Why do customers pay for your product? (3-2-1 by Story Rules #19)

Welcome to the nineteenth edition of '3-2-1 by Story Rules'.

A newsletter recommending good examples of storytelling across:

3 tweets
2 articles, and
1 long-form content piece

Let's dive in.

🐦 3 Tweets of the week

A lovely thread featuring some stunning images of the monuments and architecture of Iran. Would love to visit sometime!

I could not agree more with Ethan!

Anustup gives some much-needed perspective to the troubles of the Indian Edtech sector...

📄 2 Articles of the week

a. IndAmerica by Noah Smith
Noah comes across as a cheerleader for India and has some interesting advice for US policymakers who are being pressured by their constituents to voice concern on illiberalism in India:

And if the U.S. is going to help India get back to full liberalism, we’re not going to do it by publicly denouncing or shaming the country. And we certainly won’t do it by shunning India or trying to exclude it from multilateral organizations. That arrogant, high-horse approach wasn’t even particularly effective in the 90s, when U.S. power reigned supreme and U.S. moral authority was much stronger than it is today. It is worse than ineffectual now.

It will be easier for us to persuade India’s leaders to be more liberal if we do it politely, behind closed doors, as a friend and ally. (And frankly, India might persuade us to be a better country in certain ways as well.) Luckily, this appears to be exactly the approach Biden and the U.S. leadership are taking. Biden has good instincts for this sort of thing.

a. Is AI Fear this Century’s Overpopulation Scare?
This article by Archie Mckinzie, the writer of the Pessimists Archive Twitter handle, offers an interesting analogy to AI doomsday worriers - that of Prof. Paul Ehrlich, who predicted massive famines due to overpopulation in the 1960s and 1970s... a prediction which had some catastrophic implications for India and China:

An agonizing number of well-intentioned, logical people take Yudkowsky’s ideas seriously, at least enough to sign the open letter. Fifty years ago, a comparably agonizing number adopted Paul Ehrlich’s ideas about overpopulation, including the governments of the two largest countries on Earth. The result was forced sterilization in India and the one-child policy in China, with backing from international institutions like the World Bank.

📖 1 long-form read of the week

a. When customers are “willing” to pay by Jason Cohen

Jason gives a good primer on the three ways a company can get customers to pay for their product - either by making customers genuinely love the product (or company), creating something more useful than the competition, or using some form of coercion.

The piece has several examples from different companies and is a useful read for any leaders looking at product differentiation and pricing.

Love creates inexpensive, non-linear growth, because your customers are your allies.

You get repeat purchases, whether it’s a one-time revenue product or a loyal recurring-revenue customer. This creates growth with no additional marketing and sales costs.

You get word-of-mouth advocacy. When someone asks what to buy on Twitter, your rabid fans answer the question. When there’s a review site, your product ranks number one. When Customer Surplus is enormous, consumers reciprocate by selling new customers on your behalf9. Once again, this is growth without additional marketing and sales costs. Furthermore, the effect grows as your customer base grows: A non-linear effect.

When a new competitor arrives, even when it is superior in features or price, your customers will stay, because they’re here for more than just the features and the price. This yields retention, which is another form of growth10. There is a limit to this effect of course - at some point the product simply isn’t good enough—but it carries you through the vacillations of typical competitive one-upmanship.

Note about last week's edition: Last week I had included a tweet about the Kuznets Curve - and my good friend Anand Krishnamurthy, had this to say:

Hi Ravi,

Thanks for this! Regarding the Kuznets curve tweet by Tomas Pueyo, it is not so simple:

- With increasing per capita, lifestyle improves and becomes more dependent on natural resources. It is impossible to reverse lifestyle changes. The per capita resource consumption of US for e.g. is obscenely high, and it causes stress all over (fishing for e.g.)

- Rich countries have the wherewithal to "export" pollution. While their local environment looks clean and pristine, they are guilty of causing emissions elsewhere and even dumping waste to poorer countries

- Yes you can invest more in environmental protection as you grow richer but unless it is accompanied by fundamental lifestyle changes, overall system-level degradation will continue to increase

Having said that, some breakthrough technologies can seriously help - for e.g. controlled nuclear fusion can dramatically reduce energy footprint but still some time away.

You can look up Donella Meadows https://donellameadows.org/

Thanks for the perspective Andy!

That's all from this week's edition.

Ravi

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Ravishankar Iyer

Why do customers pay for your product? (3-2-1 by Story Rules #19)

🐦 3 Tweets of the week

📄 2 Articles of the week

📖 1 long-form read of the week

Ravishankar Iyer

Seinfeld on the Craft of Comedy (3-2-1 by Story Rules #64)

A Balanced View on India's Economy by TN Ninan (3-2-1 by Story Rules #63)

Real Estate's Falling Allure by Tomas Pueyo (3-2-1 by Story Rules #62)