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10 Steps to Start a Business (and Why The SBA’s List is Tragically Flawed)

10 Steps to Start a Business (and Why The SBA’s List is Tragically Flawed)

Earlier this week I stumbled on an example of absolutely terrible advice from the U.S. Small Business Administration.

This advice made me angry and sad at the same time. Angry at the SBA and sad for anyone who follows the advice.

I was googling some common phrases about building a business as research for an upcoming podcast episode. One of the phrases I typed was: “How to Start a Business”

Google now includes some list content from articles directly in search results, and for this search I found this special box as the first non-advertising result:

Screenshot 2016-05-24 19.07.37

This partial list is from the U.S. Small Business Administration (a government agency) from an article titled 10 Steps to Starting a Business.

Here’s the whole list:

Step 1: Write a Business Plan
Step 2: Get Business Assistance and Training
Step 3: Choose a Business Location
Step 4: Finance Your Business
Step 5: Determine the Legal Structure of Your Business
Step 6: Register a Business Name ("Doing Business As")
Step 7: Register for State and Local Taxes
Step 8: Obtain Business Licenses and Permits
Step 9: Understand Employer Responsibilities
Step 10: Find Local Assistance

They introduced the list by saying “Starting a business involves planning, making key financial decisions and completing a series of legal activities.”

What? Are you serious? Is this a joke?

This list is tragically flawed. I wouldn’t be surprised if following these steps made you less likely to succeed than if you didn’t follow any advice at all.

Here’s the simple truth the Small Business Administration is completely missing: a business can’t succeed unless it creates something people will pay for. Registering for a business name, choosing your legal structure, registering for taxes, permits, blah, blah, blah, all do nothing to help you get closer to making something people will pay for.

Filling out paperwork doesn’t make you an entrepreneur any more than buying a fancy guitar makes you a rock star. These are the steps you’d follow if you were just “playing business.”

Filling out paperwork doesn’t make you an entrepreneur any more than buying a fancy guitar makes you a rock star.
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If you were serious about making something people will pay for (i.e., building a successful business), you’d know that the two most important aspects of starting a business are shockingly absent from the SBA’s list.

The two most important parts of starting a business are: 1) your customers, and 2) your product. Without customers and a product (or service), a business isn’t a real business, it’s just a shell of paperwork and legal filings.

Yet there is zero mention of customers or product in this supposed list of 10 steps to start a business. These 10 steps are utterly insignificant compared with knowing your customer and building your product.

Seriously, this oversight is incredible. Whoever is in charge of the SBA should be fired for perpetuating this tired and dangerous advice about starting a business.

Just so you don’t think I’m being unfair to the SBA by criticizing one article from their site, you should know that nowhere within the entire outline of curriculum on the SBA site about starting and managing a business do they mention a market, customers or building a product. Here’s a screenshot of the whole curriculum:

Screenshot 2016-05-24 21.04.48

No section on making a product or connecting with customers? WTF?

Luckily this probably doesn’t affect you. I doubt you take the SBA seriously anyway. I don’t know a single successful entrepreneur who credits the SBA for any part of his or her success, with the exception of a couple of SBA loans I’ve heard of people raising. Maybe they should stick to loans and stay out of the advice business.

Anyway, enough about the SBA.

Let me offer a better list of steps for starting a business. If you asked me how to start a business, here is what I would say.

10 Steps to Starting a Business:

  1. Follow a roadmap
  2. There are many solid training programs and incubators available to entrepreneurs these days. Find and follow a system like Fizzle’s small business roadmap to avoid wasting time on things that don’t matter. You can build a business without following a proven system, but why would you want to take on so much unnecessary risk?

  3. Choose an opportunity
  4. What opportunity will your business address? You likely have many ideas floating around, but you have to pick one. An ideal business opportunity will be a combination of something you’re interested in, something you’re good at, something the world needs and something people will pay for.

  5. Define your customer
  6. Who will your business serve? What do you know about them? What is their life like? What do they value? What problems do they face and how are they currently solving those problems? Defining your customer is an essential part of your foundation.

  7. Connect with other entrepreneurs for support
  8. Being an entrepreneur is incredibly difficult, sometimes lonely and you’ll often feel like you’re on an emotional roller coaster. The most effective way to maintain a healthy perspective while also improving your odds of success is to spend time with other entrepreneurs.

  9. Talk to customers
  10. The biggest risk you face as an entrepreneur is building something nobody wants. The best way to reduce this risk is by talking directly to the potential customers you’re trying to serve, so you can learn intimately about the problems, needs or desires you aim to address.

  11. Create a 1-page business plan
  12. Business plans are full of guesses and often give a false sense of security to entrepreneurs. A simple 1-page business plan (like Fizzle’s Business Sketch Template) will give you the benefits of a business plan without page after page of unreliable guesses. This plan will primarily describe your customers, the problem, your solution and how you’ll reach those customers.

  13. Set up your business (name, legal structure, permits, taxes, etc.)
  14. Now that you know who your customers are and what you’ll be building for them, it’s time to name your business and get your legal ducks in a row.

  15. Build a minimum viable audience
  16. If you build it they will come. If only. Smart businesses today know that you have to connect with your customers to succeed, by meeting them in the channels they already use. The best time to do this is before your product launches, to build buzz and use their feedback to make your product even better.

  17. Build a minimum viable product
  18. Your business idea is nothing more than a hypothesis. You believe there is a group of people with a problem that you can solve in a way they’ll be willing to pay you for. The first step in testing this hypothesis is by building a minimum viable product, a product with just enough features for you to learn from your customers and improve upon.

  19. Measure, learn, iterate, grow
  20. Once you find a group of customers and create a simple product or service for them to consider, it’s time to measure, learn, iterate and grow. Customer feedback is essential at this stage as you turn your minimal product into a full-fledged offering.

I suppose you could argue that the business is technically “started” by the end of step 7 in our list. Steps 8, 9 and 10 are about building the business. Including these building steps here is intentional, because describing the act of starting a business without covering the actual development of the most important things (customers and product) does you a huge disservice. The SBA’s list allows would-be entrepreneurs to feel like they’re doing important work, when they haven’t done any of the important work at all, towards growing a customer base and building a product.

Even if our list stopped at step 7, notice how much of the first 7 steps is dedicated to cultivating the customer, knowing who they are and talking to them to identify problems/needs/desires you can address. This is where real business opportunities come from, from knowing your customer intimately.

So many people still think of the entrepreneur as an inventor, someone who tinkers away in a garage somewhere for months or years on a big important product that they eventually unveil to the world, which responds with oooohs and aaaaahs.

The biggest risk you face as an entrepreneur is building something nobody wants. The “inventor” mythology is wrong because it ignores this risk and assumes the inventor knows everything.

But you don’t know everything. You’re just a humble entrepreneur with a belief. You believe there exists a group of people who have a problem, need or desire that you can solve in a way they’re willing to pay money for. Your job is to prove whether this is true or not, with as little risk as possible.

Our list of 10 steps to starting a business is carefully crafted with a central focus on customers, product and your journey (and needs) as an entrepreneur, because we want to help you build something people want. Unfortunately the Small Business Administration doesn’t seem to have a clue about what really matters when it comes to building a business.

You know better now. Use our list to your advantage. Stay focused on your customers and your product and you’ll have a much better shot at building a business that matters.


Fizzle

How Long Should Your Business Take to Earn Revenue? (FS164)

I heard some advice from an entrepreneur about how hopeful entrepreneurs should pursue their first business idea. (That advice is explained in the podcast below.)

It made me think about how long it can take before your business starts earning revenue.

How long is too long?

Should you be fighting for revenue right out of the gate?

Should you keep a job so you have some financial stability while you get your own business off the ground?

In this episode we share our advice about these question. We’ve been, done and seen a lot in the world of small business, and this episode brings some excellent perspective.

Enjoy!

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How Long Should Your Business Take to Earn Revenue?
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Show Notes

If I’m so Smart Why Aren’t I Successful Yet? (FS159)

How to Afford an Entrepreneurial Lifestyle: A Comprehensive Guide to Minimum Viable Income


Fizzle

Why We’re Proud This Guy Gave up on His Business (FS162)

Real talk: are you working hard on your business, finding it very difficult and not remembering clearly why you set off to build your own thing in the first place?

Bonus points if you’re either a). angry that someone would ask you that, or b). crying right now.

On this episode of the show (this is a podcast episode, all the goodies are inside it) the two founders of Fizzle share some hard-won perspective about why this guy — who just quit his business — is NOT a failure… he’s a hero.

It’s a great episode for all of us to remember WHY THE HELL WE DO THIS STUFF. Enjoy.

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This guy quit his own business to make a bigger impact on the things he cared about. (Podcast)
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Show Notes

Religion for the Nonreligious – Wait But Why

RIP Bookslut, 2002-2016 — Vulture

5 Reasons Why I Quit my Business to Pursue my Dream Job (FS144)

3 Ways to Improve the Best Advice Ever


Fizzle

Business Advice & Wisdom for Young Family Entrepreneurs (FS160)

Running an indie business is more possible than ever — even when you’ve got a young baby or a new marriage. But if you try to simply burn more candles at more ends (or pour more cups of coffee to get through the day) you’ll find yourself and your family paying a price too high.

On the show today, some wisdom and advice for entrepreneurs in young families. Steph’s about to have a baby, Barrett’s about to get married and Chase and Corbett have lived through enough of these experiences to have a valuable vantage point.

Regardless of how far down the road of family or business you are, if you want to live well, you’re going to love this episode. Enjoy!

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Business Advice & Wisdom for Young Family Entrepreneurs
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Show Notes

Female Company President: 'I'm sorry to all the mothers I worked with’:

“I was now a woman with two choices: go back to work like before and never see my baby; or pull back on my hours and give up the career I’d built over the last ten years. When I looked at my little girl, I knew I didn’t want her to feel trapped like me.”

TLS #102: 10 Truths About Finding Peace In Being “Average” In This Season Of Our Career With Jessica Flannigan (Live The Fancy Life) | Jess Lively

Alan Watts (@AlanWattsDaily) | Twitter

“The immediate now, whatever its nature, is the goal and fulfillment of all living. Flowing from this insight is an emotional ecstasy, a sense of intense relief and lightness, and of almost unbearable love for the world.” ~ Alan Watts

Having It All Kinda Sucks — Life Tips — Medium


Fizzle

DataXu Gets $10M From Sky As Pay TV Giant Buys Into Programmatic Ad Tech

shutterstock_171635108 DataXu, a Boston-based startup that provides analytics and other tools for running programmatic ads, has picked up another round of funding. Sky, the UK-based pay-TV provider part-owned by 21st Century Fox, has made a $ 10 million investment in the company. It’s a strategic stake: Sky plans to use DataXu’s demand-side buying ad tech in its current services as well as work together… Read More
TechCrunch

15 ways American treasure Tom Brady can be your next career coach

Source: 15 ways American treasure Tom Brady can be your next career coach

How to be like greatest American quarterback Tom Brady in your office

Tom-brady-thumb

Image: Elise Amendola/Associated Press

Tom Brady — New England Patriots quarterback, committed vegan, teflon scandal shunner — is, let’s be clear, the ultimate professional.

ESPN Magazine
published a long piece on Thursday about how Brady, who’s currently chasing his fifth Superbowl championship ring, is definitely human — despite his perfectly chiseled jaw line, his mostly tomato and fruit-free diet, and superman-like statistics.

The piece details that even though his life is marred by controversies — think Deflategate, gossip items about his marriage to supermodel Gisele Bündchen, and seemingly endorsing Donald Trump for president — Brady has finally opened up to the press this season to reveal who the man, the myth, and the legend really is.

(Though, he hasn’t opened up too much: he didn’t seem to grant an on-the-record interview to ESPN, considering all of the Brady soundbites in the story are from interviews with other outlets.)

The story is filled with instructive gems, like a quote from one of Brady’s former NFL teammates who was granted anonymity just to say: “If you can’t look at what Brady’s done and appreciate and embrace who he is, then you’re missing what’s great about America.”

This is intriguing. If nothing else, we want to learn everything we can from the greatest American living.

But the real takeaway here is that human Tom Brady is a truly great career idol. You might have different career aspirations — and hey, you’ll likely never rake in $8 million a year for your ability to throw a ball — but you’d be making a mistake not to look to football’s golden boy for career advice.

Introducing the Tom Brady career advice guide, consisting entirely of quotes from the ESPN Magazine story, which will totally help you score on the in your field.

Lesson #1: Find something that you truly love to do.

You’re never going to find success if you’re spending long hours at a job that doesn’t make you roar like Tom Brady during a Sunday night football game.

Tom Brady loves what he does so much that it’s physically impossible for any other human — including every other football player in America — to love football more passionately than Tom Brady.

“Here is what you need to understand: There is not a guy in the National Football League who loves football more than Tom Brady,” [Patriots wide receiver Matthew] Slater says. “And it’s not just that he loves going out on Sundays; he loves preparation, he loves taking care of his body, he loves meetings, he loves film, coaching other guys. He loves every bit of it. And that’s what drives him to be great.”

Tom Brady

Tom Brady loves football so much that he actually vocalizes like the most noble animal on earth, ESPN reveals.

“As the referees huddled and eventually declared that Brady had not scored a touchdown, the quarterback jogged to the sideline, his temper close to a boil. The crowd, energized by what had just transpired, began chanting his name. Brady put his arm around New England offensive coordinator Josh McDaniels and began roaring and shaking McDaniels’ neck like an agitated lion. He wanted New England to challenge the call.”

So, remember. If you do not love what you do as much as Tom Brady loves football — if you are not ready to roar about it — do something else.

Lesson #2: Find a job that makes you — and only you — happy.

Surely your parents, your significant other, or your boss might have their own plans about where you should end up, career-wise. But ultimately, the only thing that matters is that you find something that makes you — above everyone else — happy. And then find the way that you can get there. It’s a lesson Brady displays loud and clear, through a Jay Z verse no less, each week.

“Several years ago, long before the Deflategate investigation and his fourth Super Bowl victory, Brady made it part of his pregame ritual to run onto the field for warm-ups while Jay Z’s ‘Public Service Announcement’ blares from the speakers inside Gillette Stadium…Brady insists ‘Public Service Announcement’ has no grander meaning. Jay Z is just an artist he enjoys. But it’s natural to listen to the lyrics and wonder if the song’s interlude doesn’t resonate, now, on a deeper level.

Before I finish, let me just say
I did not come here to show out
Did not come here to impress you
Because to tell you the truth, when I leave here, I’m gone
And I do not care what you think about me
.”

Tom Brady, in other words, DGAF. If you cannot accept yourself as the ultimate arbiter of what is good and right for your career, take a deep look inside and try to trust your instincts as much as Tom Brady does.

Lesson #3: Work hard to be the best.

If you want to get ahead in your career, work harder than everyone else. Like Tom Brady does. End of story.

“That’s why he obsesses over the simple fundamentals of playing catch, drilling for hours and hours in the offseason with guys like [Patriots’ wide receiver Julian] Edelman and former teammate Wes Welker on stuff as basic as ball position and splits.”

Have you absolutely mastered every single part of your job? Can you format a spreadsheet to the point of mystical perfection? Can you code like the Archangel Gabriel is watching over your keyboard? Is your mastery of words flawless enough that Shakespeare and Austen are your only equals? No? NO? Then work out every single skill until no one surpasses you.

Lesson #4: And keep working hard until you’ve actually accomplished your goals.

And even when you think you can’t work any harder, work harder. Be the maniacal competitor Tom Brady is — the gladiator Tom Brady believes you can be.

Case-in-point: Just when it seemed that the Patriots were poised to win the big game in the final minutes of last year’s Super Bowl against the Seattle Seahawks, Brady pushed harder until the clock had officially run down.

“The Patriots had to take the field and kneel down to make it official. After the first kneel, the Seahawks called a timeout. The Patriots would need to execute things one more time to officially put a bow on the victory. Several players began to hug, soaking up the enormity of the moment. When Brady saw this, he went bonkers, yanking his teammates back into the huddle, demanding they maintain their focus for one last play. He was taking nothing for granted. He didn’t care what anyone thought. He was going to be a maniacal competitor right to the very end.”

At your job, do you want to succeed? Then never give up. Tom Brady would never give up, so why should you?

Lesson #5: Stay self-aware about your weaknesses.

The only way you’ll truly improve is if you drop the ego and are honest with yourself about your flaws. No word on the size of Brady’s ego, but hegenuinely acknowledges that, despite his skill on the field, his flawless diet, his rapport with his teammates, his strong jaw and ideal looks and his supermodel wife, he isn’t perfect.

“What Ryan and others have never seemed to grasp, one of Brady’s former teammates explains, is that Brady has always been smart enough to accept that it’s impossible to know everything. That’s why he’s the best postseason quarterback of all time.”

Get that? Tom Brady is the best quarterback in the NFL and he is not a know-it-all. When mapping your career, you shouldn’t be either.

Lesson #6: Present yourself well.

If you’re heading in for a job interview or a big board room presentation, it’s important to command the room. And no one knows how to do that better than Tom Brady, who apparently has more in common with John F. Kennedy than calling Boston home.

“Even when he is dressed in a lumpy Patriots sweatshirt and stocking cap, standing before a wall of cameras, Tom Brady manages to look regal. He is so guarded, so calm and Kennedy-esque as he listens, nods and then gracefully says nothing.”

Costume Institute Benefit Gala

Tom Brady, in other words, is a born aristocrat. When facing down career challenges and obstacles, pull yourself up to your greatest height, gather your dignity and respect, and — most importantly — stop talking. Listen more. Pay attention. Give off an air of regal attentiveness, as Tom Brady does.

Lesson #7: Don’t overthink it.

Overthinking and overanalyzing will only lead to disaster. Trust your skills and intuition. Brady knows all too well that thinking too hard will only strain his brain and hurt his game.

“A player can study film and look at 10,000 formations on an iPad for as many hours as the eyes and the brain will allow. But ultimately, the human mind is not a computer. Overthinking in tense moments, trying to decode a defense like it’s a sudoku puzzle, is the perfect recipe for hesitation and panic.”

Tom Brady collects information, but once that’s done, he doesn’t analyze it to death. Being the best —moving forward through the scrum of humanity — means developing good instincts. Tom Brady lets his instincts take over, and so should you.

Lesson #8: Make allies at work.

Tom Brady isn’t just technically skilled. He has social skills. Most people who made it to the top didn’t do it alone. So it’s important to find people at work to have in your corner (even better if your biggest work ally is the one with the office in the corner.)

It’s an art Brady has mastered well, since he’s apparently everyone’s favorite ridiculously handsome face to see hanging around the Patriots’ front office.

But since you’re not Tom Brady, you’ll probably have to try harder to make friends at work. ESPN describes how Brady puts people at ease.

“He refers to people as ‘babe’ and ‘bud’ when he wants them to feel comfortable. He remembers faces around the office, but not every name.”

This can work for you too. Be friendly, be accessible, and at least smile in recognition. People will think more kindly of you the next time you roar.

Lesson #9: Hire good people, and trust them to get the job done.

Say you’re a manager, or you’re just tasked with working with a group of colleagues on a big project. Don’t put all of the burden on yourself — instead, surround yourself with good, competent people, and trust that they’ll pick up their share of the slack.

“What Brady gets is that he’s the only guy who understands exactly what’s going on down on the field. So when [Patriots’ offensive coordinator] Josh McDaniels calls a certain play, Brady is thinking: ‘I know exactly why he called that play. I know exactly what my read is on this.’ Brady’s genius is that he understands delegation. He trusts the people around him.”

Tom Brady is not a micromanager. He trains people well, gets communication down, then sets them free to do their best work. This will probably work for you too.

Lesson #10: Don’t let haters get to you.

Tom Brady has haters. Boy, does he have haters. There are at least hundreds of thousands of men around the country who, given the chance, would punch him in the face. Tom Brady is not alone in this. Anyone who seeks success is bound to have haters who will try to get in your way. But you can’t let them faze you. Keep doing your thing.

“Kansas City tight end Travis Kelce, looking on from a few yards away, mocked Brady with a celebration of his own, punching the air and bobbing his head. Brady glanced at Kelce, acknowledging he had seen the gesture, but jogged away in a manner suggesting that lions do not concern themselves with the opinions of sheep.”

Tom Brady

Tom Brady doesn’t sweat small-time haters. He can burn people with a look. Learn to do that and not only will you have fewer damning, ranting emails to your credit, you will also save yourself a lot of time.

Lesson #11: Keep tabs on the competition.

Not all haters are small-time. Some of those haters might be competing with you for a big promotion. Let your rivals inspire you. Let them encourage you to be better.

For Brady, the only thing that stands in between him and the title of NFL golden boy is Denver Broncos legend and sometimes better-than-average Saturday Night Life host Peyton Manning. And though Brady sent some off-color emails that made fun of Manning’s age, Brady knows he needs to get better than Manning.

“What was more interesting about the texts, though, was the private acknowledgement from Brady that he, too, looks at Manning the way most of us do: as the comparative measuring stick of his career.”

Know how your competition is, and make sure they’re worthy of you. Only then will you be able to imitate even a portion of Tom Brady’s success.

Lesson #12: Find your zen.

Even if that criticism does get to you — even Tom Brady has emotions — it’s important to find a way to calm yourself down. Stress can easily derail success, so channel your inner zen master.

“He has always prided himself on his ability to achieve some version of Zen before he walks into news conferences, armor against any annoying question that might otherwise get under his skin. He has told friends, privately, that nothing offends him, that one of his favorite books is ‘The Four Agreements’ by Don Miguel Ruiz, and it has taught him not to take anything personally.”

(In case you were wondering, the four agreements in Ruiz’s book are: 1) Be impeccable with your word, 2) Don’t take anything personally, 3) Don’t make assumptions, and 4) Always do your best.)

Tom Brady is not always zen — see above, where Tom Brady is not perfect — but he is always trying to be zen. You should be too.

Lesson #13: Support the people who’ve helped you get to success.

Once you’re at the top, don’t burn your bridges — you never know when you might need someone’s help again. Brady stands behind those who have helped him become the dominant football player he is today. Like when his best friend, business parter, and so-called ‘business guru’ came under fire for allegedly pretending to be a doctor and making unsubstantiated claims about his health products, Brady proudly and passionately defended his pal to Boston radio hosts.

“”In the 10 or 11 years we’ve been working together, he has never been wrong,” Brady said. “I had doctors with the highest and best education in our country tell us — tell me — that I wouldn’t be able to play football again. That I would need multiple surgeries on my knee from my staph infection. That I would need a new ACL, a new MCL, that I wouldn’t be able to play with my kids when I’m older. Of course, I go back the next year and we win comeback player of the year. I follow the next season, and we win the MVP of the year. I’ve chosen a different approach, and that approach works for me…I wouldn’t be playing today if it wasn’t for what he’s been able to accomplish with me.”

Josh McDaniels, Tom Brady

Remember where you came from and always dance with the people who brung you.

But note that Tom Brady also refers to himself as “we,” like a royal prince. In this alone, don’t be like Tom Brady. It’s an advanced social maneuver and you’ll only end up hurting yourself.

Lesson #14: Hang in there and keep company with the best.

Tom Brady knows: your career will inevitably come with some stresses. But don’t let them defeat you. Stay strong, and you will prevail. It’s an important piece of advice that career coach Brady is more than willing to share with those less fortunate than him.

“In 2012, when JPMorgan Chase lost $6.2 billion through a series of bad investments, Vanity Fair reported that the bank’s CEO, Jamie Dimon, received a surprise phone call from Brady, with the quarterback telling him to ‘hang in there’ and that even Super Bowl champs have bad days. The two had never met.”

An important addendum: Tom Brady does not consider anyone beneath his coaching and advice. Note that Tom Brady has absolutely no problem calling the billionaire head of the nation’s strongest bank and bonding with him. Tom Brady knows that true excellence is a very special club — that game recognize game — and he strengthens those bonds when he can.

Lesson #15: Savor your success.

There’s nothing worse than getting to the top and not enjoying it. Tom Brady enjoys stoicism, but he does not deny himself joy. To be like Tom Brady, carve out time to celebrate and revel in your success, preferably with the ones you love.

“Some moments, though, he cannot help but pause to savor. After the Patriots knocked off the Chiefs, Brady sat on a stool in front of his locker and peeled off his pads, pausing several times to ruffle the hair of his two sons, Jack, 8, and Benjamin, 6, who were making a rare appearance at the stadium.

When he stood up with a towel, preparing to head to the showers, Jack shot his father a look of concern.

“Dad, how did you get that blood on there?” he asked.

Above Brady’s heavily taped right ankle was a small, red scrape.

“Just from playing football, bud,” Brady said, grinning as he walked away.”

Tom Brady knows you have to have time for family — and he also knows there is no progress without pain. Those two lessons from Tom Brady could be very valuable to you as you plan out your career.

And there you have it: keys to career success from the man, the myth, the legend himself. Next time you face an obstacle at work, just ask: What Would Tom Brady Do?

Have something to add to this story? Share it in the comments.

Topics: Business, Jobs, espn magazine, Media, NFL, Tom Brady

Google’s Recent Core Algorithm Change Could be Called the “Lead-Gen” Update

TL;DR – If you operate a third-party lead generation site, or if your business models rely on third-party lead generation, you could be about to suffer significant traffic declines and a resultant reduction in leads.

If you live in any of the ridiculously high CPC verticals, Google’s new core algorithm update is something that should concern you in regard to your future organic traffic levels. Sites pursuing organic traffic within those spaces are coming under increased scrutiny as Google’s algorithm becomes better able to parse intent at both the user and domain levels.

The Google SERP for ‘cheapest homeowner loans’, which sits in one of the most expensive CPC verticals.

Google wants search quality, make no mistake, but they also want revenues from burgeoning business divisions (h/t @gumballgary). Challenging Google in the most competitive spaces is a tall order; if you are trying to compete in these realms, you had better bring your best and most transparent efforts lest you suffer at the hands of updates engineered specifically to prevent you from stealing Google’s thunder diluting search quality.

How sure are you that this is what’s happening?

With the caveat that presuming to know the intent of algorithm updates is a fool’s errand, I’ve seen this before, multiple times over the years.

Most recently, in March 2015, Google began laying groundwork for this current core algorithm change, via the “doorway page” update. Essentially, the “doorway page” update attempted to identify “doorways” that lead to pages that emphasize search considerations at the expense of user experience. Possibly intended to re-address “search within search,” and to some degree the duplicate and thin content that run rampant in that sphere, “doorway page” resulted in organic traffic declines for many of the third-party lead generation sites that are now a growing portion of our new clients and inbound leads.

Having had the good fortune to have been involved in client development as the digital marketing industry has matured, I can tell you with certainty that the inbound leads of today in need of urgent assistance are very often the most accurate predictor of what is happening or about to happen.

The Panda update taught us that years ago and every subsequent update has affirmed that line of thinking. As all of us involved in manning inbound leads know, search trends are often best understood by looking more closely at whose hair is most on fire. For the last few months, an inordinate amount of our inbound leads are coming from these types of sites. As we dig into their analytics, we are invariably finding that their traffic declines began with the “doorway page” update.

At the simplest level, if your home page has a large search query bar front and center, you’ve already noticed the traffic decline. And if scrolling down your homepage begins to reveal a huge list of internal links disguised as an alphabetized table of contents, you’ve probably already noticed a decline as well. If you have both of those elements on your site, well, you’re likely in a desperate panic and may have already called on us.

User intent and domain intent

By combining implicit and explicit queries to help determine context, Google continues to get better at deducing the intent behind any given query, sometimes to surprising degrees. At the domain level, too, Google has a vested interest in knowing how sites are approaching specific verticals and, ideally, what they are doing with the organic traffic they are attracting. Google, obviously, is in the business of precisely measuring such vitals and they get more thorough nearly every day.

With ever-increasing importance being placed on user experience, Google’s algorithm updates are focused on adding qualitative data layers to the staggering depth of quantitative layers upon which their business model is built. It’s no stretch to say that traditional SEO was built on the premise of leveraging the gap between Google’s expertise in data collection and the qualitative blind spot created from the difficulty in algorithmically simulating human eyeballs and user experience.

At root, the closing of that gap has been the development of artificial intelligence and machine learning, which are in turn driving Google’s online efforts in the form of algo updates and their offline efforts in the form of autonomous cars, bizarre robotic animals, and even droid soldiers. Cumulatively, it’s not a quantum leap then to infer that Google’s machine-learning focus tends toward the humanizing of the “spider,” at least in part to mitigate the effects of old-fashioned SEO and SERP gamesmanship.   

TensorFlow is the machine intelligence software that’s driving Google’s improving AI.

Google’s parsing of user intent, and their ability to monetize predictive analysis, has been clearly successful in recent years but often overlooked has been the effect of those efforts on better determining domain intent, with third-party lead generation perhaps representing a sometimes untoward combination of relatively sophisticated SEO efforts and domain intent masking.

What in the hell is third-party lead generation?

I’m glad you’ve asked. It’s more than just affiliate marketing. Third-party lead generation is focused strictly on generating leads, with those leads then being sold to, well, we’re not always exactly sure whom to…and neither is Google, that’s the potential issue here.

The point is, third-party lead generation sites are middlemen, with the resultant leads being brokered all about, and with little to no regard for the value delivered to the actual web user. In other words, so long as the lead-generation site captures the traffic via query and is able to sell the lead to whoever might be the highest bidder, the third-party lead generation site has few other concerns.

Such sites have traditionally ranked well, in large part because users do use them as a reference point in an effort to learn more about the products or services in any given vertical, which can lead to impressive data metrics around referring sites, pages viewed, conversions, and more.

Arguably, such sites are creating value for users, at least, to some extent, and their traditional ability to rank would seem to suggest sustainability.

So why does Google care exactly?

The shortest possible answer to that question is search quality, which in theory is the motivation behind every update.

It’s slightly more complicated than that, of course, but to a large extent crystallizes more specifically to user experience. Using an ‘auto insurance’ query as an example, users are very likely entering the query because they need auto insurance. In most cases, such users are searching for auto insurance, not for a third-party who can broker their contact information to a secondary middleman (the primary middleman being the agent listed rightfully in the local results at the top of the SERP). In a perfect search world, Google would connect a person in need of auto insurance with the most appropriate underwriter of auto insurance. As often as not, though, such a searcher is being directed to a highly generic middleman of some sort.

Third-party lead generation sites, in their least valuable iterations at least, serve as a secondary search market, if you will, luring users via SERPs and then moving them further away from the solution to their problem rather than closer. In this way, third-party lead generation sites often violate critical modern best practices, sometimes intentionally and sometimes not.

Is Google going to penalize or de-index third-party lead generation sites?

That could be the result for the worst violators, the spammiest among those sites, but it’s highly unlikely. Many third-party lead generation sites are creating value for users in the form of useful reference and effective market synopsis, and are more in need of reformation than outright removal or penalty.

A user searching for ‘auto insurance’ may or may not know anything about auto insurance, and the underwriting process that supports it, but a site intent on drawing organic traffic from ‘auto insurance’ should do so by way of fundamentally sound practices rather than a purposeful obfuscation of the nature of their business model. In other words, the user deserves to know if they are being directly sold what they need or if their information is being sold to someone who might be able to indirectly sell them what they need at a later time and place (including an offline place that Google can no longer track or measure).

Think of it this way: Third-party lead generation sites are built to provide leads to middlemen and, in many ways, Google’s aim is to eliminate the middleman (as it relates to search).

What can be done to mitigate the potential effects of this update?

In short, ensuring that your site is built for users rather than search remains your best defense against rankings decreases, penalties, or worse. Since many third-party lead generation sites are guilty of proffering duplicate and thin content, that may be the best place to start, but here’s a more complete short term list of potentially useful actions:

  • Find and remove duplicate content

  • Address that massive list of internal links on your top-level page.

    • This is a sure sign of either poor site design or SERP gamesmanship, neither of which is going to be rewarded and both of which diminish user experience.

  • Better strategize in relation to thin or nearly empty product-level pages.

    • Your product-level pages must be more robust; compete on differentiated content rather than on the product descriptions scraped from another site’s authoritative product-level pages. This is especially important as it relates to…

  • Investigate potentially questionable affiliate marketing partnerships.

    • Google’s view of affiliates is constantly evolving; keep an eye on what your partners are doing and how those partnerships may affect your site(s).

    • Refine your affiliate strategies.

  • Seek and destroy poorly designed or implemented interstitial ads.

    • Bad mobile design can be as dangerous as good mobile design can be rewarding; keep your mobile design clean and efficient. Nobody likes obnoxious interstitials, Google included.

  • Develop better creative content strategies

    • Focus on compelling content rather than lead generation and you will grow traffic AND leads.
  • Pages built specifically with search in mind.

    • Focus on user experience, not on SERPs.

Isn’t that all just best practices and common sense?

In many ways, it sure is, yes. There are, however, changing variables and scalability. Google appears to be suggesting that the third-party lead generation sites need some attention, some love, some evolution. Those that adapt and answer this call are going to be just fine, perhaps even better. Those that don’t, simply, will suffer. “Set it and forget it” has never been a good digital marketing strategy, no matter what you’re selling or when.

And who are you exactly?

I’m Noah Lemas. Since late last year, I’m the VP NYC at Distilled, charged with leading our New York office and team. I’ve been in the search industry for nearly a decade now, in journalism, agency, and in-house roles, where I’ve been fortunate enough to develop strategy and content for some of the web’s largest sites, brands, e-commerce retailers, and news outlets. I’d welcome the opportunity to learn more about your company and how we might help you achieve your online goals; I look forward to hearing from you, even if just in the comments below. Thanks for reading!

Source: Distilled
Google’s Recent Core Algorithm Change Could be Called the “Lead-Gen” Update