Long story short: Paul Keigan started out as a Canadian immigrant 48 years ago, with $96 and the American dream. He got into sales at a car dealership, and immediately he started making friends and repeat customers. Then, 20 years ago, he bought a failing dealership in Franklin, which was to become Keigan Chevrolet.

This year, however, GM, in the midst of its own baptism of fire, has pulled the plug.

“Nobody wants to go out this way,” he explained. “And I’m just one of thousands going through it. Honestly, I’m not bitter for me; where else could a guy like me have gotten a shot like this? I’m bitter about the good people this is hurting, like the people on my staff who performed so well.

“They had nothing to do with GM’s bankruptcy, yet they’re the ones paying for the greed that caused it.

“If we had run our business into the ground, fine. But to have done the job the way we did, only to have someone tell you, ‘Hey, buddy, you’re all done,’ it’s awful.

“Who’d have thought that could have happened in America?”

Now, my very old friend tells me, from personal knowledge, that Paul Keigan is the nicest man you’d ever want to meet. And I believe it, because if he’s as good a salesman as they make him out to be, catching the American dream using nothing more than his personality and wits, then he’s gotta be a nice guy. We picture the salesman as a sleazy type, hair slicked back, hand out ready to shake and pickpocket at the same time. But in reality, the best salesmen are personable and downright likable, because they have to be, because in the real world, that’s how you get people to like you enough for them to buy stuff from you.

So if Paul Keigan is the nicest man you’d ever want to meet, that’s going to make me the asshole, because I am definitely not feeling like a salesman right now.

Because if Keigan really cared about his employees, and if he’s really that great a salesman, he’d start a business selling something else. It’s not like there’s nothing to sell. Hell! He could probably even still sell cars. (I understand people are still driving them.) He started Keigan Chevrolet in the middle of a recession 20 years ago, and he could do the same thing again, if he wanted to.

But he doesn’t want to, and I can respect that, too. He’s 68, and he wants to retire. I can understand that… except for one thing… he’s “bitter”—his word, not mine. That sticks in my gut, makes me feel uneasy, like I’ve been emotionally violated.

I have a real hard time working up sympathy for a man who complains instead of doing something to fix what’s bothering him. Now, maybe it was just the reporter who made him seem like a bitter, old man, because playing the victim goes over really big nowadays politically. Or maybe the reporter did not misrepresent him; maybe he needs to be bitter so that he can blame someone else, rather than just admitting that he could do something for his employees, but he just doesn’t want to, because he wants to retire.

However the rhetoric falls out, one fact is clear. We have all had to adjust. I am looking for work again, even though I don’t really want to. Many people are looking for new jobs or starting new businesses. Many businesses need to find new industries or new markets—and not just during a recession, either. Every time Google changes their policy, thousands of online businesses need to adjust or go under. When Amazon some months ago seemed to be discriminating against print-on-demand books, many indie authors freaked out, because they depended on Amazon for almost all their revenue.

And you know something else? I couldn’t work up any sympathy for them, either. Because if you build your business on someone else’s, you accept that you’ll go down with them. You accept their risks. If you depend on Google, you should expect to fail as soon as your business is no longer useful to Google, because that’s the risk you accepted by depending 100% on Google. If you don’t want to accept that risk, you must diversify, only depending a little on Google, and a little each on many other sources of web traffic. That’s the smart thing to do, anyway. And I have a real hard time working up sympathy for these online businesses who don’t do the smart thing and then complain and get bitter when Google changes their policy. See this? It’s the world’s smallest violin…

So their chosen ski rope broke, or maybe their boat ran out of gas, and they sank into the water. So get up and try again already! Because that’s what the American dream is all about! What makes Paul Keigan, his industry, his business, his employees so special that they deserve a pity party instead?

What makes any of us so special that we deserve a pity party?

Remember Will Smith’s character in The Pursuit of Happyness? Even at the lowest of lows, he was still a sympathetic character. With all the mistakes he seemingly had made, we still sympathized with him. Because he never asked us to pity him. Rather, he took his destiny into his own hands and pursued his American dream.

Likewise, the American dream is only dead if we stop pursuing it.

-TimK

Seth Godin has a better quip about these make-money-fast schemes: “If no skill or effort is required, then why doesn’t the promoter just hire a bunch of people at minimum wage and keep the profits?”

Clearly, it can’t be that easy, or else everyone on the planet would either be a millionaire or would work for a millionaire who uses such a system. The truth is that even a simple business requires know-how, determination, and a success mindset. That’s why being self-employed isn’t for everyone.

-TimK

What caught my eye about Long’s article was his claim that in a genuinely free market, businesses would be significantly smaller than they are today. He points out that large, hierarchical businesses are subject to many of the same inefficiencies that plague government bureaucracies. The executives of the largest corporations cannot possibly have enough knowledge to make good decisions about the thousands of different projects various parts of their companies are undertaking, and so it’s inevitable that large companies will suffer from inefficiencies greater than those that afflict smaller firms.

For example… the Internet’s success depends on the fact that it isn’t owned or managed by any single entity. Back in the 1990s, when the Internet was competing with proprietary online services like AOL and Compuserve, the Internet’s lack of centralized control turned out to be its most important strength. The hierarchical decision-making processes of the AOL and Compuserve companies simply couldn’t keep up with the spontaneous order of millions of Internet users acting without central direction.

Lee goes on to partly agree and partly disagree. On the one hand, you have Microsoft, who started as a small, entrepreneurial, innovatively disruptive company and has grown up into a struggling, bumbling behemoth. (My words, not his.) On the other hand, you have Google: “The reason Google is so profitable, in a nutshell, is network effects. Google sits at the center of a vast network of users, website operators, and advertisers who are locked in a virtuous circle.”

Fascinating topic, and one that I haven’t yet thought much about in those terms.

-TimK

A small acting bank would never have invested in tens of thousands of loans that they hadn’t looked at. And a small acting startup wouldn’t hire dozens of people before they had a business model… and then have to lay off a third of them just because their VC firm showed them a scary PowerPoint.

As we enter a maybe-recession (and maybe worse), several wise businessmen–unfortunately, I don’t remember exactly whom–have pointed out that small businesses are also mostly likely to succeed in the uncertain economy, because small businesses can adjust to new situations and capitalize on them.

Encouraging.

-TimK

P.S. More recently, Seth also wrote that productivity is what generates wealth. (Trading stocks doesn’t. Government action doesn’t. Tightening one’s belt doesn’t.) And it reminded me of a lesson: find the things you can do better than others in your field; you can charge as much as they do, and yet spend less, because you’re more productive.

If you want to learn how to give good writing advice, the best thing you can do is to critique others’ work and to have your own work critiqued by other writers. That has nothing to do with getting published. And if you want someone to give you advice on how to tell a story, what matters most is (1) whether he has done enough research to know what he’s talking about, (2) whether he knows how to write (not how to get published), (3) whether you like his stories, and (4) whether he knows more about the art and craft than you do. These are the same kinds of questions you ask when you look for a consultant in any niche, not just storytelling.

Actually, I do have some minor publishing credits: articles, short stories, and such. This was years ago, and I haven’t tried to be published since. Part of the reason, I admit, is that I don’t like to get rejection letters. Who does? And I don’t believe rejection letters are a necessary evil, which I hope to clarify below. But there’s a much better reason. When I discovered that I had the chops to turn an editor’s eye, I ran the numbers, and I discovered that unless you’re Stephen King, there’s no money in being published. No good money, anyhow.

Now after years of research, I believe there is no use in being “published,” at least not for me. As I enter the next chapter in my saga as a self-published author, let me set down some of the thoughts that have inspired me and the risk I’m taking. And where I expect to go from here.

What’s so great about getting “published”?

I started writing this article by putting “published” in quotes everywhere. That started to wear on my eyes, so I cut it out. But the point is still valid. “Published” authors use the word to mean, specifically, “signed with a third-party publishing company.” But this is merely one path to make money with words in print. It has always been so, and in the Internet age, more options are available than ever. Being “published” is only one of the ways authors employ to be published.

And what do you get for being “published”? It’s not all skittles and beer. Firstly, you get to pitch, schmooze, and beg agents and editors. Practically all of these efforts will result in zilch-o. What kind of genius spends almost all his up-front marketing effort on tactics that he knows ahead of time will be a complete and utter failure? And success or failure does not just depend on the quality of your writing. What really matters is how many tens of thousands of copies the editor thinks his publisher can sell of your manuscript, and that may depend on factors such as whether his eyes are already glazed over from reading 70 pages of crap, and whether he had Chinese for lunch that day. Only 70,000 new titles are published each year in the U.S., but more than 8 times that are submitted to publishers. Those are tough odds to overcome. But if you want to be “published,” this is the only way.

Once you’ve finally collected enough rejection letters so that you have to move to a bigger storage facility, you finally catch a break. Your novel is accepted. Now you get to work with an editor who may or may not care about your writing. (The good ones do, though.) And he works for a publisher who probably does not care (because the publisher only cares about how fast he’ll make back his investment). In any case, you agree to give up control over your work to the publisher, because he’s taking the risk in publishing it. Meanwhile, he will do little to help you actually sell your book. You must spearhead the marketing and PR yourself, all the while working on your next book, which you may or may not be able to get “published.” And you get to do this all while living on your advance, because the profits from sales of your book pay back your publisher for that advance. Of titles published, 90% never sell out their first printing. And no one–neither the publisher nor the author–makes much money from them.

Hmm. I’m not sure if that’s the life for me. I mean, maybe if they also forced me to move to Siberia and consist on watery gruel… But I’m just too much of a sado-masochist for that, when I could instead be designing software for more money than most authors ever see.

(And I enjoy designing software. The only down-side is that I reduce myself to a commodity, selling my life to the highest bidder. Where’s the meaning in that?)

Being published is a hazing ritual.

I believe the biggest draw to being published has nothing to do with success. Rather, it’s the same draw that makes college freshmen endure cruel and dangerous hazing rituals, and then turn around and subject others to the same torments.

Dr. Robert Cialdini described the phenomenon in his landmark book Influence: The Psychology of Persuasion. Fraternity pledges persevere through embarrassment, thirst, eating disgusting foods, exposure to the elements, even punishments and beatings and death threats. Despite the cruelty of these rites, they continue on. No efforts have been able to eliminate them, divert from them, or go around them or through them. Bans have merely pushed the practices underground. Attempts to replace Hell Week with “Help Week” have fallen on deaf ears. Regulations to control them have met with physical resistance, even riots. And despite the recognized loathsomeness of these practices, even new pledges are impotent to just say no.

The evidence shows that fraternity and sorority members are just like the rest of us. There’s nothing special about them that makes them want to undergo torment and inflict it on others. Rather, this phenomenon has a well-established psychological cause, explained by a 1959 study performed by Elliot Aronson and Judson Mills. They noticed that “persons who go through a great deal of trouble or pain to attain something tend to value it more highly than persons who attain the same thing with a minimum of effort.” Quoting Dr. Cialdini (pp. 89-90):

The real stroke of inspiration came in their choice of the initiation ceremony as the best place to examine this possibility. They found that college women who had to endure a severely embarrassing initiation ceremony in order to gain access to a sex discussion group convinced themselves that their new group and its discussions were extremely valuable, even though Aronson and Mills had previously rehearsed the other group members to be as “worthless and uninteresting” as possible… Additional research showed the same results when coeds were required to endure pain rather than embarrassment to get into a group. The more electric shock a woman received as part of the initiation ceremony, the more she later persuaded herself that her new group and its activities were interesting, intelligent, and desirable.

Revolting, isn’t it?

You can see where I’m going with this. We finally can understand what makes getting published so desirable in its own right, not because of any advantage it has over other alternatives. Being published is an insider’s club, and getting there is a kind of hazing ritual. In other artistic fields, there are no such barriers. In music, for example, independent bands book their own concerts, record their own albums, arrange their own tours. When they succeed, other musicians admire them for all they’ve accomplished, regardless of whether they get signed by a big label. On the contrary, some musicians look down on big labels, because it’s said that they cater to the lowest common denominator, squeezing out creative expression. For musicians, it’s about the music, not about the size of the signing bonus.

Remember the author I told you about? He told me I was unqualified to give advice on storytelling, because he thought I was unpublished? I’d lay odds that he agrees with at least 90% of what I write about writing. And I’d lay further odds that the remaining 10% would intrigue him. Because everything I know, I learned from other writers and from experience, the same way he did. But he didn’t even want to hear what I had to say. And he didn’t want to see anything I had actually written. He was patently uninterested in arguing my qualifications on the merits.

That surprised me, but it should not have. Because he’s an insider, and I have not gone through the initiation ritual. I bailed out as soon as I figured out I could be more happy going a different route. That makes me an outsider and “unqualified” in his mind.

The publishing industry cannot cope with micro-niche markets.

In the mass market, you’re going after as big an audience as you possibly can. You cater to the lowest common denominator, you publicize far and wide, and you hope that you can make a few bucks off of each of a few hundred thousand people. By “micro-niche,” I mean the converse. I’m talking about a business that operates in a very specific niche, catering to a highly enthusiastic audience. When you operate in this kind of niche, you develop a loyal fan base, and you design your business to thrive on this enthusiasm.

Let’s apply this to fiction. In a mass market, you try to come up with a novel that will sell umpteen gajillion copies within 15 minutes of hitting the bookstore shelf, or else it gets pulled forever. There are also smaller sub-markets: genre fiction (e.g. romance), sub-genre or cross-genre fiction (e.g., historical romance), niche fiction (e.g., chick-lit), and then…

Then what? How would I categorize Abe’s Turn? I’ve been telling people it’s “libertarian fiction,” but that’s not quite right. It’s actually libertarian SF crime romance. And it’s a serial drama, too. This isn’t even a niche. It’s a micro-niche. From a marketing perspective, I’m looking for the handful of readers who fall in love with the unique qualities of this saga, and I want to market to them over and over and over again.

If a bestselling title sells 400,000 copies or more (hardcover + softcover sales), what I’m talking about is, oh… just the 400, without the thousand. I need a business model that can make money even with just 400 customers. There are plenty of such businesses in the world. But not so much in traditional publishing. As a result, I’m finding myself questioning the traditional wisdom and structure of the book-publishing industry, because it’s designed with that 400,000 number in mind. A conventional publisher must sell at least 5,000 copies of a book just to break even. And out of all the titles they publish, most are going to lose money. So they seek out authors they think can sell hundreds of thousands of copies, to subsidize all the titles they know are going to bomb.

Here are some of the questions I’ve been asking:

• Should I hire an editor? The common wisdom is unequivocal: Yes, absolutely, no doubt about it, you need a professional copyeditor. But let’s run the numbers. One half-season of Abe’s Turn plus bonus chapters, 90,000 words (or thereabouts). At up to 8 cents per word, that’s $7,200 for a copyeditor. Okay. For a short run, let’s say I could make $8 gross margin per copy sold. Now, just to pay the copyeditor, I’d need to sell 900 copies. In other words, I lose money with a micro-niche market of 400 hard-core fans. Or to put it another way, unless a copyeditor can single-handedly bring me 900 additional sales, he’s probably not worth it.

• Consider distribution and sales channels. The traditional wisdom is that you sell your book through Barnes & Noble and Amazon.com. (Although some boutique publishers do avoid these channels.) And the author handles the burden of marketing. But to cater to a small market of 400 hard-core fans, you have to know who those fans are. Not just “know them,” conceptually, as in “know what they like.” I mean, you must know their names and addresses. You must send them free stuff. You must offer them every new book, gizmo, and extra that you can think of. That means direct marketing, and that means that Amazon is right out, because they’re not going to share their customer data with you.

  This is not as insane as it sounds. Half of all books sold are sold this way, direct-marketed, delivered through the mail. They never appear on any bestseller lists, but their authors are converting real, live fans and making money doing it.

• This model requires self-publishing, but not through Lulu. Because Lulu isn’t going to share their customer data any more than Amazon will. I can have Lulu print the books, but I need to warehouse and ship them myself. This is actually not as much work as it sounds. It may become a lot of work if I get an unexpected surge in sales and I need to establish a relationship with a third-party fulfillment house. But at that point, it’s obvious I’m not operating in a micro-niche.

• Is there any sense in getting an ISBN number? What would it be used for? To take up space on the back cover? Unless the book is to be distributed through traditional channels and sold on Amazon, the ISBN seems like just extra expense and effort.

  That said, I’m not sure. While Amazon cannot be the primary sales channel, it can be a secondary sales channel. (Ditto Lulu, but Lulu doesn’t require an ISBN.) A block of 10 ISBN’s costs about $250, so if listing my books on Amazon can increase sales by only 1%, the ISBN will pay for itself. I would then use post-sale tactics to convert a portion of those readers into fans.

Wherever along the spectrum my fiction falls, self-publishing is scalable. That is, I can start small and build up. How small? I can start with a single copy. The trick is just to make one dollar profit, and then to multiply it. I’ve done this to some extent with software development. And I’m doing it with 1001 Character Quirks. (Not getting rich off of it yet, but there’s something there.) I have all the control, and I get to keep all the profit. Why would I want to sign with a third-party publisher?

I should add that there are plenty of boutique publishers out there, some with very interesting and innovative business models. And some do cater to very small markets.

In any case, all of what I’m pursuing has been done before. I’m not proposing anything new or radical. But…

I’ll never be Stephen King.

I don’t think I want to be Stephen King. Everyone knows who Stephen King is, even those people who don’t read Stephen King. People like me. I’ve never made it through a Stephen King novel. I’ve tried, numerous times. Always lost interest during the first chapter. Someone went through a lot of effort and money to make sure I knew who Stephen King is. That was wasted effort.

I’d rather be Ted Nicholas. Don’t know who Ted Nicholas is? Don’t worry, his fans do.

-TimK

Last Friday, my parents took us all out to lunch at the Rainforest Cafe, and then we all saw The Simpsons Movie. (Worth seeing, BTW, especially if you’re a Simpsons fan.) The Rainforest Cafe is a theme restaurant, owned by Landry’s Restaurants. And there are a number of things they do there that serve as positive object lessons to all small businesses, in every niche.

The Rainforest Cafe website actually kinda sucks. I won’t go into all the dumb things they did there, because I want to focus on all the things they do so well in their stores.

They don’t sell food; they sell an experience.

Naturally, the food is good. After all, it is a restaurant, which I do recommend. I absolutely love their steak. I think they marinade it before grilling. This past Friday, I had a burger– not a quarter-pounder, but a half-pound monster burger, cooked just right. This ain’t fast food, folks.

But the appeal of the restaurant is in the milieu. It’s the experience. That’s what you go there for. Beneath lighting blocked by trees lives a Noah’s Ark of animatronic animals, who occasionally growl, shriek, and trumpet at you. And from time to time, they all go on the rampage at an impending thunderstorm (sans wet). And you will likely witness at least one Chocolate Volcano, with a complement of wait staff clapping and chanting as they serve it.

The take-away: The value you give your customers is far more than just in the product or service that you provide. You can distinguish yourself from your competition by providing value–not products and services–that your competitors don’t provide. The Rainforest Cafe is in the food business. That’s a commodity market. Yet, they can charge so much more than my local supermarket or coffee shop, because they’re providing an experience that is fun and entertaining. I’m not saying every business ought to be fun and entertaining. But I am saying that your customers derive value that is only indirectly related to whatever products and services you provide. There are gazoodles of restaurants, and only one of them is Rainforest Cafe. And there may be gazoodles of businesses providing the same products or services as you, but you can still provide a unique customer value, even in a commodity market.

They know the value of the upsell.

With my kids’ meals, the waitress offered to serve their drinks in a très kewl, battery-powered, colorful, LED-lighted take-home glass… for an additional $5. Normally, I wouldn’t go for something like that, but this was a special occasion. What I would typically go for, and what I did, is cheese on my burger, 99-cents extra. This is the upsell, offering a premium package.

I’m not talking about nickle-and-diming your customers. Most people will notice if you try to charge them for every last little thing, because they’ll become disillusioned trying to figure out how much it costs for all the stuff they feel they should be getting for free. What I am talking about is offering them premium choices. Everyone wants choices. Not everyone will want the premium package, but some of do. And those are the customers who have money burning a hole in their pocket for you. By offering them a premium package, you aren’t taking advantage of them. Rather, you’re providing additional value to them.

They know the value of the cross-sell.

Rainforest Cafe is the only restaurant I know whose exit is a gift shop. An actual, honest-to-goodness gift shop. Where you can get all kinds of Rainforest Cafe branded products and other kewl fun items. I don’t mean a few items at the check-out counter. I mean a large room the size of… well, the size of a gift shop.

How many restaurants end the transaction when a patron pays his bill? Yes, you can usually get a branded mug, or dessert to go. But Rainforest Cafe has made an art out of the restaurant cross-sell, knowing that a person who has recently purchased from you is more likely to purchase something else. Again, not everyone is going to buy something from the gift shop. But most people at least browse through the merchandise on display there. It’s sheer genius!

Again, I’m not saying all businesses need a gift shop. But how many end the transaction as soon as a customer buys? Meanwhile, they know all about the myriad complementary products and services their customers are probably interested in.

Inspiration from other businesses.

I love it when I run across a business like Rainforest Cafe. Because I love to look at what they’re doing different that make it remarkable. Like the gift shop. Many business owners would think something like that is corny, or not appropriate for their business. But just stand back and look at what restaurant patrons do as they leave. They stop and browse the gift shop. Not so corny to them. What does that tell you about what you should be offering your customers?

The truth is that there are few–if any–businesses that are so unique that they can’t discover new secrets by observing what other people do in other niches.

What’s one of your favorite businesses–not in your niche–that you’ve looked to for inspiration?

-TimK