Imagine you're privy to a special deal
most people don't know about or have access to -- say a coupon to dine at an elite restaurant for a
The cost of a set menu, purchased on the premises as a
walk-in, is $100/person. The special deal entitles the buyer to purchase
tickets, in advance, for two set menus at a total cost of
$200 and get two others in to dine for free.
We'll say this restaurant is well known
and highly regarded. Even at normal prices, you'd have no problem
whatsoever asking three friends or acquaintances along and
getting them to accept. That is to say, you know for a fact most anyone is
willing to pay the $100 set menu asking price.
We'll leave you with two options. The first: you tell the other three about your special deal of
buy two, get two free. Everyone does the math and divides in four the $200
You collect the $50 from the other three, add $50 of your
own, and pick up the four tickets in advance. In this scenario, you reap the same rewards as
everyone else in your dining party, which is the $50
Perhaps you get some nods of approval from the other three,
The second option: you still tell the other three you're in possession
of a deal, but you state it's buy three, get the fourth in
free. Now the
cost is $300, which everyone divides by four to arrive at a
figure of $75/person. The other three advance you their shares of $75
apiece -- $225.
They're all unaware you can really buy two, get two in free,
so you only pay $200 to the venue for four meal tickets. In the second scenario, your rewards are different
from the other three. You get in for no cost plus pocket $25 while the
others each save $25.
The question: do you consider the second scenario fair? Is there something morally reprehensible profiting
off people you know, despite the fact you're still
delivering them measurable value?
My wife considered the second scenario
wrong. She felt
that by presenting the deal slightly askew, as outlined, she
was enriching herself at the expense of her friends or
Okay, let's assume you don't skew any of the facts; you
don't tell anyone it's a buy three, get one free deal when
it's really buy two, get two free. You just tell all the other parties that a contact of
yours can get everyone 25% off the restaurant's set menu if
the tickets are purchased in advance.
From the perspective of the other
three, it really shouldn't matter how they get the
discount just as long as they get it and value it. Yet in studies and from my personal experience, it
DOES matter. If
the other three are strangers who responded to a Craig's
List type of ad to score the 25% discount, they won't much
care if you're being enriched as long as the 25% savings is
a good enough inducement. However, if the three have some kind of friendship
relationship with you, they'll be resentful you profited off
them even if they, too, have been enriched.
On another of my web sites, I sell a
chelation product. At one time to get feedback, I offered a few bottles
to a friend for an insanely fair trade. I swapped him two bottles of my product, which I can
retail for $80, for four of his all-natural crystal stick
Those deodorants might retail, at most, for $5/apiece or $20
Even if you just account for my costs, he was still getting
the better end of the deal. As I said, I made the swap to get him to use the
product so he could tell me if he felt better afterwards. If I'd given the product to him for free, he would
have valued it as $0 and probably not regularly used it.
After he ran out, he
wanted to know my cost for the product and pay me exactly
that, not a penny more, to resupply him. If I had an endless supply sitting in my back
cupboard, maybe I would have been charitable and done so. Since I didn't and would have to import bottles just
for his use, I didn't bother. I'm not in business to supply him at cost.
The irony is that someone I don't even
know who comes across the product on his own is willing
to pay FULL price. A friend, who you would think wants me to succeed,
who should feel better that his money is going to a friend
rather than a total stranger, in some way resents the
fact he's being profited off of.
I'm not saying that friends shouldn't
be granted special prices. In the example above with the four tickets, the other
three got 25% off. As good as a deal as that is, some, maybe all, would
bear resentment if they knew the fourth person engineering
the deal got in free and made a bit of money on the side. But why?
Let's say you're friendly with someone who owns a home
stereo store and he offers you a 25% discount on a brand new
You've checked online, you've checked with other merchants,
and the price he's
willing to sell you the stereo system for really represents
a 25% savings and is a better deal than you can secure
Should you be pissed at him because he's not selling the
stereo to you for his cost but still making some kind of
undisclosed profit? Is it his obligation to sell you the stereo for his
cost because he knows you?
Your attitude towards the dealmaker
probably says more about your attitude towards money and
successful people than it does about the alleged scruples of
the dealmaker "screwing"� you. A survey conducted at the Harvard School of Public
Health in February 1995 asked if the respondents preferred
an annual income of $50,000 while others earned $25,000. Or an income of $100,000 while others earned
Purchasing power was assumed to be the same for both cases -- $100,000 in income
would always buy you twice what $50,000 could, regardless of
what your peers were earning. About half the respondents chose the lesser number. They were content with a high relative income. Their focus was more on their peers not doing
better than they were rather than doing better themselves.
I mulled over the tickets dilemma
question in my own mind. An entrepreneurial attitude is one with no guilt
attached from making money off others, whoever they are, as
long as you're providing more than commensurate value in
return. I see nothing wrong with profiting off people you
know when they're also receiving a benefit. That's called good business. All the same, there are people I would not be willing
to profit from.
I would not distort the terms of a deal to profit myself if,
say, my father, brother, or wife were involved, and this
isn't just because they're family. I can think of other family members like cousins or
uncles whom I'd have no problem offering 25% savings as I
profited and got a free ticket.
It all comes down to an individual's
attitude towards my success.
Imagine I write a book and put it up on
Amazon for a sale price of $10. I e-mail everyone on my network list a brief message
telling them about it and asking them to buy a copy and
write a review for it. Amazon's sales rank algorithms take into account
whether a book is purchased on their site, whether customers
pay full price, and how many reviews a book has. I can already envision that my wife, my brother, and
my father would go to Amazon without hesitation, pay full
price, and write me a golden review I may not even deserve
despite the fact that each is someone I would gladly gift a
free copy to. I can also think of a number of friends who would
silently bitch about having to pay full price and opt not to
pay. They might
offer to pay half price or nothing at all but still write
the review on Amazon. Or I might have to remind them three or four times to
do it, and eventually, they'd feel they were out of excuses
and buy a copy … unwillingly.
There you have in a nutshell the
difference between friends and fans. A friend or family member could be a fan, but most of
the time they are not. A
fan appreciates what you're doing and buys for the value you
In the above example, I cite my wife, father, and brother as
willing supporters, which they definitely are, but I don't
categorize any as fans. They'd buy to assist me in my success, not because
they would necessarily value for themselves what it was I was selling. And this is why books, blogs, and products don't
succeed simply because your immediate friends and family
passively support what you're doing and tell their own
intentioned support isn't the same as appreciated value. A product/video/picture won't go viral unless the
user receives some value from it.
For a project to take off, you need
fans, and these fans are, with little doubt, going to be
people you don't know when you start out. Fans don't have preconceived biases about you. They don't read your book or blog thinking about your
If you're the CEO and standing on stage delivering a
keynote, fans see you as the CEO first. Your friends and family see you first in terms of
their relationship to you.
And here's another
irony. Anyone willing to support me in my endeavors without
needing their arms twisted (i.e. a fan most of the time, but
sometimes a close friend or family member) is exactly the
type of person I would not want to excessively profit from
on any tickets. Yet these same people are the ones who
would see no problem with me benefitting off of them. I have a fan in Australia who has generously mailed
me a number of chocolate parcels, all at his expense, for me
to review at the Chocolate Republic. I insisted he didn't have to but he insisted back
that he wanted to. When I actually did write a book and wanted feedback,
I offered to send him the book for free. He refused and sent me the full purchase price. Fans value your work "� meaning you're providing
measurable value to them at a fair price "� so they want to
pay you for it.
My brother, a vegetarian, was dining at a
tapas restaurant in Puerto Vallarta, Mexico for the first
time several years ago and was told by the staff that a
number of the dishes which were seemingly vegetarian
actually were not. He proceeded to write a review of that restaurant to
bring this fact to the attention of other vegetarians eating
in Puerto Vallarta. The owner saw this review and commented on it. A good share of his items were vegetarian, he countered. He invited my brother down to his
kitchen to watch his chefs prepare them. My brother
was there for hours, watching the chefs go through 85% of
the menu's vegetarian items and eating them at no
charge. Ordered off menu, this food would amount to almost
$100. My brother has continued to patronize the place
every year he's gone down since. He's
now a fan. The
restaurateur observes that loyalty and always gifts him free
drinks, appetizers, and loaves of bread to go. My brother feels guilty taking things for free and
tries to order the lowest cost items. You see, a fan WANTS to pay. A fan WANTS to be financially supportive.
When you're the boss, there's a fine
line you must tread between being a person subordinates
respect/defer to and being a person they like. There's this concept that as a boss, you can't be too
friendly with your juniors. If they start seeing you as a peer, they won't/can't
treat you like a superior, This is why, in the military,
ranking generals don't fraternize with sergeants.
And why friends and fans don't really
know your deepest and darkest secrets. They accept you for various reasons. It could be your personality, the good times they
have when they're around you, the deep conversations, the
shared past. Many would have no specific ideas what you to do to
earn money, much less care, and would be that much less
interested if you were trying to earn money off them.
Fans don't need to know about your past
in depth, at least not in un-edited form. They only care about your past inasmuch as it's
shaped you to be the person you presently are, providing
them with the wonderful XYZ they're willing to pay you real
money for. Fans don't need to know about your painful fight with
alcoholism (unless you think making that knowledge public to
them will hold you to a course of abstinence or help them,
too) or the fact
you slept with your wife's sister (unless this is part of
your persona they're buying into as a fan).
Hence, why a fan relationship turned
into an intimate one rarely works. A fan admires you for certain traits/talents you
is always an arm's length distance between you and them. Once they get invited into the inner circle and are
privy to everything, how can they continue to remain the
fans they once were? I've never seen a workable formula that fan respect
amplified with intimacy equals an ideal union. My wife values me in ways a most devoted fan never
could without it starting to look like stalking.
The existence of three distinct categories (friends, fans,
and caring family members) makes for three very different
but identical meals.
Treat three caring family members to the elite restaurant
with your 50% coupon in tow. Your family members don't need to know about the
be touched regardless. Accompany
three fans to the same place and give them 25% off. They'll be thrilled to have been asked to dine with
you, even at full price, and doubly thrilled to get a deal. As for your friends, the type who'd be resentful if
you dare profit off them: recommend the restaurant and let them go on their own
at full price.