One problem in the business world is that business folks approach business problems as if they are school assignments to be graded rather than trying to make something customers want.
Another problem in the business world is that their bosses often do grade their work as a school assignment, on the inputs rather than the outputs.
One of my old bosses taught me a trick to snap people out of this. Ask “and that resulted in what?”
Try $25 – $50 million. Maybe $100 million for a top one.
More people watch the Little League World Series on TV than the MLS Cup.
Is it possible that they’ve never been wrong?
For development, organized soccer is the frosting. Soccer played at home and in the streets is the cake.
Soccer in the U.S. is all frosting and no cake.
Clubs and coaches did not make Messi, Ronaldo, Neymar or Pulisic, Donovan, Dempsey. Soccer at home and the streets did. Clubs and coaches just put the frosting on the cake.
Counterpoint: Some won’t. Others will. We want the ones that will, not the ones that won’t.
In countries with soccer clubs stacked in levels going from the very top to neighborhood clubs, young players entering the organized sport at age 8 are usually coached, or assistant coached, by the 16-18 year old players from the club’s senior ranks.
In such a setup, the young players have natural role models that they interact with every week for 10 months of the year that gives them a line of sight to the type of soccer players the should want to become.
They look up to their young coaches, they want to watch their games on the weekend to see how they play and they want to strive toward playing like them, someday.
This gives those young players a long-term vision of the direction they should be headed that young soccer players in the US do not have.
I was reminded of this recently when I saw a comment on Twitter about youth teams in the US chasing tournament trophies rather than development.
That’s true. Without the vision of how they should be playing by age 15 or so, wins and trophies now are all they have to go by.
Unfortunately, winning can actually have the negative effect of making development tougher as it’s tough to convince the players and parents of winning players that they still have work to do.
When young players have role models, they can win games and still be thinking long-term because they may want to be able to make the club’s senior team someday.
Persuasion tactics are all around us if you know how to spot them. Behavioral economics and government “nudge” units are versions of persuasion tactics.
These are mental hacks that folks think they can use to get you to do things that they believe are the right things to do.
If you’d like to know, a good place to start is Robert Cialdini’s book, Pre-sausion, A Revolutionary Way to Influence and Persuade.
The title of the book is misleading. Perhaps that’s a persuasion tactic, itself? The book isn’t about ‘a’ way to influence and persuade, but rather covers a laundry list of these tactics that have been discovered over the past few decades, describing origins and research.
Cialdini even broaches the topic of morality in using these tactics and warns that one risk of is loss of trust as people discover they’ve been manipulated.
Reading the book will give you a new way to see the world and you will see these tactics everywhere and you might recognize how much baloney you are surrounded with
I’m a big fan of the show Shark Tank. I think it can provide valuable lessons to us mere mortals.
I was LOL’ing during a segment of last night’s Shark Tank season premiere as the Sharks taught a valuable lesson to a self-described “husband and wife dynamic duo” who were pitching their $12 direct-to-consumer healthy bread cube for a $16.7 million valuation.
What I found funny is that these folks would be rising stars in the corporate world with their energy, salesmanship and command of jargon (ahem, BS).
What I like about Shark Tank is that what is celebrated in the corporate world, is often ridiculed in startup land.
The company’s sales sound impressive, rising in three years to $2.1 million year to date.
The dynamic duo are also self-described “digital marketing experts” but the Sharks busted them on their acquisition cost of $50 for a loaf of bread, which is probably about 5-10x what it needs to be.
O’Leary asked how they get to the $16 million valuation?
Here’s the paraphrased exchanged:
We’re on track to do $5 million this year, you heard we’ve done $2.1 million year to date. We believe other companies like us can get a 6-10x multiplier on revenue in market.
O’Leary: But, you don’t make money yet. Are you saying you’re going to make money if you hit $5 million?
No, absolutely not.
O’Leary: So, when you become profitable? Ever?
We will become profitable when we reach a certain level of scale.
O’Leary: What is that?
Cuban: No kidding? [In a sarcastic tone] You will become profitable when you reach a certain level of scale?
[In a smarmy, we’re like Jeff Bezos tone] Our goal is drive top line revenue.
Cuban: No [bleep]?
[Looks on the dynamic duo’s faces show they realize that this isn’t about to go so well. What make them stars in the corporate world is making them look like snake oil vendors in the startup world]
Corcoran: I don’t think I’ve ever spent this time in my seat and heard more fancy words in my entire life. I think if I were to put any money into your business, I would not sleep a wink tonight.
The guest Shark: You guys did not come in and demonstrate what your path to profitability is. You missed it. You spoke about all your economics, which aren’t that great by the way, because you are paying too much to acquire the customer, as everybody said, you are not profitable on your first customers. So, I think for me, I’m out.
Cuban: Why don’t you run the company to be profitable now?
That’s actually exactly what we did, Mark.
Cuban: But you lost a million dollars!
To get here we drove CAC [customer acquistion cost] to the floor. We’ve the the #1 lowest CAC in the…
Cuban: [Throwing arms up] That’s such a nonsense grammar. You start small. You got a nice little product. Whatever you do, you go door-to-door and you make money and use that to grow…but now, your back is really against the wall because you’re losing money on every product you sell. So the more customers you acquire, the more money you lose, unless you can make sure that you’re selling them a whole lot more products. Then you get the loaf of bread unsliced, what do I do now? You gonna take a bite out of it?
That crust is very important to preserving the product. People buy that product for the trifecta of three reasons. You can’t find something this healthy, that tastes this good that’s this fresh.
Cuban: Then why don’t you say that?
Corcoran: That’s the best thing you’ve said all day.
Cuban: That was the best sales pitch you’ve made.
That packaging you’re looking at there is our Gen 2 packaging before we really dialed in that positioning statement…
Cuban: [waving hands in frustration] The jargon! You’re driving me nuts.Shh..You’re overselling with all the jargon when you have an authentically good product.
End exchange. They didn’t get the deal.
Here are some business lessons that I take from this.
Customer Acquisition Cost is an important predictor of success. Large companies with deep pockets have the luxury of being able to buy sales and make new product launches appear to be successful. But, if, like Cuban says, you lose money on every product that you sell because you have to spend so much to convince people to buy it, then it isn’t worth anything.
Another lesson is to cut the BS. So many large companies are jobs programs for corporate bureaucrats that embrace a BS culture to spin their lackluster contributions to the company’s performance into resume builders for them. The companies survive on the spoils of previous successes, many happened upon long ago, which is also what helps those companies weather the damage caused by these BS artists.
The simple answer is that’s what rich folks are willing to pay for them right now.
So, to find out, you’d really need to ask rich folks who have bought MLS teams or portions of MLS teams recently, why they paid so much?
It could be that they figure someone else will be willing to pay them that much or more when they decide to cash out and in the meantime, it’s good for their profile and other business’s to have own a major sports team.
It could be that they hope the value will increase over the next 20 years by a lot. In this sense, the MLS team serves as an option on a future that they hope looks a lot like the NFL.
It could be that there are other things wrapped up in what they paid for, like the value of future franchise fees paid by new MLS owners and/or the value of payouts for the broadcast rights of international games that take place in the U.S.
I suspect that last bit could be a fair amount of the value as the amount for the MLS franchise fees seemed to start going up dramatically soon after US Soccer locked up hosting the World Cup in 2026, which could mean billions in broadcast revenue from international games.
If that’s the case, then the value of an MLS team may have little to do with what owners think the teams might be worth and more to do what they think those things are worth.
If so, that’s a big hoodwink as MLS has been playing up their increasing valuations as a sign that “MLS is growing” when by most measures of true value, like TV ratings and ticket sales, don’t line up with that story.
I also find it strange how few people, including journalists, are interested in exploring this topic. For example, a recent change of ownership stake for the Houston Dynamo valued the franchise at $400 million.
Now anyone who watches any amount of MLS can tell you that a key feature of the Dynamo home games is the empty orange seats in the stands. I’m assuming TV viewership in Houston is not much better. How that can be worth $400 million is a mystery.
I heard that from a grandparent as I walked away from the 2nd game I ever coached, after getting drubbed 6-2 with my team of 1st graders who started kicking the soccer ball about 3 weeks before.
I agreed. It seemed like the other team was all over the ball while we stood there watching.
I was reminded of this when I saw a soccer coach venting on Twitter about this common complaint from parents. He even asked, ‘what does that even mean?’
As someone who started with an untrained eye for soccer, I think I can speak for all the parents and grandparents that say it. It means that it looks like they are ball watching when the opponent is charging the ball. It means winning more 50/50s, closing down attackers quicker, not getting beat on the dribble, not being afraid of some contact and winning more tackles. It means challenging for and winning more balls in the air.
After a couple of years of witnessing this and learning the game, I changed my mind on what was really happening.
Parents and many coaches think it’s just a matter of telling the players to be more aggressive or “Move to the ball!”
But, as a coach, I found that didn’t work.
I had noticed that there were some “aggressive” kids in practice. But, even those kids often seemed less aggressive in games and I wondered why.
Then one week my team got beat 5-1. Our players looked like the less aggressive side.
The next week, we beat another team 5-2 and we looked like the more aggressive team. The parents congratulated me for turning them around in one week. I hadn’t done anything. I forgot to even mention it.
But, I saw something different. I noticed that the time it took for my players to start moving to the ball was the same in both games.
What was different was how quickly the players on the other team moved to the ball. Players on the team that beat us were moving to it faster. The players on the team we beat were moving to it slower.
I happened to know that the first team’s players had been playing soccer for a year longer on average than our kids and the second team a year less.
The more experienced team moved to it quicker in both games.
That made me think that what we mistake as difference in aggressiveness is often really a difference in how fast players can read and react to the ball and that speed is determined largely by how much experience they’ve had with the ball.
I’ve noticed this myself as I learned soccer in my 40s. As I’ve worked with the ball more, I’ve noticed my ‘aggressiveness’ improved because I was simply able to read, react and be thinking about next steps quicker.
Our Dinner Table 