RS362: Hidden Multipliers with Jason Cohen

We can't predict the future, especially now. It's extra uncertain. Almost all products can be repositioned so that you're selling more value, more transformation, more of something positive that they value rather than less of a negative thing they'd like to go away. And when you do, you can often charge 10 times as much.

Yeah, it's really simple. I've always been a person who likes to help other people, but I have this kind of you might say abrasive, but very direct and honest style. Hopefully it's the kind where you feel like, yeah, but since I have your best interest at heart too and I want you to succeed, and we're going to spend most of the time talking about how to solve it, but I just want to get to the problem and get to the crux really fast. And that can be hard. What I found over years — I mean like 20 years — as I would talk to people, what would happen is they might get a little frustrated or feel bad in the moment, but then I'd get an email in a week or two that would say, 'I've talked to a lot of people and you're the only one who told me the truth.' And so, while it was uncomfortable, can we do that again? About 15 years ago, I should say I was a founding mentor and investor in Capital Factory, which is an incubator in Austin. This was in 2009 that it started. So I did this a lot with startups even in person. So there was a reason why I was doing this. Anyway, so I started doing this show. I called it Smart Bear Live because I was already Smart Bear on Twitter and everything because of my company Smart Bear. I would sometimes do it at an event, but it would be live — helping a founder with something or challenging them, hopefully they see it as help later. It's sort of like Dr. Laura for startups, or maybe it's more like Esther Perel because it's half therapy. It happens to be in my wheelhouse of all this experience with startups, but also I have this style that some people like and I'm very fast in the moment. I don't need any prep or anything. That's actually part of the fun, I think. It's in this sweet spot of mine. Also, I don't have to make money. I don't have to run ads on it. I don't need sponsors. That's great because I can just make my best work. Same with the book I just wrote. It's just my best work. I don't sell courses. I don't sell consulting. I'm not trying to push a product. I have no other motivation but ego and wanting to do stuff, right? That's my only motivation. So that means I'm motivated to do my best work, period. Not for a financial reason. Isn't that nice? There's an intersection of my personality and what my strengths are and the fact that I don't need to make money that makes this intersection, if not unique, then special. So yeah, I revived it. I have this book coming out, Hidden Multipliers. I have this podcast, Smart Bear Live. Both of them are at smartbear.com. But I don't want this to be an ad — for any of these things, I'd rather get into some good stuff, and if people like it, then they'll go see that other stuff.

Well, I think it's a combination of we can't predict the future — especially now, it's extra uncertain. I have a lot more to say about that, but what we can't use is the past to predict the future. Your current experience is not that relevant to what's going to happen in the future. So you can't use that current experience, and things like pro-cons lists and rubrics — that's not going to be the answer this time. There are some kinds of puzzles where they are, but not this. Also, we've never done it before, so there's that. And we can't use statistics and probability. That's obviously not a useful tool in this case. So you're in this space which I call uncertainty. Meaning, we don't know, but I can't use tools like I just mentioned to apply to that to make good decisions. So I need different ways to make good decisions. It's still uncertain, and some of those decisions won't work, of course. But still I need different tools than those to make smart decisions. People aren't accustomed to that. I think that's one thing. And then also it's just always hard to know what's important. It's easy to say one or two of these things is more important than all the rest put together, so just focus on that. And that is true — except which of the things is the most important thing? I suppose it's completely uncertain or unknown. How do I decide which of those things they are? And so not wanting to make a decision because you're not sure, you tend to spread around many things or fail to make a strong decision, which kind of makes sense. But the result is that if you spread yourself thin over a bunch of things, most of which don't matter, that's just not going to work. When things are uncertain, sometimes we're stuck in not making a decision, and there we are. To me, that's what a lot of people are doing, and it's all very understandable. This is not me saying, 'Look at how dumb everyone is.' Not at all — it's just natural. So it raises these questions: okay, so how do I still figure out what's important? How do I make decisions when it's uncertain? How should I think about AI in particular, or just these things in general? It's always been hard to do strategy, which a lot of this is. That's what strategy is — finding the most important things and making decisions based on it.

There's a number of things. One is the old Jeff Bezos thing of what will still be true in 10 years. Because of course we don't know how AI will change things, but we can still guess what people will want. People always want to save money and time. People want more leads. People want to close stuff and get more revenue. People want to be entertained. In the case of Bezos, what he always cited is that people want to receive the products as soon as possible and there's no limit to how fast people want the product — and in 10 years they'll still want it as fast as possible. Or good customer service. There'll always be a premium market for people willing to pay for things like better service or quality. And there will always be literally a billion people who want the cheapest thing that can solve the problem. So what things are still true even in AI? Well, almost everything I listed, actually. One of the things to do is to realize that AI is part of the solution space — how will I execute this product — not part of the problem space, which is what the customer is trying to do. Marketers will always try to get more leads. If you have a product or service that gets more leads, they want that and they definitely have a budget for it. Often they can even measure it. There's a budget for getting more leads, or more good leads anyway. So you're thinking, 'How do I use AI for that?' That's fine. But the question is, how do I use AI to get more leads? Not just, how do I put AI on the page?

I understand you just have to say 'powered by AI' on your homepage because everyone else does. And because a lot of people are being told by their bosses, 'We got to do AI stuff,' so they have to buy AI things whether they care or not. So I understand it's on the homepage. I get it. But that's to check a box so that you get seen or may be bought. That's not really what they want. What they want is to get more leads. If they double the number of hot leads and revenue increases because of you, they will definitely give you lots of money no matter how you achieve that. Could be gremlins in a box doing that. Could be AI. It doesn't matter. If you're actually delivering value like that, it's going to work. So one of the things is to say: what is that core value or transformation that I'm doing for my customers? Okay, sure, you can ask how will AI do that more or better or more efficient or faster. Fine. But if you can't articulate what that core value is — that transformation that's happening there, or it could be something like they're very entertained — is it really doing that? And then when you say AI, is it increasing that? And often the answer is no. I just put in AI because I heard that, or I just have the 372nd tool that does something in AI just because other people are doing it. That's okay. I'm not saying you can't do that. It's just don't be surprised when nobody cares because either you're not delivering value or it's just the same as everything else.

Well, many things are. In my experience, it's common to find a product where if you reposition it, it sells much better even though it's the same product. That's one of my hobby horses because I think you can do this with literally any product. I should say a product that sells to a pain point — not entertainment, which is all different and I'm not an expert in. But for things that you're selling to, especially a business with a pain point, the common thing to do is say, 'I'm saving time, saving money, saving hassle.' You probably are — most tools probably do that. Is it worth paying to save time, paying to save money? Yes, in general that's true. So because none of that is false, it's easy to fall into that. And yet almost all products like that can be repositioned so that you're selling more value, more transformation, more of something positive that they value rather than less of a negative thing they'd like to go away. Almost all can. And when you do, you can often certainly sell close to more, but what I find is you can often charge 10 times as much. That's a big statement without an example, so let me explain. Let's say what your tool does — and this is the example I use in the book Hidden Multipliers. Go get the book. Now I'm giving you one thing from a chapter of the book. All right, fine, spoiling it. You have a tool that cuts the cost of AdWords in half. So a marketer gets it and — let's say AI, what the hell — and oh, look, I still get the 200 leads a month that are good out of AdWords, but it cost me half the amount. So let's say I spend 40 grand on that. Now I'll only spend 20 grand. I've saved 20 grand. Awesome. What am I willing to pay for this product? A good amount, but not 20 grand because that's how much I saved. There would be no point in that. Not even 10 grand. I need to keep most of the savings. So maybe I can spend five grand. So I save 20 grand a month, I pay five grand a month for that. All right. Now I'm really saving 15 grand a month, but that's pretty good. That's one way to sell that product. But here's the other way to sell that product: you say, 'Wait a minute. If my budget for AdWords is 40K, that's what I'm doing now. So if the leads cost less, then that same 40K — if I continue to pay the 40K — I could actually have way more leads.' And in fact, I'm willing to pay a certain amount per lead. Maybe I'm paying 100 bucks a lead out of that 40K. Well, if I could pay another 40K and still get double the number of leads rather than half the cost, but double the number of leads at the same cost per lead at the same 40K — so now I'm spending 80K — I would way prefer that. Because now when I go to the CEO, I don't say I saved 15K a month, which the CEO is happy about. I doubled leads, which doubled revenue. You'd even spend more than 40K for that. A lot. So I could charge 40K a month for this same product that has half the cost per lead if I pitch it as double the leads at the same price per lead. Now the person's paying 80K instead of 40K, except me, the product, I'm getting that 40K. 40K, not 5K. And all I did is position it as: wait, if it's cheaper, you can get more leads. That's the actual thing they want, not just the saving of the money. So by pitching it as double the number of leads at the same price per lead, I can 10X — or okay, 8X in this case — the price of the product. Same product. That's obviously a contrived example, but the point is that the customer already values certain things a lot, spending tons of money on that thing, and they'd spend even more if they got more of it because that's what they actually value. And if you can pitch it as creating more of that, then you can charge a whole lot more, or maybe close a lot more, rather than eliminating a cost or time. In the book, I give like 15 other quick examples of all shapes and sizes — consulting companies, other things — just to show how you can do that.

Well, yeah, I mean it's both. The job market is really tough right now, and that's because not enough people are being hired to do stuff because of the expectation that AI will do it. And we all know it's not doing that. Not that AI can't do anything. AI definitely supercharges a senior developer, for example. But it actually doesn't supercharge a junior developer. They produce demo work that you can't turn into a real product. And all senior developers who are working with junior developers will tell you that. This is why vibe-coded stuff is never a real product. It's really cool because it can one-shot stuff, but when it actually comes to a real product with all the other stuff and ongoing maintenance, and also as the codebase grows, AI gets worse. When there's nothing there yet, it can make something pretty neat. But when you have a large, mature codebase and try to use AI, you realize there are a lot of limitations. It does a lot of stuff wrong. Engineers and developers don't know that, so they're ineffective still. The truth is it doesn't work that well for a lot of these things that we're saying, 'Oh, we won't hire people.' I think the companies that understand that will just do better. They'll have better marketing because they didn't fire all their marketers. They'll have better content because they didn't — they'll realize that people don't watch AI-generated YouTube and they don't listen to AI-generated podcasts. So you can do that, and it's getting better and better, and nobody wants it ever. And I don't think they'll ever want it — which is a big statement, but here's why I think that.

Chess. Computers have been better than humans at chess for 25 years — and you can call it AI or not, I don't care, a computer is better than a human at chess, let's call it AI — for 25 years. And chess has never been more popular. It's never been that more people have played or played online or played in tournaments, both online and in person. And the chess content — there's multiple creators with millions and millions of followers. And nobody watches computers play chess. And nobody watches computer-generated chess stuff. It's all humans. Even though computers are better — forever — we never want to watch a computer. We want to see a creator who's a human. We want to watch games from a human. We want to try to get better ourselves as a human. And that's not to say computers haven't changed chess. They have. We've learned things from the way computers play chess that humans never could. How we value bishops and knights has changed since the accepted view from the 70s. A pawn in the seventh or sixth is worth way more than we thought. We already knew the seventh rank was a lot, but now we know something else about how much you can sacrifice a pawn for position because computers have shown us. It's not that it hasn't changed the game. Analysis — oh my god, now everyone has a super grandmaster to show, you know, and open.

Yeah. So computers have changed — not how I play, because I'm an idiot — but how good people play. It has changed the game in that way. It's not that it won't change all stuff. Duh. Of course it will. But we don't want to watch any of that stuff. We want the human aspect. And so now when it comes to coding, that's different because that's not entertainment. So yeah, if the AI can do better, do it faster and get rid of busy work and all this stuff, of course we're going to do it. I do it too. Of course, it's great. In that case, it will change things a whole lot more. It already has, I think. But for other things like entertainment or marketing videos from the company that I actually want to watch, I don't see it. And when I see companies that have great ads or great videos that people actually see, it's never AI. It's always people and personalities.

But I just don't see that for now because that is not what's happening, even when it could.