Selling Software Like Tote Bags

Paul Ford: Richard.

Rich Ziade: Paul Ford, how are you?

Paul: I’m good. You’re home today with a sick kid.

Rich: Yeah. But all good. I’m Rich Ziade.

Paul: Look at you being a CEO of a startup, but also a nurturing father.

Rich: Yeah, well…

Paul: Yeah, don’t tell anyone.

Rich: Yeah…

Paul: I’m Paul Ford. We are the co-founders of Aboard, a startup that lets you organize just about anything including links from the web, data, files, and put them into beautiful cards that you can move around with your friends.

Rich: Yes.

Paul: You’re going to find value in data and information that you thought was just a pile of mess but it actually turns out to be beautiful and organized if you just come on into Aboard. That’s what I would say. That’s what I’m telling you.

Rich: I like it. I like your pitch. Fun changes coming to Aboard. We’ll talk about them in a future podcast. We might hijack one and make it one giant sponsored podcast, but for now it is our sponsor.

[intro music]

Rich: Paul, we say this a lot.

Paul: What do we say, Rich?

Rich: We say we’ve seen beautiful software fail and very mediocre, downright ugly software succeed incredibly.

Paul: Yes!

Rich: Why is that? Why, Paul. Why?

Paul: I blame the users, who are wrong. [laughing]

Rich: No, don’t blame the users. You’re not allowed to do that.

Paul: No, you’re not allowed?

Rich: You’re not allowed to blame the users. No, no, no, no, no, no, no.

Paul: Well, there’s actually many categories of this. I think—I’m curious as to where you’re going. Here’s what often happens from my point of view. I see people try to solve a problem, and they use all the right tools. They use great design, and they use good modern coding practices, and it’s elegant and it’s beautiful. But the problem is a problem in the founder’s head and not a problem that people have in the world.

Rich: I think the founder thinks they’re being empathetic.

Paul: Yes, but they often have too much money to be empathetic.

Rich: [laughing] That’s fair. That’s fair.

Paul: That’s a real thing. I’ve met many, many times very successful people because they gravitate to software, will come to us and be, like, got to do this one thing. And it’s literally like, we need a better system for organizing and sharing jewelry—

Rich: Yeah.

Paul: —among ultra-high-net-worth individuals on the Internet. And you’ll be like… [laughing]

Rich: That’s madness. That’s madness. I’m talking more about, like, why would you do things that way? There’s a better way. You’ve been doing it wrong all along. And sometimes they demonize whatever tool you currently use.

Paul: This is the pitch. This is their pitch.

Rich: That’s their pitch, right?

Paul: Okay.

Rich: But it often doesn’t work.

Paul: Okay.

Rich: It often doesn’t work because people don’t buy in. And then flip the script, cut to utterly mediocre, kind of lousy software that is wildly successful because of sales.

Paul: Yeah.

Rich: Like, I don’t mean sales as in, like, it’s on sale 30% off. I mean, there are organizations, there are companies, there are brands that go out of their way to connect with you on a personal level. And I don’t mean that in, like, oh, welcome to, Denny’s. Can I show you your table? I don’t mean that. I mean, on a personal level, they see the buyer as a human being.

Paul: Yes.

Rich: And they connect, they want them to feel like they’re succeeding, and they want their emotions to feel good, and they sell that way. And when you say those words, software features and how you’ve been working wrong the whole time kind of melts away, and it doesn’t matter.

Paul: Well, you know, the other thing, software is so malleable. So, you know, okay, I can call you up and I can say, Rich, “I have a great solution for you.” And you can say, “Does it have the ability to put purple hats on every photo?” And I can go, “Absolutely.”

Rich: Not only absolutely, it’s like, you know, “We’ve heard ideas. That’s one of the best I’ve heard.”

Paul: And then I can go back to my team and say, “Purple hats by Thursday, or a rain of fire comes down upon you.” [laughter] If you’re… That’s what sales is. Enterprise, and sort of, like, there’s a sort of big, mysterious category of software. There’s a funny thing that happens with software and with technology in general, Richard, which is that people accrue this sort of magical thinking around different categories. So, like crypto, it’s money. Well, no, it’s actually just software. But everybody was like, I think we can, let’s treat it like it’s money, but it was just code run on a computer.

Rich: Mmm hmmm. Mmm hmmm. Yep.

Paul: It could run on any old computer.

Rich: Yep.

Paul: Enterprise is software that isn’t done.

Rich: Ever.

Paul: Yeah.

Rich: Ever, yeah.

Paul: And it’s software that you can’t pick it up and buy it off the shelf because it solves problems like, we do a lot of textile manufacturing in Brazil, which has a very onerous tax strategy?

Rich: Yeah.

Paul: Or taxation system. And we need a system that can account for all of the textiles going in and out of our seven factories. And it’s like, I cannot go on PCConnection.com and search for those keywords. So instead, a guy named Mike calls me 20 or 30 times a week and says, “Let me get that for you.”

Rich: Yes, that’s right. Look, I think we have a lot of big changes happening in tech right now, right? There’s AI, which is, oh my God, it’s coming for your job.

Paul: Another thing that everybody was like, this is magical and bananas, and no one can ever understand how it works. And then you kind of sit down, you’re like, I’m starting to figure out how it works. It’s technology.

Rich: Yeah, exactly. Exactly. And it’s like, well, here comes the next trillion-dollar wave of, I don’t know, value creation. Let me just use those words.

Paul: Yeah. They love trillions, too. Yeah. It was going to be climate. We had AI, then there was like a brief blip where it was going to be climate. And now everybody, or, no, sorry. We had crypto, then climate, but climate was like an hour and a half, and then everybody’s like, no, actually, it was AI.

Rich: Yeah. Yeah. And the thing that technologists kind of latch onto is that if the tech is incredibly impressive, everyone will come. And look, there are the tinkerers, the product managers, the ones that are on Product Hunt, and they’re like, yeah, well, this is cool. I’m going to use it. I’m going to show it to my cousin and they’re going to use it, too.

Paul: No, it works if you’re selling to technologists. It works if you’re building like a development environment.

Rich: Yeah. Yeah. They’re often your evangelists. So it’s great when you do that. And then there is a very different, and this is a very sort of circuitous way to get to the point I want to get to.

Paul: Oh, is there any other way? Is there, like… [laughing] Anyway, keep going.

Rich: Exactly. It’s called the first eight minutes of every one of our podcasts. [laughter] Here’s what I’m getting at. Tech. It’s not just tech. It could be anything. Anything that’s like, if I would just add this one feature. If I had variable power windows, so that the harder you press the button, the faster the window opens and closes, the more cars I will sell.

Paul: Yeah, I mean…

Rich: That—if I could just add that one feature to my software, then they will all come.

Paul: Yeah. You’re talking about us for the last three years.

Rich: Yeah, and I’m talking about a lot of tech companies for the last three years.

Paul: Yeah.

Rich: And then there is this reality. People will spend hundreds of dollars because a tote bag makes them feel good.

Paul: Yes. Those are two different economic realities. One is, I will deliver value to you and you will see it, and you will say, I want that value in my own life, and I want to use that tool, and that is a good technologist, and I love it. And the other is, I want to feel the way that that tote bag seems to make her feel.

Rich: I have an emotional connection with the product—and I don’t mean, and it’s fleeting. Often, you know what highlights this? If you want to know if your feature is going to be the feature that actually blows up sales for you, all you have to do is watch an unboxing video. To me, an unboxing video is commerce translated into emotional satisfaction in the most basic way. The product is nowhere to be found. There’s eight layers of cardboard, and fine plastic, you know that there’s that material that feels like skin that apple wraps everything in. I don’t know what they call—

Paul: It’s sort of like a translucent, but almost, like, fabric, plastic. Right?

Rich: I’m convinced they are harvesting the stomachs of little baby lambs.

Paul: No, no, that’s Oompa Loompa skins from Willy Wonka. Like, that’s how that works.

Rich: [laughing] I don’t know what it is. But they understand that. They understand that luxurious emotional moment. And guess what, man? There’s no feature set there. It’s just humans connecting to a thing. People connect to a brand. People line up for a sneaker because they only made 200 pairs of it. I don’t know what that’s called. I think that’s marketing. I think that’s…I don’t know what it is.

Paul: Now, first of all, statistically, right, the dopamine rush comes before, like, when the product kind of hits the porch.

Rich: Yeah.

Paul: Not actually using it. It’s that moment where you’re like, you feel the relief that it’s here. Okay? It’s just like—and I think the pandemic really turned this up.

Rich: Yeah. Yeah. Yeah.

Paul: Because we were just kind of watching the door, just waiting for it to ring.

Rich: Yeah.

Paul: But unboxing videos, I’m in the synths, right? And a synth is worth so much more money. And I didn’t know this when I bought my synth, that I really was excited about after we sold our company.

Rich: Oh, I know what you’re going to say.

Paul: Boxes. Boxes. And there’s memes about it, like, somebody sitting with, like, a crappy cardboard box going, I’m about to destroy 50% of the value of my synth collection. [laughter’ Like, as they throw it in the trash.

Rich: Right.

Paul: In-box, in-box, in-box. It just, that is what matters. And I think about it a lot because it is—zero value is in the box. In fact, most of them are simply cardboard boxes now with no manual. You go get the manual on PDF.

Rich: Yeah.

Paul: There is a little bit of foam, but not always for the smaller modules and things like that. And yet it represents…it represents a few different things. It’s sort of the care and the connection and sort of everything around the product is symbolized by this crappy cardboard box.

Rich: What do you tell the engineer who’s assigned one ticket for four months to smooth out the high-frequency sounds when it turns out people just love opening the box?

Paul: Well, this is what’s tricky.

Rich: There’s a value… There’s a disconnect between the value we think we’re putting into products and the value consumers and humans seem to see in them. I feel like we’re as guilty of it as anyone else. Onboarding in Aboard was always an afterthought. And then we just came to realize how absolutely critical it was, because it was really the unboxing of the software, is the onboarding experience.

Paul: Well, as technologists, right? What we tend to do is believe that code and design are enough.

Rich: That’s right.

Paul: The lesson we have learned very painfully over ten years, and that we will continue to learn, is that it’s not meaningless. I think it’s really easy to be like, “Ah, you can sell them any old garbage as long as you put a big enough ribbon on it.”

Rich: Yeah.

Paul: There’s some truth in that. I mean, look at Tesla automobiles, like the Cybertruck, right? But that’s not actually true. The product—I’ll give you an example. It’s the whole experience, right? So it’s like, you read the reviews, and it’s a really special one. This one’s important. And you really kinda, you think about it for a while, and you’re like, it’s a little too pricey for me. I promised myself I wouldn’t do it. But then, like, a month or two goes by, and you’re like, well, I did set a budget. You know? [laughing]

Rich: Yeah, yeah.

Paul: And then it comes. So it’s not, the box itself, if that box showed up at random and you’d opened it up and you didn’t know what was in it, you would go, “Oh, okay, wow, this is cool.” But it’s the whole experience of, like, I’ve learned about the thing, and then the sense of, like, “Wow, they really put on a show just for me.”

Rich: Yeah. Yeah.

Paul: And then once you get on the other side of it, actually, now you have to learn and interact with this thing, and it’s going to be part of your life. But it’s sort of like when you—you’ve told me, and I remember, you and I both have very cute stories about how we met our wives.

Rich: Yes.

Paul: I met my wife canoeing on the Gowanus Canal in Brooklyn, a superfund site, while we were, during a cleanup. You met your wife at a protest?

Rich: Yeah. I don’t know if I’d phrase that as cute, but… [laughing]

Paul: Well, no, but they’re sweet stories that actually you remember seeing that person and going, “Huh!” Right?

Rich: Yes. That’s right.

Paul: There’s a whole thing. We, as humans, those moments are incredibly important to us. That moment of connection is a story you come back to and over and over. “How did you guys meet?” Is a question you ask at a party.

Rich: Yeah.

Paul: Where did you get that bag? What is that? What are you doing?

Rich: Yeah. Yeah.

Paul: If I see you with a nice pair of headphones, I’m like, “Hey, what are those headphones?” And then you have a whole story. And we actually, that’s not the fundamental part of our relationship, but it really is something that is part of, and this is true of software, except that we get to pretend that it’s like a magical code robot that lives elsewhere. But when someone’s telling you about a new JavaScript framework that is utterly indistinguishable from the other JavaScript frameworks to any normal human being, they’re having the same relationship. I remember when I first met React.

Rich: Connection.

Paul: Yeah.

Rich: Yeah. And I think different products succeed at this in different ways. People who have an emotional connection with their product, they feel strongly about it, they defend it.

Paul: Mmm hmmm.

Rich: They don’t want you to tell them that, oh my God, you paid how much for that bag? Or how much for that? Actually it is, in a way, you’re sort of, you’re crossing a line into their relationship with the product, or their relationship with the brand, and that’s a powerful thing. And great marketers, great storytellers, like the legends of Madison Avenue know this, right?

Paul: Mmm hmmm.

Rich: They know about how to profile that audience and then send signals that are going to evoke emotion and connect them to it.

Paul: Tell the people about what sparked this conversation.

Rich: There was an article in the New York Times about a woman, I think she’s just an influencer. I think she makes videos and stuff. And then she started selling a tote bag, and the tote bag cost $120.

Paul: Just a nice, a nice tote bag.

Rich: Yeah. And a lot of people were angry about the fact that she was charging $120. In fact, people go back online—you can be angry, by the way, at a phone and just put it down and just be like, oh, that’s ridiculous, and then just walk away.

Paul: Okay, so just to fill this in, “A Tote Bag for $120?” is the title of the article by Madison Malone Kircher. It was from February 1st, and it’s got a…it’s a very pretty woman, this influencer. Her name is Emily Mariko, and she’s huge on, like, TikTok, millions of followers. And she’s—

Rich: Yeah, I will point out that the New York Times loves to give you a lemon sorbet sort of palate cleanser in between the horrific news that’s in the world, and they—but yet sometimes, it’s a bit of a wink. Right? And that’s what’s happening here. But go ahead, continue.

Paul: No, that’s—all of Styles and Real Estate is essentially trolling.

Rich: [laughing] Yeah.

Paul: And it’s, but everyone acts like, oh, no, no. But it really is. The whole point of it is just to get everyone enraged. So yeah, so she sold—it’s a plain cotton tote bag of the kind that you would get at, like, the grocery store, but obviously sourced with some nicer materials and so on and so forth. She’s selling it for $120. And as is typical, since that is a lot of money for a tote bag, and it sets up a whole conversation, it’s the same conversation we have over and over and over again as a culture about conspicuous consumption, which when other people do it, is absolutely offensive. But when we buy nice sneakers, we’re just kind of expressing how we love certain things.

Rich: Yeah. And I got to say, reading the article, a couple of things came to mind. One was for someone to be upset about that, it means that they are essentially telling that person, you’ve hurt my feelings, which means they already have a relationship with them to be upset—

Paul: You let me down. I can’t buy your $100—yeah. Why did you do that?

Rich: Exactly. Which means she succeeded in some way. Right? Initially, which is—

Paul: There is a connection.

Rich: There’s a connection. Otherwise people would be indifferent about it, right? But the article ends with the sort of little card trick that the New York Times loves to use, and it ends with essentially saying that all the tote bags are sold out. [laughing]

Paul: Oh, yeah. A little kicker.

Rich: Little kicker at the end.

Paul: Everybody is all fussy about this tote bag, but meanwhile…

Rich: That’s right.

Paul: Ms. Mariko has learned that she is utterly correct to sell $120 tote bag. She can’t keep them in stock. Look, I remember, much like you, I was deeply broke for a huge chunk of my early life. And I remember hippies lecturing me about capitalism, and I realized, you know, their Birkenstocks cost $140. And I’d never owned a pair of shoes that cost more than, like, $30 at that point. Right?

Rich: Sure.

Paul: And lots of people don’t have shoes at all. And it was just sort of like, it’s a lot of this, right? That is not the societal breakdown that people think it is. Except they’re in the club, right? They’re in the club, and they feel let down because there was supposed to be a specific kind of virtue here, and now there’s an $120 tote bag. But this is the whole freaking deal. And this is where everybody makes their margin. And this is why we don’t live in a socialist utopia. It’s because someone can say, I would like to make $75 per tote bag. And I think I can.

Rich: And I think if you mapped out the profit margin of that tote bag, let’s say if it’s $120 tote, let’s say $80—I’m being generous, by the way, probably more, the margins are even more. The gross margin is $80, meaning this thing is costing me $40, all in, and I’m going to charge $120. How can you charge $120? Now, you can charge $120 if it’s a scarce commodity like gold or some material, but it’s not, it’s a tote bag, right?

Paul: Mmm hmmm.

Rich: How can you do that? The way you can do that is something that’s well-known in sales and in economics, which is value pricing. The truth is the buyer values it enough that you can charge it. It’s not that it’s a better technology, or that it’s a better material, or it’s more durable, or you’re giving them a lifetime warranty. It’s that the buyer on the buy side is not calculating the material and your shipping costs. What they’ve decided is it means that much. It means enough to me. And here’s the beauty about markets—and I’m going to be very capitalist for 10 seconds, Paul, and then I’ll go back to being normal. If you go too far, markets slap you down real fast.

Paul: It’s real.

Rich: If you are abusive, or you somehow broke a pact with your customers, or you said something insult—markets take care of you real quick, way faster than any comment thread.

Paul: This doesn’t mean that you can’t sell nonsense. You can sell gold stereo cables that mean absolutely no—you can sell total snake oil, and if they want it, they’ll buy it. But if you charge too much for your snake oil, they’ll get upset. Like it’s not—

Rich: If you charge too much.

Paul: Yeah.

Rich: If you do something that somehow that somehow—this is the thing. You’ve decided to establish an emotional relationship with your customer base. So if you think you’re allowed to go to a Nazi rally that following weekend, you better be very careful, because it’s not a transactional relationship anymore. They have skin in the game and they can judge you.

Paul: What’s wild, we’ve talked about this before, you and I have our little hobbies, and there is no sound that I could make with the nice fancy synthesizer I bought 18 months ago that I could not make on my Macintosh with $25 worth of software.

Rich: Sure.

Paul: And in fact, my synth has a few little analog parts, but for the most part, it’s digital. And so, yes, certain headphones have a really nice response to audio signal, but not that great. Right? Like there’s no…

Rich: There’s a diminishing return curve that kicks in real fast at about $400, right?

Paul: There are very typically, except for things like healthcare, often really cheap, commoditized experiences that are available, experiences and products that are available to get anywhere.

Rich: Yeah.

Paul: So this is a fascinating one, right? Because we have chosen as a culture to get upset and write a New York Times article about the $120 tote bag. Meanwhile, we are flooded with tote bags, and there are tote bag. I have ten tote bags downstairs. Right?

Rich: Sure.

Paul: So I went ahead, you sent this to me. I read it. The actual objective reality of this article is I’m not going to buy it. It doesn’t matter. They’re going to sell out, sure. But it will represent an infinitesimal number of the tote bags. And why do I care what people do with their $100? I do care a little what people do with their billions, but with their hundreds, we got to just let it go, man.

Rich: [laughing] Yeah. And look, I think most don’t. Right? Most don’t care.

Paul: No, she has 13 million TikTok followers, so there you go.

Rich: But my point is she has 13 million TikTok followers, but 12 million don’t have a strong feeling about the tote bag. They just watch the video.

Paul: Fair enough. All right, so what is the conclusion here? By the way, have you ever done the exercise where they make you sell the pen?

Rich: That sounds like another podcast.

Paul: We’ll do that, hey—

Rich: Hat-tip to Jim.

Paul: Jim Nielsen. We have to do that. That is the great sales interview question, where they hand you a pen, and they’re like, sell it to me.

Rich: Yeah.

Paul: And then you’re like, I can’t sell this pen to you. It’s too valuable.

Rich: I want to close it with just as you’re asking a piece of advice, which is also a way to explain my behavior inside of Aboard.

Paul: Okay.

Rich: I talk about icons and fonts a lot.

Paul: [low weary noise]

Rich: [laughing] I get upset about it.

Paul: [louder desperate weary noise]

Rich: The team loses its mind.

Paul: Ugh. We’ve been—

Rich: You know what everyone tells me, Paul—

Paul: Let’s just bring people—

Rich: You know what everyone—no, no, don’t bring them in. Nobody wants to come into this.

Paul: Oh no, it’s just, if you want to see a startup out of its mind, watch us talk about the, emoji set that’s built into Aboard. Anyway. Go ahead, Rich. Go on. Go on!

Rich: And this is how I want to close it, which is actually a very wily way of defending my behavior.

Paul: [laughing] Great.

Rich: I believe that these tools, and they are tools, ultimately, they’re not life-changing experiences. [laughing] They’re just tools. I believe strongly that there are little things you can do that evoke connection and emotion from people that see them. And that’s my sales, that’s me being in sales. That’s me being in an agency who had no idea how to get people to connect with this frankly tiny little shop in New York City. And I stand by it because I’ve been in the room enough times to see how people connect with things, and rarely is it them falling out of their chairs because I showed them a drop down menu.

Paul: Well, this is tricky for me, right? Because I am the thing that people tend to connect with in this context.

Rich: Yeah.

Paul: But you’re right, the only thing that will scale is people connecting with a product.

Rich: Yes. Yes. And I care deeply about the deck. I am a Keynote gold-certified, I don’t know what level I can be at, I know that thing inside and out, because I know that is the way I tell stories with it.

Paul: [laughing] I was using another tool to get something done, and I kept showing it to Rich. He’s like, “This makes absolutely no sense. It’s chaos. What are you doing?” And he gave me the exact same thing back in Keynote and was like, “Do it like this!”

Rich: But it wasn’t even a presentation.

Paul: No, you’re like, do the website in Keynote. And I was like, you know what? This is going to take me ten extra minutes. And then you’ll actually—and I did the exact same thing. I copied the exact thing over from the other thing, and you’re like, this, finally. This is good. This finally makes sense.

Rich: [laughing] Let’s not end this on being about me. But I think this was an interesting conversation. I think this is about marketing and—

Paul: Freaking hope it was.

Rich: Yeah, yeah, yeah.

Paul: I think what we’re circling around at our company, and again, we’re trying not to over-market Aboard on this thing. We’re circling around this moment of connection. And this is where this comes back to, this great subject of onboarding and sort of these parts of the experience, which are not code, they are not features, and they are not understood as code. And so we actually do have something exciting and interesting about onboarding to tell the world. But again, we’re not going to talk about things until they are launched because we are adults.

Rich: We sure are.

[outro music]

Paul: All right, so check out aboard.com. Send us an email at hello@aboard.com. We’re still here to help. If anybody wants to hang out. We need to throw a party. We gotta get people in a room sometime.

Rich: We’re gonna throw a New York City—

Paul: I miss humans.

Rich: And then we’ll throw another one on the West coast. We’ll figure it all out.

Paul: Things are going good. We’re starting to see some interesting partnerships. The next year is going to be kind of wild, man.

Rich: It is going to be wild. Everyone out there, take care of yourselves. Have a lovely week. And thank you for listening to us as we took the extra-long route to the destination.

Paul: It’s their choice. Everybody—this is the thing. We know this about the consumers of everything. They’re not going to listen unless they absolutely want to.

Rich: Up to them.

Paul: At 1.5x speed.

Rich: Exactly. Have a lovely week.

Paul: Bye!