Interviews → Marketing Over Coffee

John:

Good morning. Welcome to Marketing over Coffee, I am John Wall. Today we have a special interview with Derek Sivers. So Derek, Thanks for talking to me today.

Derek:

Hi John. Thanks.

John:

All right. So, folks know you from CD Baby and of course our audience too follows TED a lot, so you're TED speaker. I'm sure some of the folks listening have seen that. And now you're involved with the Domino Project, your book Anything You Want is out now, available on Amazon and we will have some other links for that. But let's kind of start with the book, kind of what got you into the Domino Project and why did you decide you wanted to get a book out there.

Derek:

I didn't really decide. It's funny, for years people would ask if I am going to write a book, because I have these articles on my blog. And I always said "no no no no, I have no interest in writing a book, I don't understand the point, people could just read my blog if they're interested." And so I always just said no. And I honestly, sincerely had no plan to ever write a book.

But then Seth Godin calls me up and he says "Derek, I'm starting a new publishing company and I want you to be one of my first authors. Will you do it?" And so of course I go "yes, sir." Because he's my hero, so all of a sudden I'm writing a book for Seth. So, that's how it happened, it really wasn't a plan. That's when Seth asks you to do something you say yes.

John:

That's a tough invitation to refuse there, especially if you're following this marketing space. So the idea behind the book, one of the phrases you had for it was: a little more than 10 years of CD Baby experience packed down into like 100 pages. You have kind of your whole story there. One of the big "gotchas" that jumped right out was you talked about a $3.3 million mistake. And I'd like to get your side on that. Tell us a little bit about that.

Derek:

Yeah. The lessons we learned the hard way, right? Like I figured the most useful thing I can do with all of the mistakes I made in the last 10 years is to, for one just kind of rub my nose in it to make sure that I really learn from my mistakes, but also to share all the things I've done wrong so that I have perhaps to recognize it in their own story and maybe it can be useful to somebody.

So, one little thing that I did wrong is: way back in the mid-90s there is a thing where I borrowed 20,000 bucks from my dad, it was before I started at CD Baby but I was trying to make my own record, and everything felt through and everything had gone horribly wrong, but I was so close to finishing it. I asked if I could borrow $20,000 to finish it. And he said " yes, sure." And with the best of intentions he sent me some paperwork saying "just signed this and so and so, and I'll get my company to lend you $20,000." So I did it.

Then many years later I started CD Baby. Then years and years later CD Baby was doing really well. And my accountant told me that my dad's company owned 90% of my company. And I said "huh? What do you mean?", And he said "well, you don't know about this? Apparently there was some documents you signed back in the mid-90s selling 90% of your company to his company." And I was "no I didn't!" And he said "yeah, there was something about a $20,000 loan." And I was like "oh my God, is that what I signed?" So it turns out that like he had the best intentions because at the time I had a little corporation I had set up, but it was worth nothing, it was basically this corporation set up around my recording studio. So his way of loaning me $20,000 was to buy 90% of my company for $20,000, but I hadn't read the paperwork and I didn't understand that. So, yeah, the only way to get out of it, I had to buy it back at market value. You know, the IRS watches those inter family transactions very closely, so he couldn't just give it back to me, I had to buy it back at full market value. So, I had to come up with $3.3 million to buy back my company from my dad's company. It was hard.

John:

I didn't even realize that was completely pre-CD Baby. That was before everything had started.

Derek:

Yeah. So, if you read the full version, the joke is that my decision to make CD Baby not its own corporation, but to make it a DBA on my existing corporation, really came to me from a bank teller. Like, I went down to the bank to say "I want to open a new business account." And she's like "oh sweetie, you don't need to do that, you can just make it a DBA on your existing account." And I went "uhuh, but it's a new business." And she said "oh, don't worry about it, just make it a DBA, it's much easier." And that's one bank teller's advice cost me $3.3 million. So I guess the sharable lesson is: watch out when people give you advice, get a second opinion, don't take everything to lighthearted, because even when you're just small potatoes. You know, I was broke at the time, just making little hundred dollars here and there. But that's one little decision came back to bite me in the ass years later.

John:

Of course you focus on your mistakes, but this is still at its heart a huge success story. I mean, you were able to run this up and have the perfect exit with it too. And the core, one of the topics you're talking about is just the idea of "hell yeah", getting the right idea and if it's a "hell yeah" idea. If you could talk about that.

Derek:

Yeah, okay. This is one of my favorite philosophies in the world. I swear, I still use this every single day. The idea goes like this: whenever you're kind of trying to decide whether to do something or not, like somebody says "hey, do you want to go to this event?" Or "hey, can we meet over coffee and I'll pick your brain about something?" The idea is that we all have lives filled with so many requests and so many people that want us to do things. And I think most of us say yes to too much, but instead if you set your bar higher and you decide: if I'm not feeling like "hell yeah!" About this, like if I'm not feeling like "oh my God that would be awesome! Well, that would be incredible!", If you're feeling anything less than that then just say no.

If you say no to almost everything, then you leave a room in your life for that occasional, rare "hell yeah" thing to come along. And when it does come along you have all the time in the world to devote to it, because you said no to all that other stuff that you weren't so enthusiastic about, right? So, you can use this on the grand scale of like, what kind of job you should get or what kind of contract should I take or something.

But even on the small little day-to-day level, you know my wife and I still do this thing: when somebody's asking us to go do some barbecue and it's far away and we don't even really know these people that's well… It's like sometimes you feel that social pressure, like "yeah, maybe we should", and then we even use it on each other. "Are we really feeling like "hell yeah" about this? No. So, let's not do it. Okay, great." And then you just say no and all of a sudden you have spare time. So I really think that most of us are overcommitted and that saying yes to less is the way out.

John:

Yeah, that's interesting. If we had more than an hour we could even deeper. The thing that struck me about that is you see so much of that in the sales and marketing end of things too, where people are afraid to say no, that's ultimately what it comes down to. Whereas the sales guy would be much happier if you blew him off within 10 seconds so he could go pitch somebody else. But nonetheless you both sit there and kind of do that dance. And I think it's a cultural thing.

Derek:

Exactly, great point!

John:

I see this as a running thread through everything you've done. One of the great stories about CD Baby is that you weren't like the serial entrepreneur, that this was your 35th company and you know 25 of them had failed and you've got VC, you know this whole war march. This was really like: you started with focusing on the customer first. And that drove you the whole way through. And, again, because I think you had that "hell yeah" idea too. The idea was huge. So, you didn't need all that extra stuff pulling you on. Highly you feel that this minimalist thing works for you? Did you apply this to business or is this just the way you live and it went right along with that?

Derek:

Yeah, I guess the minimalist thing, I do that in every aspect of life. But for whoever's listening to this, sometimes you listen to an interview like this and you think that you're supposed to do whatever the interviewee is doing. So, we could just as well be interviewing somebody is the opposite of that, like they say yes to everything in their life and they own seven homes and having nine cars and three wives and 12 businesses, you know what I mean? Like, there's some people, to them that's an exciting life. And they want that. To me, that's like my idea of hell.

Just personally, I love having the least amount possible. If there is something I'm not using in the house I give it away to somebody who could use it. I don't even like owning anything I'm not using. So of course in my business, anytime some well-meaning person would show up at the door with a clipboard telling us that we should have some kind of employee review policy or something something, and post terms and conditions on our website, my big question for them would be: "will I be arrested and thrown in jail if I do not do this?" And they'd say "well, no it's not against the law, but it's a really good idea for you to have." Like, "no no no no no, okay, goodbye, we're done." I don't want anything in my business that doesn't have to be there. If I'm not going to be thrown in jail for not having it, then I don't want it, You know?

So even in the way that I design my business, you just have to get used to saying no to everything. Because every other B2B company wants to sell you something and wants to pitch you on that idea. You need to have their insurance plan and their this plan and their this and that. Everybody is trying to sell you something, you just have to get used to say no to all of it. And it's the same thing with life, I mean look at all the advertising where bombarded with every day. Everybody trying to convince you that you really do need the iPad 2 because it's so much better than the iPad 1, you just have to get used to just say no to everything to find some kind of peace in your life.

John:

Yeah, yeah exactly. To escape the never ending treadmill of it all.

Derek:

Yeah.

John:

So there is a great story in there. because even though you're talking about minimalism in there too, there is also a core of personal responsibility there. And there is a neat story where you talk about the first employee who said "hey, I'm leaving CD Baby, I've got another opportunity." We would love to hear the story from you of course.

Derek:

Sure. Well okay, the background is: the last day job I ever held, kind of the first day job I ever held, I worked at Warner Bros. for two years from the age of like 20 to 22. Loved it. And when I decided to leave, that was like the last time I ever had a job, that was in 1992, because I quit and I devoted myself to being a full-time musician and I did it. So when I quit that job at Warner Bros. I had such respect for my boss and the company and everything, I figured that if I want to quit that's not their problem. It's my problem that I want to quit. So I had to go find and train my replacement. I just figured this is common courtesy. So I went and found somebody good and I trained them and I had 'em kind of come for a week and learned everything I did and showed them everything I could. And at the end of the week I went to my boss and I said "alright, I'm leaving today, but here is my replacement, her name is Nikki, she's wonderful, I've known her for years, I've showed her everything and she's ready to start Monday at my same salary." And my boss just kind of looked at me and went "...okay great. Send her into HR."

So I just kind of thought that that's the way that things are… I mean, that's kind of common sense, right? Like, if you decide you want to quit your job, that's not your bosses problem, that's supposed to be your problem. You've decided you want to quit.

So years and years later, now I'm the employer and I'm running CD Baby and my first employee said that he needs to quit, he's going to move to Tennessee or something. I said "okay, congratulations. So who's your replacement?" And he said "...what?" I said "well, who's your replacement?" He said "I think that's your job." And I said "really?" And I went and found out "oh oops!" like I just kind of naïvely thought that whoever's quitting it's their responsibility to find a replacement. I think it's kind of funny, this idea, because I didn't go to business school, because I wasn't really trained in business and in fact I never really meant to start a company. I was so naïve in so many ways. But I think sometimes, kind of like that Forrest Gump kind of idea that sometimes being naïve to the ways of the world helps you see common sense better than people who, maybe, have the ways of the world cluttered in their brain.

John:

This kind of a pet peeve of mine: punishing everyone for one person's mistake. A lot of businesses do this. It's just part of the burgeoning bureaucracy. If you could kind of talk about that.

Derek:

Oh God, okay. It starts with just a typical coffee shop. I was living in New York City in Queens and there is this coffee shop on the corner, that it's filled with these signs. Every time you're in there trying to eat, you can't help but escape these big giant shouting signs posted all around the store that where just like: "absolutely no refunds for any reason! No shoes, no shirt, no service! The violators will be prosecuted to the fullest extent of the law!"

And all of these signs, I just kept looking at them thinking "this poor guy..." You know what it seems that happened, he's probably been here for like 20 years and every time somebody comes in and does something wrong, may be somebodies like demanding a refund and start screaming, he thinks the way to solve it is he's going to get a huge damn sign and put it up there, so that everybody for all future time will now see that you can have no refunds for any reason! But the funny thing is it's made his little cafeteria such an unpleasant place to be, because the rest of us were not ever going to ask for a refund, it's like we're getting yelled at every time we walk in there.

And then I thought of like there's so many businesses that do this, like they overprotect themselves so hard. Like they make you agree to these massive terms and conditions, on the rare condition that you might be that one person in the million that might try to sue them, so now all one million of you are going to sign this big legalese contract, just so that nobody can try to sue us. It seems to only be getting worse. It's like more and more people going overprotecting themselves in this litigious society. Let's cover your ass and treat everybody like a potential enemy just to protect yourself from that one that might be... and I think that's a horrible way to do business. And I think that, especially if you're the business owner or your somebody that in control of your company's policies, if you reverse that and instead treat everybody with trust. And that a rare outlier person that's trying to screw you over, then deal with that person one at the time. But treat everybody else with trust and I think that you'll find that the growth and the trustability that comes with your business by treating everybody well will more than pay for itself for that one occasional person that it's going to be a thief and whatever. Then you just deal with the thief, but don't bother everybody else with that. Do you know what I mean?

John:

Yeah. And you know, with the technology we have now you can kind of track to the folks who are harder to deal with and make sure that they get the promotion to go to one of your competitors or something like that.

Derek:

Exactly!

John:

You know, it's funny, it's both the service thing and then just the cruft that builds up to it. Joel Spolsky has a great tale, he was talking about his dad and how it just takes his dad like 20 minutes to get out of the house. Because he has to do the alarm and he has to lock the door and he has to check the door again because that one time he forgot, you know? And is just like things build up over time.

Derek:

That's a great metaphor.

John:

If you can strip it down to the bare minimum that's efficient and fast.

Derek:

Well, you know, out give you one other an example because I think this is kind of importance. About a year after I started CD Baby somebody came to me that was thinking of starting his own similar websites and he said "hey, so which lawyer did you hire to do like your terms and conditions and privacy policy?" And I said "well I've never hired a lawyer and I don't have terms and conditions as privacy policy." He said "what?? You don't have… You need that stuff, you gotta have that stuff!" I was like "no you don't." He's like "yes you do, because if you don't… What happens if some kid buys a CD from CD Baby and then kills himself and then the parents are going to try to sue you and hold you responsible? Well, what if that?" I was like "well, if that happens I'll deal with it. And some stupid link in the fine print on the bottom of the page isn't going to keep that from happening."

Like, come on, you gotta learn to say no to this stuff and not clutter your site with stuff that... You know, it kind of comes back to that "hell yeah or no" philosophy. Are you really excited about having terms and conditions and privacy policy on your website? If not, then don't put it there. You don't need that stuff. I love that the metaphor of Joel's dad, who just filled his life with all these kind of like crufty habits. You can optimize your business like that to and just make sure that you're not filling your company with cruft that nobody loves the fact that it's there, then get rid of it.

John:

Okay. So, you've spoken and TED too. In fact, one of the classics, the first follower short that you did, which was fantastic. That just lit a fire, and we had plugged that already in the show. And that was funny, so I was doing research for this and I was like "oh, that's right, you had done the first follower thing." But tell us about the TED experience, and prep for that and whatever comes to mind on that.

Derek:

Sure, so when I sold CD Baby, most people when you sell a company like that, millions of dollars, whatever, you do something to celebrate, right? Some people will go buy a mansion or a Ferrari or a trip around the world or something like that. To me, I decided to go to TED, because it's so expensive, it's like $6000 to attend. And I was like "you know what? That's going to be my splurge." I didn't buy a car or anything else. I just started going to TED. So I went to five TED conferences in a row and loved it. You meet some interesting people there, the talks are inspiring. And just sometimes you just kind of feel cool, you know? I was waiting in line for the bathroom and Bill Gates is waiting behind me and Bill Joy walks out, I'm just like "wow, I love this!" It was a little bit kind of, you know, what do you call that? Starstruck kind of stuff.

At the second one I went to, I gave a little talk about the Japanese addressing system. I think on the ted.com website it's called “Weird, or just different”, but to me it was about the Japanese addressing system and how it's a great metaphor for: there are so many things in our life that could be the opposite of what we expect, that work just as well in their opposite. I was really kind of proud of that talk.

Then the next time I went to TED I had this little thing that I had posted on my website, which is that there was this YouTube video going around of a guy dancing at a music festival. And at first it's just one guy dancing, then everybody gets up and joined him. And watching that video, the first time I laughed and then the second time I was like "huh, that's actually really good metaphor for everything I've learned about leadership and how to make the movements and, you know, books like Seth Godin's Tribes that Malcolm Gladwell's Tipping Point. It felt like that was kind of like the visual metaphor for everything I had been reading about in those books. So I just went on my site and I wrote this little thing like: notice that this is kind of like a movement, I mean here it starts with this guy and then this guy joins in and then everybody, you know such and such, and then the latecomers and pretty soon you have a movement. The funny thing is I posted it on my blog and nobody took much attention to it. But then when they were looking for TED speakers I kind of offered to give this little three minute talk and they said okay. And I got up on stage at TED and I did the same talk and it's the power of knowing what audience you're speaking to, because that day over a hundred movers and shakers tweeted it. I mean people like Tony Robbins and Bill Gross from PIMCO and all these people like tweeted it out to all of their followers about this first follower talk at TED and how it was one of their favorite things.

And Peter Gabriel, to me this was the highlight! Peter Gabriel, after I gave to talk, came running up to me. Like, he was actually in conversation with somebody else, he sees me over his shoulder, he interrupts his conversation and runs up to me to say "very powerful and profound and funny, that was a really really my favorite thing of the conference, just absolutely wonderful." I was like "thank you sir." So that was a real highlight to me.

So it's funny, it was a little bit like my a hit single. Which is funny, because it was just such a lark, you know what I mean? This one little talk I gave. It's funny. Honestly on a personal level, when I decided to sell CD Baby it was a little scary because I thought this is my one big achievement in life and I will die and my gravestone will say "he made CD Baby back in his 30s and that's all he did with his life." So it's kind of cool now that as I go around the world most people now seem to know me more from my TED talks and the question I get often is "so what did you do before these TED talks?" I'm like "yes! That's awesome!" I'm really glad that I'm known for more than just CD Baby. That's very heartwarming.

John:

This is a good segway to, I've noticed over at sive.rs you've got to other startups, things that you're working on. If you want to talk about that a bit.

Derek:

There's actually not much to say about that yet. They don't really exist yet. I just incorporated a few weeks ago. I have this core belief that you never really know what a business is going to be until you put it out into the world. So anybody speaking in future tense about what their business is going to be, it's kind of moot. Because like for example: I thought CD Baby was just going to be a credit card processing service, that's it. And it wasn't until a few weeks after I launched that one of my customers thought I was a store and he asked where my new releases were. I said "new releases, what do you mean? I'm just a credit card processor." And he said "I thought you were a store." And I went "ooh, a store. Now there is an idea!" So all of a sudden, just like that my plan completely changed, you know? So I think there is no point in me talking about my future businesses, because who knows what they'll turn into by the time I actually launched them.

John:

I think that's a good point to wind down. Unless, is there anything else that you want to hit, do you have any topics you want to run or points you want to revisit?

Derek:

You know what? Yeah, I would like to just add one thing at the end. Some of the coolest people I've ever met in my life are the people who contact me after an interview kind of thing like this. I'm surprisingly easy to contact and people email me saying things like "I know you must be incredibly busy" and I'm like: no I'm not busy because my whole kind of hell yeah or no philosophy, it's like you know I actually say no to most things so that I do have room in my life to have interesting conversations with people. I would just like to add that anybody listening to things, if you made it all the way through to the end and you think this is interesting at all, drop me an email and say hello, because I'd really love to hear what other people are working on. Yeah, so some of the coolest people I meet are the kind of people that listen to things like Marketing over Coffee. So anybody please go to my sive.rs website and say hello and drop me an email.

John:

Alright, that sounds great. All the links in the show notes too: first follower TED pitch, sive.rs/a is the site for the book where you can get information on where to purchase and then there's also a promo with the book too. If you get the book you'll get a code to get a bunch of songs, free music from Derek. Your favorites from CD Baby artists, is that where those guys come from?

Derek:

Yup. I kind of handpicked some of my favorite artists of all time. In fact, I didn't ask them to give away a song, I paid them 50 bucks each to let me include their song as a giveaway to the book.

John:

That's great marketing for them, right? Just another venue to get it out there. All right, that's great! That'll do it for today. Derek, thanks for joining us and until next week, enjoy the coffee!

Derek:

Thanks!