645 --> 01:10:13,270
And then you can get
about the business

1485
01:10:13,270 --> 01:10:14,730
of growing the company.

1486
01:10:14,730 --> 01:10:17,590
And, by the way, you might be
able to raise a little money

1487
01:10:17,590 --> 01:10:19,460
at a couple of those points.

1488
01:10:19,460 --> 01:10:21,351
A little money to
build your prototype,

1489
01:10:21,351 --> 01:10:23,350
and then, once you figure
out what you're doing,

1490
01:10:23,350 --> 01:10:26,240
a little money to actually take
something to the marketplace,

1491
01:10:26,240 --> 01:10:29,470
because you have
reduced the risk.

1492
01:10:29,470 --> 01:10:33,550
But that stage of the
game is hugely useful.

1493
01:10:33,550 --> 01:10:35,750
And I submit that that's
what Aleem and his team

1494
01:10:35,750 --> 01:10:36,937
have done already.

1495
01:10:36,937 --> 01:10:38,520
They've made a minimum
viable product,

1496
01:10:38,520 --> 01:10:40,550
they're circulating
a pancake mix,

1497
01:10:40,550 --> 01:10:43,740
and they're getting
valuable customer feedback.

1498
01:10:43,740 --> 01:10:46,220
Aleem, your recipe calls
for sparkling water.

1499
01:10:46,220 --> 01:10:48,100
I don't keep sparkling
water at home.

1500
01:10:48,100 --> 01:10:50,410
How can I make pancakes
without sparkling water?

1501
01:10:50,410 --> 01:10:52,910
Oh, well, useful, right?

1502
01:10:52,910 --> 01:10:56,220
OK, so we're going to
skip what I'm doing now.

1503
01:10:56,220 --> 01:10:59,390
Though, of course,
it's fascinating.

1504
01:10:59,390 --> 01:11:00,402
We're out of time.

1505
01:11:04,250 --> 01:11:08,650
So, I have one set
of final questions.

1506
01:11:08,650 --> 01:11:10,310
Where do customers go for help?

1507
01:11:10,310 --> 01:11:11,810
How are you going to reach them?

1508
01:11:11,810 --> 01:11:16,720
Paint a picture of who's going
to write you that first check.

1509
01:11:16,720 --> 01:11:19,590
What evidence do you have that
they will pay for your product?

1510
01:11:19,590 --> 01:11:21,400
This was crucial to
me for the gentleman

1511
01:11:21,400 --> 01:11:24,590
talking about calling
on IBM and calling

1512
01:11:24,590 --> 01:11:28,697
on people who would want
his augmentation of Google.

1513
01:11:28,697 --> 01:11:31,280
What evidence do you have that
somebody's going to pay for it?

1514
01:11:31,280 --> 01:11:32,100
How much?

1515
01:11:32,100 --> 01:11:35,110
And then, it calls
for someone who's

1516
01:11:35,110 --> 01:11:39,390
a kind of a pervert to actually
be responsible for sales,

1517
01:11:39,390 --> 01:11:41,895
although some of us like it.

1518
01:11:41,895 --> 01:11:42,770
Who's going to do it?

1519
01:11:45,460 --> 01:11:47,980
I don't think we have time
for anymore of your questions,

1520
01:11:47,980 --> 01:11:49,600
with regret, so
let me summarize.

1521
01:11:49,600 --> 01:11:51,400
The only non-negotiable
requirement

1522
01:11:51,400 --> 01:11:54,342
for successful business
is your customers.

1523
01:11:54,342 --> 01:11:55,800
And if you're going
to succeed, you

1524
01:11:55,800 --> 01:11:58,660
have to have something
that's unique and important

1525
01:11:58,660 --> 01:12:00,440
for someone.

1526
01:12:00,440 --> 01:12:03,170
You gave us a great
example of pivoting that

1527
01:12:03,170 --> 01:12:06,270
from the head of IBM
to college students.

1528
01:12:06,270 --> 01:12:08,990
It's got to be
important to someone.

1529
01:12:08,990 --> 01:12:12,435
So figure out who can't live
without it, go find them

1530
01:12:12,435 --> 01:12:15,410
and tell them about it,
and take their money.

1531
01:12:15,410 --> 01:12:16,910
Thank you very much.

1532
01:12:16,910 --> 01:12:21,160
[APPLAUSE]