NEW COLUMN FROM HOWARD TULLMAN

 

THE FASTEST RAT IN THE RACE IS STILL A RODENT

            Over the last 50 years, I’ve given hundreds of speeches to ambitious students, eager educators, anxious graduates, new business builders, experienced entrepreneurs, seasoned executives and owners/operators of large and small companies. And, notwithstanding the perils of repeating myself, I have always offered a few basic “perspiration” principles which I believe have more than stood the test of time at least until recently with the arrival of Trump 2.0. where anything goes, everyone’s out for themselves, honor, sacrifice and loyalty are all regarded as foolish notions, and all that matters is who you can blame and abuse, who you can buy or bribe, what you can make your own and what you can get away with taking while you’re at it. None of this bodes well for the next several generations and there’s really no near-term relief or solution in sight. But we owe it to ourselves, our kids, and our employees to say something. It’s not enough to simply note that the fastest rat who wins the race is still a rodent. (See https://www.inc.com/howard-tullman/leadership-employees-president-trump-communication/91250512.)

            My primary pitches and premises for decades were simple: have a realistic goal, work hard toward it every day, pay attention to your customers and the people around you, focus on what’s important and what matters, sweat the details and pay your dues, tell the truth even when it hurts, have each other’s backs, and try hard to treat everyone fairly. The basics never really change, but these days the ways they’re regarded and valued - like the skill sets of millions of older workers - are constantly shifting in the wrong direction. Everyone today needs a trick or a gimmick; there are sneaky shortcuts and cheap cheats for everything – shame on you if you can’t find them – and only the little people still need to work hard for a living.

I used to argue that the ultimate goal for anyone trying to grow and move ahead in an organization was to be the “go-to guy” – the one that everyone else could count on, rely upon, and know that he or she would go the extra mile to get the job done. (See https://www.inc.com/howard-tullman/to-succedd-be-the-one-everyone-can-count-on.html.) Five simple guidelines for getting things done: Stay up (perspiration), Step up (passion and commitment), Study up (preparation), Stand up (principles and morals), and Buck up (perseverance). The world was never really fair, but we believed back in the day that it leaned toward the ones who worked hardest and cared the most and bent toward justice. These days it’s all about dodging the bullets, dirty dealing, avoiding the blame and staying in the shadows so the “boss” gets all the glory.

Today, even as I write these traditional concepts, I’m overcome by the feeling that they’re sorely out of date, naïve, and sadly pollyannaish. In the Trump world, where grifting is a religion, trust is a distant and much disparaged idea, and scams and schemes stain every part of the government, the entire feckless and grossly unqualified administration is filled with robotically obedient and fearful fools constantly looking over their shoulders to see who’s most likely to stab them in the back. They don’t even understand that Trump prefers to humiliate people, tell them to their faces that they’re worthless, and stab them squarely in their guts. Even if you please this corrupt and venal pig, your days are still numbered because he cares about no one but himself.

This is what our kids, employees, customers and clients see every day on their phones and screens where none of these criminals and perverts make even the slightest attempt to hide what’s going on – they preen and gloat instead - or how they feel that the old laws and moral behaviors simply don’t apply to them. This is the message and the permission that the Orange Monster has given them and all the MAGAts with the cooperation and connivance of the Supreme Court and the ultimate submission and cowardice of the Congress.

As a result, we’re all finding it harder and harder with a straight face and any degree of confidence to tell a young man or woman what the new ground rules are for success, why it still makes sense to act honorably and honestly, and how they should prepare themselves to function in a world that seems like a Washington Wonderland. A time and place where the rules, the laws and even the facts are fluid and change regularly at the whims of someone who rarely remembers (or flatly denies) whatever he spewed the day before. Dementia Don is putting the whole country and our democracy in peril as we watch helplessly and listen to his lies.

As Humpty Dumpty declared: "When I use a word, it means just what I choose it to mean — neither more nor less.” When Trump speaks these days and lies out of both sides of his mouth at the same time, it’s pretty clear that not even he understands what’s he’s saying or what he means. He’s ignorant and unwilling to learn, he’s arrogant and utterly amoral, and he’s a demented sociopath. His enabling sycophants and sorry suck-ups like Noem, Hegseth and Leavitt are even worse. They stupidly lie to our collective faces more fervently every day with spurious suggestions claiming that we are fools to believe what we see and hear with our own eyes and ears. Their arrogance knows no bounds and they’re shameless and eager to rub it in our faces.

Frankly, I never thought I’d write a piece like I did a couple of weeks ago where I expressed my sincere hope that Netflix had found and employed its own “fixers” and “guys who knew guys” so that it would have a serious prospect of overcoming the efforts of the rotten government regulators, crooked administration flunkies, and even the overt and public pronouncements of the Crook-in-Chief himself as they combined to interfere with, interrupt and otherwise influence the outcome and determine the winning buyer in Warner Bros Discovery deal. (See https://www.inc.com/howard-tullman/netflix-warner-bros-discovery-trump/91282958.)  

But these are the sick, corrupt and demented times that we live in today and this is the business world that every upcoming entrepreneur, business owner, manager and operator needs to work in. And it’s on us to tell them something. I’ve already told businesses that in the fragile, confused and shaky post-pandemic world with elections right around the corner the smartest thing you can do is hunker down and take it slow. (See  https://www.inc.com/howard-tullman/four-rules-for-the-next-six-months.html.)

But now I’ve also had to alter and temper my advice to the up-and-comers. Here’s what I’d tell your team, your peers and your kids today.

1.     No one wants to be average or just do a “decent” job.

Now is simply not the time to take giant leaps or make waves. It’s frankly a time to be grateful for the job that you have and to concentrate on doing that job as well as you possibly can. No one enjoys playing for a tie, but for the moment good enough may be plenty. It’s OK to have big dreams for down the line, but for now patience and solid performance are the priorities. Remember that you’re not working solely for yourself – plenty of others are depending on you as well – inside and outside of the office.

2.     Having low expectations is the key to happiness these days.

Everyone wants to set the world on fire in a good way except, of course, Trump who’s happy to burn the whole place down and run off with the billions he and his family and chums have stolen. But for us working stiffs, at the moment, it’s an entirely different calculation. I used to say that, if you settle for less than you deserve, you’ll eventually get even less than you settled for, but now I think that it’s most important to accept gratefully what you’ve earned, focus on your family, save and protect what you have, hunker down, and remember that there are unfortunately millions in our country who have far less to be thankful for than you do. It’s not everything, but it’s far better than nothing.

3.     Get used to disappointment in our “leaders” – it’s par for the course.

At the circus, the crooked carnies at least know that they are carnies. They don’t try to kid themselves like our corrupt politicians and grifting leaders who like to pretend that they’re statesmen and serious professionals when the fact is that they’re all on the take and all bending over to placate and avoid Trump’s wrath even as they watch him mentally fall apart and circle the drain. They are all just praying that they don’t also get sucked in when the toilet is finally flushed.

4.     If you want to succeed, keep things simple, small and specific.

No one’s saving the world these days and sadly too many of the standard charitable activities are too broad, too random, too vaguely impactful and often spending their funds in the wrong ways and places. Arbitrary empathy is largely an empty gesture for all concerned. If you want to make a difference and actually have some connection to and satisfaction from your efforts, stay simple, small, and specific. Help one person, one family, or one business to start.

Maybe things will get better in a few years. The further away the future is, the better it looks. Right now, it still looks pretty bleak.

 

 

NEW INC. MAGAZINE COLUMN FROM HOWARD TULLMAN

 

I Hope Netflix Knows a Guy Who Knows a Guy

How do we get business leaders to act in their own best interests, even as their greed and indifference keeps them from doing anything?

EXPERT OPINION BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS @HOWARDTULLMAN1

Dec 29, 2025

 

I’ve pretty much abandoned any hope that you can have an intelligent talk with any of your former business associates about the merits of any of the programs, policies or orders flying out of the Oval Office, or even be certain who is authoring and issuing these diktats in the name of a demonstrably illiterate emperor. The sad truth is that so many formerly rational and reasonable people are now MAGA folk who are still trying to defend the cruelty, wretched excesses, despicable slanders of the dead, flagrant thefts and grifting, narcissistic branding and destruction of historic buildings for its own sake that are the hallmarks of the second Trump regime.

I’m just praying that some day soon it’s going to dawn on a critical mass of them that it’s only a matter of time before it’s their own butts and businesses in the sling, because what comes around goes around, and everyone knows that no one is safe from the greed, jealousy and hate that thrives these days in our nation’s capital.

I hope that these entrepreneurs, owners and operators know a guy who knows a guy or that, like Netflix at the moment, they’re running around furiously looking for such a person who’s happily connected, corrupt and complicit. Because that’s what doing business in the U.S. for any large, regulated company has come down to–it’s a mob and gangster mentality. You need a fixer with a checkbook and access to Trump or you’re just as likely to be the next item on the menu. When you get in a cage with a tiger, you’re not a visitor, you’re eventually lunch. It’s media and entertainment right now, and paid-for pardons galore of course, but don’t think any industry is safe or isolated from these crooks and creeps. After all, they’ve watched Putin, Orban and their acolytes run this program over and over again. You can’t reason with a tiger when your head is in its mouth.

I’m not talking simply about the cultists who buy every sick word out of the mouths of these crooked cabinet members, vengeful regulatory heads, and other pathetic and punitive agency executives. Unfortunately, the venom and poison spewed daily by the Orange Monster and his band of enablers, sycophants and flunkies has spread so broadly across the entire political spectrum that there’s virtually no one left in the business world who still calls themselves Republicans and who are willing to have any honest discussion at all about what’s going on right before our eyes in Washington. But they all know in the back of their heads that Trump’s favorite fable has always been about the tender-hearted woman who invites the snake home and ends up being bitten. That’s why all the tech CEOs prancing around the White House with blank stares and fake smiles actually look like they’re walking on eggshells. They’re just waiting for the next shoe to drop and hoping that it’s not a boot on their respective throats.

Of course, this continued pattern of delusion, studied ignorance and abject avoidance is largely because these makers and mavens foolishly continue to believe that their own lives and businesses won’t be impacted or harmed by the demented craziness, the TACO tariffs, the wanton destruction and hollowing out of entire government agencies—not to mention the constant din of the drums of war. They must be able to see that no one has the slightest idea from day to day of what insanity to expect next from Trump.

They also know that stability and predictability have always been essential attributes of our economy, stock market, and trade policies. But as long as a dozen or so tech and AI-centric story stocks keep driving the stock indices to new heights, they’ll keep on ignoring the underlying fragility of our economy and think that everything will be business as usual—if they just keep their heads down and mouths shut. After all, it’s the nail that’s sticking up which always gets pounded into the floor.

But my real concern is two-fold. First, can we do anything to wake these folks up and explain to them that they don’t have to be patriots or liberals to understand that the continued damage and destruction of our laws, institutions, fundamental beliefs, and actual economy are no longer simply debatable “political” issues; they’re existential concerns for all of us, regardless of our political leanings. As my friend Bill McGowan said long ago, “These guys have great loyalty to their businesses, but their number one loyalty is to their own tush.” How do we get them to act in their own best interests even as their greed and indifference keeps them from doing anything?

And second, what do we say to teach the new business builders and the next generations of entrepreneurs about how the world works when honesty, effort, commitment, integrity, the laws and truth simply no longer matter, when winning by any means is all that counts, and when any issue or problem you may encounter along the way that can be solved with a check or a timely donation isn’t a problem at all? No longer do you work your butt off and build your business to success; you bribe and buy your way there through crooked politicians, rotten regulators, and agencies governing and ruling according to the latest threats, demands and flatulent formulations from D.C. A material part of every business calculation will now have to be the cost of paying fixers, agents and middlemen to keep the intrusive and venal government off your back or to sic these fake regulators on your competition.

Netflix’s owners and managers must be sweating bullets right now and looking desperately for help and leverage as they try to complete their acquisition of Warner Bros. Discovery in the face of looming and corrupt opposition and promised interference from the Trump administration and Trump himself, as well as competition from the Ellison family who have contributed millions of dollars to Trump over many years and who have already assured Trump that their successful acquisition of WBD and its “independent” subsidiary CNN will quickly and completely shut down one of the last viable media vehicles for criticizing him, just as they have already done with CBS.

It’s increasingly difficult as the new year looms to be hopeful and optimistic that things will improve any time soon but there is one thing we can rely upon in watching all of these greed heads circle around each other and constantly fight over the spoils: if you count on self-interest, not self-sacrifice, from these people, you will never be disappointed.

Feeding the insatiable monsters heading our country at the moment is an exponentially more difficult task. Hopefully, they will eventually turn on and consume each other as we’ve seen with the regularly disappearing Russian oligarchs who are apparently the world’s most accident-prone individuals. Those who foolishly seek power by riding the back of the tiger often end up inside.

 

NEW INC. MAGAZINE COLUMN BY HOWARD TULLMAN

 

Why Amazon and Netflix Made a Big Play for Sports

They're not sports companies by any means. But the smartest companies learn fast where their customers are heading and meet them there, with the right products to sell them. 

Expert Opinion By Howard Tullman, General managing partner, G2T3V and Chicago High Tech Investors @howardtullman1

Aug 13, 2024

 

The smartest players who are now winning in major markets are those whose primary advantage is learning faster than their competition--learning faster about the state of their marketplaces and swiftly reacting in real time to the changes they uncover.

You can't be it if you can't see it. That's why learning to manage the often-overwhelming flow of new data now available and turning that flood into useful and actionable information is a critical skill set in the global digital economy. Two of the most crucial things that smart entrepreneurs are incorporating into their plans are: (a) how to better determine and define the shifting needs and desires of their target customers; and (b) knowing who, what and where they are actually competing against in order to attract, win and retain those customers. The idea is that there may be incremental and sometimes even larger openings readily available in spaces adjacent to your current verticals seems obvious, but it's often overlooked.  Companies often ignore the chance to "slide to the side".

 Surprisingly, in many cases, the losing laggards are those who don't quickly appreciate that the scope and scale of competition has expanded beyond their traditional competitors to include new players, new offerings, alternative consumer choices, and adjacent markets that are readily accessible -- merely a click away. They're also missing changes in demand that have almost nothing to do with their current products or services. Their typical reaction as their revenues and profits shrink is to double down and do more of the same rather than shift their approach and strategies to adapt to the new realities and take a much broader view of the landscape. Often, the main barrier to an effective response is the locked-in reluctance to change what they've always done and what has historically worked.

The changes we're seeing these days simply aren't the kind that you can wait out or wish away.  

As more and more foundational products become commoditized or tired, often through externalities like changing tastes or attitudes rather than any fault of the providers, the most exciting opportunities and accompanying profits move elsewhere in the value chain. It becomes necessary for viable competitors to identify those new locations and quickly develop brand extensions, responsive products, enhanced or expanded services, and new delivery channels to meet the customers' emerging needs and to deliver the goods when and where they're now at. You've got to be there when the buyer is ready to buy - the markets no longer wait for providers to catch up.

Of all things, kids' "clothing" offers a very interesting and telling example and a very challenging look forward for the major apparel manufacturers. Right now, tens of thousands of game-playing teenagers globally are spending more time and money in front of their screens styling, outfitting and branding their online gaming avatars than they are on their actual clothing. Swifties and sneaker heads are obvious exceptions to the rule, but suffice it to say that none of the major luxury or sports brands (including teams) can afford not to be an active presence in these growing virtual worlds.

This is not only because there are serious dollars to be made in the gaming space (where the New York Times makes more money than on advertising) by marketing and selling this digital stuff. But also because this is a powerful and compelling way to grab mindshare and establish brand identities in the heads of millions of future consumers who will eventually "graduate" into the real world.  

A more major and important shift is happening as billions of dollars are rapidly moving away from classic entertainment vehicles and network TV toward anything and everything that has to do with sports, gaming and gambling. There's no longer any urgency, novelty or FOMO associated with the latest mediocre sequel, newly-cast, oldie-but-goodie, or CG-stuffed action film filled with nobodies. For every crazy breakout like Deadpool & Wolverine, there are several dozen films that never even make it to a theatrical release because the studios and distributors decide not to waste the marketing dollars on films that no one wants to see.

Sports remain a real-time offering while consumers worldwide have become convinced (in part because the industry itself has sold them on the idea) that there's nothing on television or in the movie theatres that you won't be able to see on your own device in the very near future. NBC's amazing efforts to completely slice, dice and fractionalize the Olympics and make everything available all day, in every way, and over every channel was a clear glimpse of the future of the on-demand streaming world. But the Olympics only happen every couple of years. F1 racing has become a must-have for corporate sponsors chasing tech bros and European soccer continues to explode as well, but these will simply be additional content generators which will further replace and displace traditional entertainment fare.

Amazon spent more than $1 billion to stream Thursday night NFL games. It certainly wasn't lost on them that in a typical, three-hour NFL game, the actual playing time is around 11 minutes. While Amazon is one of the few tech companies also still spending big on new entertainment series because of the power of the Prime package, we're seeing other large players like Netflix also spending vast amounts to make multi-year commitments to carry NFL games.  Even fake sports are hot: Netflix also agreed to pay about $5 billion for the rights to WWE wrestling.

It's a fairly fundamental calculation - you've got to go where the fans, and the eyeballs, are spending their time. As Coach Walz would surely say: fish where the fish are.

           

 

 

NEW INC. MAGAZINE ARTICLE BY HOWARD TULLMAN

 

Don't Turn Your Business Over to the Trolls

If you don't stand up for your company's values, the vacuum won't go unfilled. Defendant Don has shown that lies are powerful. Leaders need to speak up or their employees will do it for them-- right or wrong. 

 

BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS@HOWARDTULLMAN1

 

Summer TV is the worst. A three-month mediocre mashup of cheap and embarrassing reality shows, real estate porn, and an endless collection of reruns that weren't worth watching the first time around. As we roll into August, there are only two things that are demonstrably less appealing to contemplate than another month of fruitlessly smashing your remote searching for something to watch.

First, the fact that the summer season of eyewash and squalor may never end because of the writers' and actors' strike. Thank goodness for Netflix's backlog and the few offshore, non-union productions that are still cranking out new stuff. And second, the prospect that the 2024 election is highly likely to be a painful, perverse, and putrid repeat of the last Biden-Trump battle. To paraphrase Jerry Garcia of the Grateful Dead, it's just incredibly pathetic that it has to be these two guys. As someone recently said, with all of Defendant Trump's accumulated legal problems, frauds and lies, and sexual predations, the only job he probably could get at this point is the Presidency.

Two old men-- one bitter, crooked, and destructive and the other tired, tongue-tied, and torn in too many directions by his own stupid party - will duke it out, spend hundreds of millions of dollars to no good end, and not change a single voter's mind except maybe for those who are dissuaded from voting by all this nonsense. Once again, most voters will already know what they believe and who they're voting for, right or wrong; they're simply looking for reinforcement and reassurance rather than any kind of enlightenment or education. 

As much as I hate creepy Mike Lindell, I'd rather skip the next 18 months of ugliness to see these two old codgers in a charity pay-per-view cage match using My Pillows to harmlessly beat each other up with all the proceeds going to institutions that can save lives, feed children, and make some actual difference in the world. Instead, we can expect non-stop noise, negativity and name-calling--mostly from the MAGA morons-- and not much else.

The Democrats still haven't learned who they're battling and just how low these creatures will go. Going soft seems to be in vogue everywhere these days - certainly when you look among Democratic politicians, starting with the president. They all seem afraid to say virtually anything to avoid offending anyone. Senate Majority Whip Dick Durbin and Senate Majority Leader Chuck Schumer, with their old school protocols, stupid antiquated rules and time-consuming procedures are clueless and aren't up to the battle. The game today is all about heat, not light, and they're losing every day. President Biden really needs to get into the fight, or he may get beat because people today understand passion and energy much better than facts and figures.

The singly most frightening aspect of Trump getting back on the debate stage with Biden is that the Orange Monster's rants, rages, lies and sheer presence will blow Uncle Joe away. Trump's passion may be fraudulent, his language may be libelous, his tales may all be lies, but the power and theatricality of his performances and the overpowering force of his debauched and despicable personality are undeniable. They connect with millions of confused and unhappy people today who are easily swayed and looking for guidance and charismatic leadership for anyone and anywhere they can find it.

Regrettably, Trump and his clones continue to show the world and demonstrate that screaming, scheming, and whining often succeeds. Too many people simply no longer care for the warm and fuzzy pablum the Dems are putting out or believe that good thoughts, calm competence and good deeds matter.  They've been taught that the louder the lie, the more likely it is to be believed. It's all about confrontation, conflict, complaints and criticism rather than reason and rapport. Sincerity and subtlety are remnants of times long past and sadly these are Biden's strengths.

We live in a media-made world of fake tough guys like Trump, Texas Gov. Greg Abbott and Florida Gov. Ron DeSantis. The message of their constant threats, claims and belligerence bleeds through whether you like it or not and infects people who work for you as well.  This rot is contagious and it's also impacting our peers, our partners and our kids. Far too many entrepreneurs are trying to fight the onslaught of cynicism, selfishness, and victimhood by bending over backwards to placate and pacify their employees and offer them things that simply make no sense for their businesses - all in the name of buying some peace and quiet. This is a very slippery slope and, unfortunately, all these actions aren't being interpreted by the younger workers as expressions of care and concern; they're being seen as signs of weakness and as concessions, which most often precipitate further demands.

Whether the issue is "work from home," debates over company policies or positions, comp questions or dress and pet codes, it's starting to feel like too many of the loudest and most vocal "inmates" think they should be running the asylum. Putting aside the governance concerns, and the damage that's always caused by dragging performance and politics into the workplace,  I think a much bigger question is the risk that the key members of the team -- focused, heads-down, and working their butts off every day - will lose confidence in senior management, believing that they no longer represent the aggressive and competitive leaders.

If you look around, the signs of "softness" are spreading. Who really knew that Scott Galloway, a New York University marketing professor, prolific pontificator, and erstwhile celebrity podcaster had a soft and sensitive side and, far more importantly, who really cares. I'm glad he loved his Mom and loves his kids but was that the reason that anyone paid attention to his entertaining and usually enlightening speeches, classes, courses, marketing screeds and profane stock predictions? I don't think so.

If that's the direction he's headed in his Pivot podcasts along with Kara Swisher's constant updates on her family affairs, opening night fetes, and non-stop name dropping, I'll be pivoting promptly to some new sources for the tech spiels, scoops, and stick-it-to-ems that were once the duo's stock in trade. Galloway morphed from a hard-edged and critical corporate analyst to a happy house husband and pseudo-psychiatrist. He was strong and strident and now he's soft and squishy. Whatever is driving the new plentiful and painful sharing, it's just TMI and certainly too much for me.

And it's just another version of the "bring your whole self to work" delusion that ignores the abundant evidence that almost no one in charge really cares about your whole self, all your hurt feelings, your triggers, and your conviction that you're grossly under-appreciated, under-valued, and unfairly compensated. If you're unhappy with your job and your life, find something else to do and somewhere else to work.

If you're watching your business slowly float away from you and you feel as though you're losing control of the conversation, now's the time to step in and stem the flow by saying, "enough is enough."  Your people need direction, vision and leadership and you can't do the job halfway. Make your message simple, short, and strong. The rules haven't changed: the ones who care the most win. Don't wait for things to get worse. Be difficult and direct when you need to be. Tell the truth - stand up for what you believe is right and fair - and tell your people why it's worth the pain and struggle to do the right things the right way.

As former British Prime Minister Margaret Thatcher famously told President George H.W. Bush in discussing how the U.S. should respond to Iraq's invasion of Kuwait: "Remember George, this is no time to go wobbly." 

NEW INC. MAGAZINE COLUMN BY HOWARD TULLMAN,

 

Upgrade or Die

Companies such as AAA are being overtaken by technology. But they still have huge customer bases. The challenge: offer customers a new, differentiated product before that connection fades. 

BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS@TULLMAN

The only survival path in the new digital age for many older firms with huge customer bases such as cable television, local newspapers, and the home alarm companies like ADT is for them to continually add new features and functionality to their basic bundle of services. They need to do this immediately, before millions of their customers -- who are accustomed to paying fees that automatically renew monthly or annually-- figure out that they're paying too much for what little value and utility they're actually getting from their provider given the existence of so many largely "free" alternatives.

These companies have a huge advantage in that they already communicate with their customers on a regular basis through reports, billings, newsletters, and email blasts so they have effectively zero incremental costs of customer acquisition in terms of promoting new offerings. But, of course, these kinds of tactical upgrades don't happen by themselves. And simply adding "me-too" products that don't make a demonstrable difference to customers doesn't help anyone's cause.

For many traditional product and service providers, the risks of rejection are rapidly rising, because the mobile and digital world has moved beyond the historical offerings of these companies and either improved upon or entirely obviated any need for their products. In many cases, the mistakes these companies made in failing to recognize, adapt, and move promptly to keep up with the changing times are unrecoverable. Too many have simply been greedy for too long - unwilling to impair today's cash flows to prepare for tomorrow. Kodak "moments" are no longer captured on film, long distance charges are history, bank checks and credit card scanners are quickly being phased out, and it's far easier to catch Covid these days than a cab at the corner. It's brutal to realize that you're a buggy whip. 

Cutting the cord won't simply be a cable TV phenomenon for much longer, even if cable is the all-time leading grudge buy and the current league leader in getting dumped. Streaming packages like Netflix aren't too far behind. Nobody needs four different streaming services. These days every consumer is looking to save money, eliminate old and useless bundles, and free themselves from "ghost" subscriptions. There's even an app called Truebill that helps people tap and toss these unused and un-useful artifacts.

Interestingly enough, the likelihood that buyers in any given market will wake up one day and drop a certain product or service is highly variable and depends on a number of key factors. The key determinants include: (a) how often purchases are made, (b) how frequently the consumer otherwise interacts with the service, (c) how significant (emotionally or dollar-wise) the amount of the purchase is, (d) how different or costly the service is compared with other available offerings, and (e) how easy it is to switch. This is why the cable providers were fat and happy for so many years since it was harder - especially given exclusionary territorial protections - to dump your cable service than to divorce your spouse. Life insurance is another one of these areas where the insurers' basic philosophy is - no pun intended - to let sleeping dogs lie until they die.

For other players, there are still opportunities to react and respond to the oncoming changes in their particular marketplaces if they're mentally prepared to take the necessary steps and make the required changes. But the moves they make can't simply be more of the same. Sadly, our view of the future is too often limited in perspective and limited as well in considered alternatives by our existing reference points. Adding commoditized offerings readily available elsewhere to increase weight and volume is really nothing more than an effort to build bigger, boring bundles, which won't excite anyone.  Even a big box of the best candles is no match for a light bulb. 

If the proffered responses are tepid and tentative, there's very little chance of serious adoption by current customers and few realistic prospects for material success. It makes sense to constantly be looking for adjacencies and opportunities to land and expand and to add new revenue streams to your base, but these enhancements and extensions are likely to be only modest movers of the needle.

The example I most often use is the American Automobile Association (AAA), which has around 57 million members nationwide. When I was growing up, AAA provided two primary benefits. The first offering was TripTik, which was basically a loosely bound set of sequential road maps that would show you how to drive from Point A to Point B. It also served up information about all the interstate attractions you might enjoy along the way as you and your family shuttled from one set of Golden Arches to the next. The second service was Roadside Assistance, which offered towing, flat tire changes and battery boosts.

Both services made sense and provided real value at a reasonable annual cost to millions of AAA "members" until the arrival of free turn-by-turn navigation on every cellphone. Auto manufacturers then included in-car guidance and emergency notification features as standard equipment. Similarly, every upscale manufacturer has incorporated towing and other roadside services in their basic support packages for owners along with the assurance that they would be dealing with experienced support personnel from local dealerships rather than some random tow truck guy.

Unfortunately, AAA's response has been mainly more of the same. Offering home and renters insurance has basically been a bust with less than 1% of their members signing up.  Car loans, credit cards and mortgage services haven't done much better and random travel services and purchase discounts didn't make a dent. There were simply no compelling reasons sufficient to overcome the consumers' eventual indifference. And, of course, there was nothing new to see or offer. To move the needle in cases like this, you've got to jump ahead and leapfrog the mass of commoditized competitors.

Porsche did it right by forming a partnership with Mile Auto to offer pay-by-the-mile Porsche-branded auto insurance to its high-end owners, whose annual mileage was always a tiny fraction of the national averages. This was a clear benefit, a carefully differentiated offering, and a real savings and service to its owners.

AAA needs to find similar prospective, rather than reactive, solutions. A perfect example of a next generation offering that would be ideal for them is a startup called SparkCharge which provides EV charging anytime, anywhere. This enables customers to charge their electric vehicles on demand and without the grief and hassles of finding the "right" charging station, hoping that it's not occupied, and waiting for the charge to be completed.  They can be in a meeting, at a restaurant, watching a movie or a ballgame and know that their vehicle is being serviced at the same time.

It's a perfect fit for AAA's customers now and even more so in the future and a great marketing channel for SparkCharge to reach millions of precisely targeted prospects at little or no cost. There's nothing better or smarter for a new business to do than to ride someone else's already-built rails.

The bottom line is that sticking more of the same old stuff into your offerings might make your marketing people feel like they're keeping busy and earning their keep, but it's not an effective strategy. It's like talking back to the TV.  It may make you feel better, but it doesn't make a difference. If you've got nothing new, you've got nothing going for you.

 

NEW INC. MAGAZINE COLUMN BY HOWARD TULLMAN

 

Netflix Needs Another Masterstroke

The streaming service pioneer created the industry with one brilliant strategy shift. But now it has to address the falling number of subscribers and the millions of non-paying freeloaders that are hurting its prospects. 

BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS@TULLMAN

One of the great "no net" pivots in tech history was the gutsy decision by Netflix CEO Reed Hastings to sunset the company's basic DVD-by -mail business, which accounted for virtually all its revenue at the time. Hastings basically bet the farm on the digital delivery of movies, which ultimately led to the creation of the premiere video streaming service-- along with many copycat competitors-- which we all take for granted today.

This critical shift changed the trajectory of the company. Importantly, the DVD service continued, and contributed substantially and critically to Netflix's profits in those transition years when the streaming service couldn't pay its own way. You always want to make sure you see the next log to land on as you skip merrily across the raging river. There's a lot to be said for slow and steady change, especially in any B2C marketplace where you're introducing new services, new technologies, and expecting significant consumer behavior changes.

This is a lesson, given its current and serious woes,  that Netflix's leadership team needs to keep in mind just as much today as in the past. Ultimately, Netflix's hundreds of millions of streaming video subscribers turned the company into the industry's 800-pound gorilla. There were certainly a few missteps along the way, such as the 2011 Quickster debacle, but the path forward was remarkably stable and exponential--at least until this year. Even the entry of multiple, large-scale, and well-funded competitors didn't seem to slow Netflix's growth or forward progress. 

But now, the combined impact of all of those other like offerings along with Netflix's regularly recurring price hikes, the slowly reopening post-pandemic world, and international subscriber losses due to the war in the Ukraine, has come home to roost with a vengeance. Since January, with the early warnings of first-ever subscriber count decreases, the dreary forecasts suggest accelerating future departures. Likewise, the most recent earnings reports have undermined much of the storied legend, leadership, and legacy of Netflix. The company's market cap has shrunk by more $170 billion, and its stock price has fallen from a high of $700 a share to around $180.

Responding to what increasingly looks like an existential challenge will be the biggest obstacle its longtime management has ever faced (never mind its size, resources and history) and a test as well of its vaunted culture and business practices. Time is short and an effective response will need to quickly address both the macro issue of the market's fears about the dramatically changed and far more competitive streaming environment and the micro issue of how to fill the revenue holes the ongoing losses of millions of subscribers will create. As UCLA's legendary basketball coach John Wooden used to say: "Be quick, but don't rush."

By Netflix's own admission, the company will lose about two million more subscribers in the next quarter alone. Safe to say, these folks won't be coming back any time soon and certainly not at the subscription price points they previously represented. Long story short: given the stock market's complete fixation with numbers, there's little relief in sight on the macro front. The shadow over streaming's future will continue to spread for some considerable time, and the implosion of CNN+ couldn't have come at a worse time for the industry.

So, the main challenge for NFLX management seems to be the in-house micro issue of how to replace tens of millions of dollars in lost revenue with alternative revenue streams. And how to do that as soon as possible without jumping from the frying pan into the fire by moving too quickly. If existing subscribers aren't going to grow and departed subscribers aren't coming back, the only two paths forward are adding new subscribers from a diminishing and costly pool or increasing the monthly spend of each of the remaining subscribers.

It's no surprise that Hastings-- much to the chagrin of almost his entire team -- immediately suggested adding an ad-supported version of its basic service to the mix to attract new "ad subsidized" members, even though this concept has always been treated as sacrilege by the company and the very last thing current Netflix members would accept, since it completely upends the traditional NFLX experience. In truth, this traumatic and hasty suggestion reeks more of desperation and knee-jerk reaction than any kind of rational solution. This looks more like turning a carefully differentiated and premier service into just another "me too" offering and sacrificing years of brand equity and goodwill in the process.

The far more interesting suggestion, and one that's been long overdue, is the need to recoup the millions in forfeited monthly subscription revenues that Netflix has winked at almost since inception by permitting subscribers to share their NFLX passwords with friends and family on an unlimited basis. This was a deal with the devil from Day One, which was always going to become an issue as the dollars involved continued to grow. But management apparently concluded that the favorable word of mouth and the growth in "users" -- as opposed to paying members -- was worth the hidden costs.

A side concern is whether, because the company knew that millions of consumers were fraudulently using its service, there were disclosures and other accounting issues that were ignored or concealed. Of course, we continue to live in a time where situational ethics too often dictate behavior and there's no reason to expect an end any time soon. Amazon knows it has millions of counterfeit vendors who are killing small retailers by ripping off their products and selling cheap, defective copies all day long, but won't take the necessary steps to shut these crooks down. Way back when, Snapchat's founders knew that its photos weren't really ephemeral but didn't bother to tell its users or the public. And, of course, the persistent lies and continual frauds which let Theranos survive far longer than it should have are just the most recent examples.

Netflix's management's multi-year acquiescence in the theft of its own services for whatever reasons and its refusal to take any actions to acknowledge or eliminate the leakage aren't much better than the old revenue-pumping scams of Crazy Eddie Antar. At least, in a somewhat perverse reckoning, they will now belatedly have to address the problem. It will be interesting to see how Netflix attempts to explain its way out of the massive financial and ethical hole which it has dug for itself. Blaming the longtime beneficiaries of its knowing, but sleazy and shortsighted, generosity won't fly. I'm sure the company's board is simply praying that the whole problem somehow disappears, but unfortunately you can't pray a lie.

MAY 10, 2022