Scarcity and Urgency in the Creator Economy

A few days ago, Dr. Desktop pulled up our long steep driveway in a white van with bright red warning stripes like an ambulance or paramedic with Emergency Computer Services painted boldly on the back and an EEG cardiogram spike on the side.

The reason Dr. Desktop was here is that Monica and I are putting our home up on Airbnb. Our three beautiful children have all taken flight and embarked on adventures in their own time and space.

We chose this place as a home for our family after asking ourselves "if we could have experienced childhood anywhere, where would it be?"

We were living in Baltimore at the time because Monica had a job, a car and a condo there, while I didn't have much more than a dog, a guitar and motorcycle back in DC.

This was 1995 and Monica was about eight months pregnant with our daughter Zoe when I suggested we take a look at Shepherdstown, WV.

I knew the town from a job I had building crates a few years earlier in the basement of the Smithsonian to pack up museum exhibits. I subcontracted to Bradley Sanders, who owned a small museum services company.

Bradley lived on a sprawling compound outside Shepherdstown where craftspeople would forge brass fittings, mold stands and create mounts for the displays.

Each morning Bradley’s crew would pile in a Winnebago and drive the 90 minutes to the Smithsonian.

On a beautiful Friday afternoon I hopped in the Winnebago full of hippies and freaks and spent the weekend in sprawling river parties with apple whiskey made in a 1950s Maytag washer.

With each sip, you could feel your neurons pirouette, stumble, leap and finally collapse in a big cuddle puddle with all the others.

Then I started riding out to Shepherdstown on my 1985 Moto Guzzi La Mans III 850. I'd stop in Shepherdstown at the beginning and end of a daylong tour of the Eastern Panhandle of West Virginia, enjoying the butt-dragging curves of the Blue Ridge Mountains along the Shenandoah River.

I said to myself someday, when I could live anywhere, this is where I want to be.

So one weekend Monica and I drove to Shepherdstown to look at homes. 

Her condo in Baltimore was an elegant mid-century modern Mies van der Rohe with about 8 perfect things. Not the kind of place for a puppy and a baby.

In Baltimore, we weren't finding anyplace suitable for puppies and children that we could afford on her salary as an art director for a creative agency. I was making a name for myself and my company, HuskyLabs, as one of the worlds first web development studios but income was still sketchy.

So one hot summer weekend I strolled through Shepherdstown with my very pregnant wife and who did we see but Larry, an amazing fiddler who worked with Bradley's crew, sitting on a curb with an iguana on his shoulder.

I said to Monica this was a sign. This is our place.

The commercial Internet was still in its infancy in 1995, but I was pretty confident that we could figure out a way to make a living online.

We walked into a realtor who drove us around until we found a cute Cape Cod style home right on the river in five acres of woods without any neighbors that we could see.

For $140,000.

With financing help from our folks, we made this place our home.

Monica joined HuskyLabs full-time and our business grew rapidly. 

Then in 1998 we pivoted to a loan-trading platform for the secondary mortgage market called Ultraprise and raised three quick rounds of $1M, then $7M then $20M dollars from venture capital funds and strategic investors including GE Capital, Citigroup and First Union.

We hired investment bankers and prepared for an IPO.

Our investors insisted we move our headquarters to Dulles, VA and our operations center to Frederick, MD forcing most of our employees to drive over an hour each way, adding significantly to our burn rate and pretty thoroughly decimating corporate culture in the process.

One reason was optics. You couldn’t possibly have a public tech company based in West Virginia.

Another reason was ego. When the GE executives would come out to Shepherdstown it was an hour drive from Dulles Airport. They would show up in a caravan of black town cars and complain about the hilly terrain and how they were all car sick.

From driving an hour.

Through Harpers Ferry where the Shenandoah meets the Potomac.

“The passage of the Patowmac through the Blue Ridge is perhaps one of the most stupendous scenes in Nature, wrote Thomas Jefferson in 1783. “This scene is worth a voyage across the Atlantic.”

But not a drive from the airport in the backseat of a black town car.

As a side note, GE’s internal code-name for their $5M investment in Ultraprise was “Coal.” Because that’s what they associate with West Virginia.

One clear memory of that time was a meeting of the Ultraprise Board of Directors, when one of the directors, an associate at FBR Technology Venture Partners, stated in the Board meeting that you’re not a player if you’re not burning at least $1M a month.

When we had an IPO roadshow practice run this same director said he got goosebumps. 

Then a couple months later in April of 2000 the internet bubble burst and my investors wanted to replace me as CEO and recapitalize the company.

I managed to sell $250,000 of my shares as part of my exit package,  took the family to Disney world (Zoe and Milo loved it; Daisy was still in-utero at the time, so she probably enjoyed some of the rides in Monica’s bouncing belly) and refinanced our home to give Monica a $450,000 budget for a major renovation and addition she designed with an architect friend.

My only requests were a really big office with a lot of light and a fast network that went everywhere throughout the house.

I’m in the light-filled office right now, drafting this missive.

The forest is out the window to my right, where I can observe deer, woodpecker and occasionally fox trot by.

To my left is a wall of pebbled glass with sunshine streaming in from the skylights over the staircase just beyond. 

Back in the year 2000, when this office was still a dream, while the kids and Monica napped in our room at Disney’s Polynesian Villas and Bungalows between trips to the park and dips in the pool, I took out my engineering notebooks and designed my next startup.

It was called Butterfly.net and it was a video game technology platform that connected consoles, PC, mobile devices, Augmented Reality (AR) and Virtual Reality (VR) goggles into completely immersive worlds overlaid on the physical environment.

‍

I imagined seeing Mickey Mouse as the sorcerer's apprentice on a broomstick flying by the Washington Monument through my AR goggles. With my phone I could conjure waves and fireballs and throw obstructions.

I wanted to design a video game platform for my children. To teach and entertain them. So that I could play with them for years to come.

We filed a patent application, raised some money and started building our platform. The company was called Butterfly.net.

While I was in LA pitching Sony Pictures Entertainment on some online video games to go with their films in development (we explored a Vampires vs Werewolves online video game to go along with the upcoming Underworld franchise and a cryptids game to accompany the Mothman Prophecies) I picked up the USA Today that was tossed in front of my hotel room door.

There was a big article on how IBM was placing a billion dollar bet on Grid Computing. We had designed a highly scalable massively-multiplayer video game service.

“Cloud computing” wasn’t a thing yet. (This was 2001).

So I called my CTO and asked him to figure out how to integrate the Globus Toolkit, which IBM was going to be using for Grid Computing, into our platform.

Within a few months, we had IBM as a partner, Sony as a partner, Intel as a partner. We raised over $7 million from Worldview Technology Partners, Cisco Systems and Walker Ventures. We demonstrated our video game grid at the Game Developer’s Conference in San Francisco and E3 in LA.

Our demo game was called Burners. It was on the Playa and had Burners, Tourists and Rangers (based on BLM). There was a spectrum of Burners at one extreme, Rangers on the other and Tourists in the middle.

Gameplay was simple -- a sort of tug-of-war where Burners would pull Rangers over by dosing them or exposing them to Electronic Dance Music and Rangers would pull Burners over to their side through lithium bombs or Wayne Newton songs.

The benefit of the Playa was that we didn’t need much in the way of rendering. No trees, hills or cityscapes.

Almost immediately after the wire with $7M hit our account, the pressure started.

Phone calls to my home at 7:30 pm from the Worldview general partner and associate. “What are you doing at home?” “What??!! You’re having dinner with your family?!” (It was only 4:30 pm in the Palo Alto conference room where the VCs originated the call.) 

“You can’t stay in West Virginia. Only lifestyle companies would be in West Virginia.”

“We need to be able to drive by your office at 11pm and see that the cars are still in the parking lot and the lights are on inside.”

Then the pressure to hire the recruiting firm.

Then the pressure to replace myself with an “new media” executive from Disney.

Then the move of the office from West Virginia to California.

Technically, I had the power to say no, or to move to California and keep running the company. Just like back at Ultraprise, the common shareholders had a majority of the Board seats and I held a majority of the common stock.

So I could have resisted, but there was tremendous psychological pressure to go along with the wishes of the big money.

So I handed the keys to the company to the Disney exec who set up some very cushy offices near his home in Calabasas, CA, moved some of the team from West Virginia and hired others in LA and proceeded to burn through the $7M at an astounding rate.

My last vivid memory of my video game technology company was this exec walking through the LA office chanting “it’s good to be the king!”

The company ran out of money and was recapitalized, of course, making my shares worthless. Then it was sold to a Korean game company and is now still operating as Gamebryo, which was our main product that we gained in an acquisition.

In my employment agreement I had a six-month severance period, so I had some time to chill out and play video games with my kids who were by now 4, 7 and 9.

Jak and Daxter and Sly Cooper were our favorites.

I would stay up after the children were in bed, sometimes all night, facing a challenging boss level so I could show the kids how to beat the boss in the morning.

Which brings me back to Dr. Desktop.

In the year 2000, while Monica was designing our home and the corporate identity for Butterfly.net, I was imagining and designing a future where we would be holding in our hands magic wands that could sense and record our surroundings to create immersive experiences that we would share over the wired and wireless broadband spectrum.

The two came together in our home. I wanted to future-proof our addition by putting fiber, copper and speaker-wire everwhere. Cables were run through the walls into every room and through a trench underneath our patio to the guest house.

We had phone jacks, ethernet jacks, connections for cable TV and fiber terminated everywhere.

Now, most of this is useless. 

We’ve covered over the speaker wire because we have smart speakers that connect through wifi.

We don’t plug our computers or phones into the wall. Those all communicate over wifi.

AR goggles aren’t really here much, but VR goggles and immersive spaces are. Facebook’s Oculus purchase is bearing fruit, and within four or five years immersive VR will likely be a primary interface to the network.

Google provides immersive meeting spaces for telepresence in the business setting.

Apple has built LiDAR into the iPhone 12. LiDAR sends out laser light pulses that bounce off objects in the surrounding environment to create accurate software models for virtual environments.

So I was a bit off on the timing of all this, but I was pretty spot-on about the fundamentals.

Sadly, the CEO from Disney didn’t see the value of patents so he let the applications expire.

The only element of the that future world from the year 2000 that remained active for the last two decades was the ethernet switch and 10baseT line running from our home to the guest house across the patio.

The guest house had served us admirably for birthday parties, sleepovers, movie nights and a band practice space. As well as the occasional guest.

We had put the the guest house up on Airbnb and the first guest was to arrive in a week. But the wifi suddenly flaked out.

It was worked sometimes, then it stopped. Then it had a bit of bandwidth, then a lot, then none. Speed tests went all over the dial.

I googled for “networking services” and found a few within an hours drive and called them all. One guy came out for a full day updating software, adding a router in the guest house and upgrading the switch to gigabit speeds.

It improved for a bit, then with only three days to go before our guests arrived, the network failed again.

Completely.

This time I tried some other searches, including computer services and found Dr. Desktop.

He asked me some questions over the phone, and diagnosed the problem immediately.

He asked if the cable running between the house and the guest house was rated for underground transmission.

“I doubt it,” I responded.

I recalled fishing a long ethernet cable through the conduit that the builders had left under the patio. It was just a regular cable.

“Well,” Dr. Desktop said, “Over 20 years, you’ve probably had water seep into the conduit and that’s going to effect the performance of your network. I have some high-grade cable on the truck and can stop by tomorrow.”

‍

After conducting some tests and following the cable, Dr. Desktop showed me were the fraying cable came out into the garage beneath the guest house.

Our ethernet line had been hanging from garage ceiling and bumped by kayaks and canoes, rakes, brooms and snowshovels over its years of service.

He also ran a landline to the guest house in case cell phone service wasn’t available on a particular network where we’re nestled in the hills by the river.

In addition to upgrading the cable and installing the phone line, Dr. Desktop ran them through the garage against a beam and replaced the wall plates in the guest house to be more aesthetically pleasing.

Oh yeah... and he's going to replace the lightning port on my iPhone which is getting wonky and takes a lot of fiddling to charge.

By the time our Airbnb guests arrived yesterday we were getting about 400 mbps download speeds. That might not be a lot in the Bay Area, but in the Mountain State that’s miraculous.

The time and labor plus equipment cost about $500. 

Based on my urgency level and the scarcity of available talent in our local, Dr. Desktop was invaluable.

While Dr. Desktop serviced our network, we talked shop.

I told him about my online searches, and how I wouldn’t have found him if I hadn’t tried several others first, including Best Buy’s Geek Squad, and everyone was either unavailable or incompetent.

He handed me a few of his business cards and a refrigerator magnet with his a picture of his van and his contact information.

He was positioned within the niche of computer services.

I was searching for him in the niche of networking services.

Dr. Desktop's overall domain included laptops, cabling, hubs, routers, mobile phones, software, servers and a host of other capabilities.

I don't know the last time I thought about a desktop computer, much less used one.

The point is that I was Dr. Desktop's dream client.

I was on a quest to find him, but I didn't know it.

He was available to me and wanted me to find him.

The issue was that he wasn't sending out signals that I could see.

And from those signals, there wasn't a clear trail for me to follow.

I'd been thinking about having someone come in and service our network for months... but when the idea was top of mind, he was available right then and there.

In marketing, this is known as product placement.

Is your offering in a place that it's likely to be discovered by someone who wants it then and then?

That brings us to the themes of Session 11: Domains and Niches, Scarcity and Urgency, and Economies of Scale.

Conventional online direct-to-consumer marketing wisdom will suggest that you laser-focus on a specific niche, or perhaps even a micro-niche.

That comes from the days of direct mail marketing, where marketers rented address lists and sent mail to those lists.

The lists came from magazine subscriptions, credit bureaus reports, purchase histories and were combined to determine an individuals propensity and capacity to buy.

It wasn’t enough to have people on a list who could afford your offer and would be likely to purchase it from a store, you wanted people on the list who responded to offers that came in the mail.

The offers that succeeded in direct marketing were highly targeted and conveyed a great deal of urgency and scarcity to get the target to respond.

In direct marketing on TV and radio the urgency and scarcity was amplified with “act now!” “while supplies last” and “not available in stores.”

As the internet grew and reached more people, the same techniques were brought forward into direct marketing.

For example Tony Robbins, one of the most successful online marketers, was essentially manufactured by Guthy|Renker, the global leader in direct marketing, before the advent of the commercial internet.

Guthy|Renker created Proactiv, the anti-acne system, and Principal Secret, the anti-aging products. They pioneered “influencer marketing” in partnerships with Cindy Crawford to produce the Meaningful Beauty brand and Jennifer Lopez for the JLo Beauty brand.

In 1990, Guthy|Renker teamed with Tony Robbins to launch Personal Power. In doing so, they transformed the self-help market and build a mega-brand.

Guthy|Renker itself was born from the self-help movement. When Bill Guthy noticed his audio cassette manufacturing business saw increasing demand from  television direct marketers selling self-help courses. Bill Guthy and Greg Renker studied and researched direct-to-consumer (“DTC”) marketing to launch their own self-help product based on the principles of Think and Grow Rich, the 1937 book by Napolean Hill.

Over the last year, I immersed myself in the culture, people and offerings of the online DTC market. I took every course, webinar, challenge, training and masterclass possible.

I learned, unpacked, analyzed and tested the software, systems, tactics, strategies, methods and models of the DTC gurus, including Russel Brunson, Tony Robbins, Dean Grazio, Amy Portersfield, Jeff Walker, Robert Kyoaski, Frank Kern, Myron Golden, Eileen Wilder, Robert Cialdini, Joe Giglietti, Brad Hart, Grant Cardon, Peng Joon, Pedro Adeo and many more.

Most of these systems derive their insights from the book Napolean Hill wrote at the peak of the Great Depression by interviewing Andrew Carnegie, Henry Ford, Alexander Graham Bell, Charles Schwab and 500 other millionaires.

Putting forth the image that you could think like a millionaire and become a millionaire sold a lot of books. 

The concept of “mindset” is still at the center of most DTC programs today, along with “masterminds” and the “Law of Attraction,” all originated in Think and Grow Rich.

Today, the gap between the wealth gap between the haves and have nots is greater than at any time in history since the gilded age of the robber barons.

The middle class has been hollowed out, so more and more people are desperately scrambling to get from the state of poverty and helplessness to power and wealth.

Rather than industrialists and transportation magnates, the wealth is aggregated in the bank accounts of the new digital robber barons sitting atop Facebook, Google, Microsoft, Apple and Amazon.

Whatever strategy, tactics, systems and software you employ to market yourself, your business or your practice, your fate is fundamentally determined by the Big Tech treadmill.

By the algorithms.

By machine learning.

Venture capitalists focus on three primary metrics for the startups they invest in: CAC (customer acquisition costs), LTV (lifetime value of those customers) and the ration of LTV to CAC.

In search and social, CAC is always changing because it’s based on the scarcity of attention.

You are bidding against others to insert your message into flow of searching and scrolling.

As you (or your agency) refines its advertising strategy, others are doing the same.

You can reduce your CAC for short periods of time, but then something will change and it will increase because others have figured out the same method and are bidding against you for attention.

So you focus on LTV and create funnels that upsell, cross-sell and downsell so you can make more money from each client.

This requires a relentless focus on your offers, and a constent innovation to create new and different offers for your clients to consume.

I didn’t move out to Shepherdstown, WV to get rich.

I moved here so my children could experience the magic of childhood in a magical environment.

I wanted my friends to be artists, bakers, farmers, carpenters, authors, scholars, restauranteurs, librarians and shopkeepers. 

I didn’t want to be standing on the sidelines of my children’s sporting events talking with entrepreneurs and investors about term sheets, cap tables, cramdowns, anti-dilution, kubernetes, firebase and flutter.

What the VC said to me was true -- I did want a lifestyle company.

I didn’t want to have to move to the Bay Area, LA, Austin, New York or Boston to make it.

And I see the same thing in executives, entrepreneurs and professionals today.

You probably don’t want to resort to tactics of manipulation, influence and persuasion to get ahead.

You don’t want to prey on people’s fear, shame and guilt.

That’s what’s underneath all these DTC systems.

You probably like it where you are.

You like what you do.

You don't want to have to move or change or hustle or stress out to grow.

Whatever you do, you just want to do more of it, to serve more people, to increase your capacity for service, and to make good money in the process.

That’s why I developed Scoby as a complete ecosystem for creators like us.

As you’ve seen from the first 10 sessions, and as you’ll see in Session 11, the creators who play a vital role in our ecosystem don’t manipulate, influence and persuade.

They engage, support and guide their clients on a co-creative quest.

They don’t prey on vulnerabilities like fear, shame and guilt, they honor vulnerability as a superpower. 

And here’s where we get to the root purpose of this summit, of Scoby and of this email.

To make good money right where you are, doing what you do, you don’t need to manufacture urgency and scarcity.

You don't need to target, build a brand, or exploit a niche.

The urgency is real.

There are people looking for you, wanting what you have, urgently trying to find you.

If they don’t know how to find you, it's because you’re not available to them.

Like Dr. Desktop, you’re not sending out the signals that let them find you.

You’re not leaving the trail markers for their creative quest.

The scarcity is also real.

There is only one of you.

You have something completely unique and original to share.

You and your dream client are twin flames.

Nobody else will do.

Not for them, not for you.

Together, you are on a co-creative quest.