InIn this episode I review Seth Godin’s podcast, through the lens of a theoretical fight between Seth and Mark Ritson! The couple of bits I picked to focus on are:
- Tesla’s price cut – who was right?
- The power of storytelling
- Changing ourselves to change the world?
Seth Godin’s episode of the Strategy Sessions
Storytelling on Strategy in Praxis with JP Castlin
Strategy Sessions Host – Andi Jarvis
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This transcript has been done automagically using Happy Scribe and hasn’t been checked by a real person, so there may be some hilarious mistakes where the AI can’t work out our accents – I’m sure they’re trained on just the American accent.
Eyup, and welcome to the Strategy Sessions. It is episode 12 of this season, and I am here with another dog shit podcast for you to review Seth Gordian’s episode. If you’re unfamiliar with what a dog shit podcast is, if you’re a new listener, I, a little while ago, was talking to someone. My episodes are about an hour long, and they said it would be good to have a podcast that you could listen to while you take the dog out for a pooh in the morning. That’s about a 30-minute podcast. So these shorter episodes are me reviewing the guest episodes, and it’s just me. Who am I? My name is Andi Jarvis. I am the host of the Strategy Sessions, and I run a company called Eximo Marketing. Do marketing strategy for firms that have a strategy problem. That’s most firms, really. I’m a marketing strategist and a professional speaker as well. Professional speaker, just drop that in. If you’re watching the video, have a look. I’ve got some Disney merch I am fresh back off the plane from speaking at a conference at Disney World in Florida, which was an amazing experience. Americans invented marketing, and it always feels mind boggling and amazing whenever I’m invited to America to speak.
I’m like, You guys invented marketing. You put the sizzle in the sausage. And here I am, a bald British fellow being invited over there to talk about marketing. So I love it. And being invited to Disney, who You do it really, really well. You wouldn’t think of Disney for a conference venue, but you should. The food was amazing, the venue was great. And the whole Disney welcome thing. In fact, I’ll talk about that just briefly before I talk about Seth Godin. The first one of these I did was reviewing an episode by David Mannheim, who is a massive Disney fan and who talks about how Disney has let them down on the personalization journey by just scalping everybody for every penny that they’re worth. And I can see that. I could see you get to Disney and everything costs a ridiculous amount of money. It’s a premium venue, it’s a premium attraction. I get that. But Disney’s original pitch for Disney World was for it to be a place for everybody. And they’ve moved away from that. Have a listen to the episode with David. It’s in the show notes with him talking about it and how much prices have gone up and so on and so forth.
And it was all pretty negative about Disney, if I’m honest with you. However, there is a bit of this that I’ve got to take my hat off to Disney. I’m a Brit, and I hate the forced, Hey, sir, how’s your day going? It’s like, Just leave me alone. I was happy enough going about my day anyway, and I didn’t need you popping in my face and being all overly polite and friendly when, let’s be honest, you don’t really care. I hate all of that with a passion. There’s nothing makes me turn to anger more than any of that. And I absolutely loved the welcome at Disney. I loved everything about it. I loved the way people interacted with you. I loved the way every member of staff or crew members, they call them, took the time to ask how your day was going. It was weird because every bit of my body was going, You should hate this. But it was done so flippin well. Everything about the experience at Disney was incredible, and you can see they put the money into that. Now, that’s not to say that they should keep putting the prices up and scalping everybody for every penny that they’re worth.
Hard not to that. But I think that what they do, they do really, really well. I think the last episode was probably a look at maybe the negative side of Disney, but I’m Credit where it’s true, I was really, really impressed with how they did that. And also really, really impressed with the brazen cheek they have of charging such high prices for certain things, including $60 for a long sleeve T-shirt. But here I am, sucked in and I bought it. Anyway, so from David Mannheim to Seth Godin, a link I know David will be over the moon with. And I wanted to review the episode with Seth and where did he start? I loved it. I really enjoyed the episode. Talking to Seth was maybe a career high, I would say. And listening to his insight into marketing, into where his career’s gone, into what needs to change, it was eye-opening, and there were some really interesting things in there. If you’ve listened to the episode, which I’m sure you have, There is a link in the show notes if you haven’t. But if you’ve listened to the episode, you’ll notice there’s a couple of bits where I disagree with Seth.
And we have all very professional and well-meaning but debate about things that have been said in the episode where I have a slightly different perspective to Seth. And if you don’t know me, you’ll be thinking, who is this guy and who does he think he is disagreeing with Seth Godin? But we’re more of an art than a science in marketing. And come at me if you want to fight about that, but we are definitely more of an art than a science. And that means that there’s no definence. This isn’t physics, it’s not maths. Two plus two does not always equal four in marketing. There are different perceptions. Context is really, really important in marketing, hence the classic it depends answer to almost every question that we ask, that we get asked. There are different ways of tackling problems. There was two particular points where I picked Seth up on a couple of things and disagreed with him. The first one I want to talk about is Tesla. In a fight between two of the current marketing grandees, Mark Ritson and Seth Godin, in a fight to the death. I don’t think such a thing would ever happen.
But having read Mark Ritson’s work on Tesla, and I think I’m probably more on the Ritz and camp on this than the Godin camp. And the basic premise is Tesla have started cutting prices. Now, I hate talking about Tesla. It feels a bit tech, bro. Let’s talk about Tesla all the time. But it came up naturally in the discussion. And I think there’s a really interesting point that is worth diving into, which is what I want to do now. So it’s not, yes, we’re talking about Tesla, and yes, you’re probably rolling your eyes going, oh my God, he’s on about Tesla. But I have no insight into Tesla. I have no background into it. I don’t look at their performance stats. All I know is I’ll probably never drive one because the guy who runs the company is an idiot. That’s the only way my view is on Tesla. But we’re talking about pricing, particularly. So the background to this is Tesla launched one of the first or one of the first mass market electric cars, you probably know that, and got a huge leap on the rest of the market, miles in front in terms of software, hardware, desirability.
While the rest of the car industry was around holding its stucks its thumb going, Why would we build an electric car? We make X billion a year from selling diesel and selling petrol. We can’t make batteries work. I said this wasn’t their problem. Tesla just Hoovered up the market and did, let’s be honest, an amazing job at it. They had futuristic designs, they had great technology in their cars, and a fairly eccentric leader who claims to be anti-government but seems to be quite happy with his handout taking their subsidies, but by and large, We got ahead of everybody else. I would say we probably have the European Union to thank for the change in that. Again, I’m not a car market analyst, but the European Union decided that net zero goals, what we were going to do was force car companies to build electric cars because by a certain point in time, which I think is 2035, they’re going to ban the sale of what’s known as ICE, internal combustion engine cars, diesel and petrol, gas cars, if you’re listening in America. They told them they had to do that. That made the European companies jump really far not forward because their whole business was now at risk.
You’ve suddenly got Volvo, Volkswagen, all these companies, Volkswagen Group, so that’s Audi and Seat and Skoda and all those things. All of a sudden, putting out huge industry-leading cars, cars that are actually pretty good and similar to Tesla, or maybe in some cases, better than Tesla. Fiat and all the European companies getting there. America, I’ll be honest, was probably a little bit slow out of the blocks. You Ford, General Motors, and companies like that. Chevrolet pulled out of the British market and the European market because they couldn’t make the cars as efficient as the European standards were. You got all this global stuff going on in the car market. But if you look at the car sales figures, you see all these other companies suddenly catching up. Because once you bought a Volkswagen, it’s really easy just to buy a new Volkswagen. They make it easy for you the way to finance it and all that thing. Then the Chinese and the Japanese automakers made a big dint in that as well, the Hondas and Toyotas. Then the Chinese came to the party. Huge companies like BYD and others like that have been making cars in China using electric batteries.
Where do all the batteries come from? China. Oh, so they’ve got supply chain advantages and things. You’ve got all of a sudden, Tesla’s market of no one’s making an electric car that’s worth having is now, I’ve got loads of options as a consumer. In this market, Tesla started cutting prices. One of their models, I think it was the Model 3, let me just double check, had been reduced by, in UK terms, about £10,000. It had gone from about £7,000 Anyway, I can’t find the exact figure, but it had gone down, I think from 50 to 40 or something like that. No, there we go. The Model 3 had a starting price dropped from 48,500 to 43,000 in round numbers, and the Model Y performance dropped from 68,000 to 60,000. You’re talking an 8,000-pound drop, which is a chunky percentage number as well. And they cut the prices. Within this, I put this question to Seth along the lines of, as a classically trained marketer, I think this is the stupidest thing they could have done. They’ve cut the prices at exactly the wrong time because they’re going to have all sorts of problems from that.
They’re going to have less money coming in. They’re going to have less chances and opportunity to innovate because they’re The margins are under pressure now because they’ve just taken £8,000 off the bottom line and so on, which is influenced by some of Mark Ritson’s writing, which I’ll come to in a moment. Seth had a very different view. Seth referred to Jeff Mohs’ phrase about crossing the chasm. Now, obviously, you gave an example of digital watches, which are much lower ticket, obviously, than a car. But the point is that when you’re making a new technology, the cost to buy this new technology is usually huge. It’s horrendous. You think of the first digital watches or the first PDAs like the Apple Newton, I think Seth mentioned, were horrifically expensive, and all digital technology costs a fortune. But as we work out how to produce that technology quicker, the price falls and you get there. And he referred to crossing the Chasm as, The people who’ve bought a Tesla initially are the super fans, super fans of the brand and super fans of wanting to do something to save the planet. And there is a chasm that Tesla have to cross now.
Everyone who wants one of those cars has probably got one now. They then have to make the rest of their cars attracted to everybody else. They have to cross that chasm and get there and make it mass market and get people to want to buy a who are never considering it now. That’s the challenge that they face. So cutting the prices is just what happens when you cross the chasm. The price of a digital watch fell from, I can’t remember what he said, maybe $1,000. And now it costs $10 because over time, the price has fallen. And that’s the chasm that they need to cross when you do that. Okay, so my disagreement was actually, I think they’ve hit onto a classic mistake that people who don’t study marketing, and Musk is famously disparaging. I don’t think they have a marketing team at Tesla. He says it’s not important, advertising is not important, and so on and so forth. What they’ve done is they’ve cut prices. Now, to me, I think the first problem that they have is you cut the price and You take 10-ish % off the top line. That’s not 10% off the bottom line because all that 10% that you’ve taken off is all coming straight from your bottom line.
You might have had a 30 or 40% impact on your profits by doing that. That has a roll on effect. You want to innovate Tesla hasn’t really released a new car design, a new car model in a lot of years. So how are you going to do that? You need to innovate. You need to put new technology in it. You need to redesign it. What does that? It costs money. Building cars costs a lot of money. There’s a huge investment up front Regearing production lines, letting people know it’s coming, moving it on to people. You’ve got all that to do. It costs a lot. And to do that, you’ve got to do that at the point where you’ve just started hitting your profits. You might say, Oh, we’re not looking to do that. It probably should be as an innovative company, but okay, maybe that’s not an issue. But it has a huge impact. The other thing is that I thought as well, it impacts the brand. Tesla was a premium car brand. It is a premium car brand. What don’t premium brands do? Discount very often. Because if you’re discounting, you’re suddenly trying to say we’re every day.
And I think this is, again, where the Ritz and view and the Gouldian view contrast it. I think Seth’s point is, if they want to become a car for everybody, they’ve got to cross that chasm. I think Ritz and’s point is, you’ll never It would be a car for everybody. I don’t know which car and model has the highest market share in terms of all cars. It’s probably like 4% or something like that. Because if you think of all the different types of car that people buy. Tesla, the way they build cars, Well, they’re never going to have a huge market share anyway. So all they’re doing is just killing their brand and killing the price. I went back to Ritzam’s original piece, again, linking the show notes, where he talks about, I think, seven or eight things. He talked about negative signalling as well as another problem. So this is a point where you start to tell people. It’s a brand point. You start to push the price down. People are like, Oh, what’s happening with that brand? As a Yorksman who likes everything as cheap as possible, I don’t think it’s the biggest point, but it is certainly a point worth looking at.
You’ve also got user disillusionment, which is easy for me to say, where if you bought a Tesla last year and you paid £70,000 for it and you find out that three months later, that same car is going for £60,000, you’re going to be a little bit pissed off. That has an impact on your brand association. But also then you start to have this impact on future customers going, Well, if there’s a discount now, maybe I’ll just wait until… In the UK, car registrations happen every year, twice a year, and that usually has an effect on pricing. So when a new registration year comes out, the price falls. When the price is falling now, I’ll just wait until the new reg comes out because the price might fall again because it’s now an older model. So you suddenly have this impact of people then start to wait for the next price offer. And then there’s another effect which Richard talks about, the bullwip effect. So you cut your price. All of a sudden, everyone who was going to be in the market for a Tesla. So some people will wait looking for another discount, but some people will run towards you.
I was thinking about getting a Tesla. I was just seen the price has fallen £10,000. I’m going to go buy it. Well, hey. So you look at your order sheet and your orders are going up and you go, This price promotion has driven more orders. Wonderful. Fantastic. Isn’t this great? Problem is you’ve just moved everyone down the funnel really, really and nobody’s joined the other end of the funnel because you haven’t done anything to rehash that. You’ve just put a price promotion in at the end. So now you’ve got nobody coming in. But all you can see that your data tells you is you go, oh, so my data tells me we run a price promotion and we sold 30% more cars than we were expecting. Now we’ve got no demand. How do we get sales running again? We put on another price promotion. You’ve suddenly got yourself into somebody, maybe Ritz and it may be someone else, calls it the crack of price promotion. You’re now addicted to it and you can’t get off price promotion because you’ve just chewed up all your demand. We’ve talked about the profit impact, we’ve talked about the brand impact, and the other thing is you can start a price war.
Somebody with the market leverage that Tesla does almost becomes like an anchor point for people’s pricing. We just need to be a little bit cheaper than Tesla. If you’re selling a Renault or if you’re selling a Volkswagen or if you’re selling a Chinese car or whatever or a Honda, then you suddenly go, Well, we like to keep our prices just a little bit below Tesla’s because that’s where we see our demand. We don’t have maybe the brand that they do in electric cars and EV, so we’ll just sell cheaper than them. So you put your prices down and they put their prices down. But then all you’ve done is everyone’s just reduced their profitability, but you’re not selling anymore because the customer coming to the market goes, Oh, I can get a Tesla for six. Oh, but I can still buy a Renault for 50. Oh, great. So you’ve suddenly started a price war that you really didn’t want to fight. You didn’t want to get into. And now to fight a price war, you need money, you You need a brand, you need new products, you need all these things, which you can’t do as well because you’ve just hammered your bottom line and impacted your profitability.
To me, the cutting of prices didn’t feel like the right thing to do. Now, this is a very outsider’s point of view. I know sometimes in big companies, they’ll have volume targets to hate and deals with battery manufacturers or tyre manufacturers or whatever it might be. That means that they’ve got to hit those numbers to be able to get the things a certain price. That might be behind it. But it feels like on the Ritzan side of this debate, I think that’s where I would be. I wouldn’t have cut prices if I was Tesla. But Seth’s point is that you got to cross the chasm. Evs are coming to that point. Electric vehicles are coming to that point. More and more people are in the market. In Europe, you’ll not be able to buy a petrol or diesel car anymore in 10 years time-ish. All of a sudden, being the first to cross the chasm actually makes you the first to make an advantage. Tesla was the first with the geeks and the green fans who wanted to get a car. Brilliant. Can they be the first to go truly mass market with it? That’s crossing the chasm point.
Where do you stand? Are you Gordin? Are you Ritzin? Are you? Neither. Do you not really care? I don’t know. I’d be really interested. My details, as always, are in the show notes. If you want to, and there’ll be a LinkedIn post about this. If you want to jump into that discussion, send me an email. Again, everything’s below in the show Send me an email, have a look on LinkedIn, find the post and comment on that. I’d be really interested in your thoughts because we’re an art, not a science. I think there is merit in both points. I lean more towards the Ritzan side of things. Personally, I think Tesla’s future is as a premium brand. I just don’t see them as a mass market brand. Now, all the major car companies are moving into selling EVs. They’ve got huge network benefits to that. They’ve got a dealership network already existing. They’ve got millions of customers who they have finance deals with on PCPs, certainly in Europe anyway, personal contract plans, which means it’s just easier to roll in with the same company over and over again rather than it is moving elsewhere. The friction to staying with your current car provider is much less than it is to move.
If you’ve got a great EV for sale from a company you already have a car with, that’s the path of least resistance for you as a customer. I think Tesla, any Tesla driver I know, loves their car, absolutely loves it. They make an amazing vehicle. Fantastic. So I wonder if the future for them is as a premium auto retailer. To make that statement properly, I think you need to be on the inside. You need to look at the data and you need to know what their strategy is as a company. I have none of that. I’m just an idiot looking at from outside. But I’d be interested in your thoughts. Are you team Gordon? Are you team Ritson? Do you not care? Do you think there’s a different team altogether? Let me know your thoughts. What else did Seth Jeff talk about? He talked about storytelling, which I want to briefly touch on. He talks about at the end how we need to tell… Marketing needs to tell better stories because there are some issues around. And he posted on his blog recently about the problems with bottled water, how it becomes the story we’ve told ourselves over the time is that it’s a status symbol.
It shows who you are. The brand can communicate part of your personality. Fiji water became a way of status signalling that you have money, things like this. But actually, and when you start saying, Yeah, but we shouldn’t drink bottled water, why not? Because the bottles wash up on the shore in countries far, far away and look at the huge environmental damage that they’re doing. The story people tell themselves is, Yeah, I put it in the blue bin and recycled. It’s not my fault anymore. I’ve done my thing. I’ve done the thing you asked me to do. The change that he had noticed is that there’s been some research out recently that says that there is a huge, massive, I can’t remember the number 10, maybe a thousand times more plastic in water that you drink from water bottles than we never previously thought. And Seth’s view is that this is actually the start of the end of bottled water, because now the story that we tell people isn’t, you shouldn’t drink bottled water because it will do some harm to a country over there that you don’t know on a map. It’s drinking bottled water could well be poisoning you, could be causing you a problem.
And your children that you’re giving it to, it could be causing them a problem. Now it’s no longer I’ve put it in the recycle bin, it’s, But this is having an impact on me. And it’s a really interesting view on that. And I think storytelling is hugely important for marketers. And I don’t just mean storytelling and how do we create an ad. I think marketers need to be better at storytelling all across the organisation. What’s pitching? Storytelling. And I think managing your managing outputs can be down to storytelling as well. The number of times I’ve been involved in conversations with marketers where they say things like, But when the board see it, they don’t care. They’re not interested in click-through rates. They don’t know what this thing means. They don’t know what that things mean because you’re not telling them the right story. Tell them a story in a language they understand and a way that they can get on board with. Now, JP Castlin, previously of this parish in Season 2, I think, links below, asked me last summer, June, July 2023, if I’d write for his strategy and practise blog, which I was over the moon to do.
It’s one of the A few email newsletters I’ve signed up to that I actually read every week when it comes in. I was like, Yeah, great. I’ll write a piece on storytelling. Oh, shit. You got to write a piece on storytelling. You’ve got to be able to tell a good story. I was like, How do I do this? I spent a lot of time thinking about it. I wrote a piece, I’ve linked to it below, that is about how and why we use storytelling and how we can do it as strategists to be able to make organisations come along or help organisations come along with the road that we’ve plotted for them in the course we’re trying to do. I believe organisations are inert by default. People don’t come in in a morning in a big organisation or in any organisation, How do we change the world today? Some people do. But most of them are just looking at how do we get out the door at the end of the day or do the thing that they need to do. But when you multiply that up, you end up with an organisation that generally doesn’t want to move unless there is a force applied to it.
There’s some physics concept. Isn’t there about a Newton concept? Maybe about applying force to it until it goes. You need to apply that. You need to get people to You need to move. You need to get those micro movements to get activity to happen. To do that, I think you need storytelling. I think you need to bring people along a journey so you can paint a picture of what the future might look like. Hence, I say might because I know we can’t actually predict the future. But we have to let people know what that future might look like so that we can help start that movement. Because momentum is hugely important when it comes to marketing. I’ve said huge far too many times in this podcast, haven’t I? No more. I’m going to have a huge swear jar. Otherwise, I’ll put pound in every time I say the H-word. But momentum is important. If you don’t get momentum, all the best strategies just stop. They just grind to a halt because they haven’t started moving, actually. They don’t grind to a halt. They just don’t go anywhere. You need to create momentum. To do that, I think you need to tell people’s stories.
It was really nice to hear Seth say about the value of storytelling and how that works. He actually gives a negative example of how it’s used to reinforce climate change. But I think it’s really important that we can use storytelling. One really important thing that I mentioned in my piece on strategy and practise blog is I talk about religion a little bit, and not to belittle anyone’s religion, but religion is great storytelling, lots of great storytelling. What’s the one thing you never hear any religious preacher use, ever? Just let you have a little think about that. Percentages. I’ve never heard a preacher. I’ve seen a couple of different religious ceremonies in Islam, in Hinduism. No, Sikhism, sorry. I have seen Hindu ceremony as well. And Christie Anna has seen all the sorts of different flavours. Never seen anybody give a speech from the front of the stage and talk about percentages. So think about that when you are giving your works process. If you’ve got to give a percentage, you have to tell the story behind it. Every number tells a story. Don’t just batter people to death with percentages because that’s not telling them a story.
That is firing bullets at them and beating them to death. So have a think about that. And my last point on what Seth said. What else should we pick There was one other thing, going back to what I just said about momentum. We were talking about climate change and it sets a view of that we need to tackle big things first, and we do 100% agree with that. We’re going to tackle the big things first. Leaf blowers, for example, Leaf blowers for half an hour or something or an hour use more gas than emit more pollution than driving across America, which was mind-blowing in terms of the stats. But I asked the question, I said, Yeah, but do we not need to still encourage people to do the recycling thing, to make those small changes in their lives because that creates the category, it creates the awareness and the system where people are ready for that change to happen. I even quoted Gandhi, which is if we want to change the world, we’ve got to change ourselves. So is that not where we need to be? Seth made a good point, which again challenged my thinking on this, which is actually that’s because we’ve been conditioned to believe that.
And he’s not disagreeing with Gandhi on most things, but just in terms of climate change. The phrase carbon footprint, our own carbon footprint, was an advertising phrase, I think by Ogilian Mather, for one of the oil companies, and how that has been used to make us think that What we need to do is just change our carbon footprint slightly or stop us from being able to call for bigger change until we can make our little change. It’s actually stymied any major changes in the industry. We need to forget about the small changes and we need to go with the big changes. Now, personally, that doesn’t mean I’m going to stop doing the things I’m doing. As someone who’s just come back on a flight from Florida, it’s hard for me to sit here and say that, Oh, yeah, you should do all the things. I’m still flying for work. Then it’s like, Oh, well, that makes me a hypocrite because I’m not reducing my carbon footprint. And all of a sudden, what Seth said made perfect sense. I cannot ask for big change in the system because I’m not making small change myself. Maybe we should change concrete and cows because that’s where a lot of the pollution comes from.
What the shipping industry, all these things. But I’m not allowed to join that debate because I fly too much. Got it. Now I see what he means by that point. So it’s good to have these discussions. It’s one of the reasons I have the podcast because I love having these discussions. What’s your view? Tell me what your view is. I would love to hear it. I just want to give one more shout out to a friend of mine before I finish and before I wrap up this podcast, Simon Harper. Right at the beginning of the Seth podcast, I referred to email as the cockroach of the Internet. Now, Simon has an email marketer, so he particularly loved that. Just to attribute that quote properly, it was by Stuart Butterfield, who is the co founder and I believe currently the CEO of Slack. So while it’s a beautiful quote, maybe the man who’s trying to kill email with an instant messaging product is probably not the most impartial of observers to be making that. So thanks to Simon for loving that quote and making me go and dig out the original citation for it. Email the cockroach of the Internet.
Do we need to be better storytellers as marketers? Should we change ourselves before we try and change the world? And who’s right? Ritson versus Godin in a battle to the death. Let me know what you think. Love the chat, love the debate, social media, I’m on threads, Instagram, LinkedIn. I do have a Twitter X page, but I never use it because the same idiot runs Tesla runs that. So I’ve had to come away from there, sadly. Or just send me an email. If you got this by email, just hit reply to the email. You find me everywhere. Look in the show notes, see where you get. And lovely to have you along. Got another episode out soon. I’m not going to tell you who it is. It’ll just be a nice little surprise for you.
Till next time. Thank you.