Scaling With People
Tired of spinning your startup wheels but never gaining traction? Buckle up, founders and CEOs, because this podcast is your rocket fuel to profitability! Every week, we ignite explosive conversations with bold-faced founders, brainy experts, and even a few out-of-this-world vendors. Get ready to crack the code on growth, master employee engagement, and blast through your scaling goals. We’re talking real-world strategies, actionable tips, and perspectives that’ll make your business do a cosmic dance. So, strap in and prepare for lift-off!
Scaling With People
Your business is either a star or it's struggling - learn why with Perry Marshall
Want to build a business moat so powerful competitors can't touch you—without the headache of chasing VC funding? Perry Marshall reveals a game-changing approach to market dominance that's hiding in plain sight.
Marshall, author of "80-20 Sales and Marketing," introduces us to what he calls "Network Effect for Mere Mortals"—the overlooked feedback loops that transform ordinary businesses into unstoppable forces. Through the story of a roofing company that systematically cultivated review velocity, Marshall demonstrates how simple flywheels create compounding advantages that make your competition irrelevant.
The conversation takes a fascinating turn when Marshall unpacks the AI opportunity most entrepreneurs are missing. Forget using AI as a fancy search engine—the real goldmine lies in creating proprietary knowledge systems that continuously improve. The companies already building these systems aren't just more efficient; they're establishing moats that will become increasingly impenetrable as time goes on.
Perhaps most valuable is Marshall's explanation of the "Star Principle," a forgotten business framework from 1960 that explains why most businesses struggle despite good execution. His blunt assessment—"If your market is not growing and you're not number one, your life sucks"—cuts through the noise of conventional business advice. As markets shift from 80-20 to 90-10 distribution online, positioning yourself among the vital 10% becomes even more critical.
Ready to stop exhausting yourself chasing marketing fads and build something with lasting power instead? Visit perrymarshall.com/podcast for special resources including his book that will transform how you see business fundamentals forever.
Welcome everyone to today's Scaling with People podcast. I'm Gwenevere Curry, your host and founder and CEO to Guide to HR. So what if I told you there's a way to achieve uber level dominance without VC backing? Or that the most important business tool that you've never heard of was invented back in 1960.
Speaker 2:And while we're at it, why?
Speaker 1:is everyone scrambling for AI riches? There's an overlooked goldmine just waiting for those who know where to dig. Are you curious yet? Because I certainly am, welcome Perry Marshall to our call today and, perry, I'm so excited to dive into all these really amazing topics. Can you tell the audience a little bit about yourself?
Speaker 2:I am the engineer that got laid off when his wife was three months pregnant with first child and had to go into sales and two years of bologna sandwiches and ramen soup and baked potatoes and salsa and other kinds of cheap nutrition, spiraling credit card debt, pounding the phone, pounding the pavement, driving all over Chicago metro area in my little red Honda Civic that's me. And I finally discovered real marketing, which saved my bacon and well, after helping to sell a company and doing very well with an exit, I hung out my own shingle and now I'm author of a bunch of books. People know me for my book 80-20, sales and Marketing. So we can have a great conversation today.
Speaker 1:Awesome, I love it, so let's dive in. I mean, that seems like a teaser for all of founders out there that they can achieve uber level dominance without VC funding. What is this all?
Speaker 2:about.
Speaker 1:What can be some of the context around this and what's kind of the first or maybe even second step a founder could take to get there?
Speaker 2:So I have seen every kind of business that you can imagine. I've consulted in 300 industries, and one thing I'm very not interested in is things that'll make money this week or this quarter that are going to go away and now we have to relearn another technique or we have to go to school again. I am interested in businesses that have moats that are very hard to compete with, and 20th century moats are things like factories and distribution channels and car lots and things like that, and that's very 20th century. 21st century moat is what silicon valley calls network effect, and everybody's seen it. It's when uber attracts more riders, which attracts more drivers, which lowers the wait time, which gets more riders, which gets more drivers, and so on and so on, and that is how all of silicon valley runs, and it's very expensive and it's very easy to fail and it's a chicken and egg problem. You know, if only we could have more customers and if only more people used our apps and if only we had more drivers. But there's another version of it that I invented and I call it network effect for mere mortals, and it's invisible, okay, until it's so powerful that you can't really beat it anymore, and it can be done by very ordinary companies. So let me give you an example.
Speaker 2:I have a client called Roof Simple and they're in the DC area and it was started by a guy who was not from the roofing industry, who hated the roofing industry. He thought the way that their salespeople are trained and the culture of the roofing industry. He thought the way that their salespeople are trained and the culture of the roofing industry and storm chasers and all those kind of. He intensely disliked it and he said I'm going to have a different kind of roofing company that creates a different kind of roofing experience and one of the things. So he designed a way of interacting with the customers that the customers always felt good about. I don't have time to go into it, but it was much more pleasant than the typical roofing experience.
Speaker 2:So when they would get to the very end and we're all done with your roof and Mrs Smith is everything great they would get her check and they would say would you mind signing into my iPad and writing a Google review for us? And because she was pretty happy with it, they did not have a hard time getting a yes and they started getting five star reviews and mark coined a term that I've never heard before, called review velocity the speed of getting good reviews. Well, something interesting happened. By the time they got past a hundred, not only was all of their marketing and advertising online cheaper than all of the other roofing companies in town the first day they opened in Houston, their advertising was also cheaper in Houston than it was anywhere. Now, that's just one example. There's lots of examples of this. I can give you another one when we talk about AI. Okay, because there's really about 100 of these and people just don't recognize them for what they are.
Speaker 2:But can you understand that once Roof Simple had a hundred or 200 reviews, it is really hard for Joe Carpetbagger Roofer to just you, you know put a sign on his truck and compete with that yeah because otherwise, other than that, roofers are a dime, a dozen yeah so I call that network effect for mere mortals and that's one of the things that we specialize in, and in my coaching groups, in my consulting projects, I look for that and they are internal feedback loops. They're like flywheels and once you get those flywheels going they're very hard to compete with and you're usually much harder to compete with than it looks like you are, and that's really the way I like it.
Speaker 1:Yeah, it's all about the perception, right? Yes, yes. Well, and then hopefully obviously the follow through as well but to get through the door. It's the perception.
Speaker 2:Of course, and so I don't think people realize. All businesses are ecosystems and ecosystems thrive on. There's a cycle somewhere that needs to go round and round as effortlessly as possible, and that is how you build a moat around a business. That's how you make a business sellable. Frankly, it's also how you make a business that you're buying every morning when you roll out of bed, because if you're not selling the business, you're buying it.
Speaker 1:Yeah, yeah, that's interesting. I love that idea and so for someone listening, what could be like a first step even if it's a baby step for them to take in order to get this velocity going, the flywheel going as you had said.
Speaker 2:So ask yourself a question what behavior if we reinforced it would happen more often, faster and in higher volume, if we removed all the friction of this happening and it could be just about anything happening. And it could be just about anything. Um I I have a book called detox, declutter, dominate that has a little section specifically devoted to this. But this is the 21st century mode. It's all network effects. It's going to be even more so as ai becomes the norm, Like, I think, right now, 99% of people. They treat AI like a search engine. Okay, it's a great search engine. It is so much more than that.
Speaker 1:So much more, yeah, yeah, I mean.
Speaker 2:I'll be honest with the audience.
Speaker 1:I created my little intro through using AI as we were talking about what we wanted to talk about to the audience, so that I could send you know I'm a math major.
Speaker 2:I hate writing.
Speaker 1:Anyone that knows me knows that so well. Ai has been a game changer for me, so let's dive into the AI. We'll jump the other topic really quick. Let's talk about AI. It is a goldmine if you know what you're doing. But what are people? What are we completely overlooking, and how should we be thinking about AI from your perspective?
Speaker 2:So I want to speak to every single person that has a body of work.
Speaker 1:So that's, everybody.
Speaker 2:Well, it should be so. This could be authors, consultants, subject matter experts. It's also any company that relies on some kind of technical expertise to do a very particular job, a very particular way. So let me give you an example. That's not an author, not a consultant.
Speaker 1:Okay.
Speaker 2:Very recent victory from one of my clients. The client is solarquotescomau. It's an Australian company where you go to their website you say I'm interested in putting solar power on my house and they connect you with three good, qualified installers that will give you a quote and you can pick between them and they have a certain amount of guarantees of the quality. So this is what the business is. This is a network effect for mere mortal story using AI. So the founder, Finn Peacock he came to an AI seminar he did a couple of years ago and he said I'm going to create an AI chat bot that is trained on all of our internal knowledge of how solar power works in Australia, how we do it compared to how everybody else does it Very curated.
Speaker 2:And so they started putting that together and they developed a system where, when a support ticket comes in, the chat bot answers. It sends the answer to a person. The person has to check it first and then it's either thumbs up or thumbs down. Thumbs up goes back to the person, Thumbs down goes to the reject pile and the customer support person fixes the answer. And then once a week they're going to go fix the reject pile and try to straighten out the data set so that mistake doesn't happen again, so it gets better. So on the face of it, this just sounds like the next step of 21st century customer service. And it is, and it made their customer service 30 percent more efficient. It made the customer service job more interesting, because now they're managing a bot rather than just answering the same stupid questions over and over yes.
Speaker 2:So that's great, but it's also another thing that this is what people don't get. That is network effect for mere mortals too. So let me unpack that Every time they improve the database, if the accuracy goes from 70% to 75% to 76% to 82%, every time it gets better, the flow of information goes faster and the cost of servicing that goes down. And if it's good information, it attracts more customers, which attracts more. It's a flywheel. Attracts more customers, which attracts more. It's a flywheel and it might seem insignificant. It's not. And here's why it's not insignificant, because if you go to chat GPT or Gemini or GROK or whoever you like to hang out at, and you ask a solar power question, you are going to get an average answer across all the websites in the world that is inconsistent and jumbled full of incorrect details. And if you're working with 440 volts AC, that is probably not a great thing. This matters.
Speaker 1:Yeah.
Speaker 2:So what he also was doing at the same time was building the best interactive solar panel portal in the world, and then the flywheel makes it improve faster than anybody else's else's. Right now, like as of today in most industries and most niches, it is possible to be the first person to get there who delivers specialized information on your topic yeah, that is a short window.
Speaker 2:Does anybody remember the short windows of the two thousands when you know when websites were new or Google AdWords was new or Facebook ads were new? This is a next thing, and it will get bigger and bigger and bigger, and anybody who has a unique body of work, with a unique perspective on important problems that affect people can do this. And the clock is ticking yes, yeah, absolutely.
Speaker 1:I would agree with that.
Speaker 1:It's a short span to become the first right yeah so yeah, like get your running shoes on and put some um fireworks or some, like you know accelerators on those shoes as well at the same time. Yeah, so, as we're talking about inventing your new thing with AI, let's go back in the past. Something was invented in 1960. And it was a business tool we probably have never heard of. I'm curious what is this tool and why is it such an important faucet from your perspective to help a business grow and succeed?
Speaker 2:The tool is called Star Principle and it's also known as the Boston Box. It is a little two-by-two grid. That Boston Consulting Group came up in the 1960s and it is probably the most important thing that you can know in business, and most people I've met have never heard of it. And what they did was they divided all businesses into four quadrants and the quadrants were businesses into four quadrants and the quadrants were is the market growing 10% plus or not? Is it growing less than 10% a year? And that's one line across the middle. And the other one is is the company number one in their market or are they not number one in their market?
Speaker 2:And so if you're number one and the market's growing 10%, you're a star. If you're number one, no sorry. If the market's growing 10% but you're not number one, you're a question mark, which means you could be doing okay or you could not, kind of depends, which means you could be doing okay or you could not kind of depends. Then there's market not growing 10% but you're number one. That's called a cash cow. That would be like Procter and Gamble. I don't think soap is super hot right now, but they're number one and they're they're doing fine. And then the last quadrant was not growing. 10%, not number one. That's called a dog. If your market is not growing and you're not number one, your life sucks.
Speaker 1:Yeah.
Speaker 2:And they came up with this, analyzing data from thousands of companies. But they came up with this very simple thing analyzing data from thousands of companies. But they came up with this very simple thing. And whether you are investing or starting a company or developing a new product or advertising or anything, if you can't figure out how to make your new product a star which means the market's growing 10% at least, and you are number one don't do it. Most business people are trained to be like the other guy, but a little better and a little cheaper.
Speaker 1:That sounds very familiar.
Speaker 2:It never works.
Speaker 1:Yep.
Speaker 2:If they're number one and you're not, you might be a little better and you might be a little cheaper, and your profit margins will be smaller than theirs and your life will suck. Nobody seems to know this, but it's true. And if you're not number one, you need to figure out either where can I do something that nobody else is doing, or get out.
Speaker 1:Yeah, I think that's the key. You might be coming into a saturated or old school industry, but what is it that you're going to be doing different? How are you going to break that mold? How are you going to disrupt this, whatever it is you're working on? And if you can't answer that in a pretty simple, clear way, then you either need to do more research or maybe think of something else to deal with your time.
Speaker 2:And I want you to notice that all of the companies that are like on Wall Street, they're doing extremely well right now, like NVIDIA or whatever, they're all stars and they all have network effect.
Speaker 1:I love tying both of them.
Speaker 2:All of them and little companies can be stars with network effect too, but you do it differently. So you don't have to have venture capital level money to get five-star Google reviews and have a process of getting that done. You don't have to venture capital level money to build a good AI bot, but you do have to decide. This is what we are going to do. We are going to do this right, we are going to do this well and the better it gets, the more we're going to feed the flywheel, the more we're going to use it, the more we're going to rely on it. And, like I mentioned, I have a book called 80-20 Sales and Marketing that everybody should read. I want to.
Speaker 2:The world is shifting from 80-20 to 90-10. And let me tell you what I mean by that. So traditionally, 80-20 says 20% of the people have 80% of the money and the other 80% of the people have 20% of the money. And that is true in the brick and mortar world, but online it's 90, 10,. 10% of the people have 90% of the business. And if, if you look at the Airbnbs and the Spotify's and the Ubers and all of that, it's true Ubers and all of that.
Speaker 1:It's true.
Speaker 2:You need to be the 10%, the controls, 90% or your life will suck, and who wants to have their life in that unfortunate capacity?
Speaker 1:Well, some people apparently like it, but I don't want to be one. I don't disagree with you on that one Perry. Well, I feel like there's so much more that we can dive into today, but, as we wrap up here, any last final thoughts or words or wisdom you'd like to share with the audience today.
Speaker 2:Yes, I think that people haven't really gotten the memo that most of marketing is dead.
Speaker 2:It's either dead or in the process it's on life support and the nails are getting hammered into the coffin and there there is a huge, huge difference between between marketing principles that are always true for all time, like you know, since Adam and Eve, versus the flavor of the month, like the latest thing, that changes and changes and changes and changes. And most people are, they're completely obsessed with techniques and fads and they're not obsessed with principles, and that's completely backwards. If you want to exhaust yourself and wear yourself out, just live in the world of techniques and you'll have a golden opportunity to run on a hamster wheel as long as you could ever want to.
Speaker 1:Yeah, again, putting yourself into the space of your life sucks. Well, these were great tips and tricks and tools that you presented to us, and if someone wants to pick up one of your books or learn more about you, we'll get your website and any other additional information attached to the podcast as well.
Speaker 2:You should go to perrymarshallcom slash podcast and we have some gifts for podcast listeners. One of them is my book 80, 20 sales and marketing, which will absolutely change your life. This is the stuff that's always, always true, forever, as opposed to the flash in the pan. And you, you know, maybe chasing techniques is a lot of fun when you're 25. It you know it's, it's downright annoying when you're 45 and it's exhausting when you're 55 and it's deadly when you're 65. And so I just think the younger that you figure out that it's all about the principles, the better off you are, you will be Awesome.
Speaker 1:Well, thank you for that gift for the listeners. I hope you all take advantage of that and thank you everyone for joining us today on the podcast and we look forward to having you on next time. And thank you, perry, for joining us and giving us your wisdom today.
Speaker 2:Thank you, Gwyneth Paltrow.
Speaker 1:Have a good one, everyone. See you on the next one.
