Jessica Jalsevac on May 15th, 2014
How do you conduct your business?
Leo Babauta has given this a lot of thought. His blog, Zen Habits, has been named one of the Top 25 blogs and Top 50 websites in the world, with more than a million monthly readers. But he got to where he is by doing things a little differently.
In February Leo wrote an article outlining the exact principles that guide his business decisions - including completely uncopyrighted content, no affiliates, and putting readers first. We thought it was bold and inspiring, and reached out with a few more questions.
We’re also honored to have Leo speak at the next Gumroad Creator’s Studio event - Authentic Business in the Age of Online Noise - taking place May 22, 2014 in San Francisco. We hope to see you there.
What prompted you to write the article, How I Conduct My Business?
I see so many good writers and online entrepreneurs who I want to succeed, but who do things with their websites that are frankly spammy, market-y and annoying. Things like pop-ups to get you to subscribe, affiliate marketing to make money trying to sell things to their audiences all the time, super sales to make lots of money.
I realize that these good people are doing these annoying tactics because 1) everyone else is doing it; 2) they fear not being able to survive as a business if they don’t; and 3) they don’t know of a more authentic alternative.
So that article was meant to show people that there’s an alternative, that you don’t have to do it just because the “successful” guys are doing it, and that you can overcome the fear to be trustworthy.
Why is it important to be authentic in business?
The two most valuable things we can get from our readers and customers are attention and trust. Lots of people act like it’s making money or hitting hundred thousand subscribers, so they do as much as possible to get those things and get caught up in those metrics. But the things they do erode the trust and attention over time, so that you hurt your relationship with your reader or customer.
It’s easy to get attention but you can do it in a way that’s untrustworthy (linkbait articles or articles written just for SEO purposes, for example). So really, the most important thing is to be trustworthy — if you do that, then when you do get a reader’s attention, you’ll keep it because they know you’re not just spamming them.
To be authentic is to be trustworthy. If you’re selling snake oil, or doing Internet Marketing just to make a lot of money, you’re not being authentic. You’re selling something falsely. And people will figure that out, no matter how hard you try. We have a sense for this, and while we might fall for the sales gimmicks for a little while, we’ll catch on to you. And then you’ve lost the respect of that customer, probably forever. Avoid this by being as authentic as you can.
You mentioned that you developed these principles through trial and error - can you share a story about one of the “errors” that made you realize what not to do?
Well, I used to have a lot of ads on my site, because other successful bloggers had them and said that’s the way to make money from your blog. But when I realized that they annoyed my readers, I asked myself whether I wanted to make money by annoying people. That’s not trustworthy.
So I cut back on ads, and eventually only had one. That felt a lot better, but I still felt inauthentic in that I was letting another company buy my readers’ attention (and trust), and my readers were having to put up with it to get my content. I don’t like it when readers or customers have to put up with anything — you should try to create the best possible experience for them, delight them not irritate them.
I finally let go of all ads on my site a few years ago, and that was scary. I wondered whether I’d still survive as a business. But by trying it out, I found that I could survive and even do really well, just by selling my own stuff. Stuff I could stand behind 100% because I made it.
I’ve done similar trials with letting go of affiliate marketing and Amazon affiliate links, for example, and my business didn’t collapse. I think I’m being more trustworthy because of it.
One of your principles is “No sales”. You go on to say, “Either set the price at the higher price point (because you think its worth it), or set it at the lower price point (because you want to get it into the hands of more people).” What other criteria do you use to decide on the final pricing for your products?
Actually I’m not good at optimal pricing. I try different price points for different products ($9.50 for one ebook, $16 for a different one, $35 for one that included videos, etc.) and see if they sell. They invariably do really well, which either means I’m underpricing (or pricing perfectly just by intuition, which isn’t likely) or perhaps my readers trust me enough to buy things on faith, with the idea that this will be more than worth their money or I’ll refund them.
My approach to pricing is to put myself in the reader’s perspective (and I think of them as readers, not customers, simply because I like the author-reader relationship better than vendor-customer). I think, “If I wanted help solving this problem with an ebook or course, how much would I want to pay?” And then I price it a little lower, because I know not everyone can pay. So I’m underpricing, but hopefully overdelivering.
I’ve done some interesting experiments where people could pay whatever they wanted for an ebook, including $0. Lots of people paid $0, but others paid $1, and still others paid the suggested $16. So there was a wide range, and people who couldn’t pay even emailed me to apologize that they couldn’t afford to pay but thanked me for letting them have my ebook. They thanked me for getting my product. That’s an incredible effect to have on your customers — that they’re grateful to have what you made, in their hands.
Any final thoughts?
The biggest obstacle to being authentic and trustworthy is fear. People who are new, and even those who’ve been in business for a little while, are afraid of failing as businesses. So they use the successful people as models, and see how they do things. That means they follow in the footsteps of Internet Marketers who’ve made millions being untrustworthy and pushy.
All of the tactics you see today that are annoying … these came from Internet Marketers. Who got them from Direct Mail and Infomercial Marketers before them. Things like how to warm up your list and put time pressure on them and give them a fear of scarcity and affiliate marketing and pop-ups and free ebooks if you subscribe to my newsletter … these are from Internet Marketers.
I’ve been offered millions to join some Internet Marketing campaigns. I was tempted, because my family would be set and we’d be secure. But the fear of financial insecurity isn’t a good reason to join these tactics. Don’t act out of fear: act out of the genuine desire to help people.
When you find yourself doing something because others do it, because the successful people do it, you’re afraid of failure. Which is natural, but not a good way to operate your business. Do things that people love, that change their lives, and you’ll have customers thanking you for what you do.
Leo Babauta will be speaking at the next Gumroad Creator’s Studio event - Authentic Business in the Age of Online Noise - taking place May 22. 2014 in San Francisco. See you there?