Snake oil decoded

By Neil Patrick

This could be pointing to a cliff edge...

All the time I go onto social media at the moment, I am assailed by ads that say: ‘Follow my fool proof plan to riches’, ‘Turn your passion to profit’, ‘Hack your way to success’, and any number of similar sales pitches.

I don’t know about you, but it’s clear to me they all use the same formula. Some of it is obvious, some of it is subtle. But I detest all of it because of one critical aspect:

They entice people who are often desperate and extract money from them without any obligation to deliver success for their clients.

Don’t get me wrong. I am passionate about entrepreneurship and business start-ups. We need more people succeeding in their entrepreneurial efforts and I spend a lot of time helping people do this.

I have no problem with XYZ Megacorp paying Tony Robbins or whoever many thousands of dollars to speak at their events. Or with people who genuinely help others to get better at whatever they do.

I do a lot of coaching myself. But there’s a key difference from what the snake oil salesmen do:

I do not resort to a one size fits all, silver bullet solution.

Every piece of coaching and consulting I do is unique to each client. If I think a client will not or cannot benefit from my involvement, I tell them and try to introduce them to someone else I know and trust who can help.

I’d rather make no sale than take money for something that will not work for that client.

The snake oil men and women take a different view however:

They want your money more than they want your success.

I despair every time I am presented with one of these programmes. Because these books, DVDs, coaching programmes and seminars are cynically selling false hope in the full knowledge that only a few buyers will ultimately benefit.

Yet usually, these packages are not scams. Many contain good advice – once you get through all the padding. And there’s A LOT of padding.

So I thought I’d decode their methods so you can see them for what they really are. Because I have spent my whole career in business and specifically marketing, I think I can see through these people better than most.

And I’ll admit that I have spent a lot of my own money to buy these things, not because I believed they would be of great value to me, but because my curiosity to see them from the inside proved too strong to resist.

They all use similar devices and once you know what they are, you are much better equipped to avoid being duped. So to help you see through the polished and persuasive pitches, here’s a quick summary of what to look out for. 

They are their own proof

This is not a reason to buy anything from anyone...

They ‘prove’ their method works by describing and showing pictures of how wealthy, happy and successful they have become. Look at me! This could be you…IF you buy this now. So be prepared for lots of pictures of expensive cars and houses, big bank statements and pictures of palm trees, white sand and blue skies. 

They use free enticements

They bait the trap with a free offer. This is a device to snare your personal details so they can upsell.

The way to secure thousands of prospects is to give away something for free. Except it’s not really free. You must give them your email address and quite possibly a lot more personal information. This might be sold on, but more typically is used to fill your mailbox forever with more offers and sales messages. To minimize the chance that you unsubscribe, these emails will typically ‘give’ you ‘incredibly valuable information’.

 
They imply scarcity when there is none

This is a common trick. ‘Last few places remaining – don’t miss out’. I cannot keep this offer open longer than the next 24 hours. Etc. This is another ruse which implies that it’s popular so it must be good. And we are at risk of missing out if we don’t buy now. Poppycock. Ignore the offer, and another one will arrive within a few days for sure. 

They all have a rags to riches story to tell

This is another device used to convince us that if they were once struggling and are now millionaires, then their brilliant ‘secret’ recipe must work. They used to be ordinary just like us, until they ‘discovered’ this amazing secret to fabulous wealth. If they can do it, anyone can.

They all use upsell

The freebie is a loss leader. Give away 1,000 books, DVDs or whatever and then harangue the hell out of the takers with more offers at massively inflated prices. Taking the freebie says to them, you are interested. And once they have their claws in you, they won’t let go. They all seek to amass huge mailing lists so they can grow their marketing machines. 

The fake offer

This is how the upsell works. First, the prices quoted as ‘normal’ are no such thing. ‘Normally this would cost $2,500. But for a limited time, you can have it for 'just' $499'.

‘And I’ll also provide you with all these amazing extras absolutely free.’

If you were a retailer, you’d have to meet very strict rules before you could make an offer like this. But online direct selling of services has no such rules to satisfy. Your ‘normal price’ is whatever you want it to be; you don’t fool me. 

The money back guarantee

This is another trick. If you sell 100 items at $499, you have just made $49,900 gross revenue. Maybe half the people that bought it didn’t like it very much. But only a few of these will actually ever get around to asking for their money back. It’s human nature. We can be quick to buy, but slow to ask for our money back, especially if the process is made unnecessarily lengthy and complex. So I refund 10 people let’s say. My revenue is reduced to ‘just’ $44,910, and I’ve refunded everyone who asked. My conscience is clear and my bank balance is still looking sweet. 

The universal solution

We are all prone to believe in experts. That because if someone else is doing well and we are not, we believe that if we copy them, we’ll do well too.

This is faulty logic because we are all unique. What works for one person is quite possibly a disaster for someone else. The real secret to our success lies inside each of us. By striving to become the best version of us we can possibly be, not a pale imitation of someone else.

Nonetheless, all these people are experts. They are experts at extracting cash from others for things which cost them very little. 

The excuse

This is the get out of jail free card. It runs like this. If you didn’t succeed, that’s because you didn’t do everything I told you. It’s a circular argument which serves snake oil vendors well, because it transfers the responsibility for our success from them to us.

If I hire you to do something for me, I will hold you accountable for delivering what you promise. Yet snake oil salesmen accept no such responsibility.

The really clever trick by the snake oil vendors is that because we are the only ones who can make this happen, they are completely off the hook. They take our money but have absolutely no accountability for our success.

If you want to create your own business, good for you. Work at it. Get the best advice you can from people who understand your business sector and are not peddling snake oil. Figure out how you can do something better, faster or cheaper than others in your marketplace. Recognize your uniqueness and build on it.

Just don’t pay for someone else’s magic formula. The only guarantee from that is that they will get richer and you won’t.

Welcome to the age of opportunity

By Neil Patrick

In life there are things we can change and things that we cannot. The Fourth Industrial Revolution (FIR) is something none of us can change. It's demolishing the life expectations of a generation. But from amidst the smoke and debris, new hope is coming into view for those who can embrace it...

We can adapt to survive and thrive in this fast changing world.  And the first step is recognizing and ditching the baggage that we have been accumulating for our entire lives about how the world of work works. The only reason millennials are taking all the glory in the world of business start-ups is because they just did it. No-one told them they couldn't or shouldn't.

And just as older people can become victims of ageism in their job-search, so too do recent grads. They get passed up because they haven't got enough experience. The difference is they say, "Well if no-one is going to give me a job, I'll make my own".

Forget all the headlines about multi-million pound crowd-funded start-ups. About franchises. About network marketing. All these are just working for someone else's benefit - for investors, for franchisors or some shady character you'll probably never meet.

The FIR may be destroying 'old' jobs, but its also creating new ones. It's time that boomers learned how to make their own jobs too...

Creativity, flexibility and adaptability are key requirements for every person and every business that wants to prosper in the fourth industrial revolution.

According to Dr.Yuval Noah Harari, best selling author of  Sapiens: A Brief History of Humankind, our abilities to adapt and collaborate are the principal reasons humans came to be the dominant species on the planet.

But the world we spent most of our careers in, the old world of corporate control, hierarchy and obedience, was pretty successful at repressing these essential human qualities. Despite having teams of people who supposedly 'managed' human resources, they didn't and they don't. Mostly they seek to control and administrate it. Not nurture it.

We have to recover our abilities to adapt and collaborate. And this involves thinking outside the box, learning  new skills, developing new networks, and nurturing our creativity. It's no co-incidence that these are the traits that the most progressive and promising businesses and organisations place high value on.

They are also the key requirements for anyone who wants to stop relying on whatever job they can get and make their own way in the world.

We have to get used to the fact that everything we learned about how the world of work worked is either wrong now or will be soon.

There’s not much that most of us learned at school which carries much value in the FIR. Traditional education places value on facts and understanding. Facts have become devalued to such an extent that they have little value in and of themselves. They might be useful in a pub quiz or crossword puzzle, but in the workplace they are worth pretty much zilch because the internet has reduced knowledge to a universally available and virtually free commodity.

You might think understanding and raw intelligence is less devalued. In part it is, but understanding only has economic value if it is coupled with creativity. So for example, you may understand how a solar panel works. But you can only harness this knowledge and extract significant value from it, if you can create a new version which works better, or find new applications for the technology, or solve problems within the industry. Otherwise, the best you can hope for is a low paid job making, installing or repairing them.

The previous industrial eras made incomes possible for people because at almost every level, the same type of work needed doing more or less endlessly. In the FIR, almost any task which can be reduced to repetitive sequential activities can and will be done by AI and/or robots. Including the ones which can be done better by real people - yes I'm talking about you, you rage-inducing recorded phone menus...

We cannot stop this change. But we can seize hold of the opportunities it delivers, to do things faster, cheaper and better than ever before. It's putting power into the hands of everyone that in the old world was only available to big corporations.

We have to re-engage our creativity. Rediscover our core talents and use them. Everyone has talents, but most people work in jobs where they have none. And last but not least dive into the online world to really discover all the power that's now at our fingertips.

We have to become comfortable with uncertainty and spotting change before it hurts us

For the first time in history, the shape of things to come is harder to predict than ever before. Every decade in the 20th century was a reaction to the preceding one. Change happened relatively slowly, there were inter-generational changes but these were more about social attitudes and ideas than a changing world. Today and in the future, the world will be changing faster than ever before.

So understanding what will change in our own areas of professional activity will become an ever more important career survival skill. Early last year, a friend of mine in the oil and gas industry realised that his industry was on the cusp of flipping from a high profit, steady growth sector with great career security and prospects, to one which was going to be increasingly unstable. He spotted the coming change and immediately went about setting up his plan to cope with the threats. His colleagues continued as normal, relying purely on hope that all would be okay. Today his expectations have been realised. He escaped relatively unscathed. Many of his colleagues didn’t.

We have to be able to see ahead of the curve. And this means keeping our antennae alert for change and threat, not just ploughing on hoping everything will be okay. And it is exactly the same sensing apparatus which spots opportunities as well as threats.

We have to understand and constantly grow our career assets and intellectual capital

It doesn’t matter if you are an architect, a steel worker, an accountant or a bus driver. If our only career asset is knowing how to do what we do today to earn money to live, we are extremely vulnerable. The moment our work or employer changes for any reason, we are high and dry.

So we need to not just predict change, we have to take action to create career assets which may not be useful today, but which will support us and our incomes in the future. This requires spotting where our income opportunities will be in future and figuring out how we can make ourselves a prime candidate to exploit them.

Our time needs to be carefully managed so that we are continually amassing assets which may be of little or no value to the job or work we are doing today, but which we will need when the day comes that we no longer have that job.


We have to nurture diverse and global networks

Increased connectivity is a key aspect of the FIR. The world now operates globally and it is as easy to have a video chat with someone on the other side of the world as it is with someone in the next office. Social media gives us the opportunity to meet people online that we would never even have been aware of in the pre-digital world.

My own clients are all over the planet. Almost every single one of them found me through social media. The only limitation on who I can communicate with is language, but how long before real time translation apps remove that barrier too?

And my network is growing daily. New Twitter followers, new Linkedin connections and last but far from least, new people who even though they live on my doorstep, only became aware of me because of the internet.

I can never tell who is going to be of value to me and who isn't. I just know that someone will. So I treat everyone I meet with care, courtesy and generosity. And more often than not that's what I get back in return.

We have to understand how technology is going to impact our area of professionalism and get ahead of the change curve

This is an age of opportunity. It just doesn’t feel like it for people who have spent their entire lives being conditioned to deliver what the pre-internet age required.

What is tricking people is that opportunities don’t look how they used to. Do you really think that a 25 year old, fresh out of university is smarter than you? More valuable than you? More skilled than you? I don’t.

The only difference is that he or she has less fear; the boundless optimism of youth. He or she has nothing to lose and everything to gain. And it is this fear which is our greatest enemy.

In the next post, I’ll look at the five things I think everyone needs if they want to find and exploit their own opportunities in the Fourth Industrial Revolution.

And it seems I am not the only one who has this opinion. Gary Vaynerchuk has expressed pretty much the same view with his own unique brand of raw energy:

The heresy of telling new entrepreneurs they are wrong

By Neil Patrick

I know a lot of people who are starting businesses these days. It’s partly because of what I do and partly because my networking means I inevitably meet a lot of them. And I enjoy it. I get genuinely excited hearing about people’s plans and ideas and I love helping them improve and refine them.

But there’s something which troubles me. It’s the idea that anyone can become an entrepreneur and anyone can make a fortune this way. Both these notions are wrong. Not wrong because people shouldn’t aspire, but wrong in terms of what people’s goals and expectations are.

The media focus on business success stories and the absolute armies of people selling stuff to ‘help’ businesses succeed, support and encourage these aspirations. Which is fine, except if a business is doomed to fail. Which sadly is the majority. Long before this happens, any wise and caring counselor would say to them, ‘No. You’re wrong. This will NOT work. Stop wasting your time, money and energy on this RIGHT NOW.”

But we live in a society where such counsel is chastised as negativity. As lack of belief. As discouragement. For people who need and deserve encouragement. Even governments and government agencies attempt in their own bureaucratic ways to support entrepreneurs.

And because setting up and growing a business is truly hard work, most successful entrepreneurs tell us that the unwavering belief of someone else meant everything when they were so worn down and frustrated that they just wanted to quit. That belief and support kept them going. And they went on to achieve great success in the end.

People lap this up. It’s become a business start-up archetype. A rags to riches fairy tale that is deeply seductive. Just keep going. Never quit. And eventually you will succeed. It’s a simple and powerful idea that permeates so much of what we are told about entrepreneurship.

Yes commitment, passion, belief and sheer hard work are all essential for successful entrepreneurs. But no amount of these things will make up for a business idea that is so full of holes and flaws that if it were a ship, it would sink in the harbour.

Most people that new entrepreneurs meet want to sell them something. Even if that something is dressed up as ‘help’. This vested interest means no-one is likely to tell them that their business plan sucks. That it has some terrible flaw that will kill it dead. On the contrary, they express entirely fake enthusiasm, either because they cannot see the problems, or if they can, they are sure as hell are not going to mention it for fear of losing a bit of earning potential before the whole thing collapses.

So why would anyone want to become an entrepreneur? Part of the answer these days lies in the difficulty of finding and retaining a relatively secure and well paid job. People lose their jobs and think, “do I really want to go back to anything like that again?” Often the answer is “No”. So that leads inevitably to the idea of self-employment. Which in turn leads people to start up companies.

But start-up businesses have a truly dreadful record of success. Depending on who you listen to, around 80% fail in their first three years. They fail for all sorts of reasons, but one is that people might be very experienced at what they do, but have absolutely no-experience of setting up a business, let alone growing one.

Another is that what they aspire to be and what they actually are, are so far removed from reality that they chase the wrong dream. They lack the self-awareness to determine where their true talents really lie. It’s much better (and more profitable) to be a great version of you, than a second rate impersonation of someone else.

But the greatest failing is our fantasy notion of what success looks like. Business success isn’t about fabulous riches, business empires or fame. Success is about figuring out a way that your work rewards you in a way that enables you to live the life you want on your terms. And the best way I know to do that is not to become a slave to some idealized fantasy of what an entrepreneur is but just to earn our living independently by being the absolute best version of ourselves that we possibly can.

And by making sure your advice comes from someone who knows and cares enough to tell you when you've got it wrong.

Jim Clifton, former CEO of Gallup and author of 'The Coming Jobs War' has one of the most insightful (and least viewed videos) on YouTube about the problems with entrepreneurship in the US today, and its consequences for jobs and society. Clearly there is no correlation between brilliant insight and social media popularity!

Ignore the mass media herd, this is the information that matters:

Why entrepreneurs alone cannot solve the jobs crisis

By Neil Patrick

In the UK, the recession is over apparently. The press and politicians are busy telling us things are steadily improving; Britain currently has faster growth than any other country in Europe. We have record numbers of new company registrations. And record numbers of people in (low paid) jobs. None of these things amount to recovery apart from in a technical sense that only economists would recognise.

This week I've been looking at how a favourite statistic of the media and politicians really stacks up.

The statistic in question is the number of businesses registered at Companies House.

Today, in the UK, there are 3,153,248 registered companies, up by 581,173 from last year. You'd be tempted to think this represents a growth new businesses by 18.4%. Except it's not. Granted, it is higher than it has ever been before, but its not really 18% growth in actual businesses or anything like it as I'll reveal shortly.

It’s typically quoted as an apparently simple measure of whether or not the business stock of the country is expanding or shrinking. It’s often presented as a measure of entrepreneurial activity.

We are told this record high number is a sure sign that we are on the path to recovery. But this deceptive raw statistic conceals the fact that this is a jobless recovery. And worse, it’s a low wage recovery to boot.

Jobs can only be recovered with the growth of new smaller businesses 

The news of vast redundancy programmes by large employers continues to fill the media almost weekly. In the UK oil industry alone it is reported that 37,500 jobs are at currently risk. There’s no sign of large-scale redundancies from our big employers letting up in the alleged recovery.

In large organisations, a relatively small percentage cut in headcount can easily result in tens of thousands of lay-offs. These jobs have to be taken up elsewhere and there’s really only one sector where this can happen - smaller growing private businesses. They are certainly not going to be absorbed by the public sector, which is still endlessly cutting jobs to meet austerity targets. 

And all the while, the march of technology is making people less and less valuable to organisations. This is what Jeremy Rifkin calls the zero marginal cost society and it’s becoming a reality faster than even he thought possible. I have provided an outline of this and what it means here.

Why record numbers of company registrations don’t mean a thing

In pre-election UK, the government is gleefully claiming a surge in business start-ups. A record breaking total of 581,173 new businesses were registered at Companies House last year. This was a higher total than the 526,447 in 2013 and 484,224 in 2012. 

Is this an explosion of entrepreneurial activity? Sadly no.

Office for National Statistics (ONS) data reveals that only around 60% of start-up businesses survive beyond their first three years. According to research by Richard Murphy at Taxresearch.org.uk, around half of the businesses registered at Companies House have never even filed a tax return! Let’s ignore the distracting question about tax avoidance; the matter I am interested in is what this tells us about the scale of real business activity.

The disappointing truth is this measure tells us nothing. Every year around 500,000 companies registered at Companies House are dissolved. The total of 3,153,248 ‘active’ companies on the register is a merry go round of new registrations, dormant companies, strike offs and disolutions.

Even if this were a meaningful measure of entrepreneurial activity, the trouble is that in the UK, 88.8% of all UK registered businesses employ less than 10 people according to the Office for National Statistics (ONS) here 

So if we take the 581,173 new companies registered for 2014 and assume that 50% are actual trading business entities, that means there were actually 290,586 ‘real’ new businesses registered in the UK in 2014. Assuming that 60% of them survive past 3 years, around 174,351 will survive. Assuming that by this point they employ an average of 3 people that’s 523,000 jobs…in about three years from now. 

Of course the number of new business start-ups is broadly encouraging, but it’s not a meaningful barometer for the health of UK business overall. 

UK redundancies are now at their lowest level since the beginning of the recession, but were still running in the last quarter of 2014 at around 35,000 a month. Assuming this were to flat line at this low level, three years from now, this would amount to 1,260,000 redundancies, almost two and a half times greater than my admittedly rough calculations of the creation of new jobs above.

Growth prospects for business in Britain 

When the coalition government came to power in 2010, the recovery strategy was simple.

The Bank of England ramped up quantitative easing and tag teamed with the Treasury to provide cheap cash to banks. Chancellor George Osborne allowed borrowing to remain high. In 2013, new Bank of England governor, Canadian Mark Carney, promised low interest rates for as long as was deemed necessary.

Demand and growth duly returned. Pay deflation effectively made British goods and services cheaper.

But this strategy has now been played out. Britain now has a new challenge. Today, the economy can no longer be propelled faster by keeping the foot on the QE/low pay pedal. Instead, its worn out and low-tech engine must become more efficient.

The productivity situation is especially dismal in Britain. Output per hour worked is still 2% below its pre-crisis peak; in the rest of the G7 group of countries it is 5% higher. The French could take Friday off and still produce more than Britons do in a week. Confounding the stereotypes, Italians are 9% more productive.

Britain’s workers are a bargain though, because their pay is so pitiful. Of the fifteen original members of the EU, only Greece and Portugal now have lower hourly wages. A British employee produces a fifth less their French counterpart, but he or she is more than a third cheaper to hire.

Britain has accomplished a recovery which has been fuelled not by growth in entrepreneurialism and productivity but a simple slashing of costs and an injection of cheap foreign labour..

And where investment is happening, it’s not in human capital, it’s in technology capital. This is why the outlook for future jobs still looks dire. And why average household incomes continue to fall:

Is there an end to the mass redundancies of recent years?

According to the Office for National Statistics (ONS), between October and December 2014 in the UK, there were 107,000 redundancies, an average of 35,600 or so a month – an annualised level of 427,200 a year. The good news is that the peak of quarterly redundancies is long past – there were a whopping 300,000 redundancies in the UK in January to March 2009. But there's a lot of ground to make up. In total, since Jan 2008, the UK has experienced 4,347,000 redundancies.

And low wage Britain has attracted a swath of eager immigrants from even lower wage economies around the world. This has been helpful for the short term in providing abundant low cost workers for business. But as the challenge shifts from survival to growth, this part of the workforce is not equipped to deliver this critical next stage of recovery.

The simple facts are that whilst job losses are slowing, and new businesses are growing, there are just not enough new businesses employing enough people to compensate for the endless stream of technology driven redundancies from larger organisations.

It’s this substitution of technology and low cost labour for higher skilled and higher paid people which means we have a recovery in name only. In essence, the relentless march of technology and global labour mobility is destroying jobs far faster than our economy can create new ones. And sadly the legions of brave new entrepreneurs cannot come to the rescue.