Episode #483: Subscription Economy Update — March 2024

Join Ron and Ed as we dive deep into the dynamic world of subscription business models. With the landscape constantly evolving, we'll bring you the latest insights and happenings that are shaping the future of subscriptions. Whether it's the introduction of new technologies, shifts in consumer preferences, or innovative strategies companies are adopting to retain subscribers, we've got it covered. Stay ahead of the curve and understand what these changes mean for businesses and consumers alike. Don't miss out on this insightful update – tune in to stay informed!

Use these show notes to follow along with the audio:

Segment one

• “[The subscription economy] has become our new normal.” —Tien Tzuo

• “Is the Subscription Economy over?” This is what Tien Tzuo asked in his most recent Subscribed newsletter https://www.linkedin.com/pulse/subscription-economy-over-tien-tzuo-w6vwe/?trackingId=16QSer9BSGylg9hNp4BoOg%3D%3D 

• Today I learned: Of the 10.36 million subscribers to The NY Times, 9.7 million are digital-only

• Of the companies expanding their understanding of subscription, there are 3 strategies in common: 1) monetization is bigger than pricing, 2) strategies are living and evolving, and 3) they address the root questions

• Most of segment one was based on the most recent post from Tien Tzuo (former guest and CEO of Zuora) at this link: https://www.zuora.com/subscribed/is-the-subscription-economy-over/ 

Segment two

• For the second segment, Ron and Ed are talking about the article titled, “Follow the dots: Why a customer-centric world requires a demand-led strategy” - More here: https://www.zuora.com/subscribed/why-a-customer-centric-world-requires-a-demand-led-strategy/ 

• “The consumer isn't a moron; She is your wife” —David Ogilvy

• 1/2 How big does a business or personal transformation really need to be? Don’t over-exaggerate it in your mind. It’s doesn’t need to be a complete transformation. Take the small steps first.

• 2/2 For example, with a tax practice customer: “I used to think of you as someone who did my taxes. Now I see you can also provide guidance and insight to help with better planning.”

• Transformations that are not MAJOR transformations but are still important….what are they called? You are HONING (think of sharpening a knife blade)

• ...many businesses claim today to be customer-centric, they still operate like they [...] can create a product, package it up, and sell it in the fashion most convenient for them — and expect consumers to eat it up. https://bit.ly/3TXSoQX

Segment three

• All of Tien Tzou’s Subscribed newsletter articles can be found at this link https://www.zuora.com/subscribed 

• Robbie Kellman Baxter (also a TSOE guest) possibly said it best: “A lot of boards and executives are now saying, ‘let’s get some subscription revenue,’ without thinking about why that would be good for the customer.” More here: https://www.zuora.com/subscribed/why-a-customer-centric-world-requires-a-demand-led-strategy/

• Regarding subscription: “We’re in a critical moment. There’s no time for frauds. This market is too competitive for any company posing as anything but one with a customer-centric and future-proof approach. This approach is not an option.” More here https://www.zuora.com/subscribed/why-a-customer-centric-world-requires-a-demand-led-strategy/  

• Is there room in the market for a high end, subscription only restaurant? Ron mentioned the French Laundry as a possibility but ultimately you are paying for access (which is the point!) 

• WFH is now Working From Helm — Virgin Voyages is now offering summer season passes for cruise ships https://www.virginvoyages.com/l/one-month-summer-mediterranean-cruise 

• Cruising not your thing? Instead, why don’t you subscribe to skiing with the IKON Pass? https://www.ikonpass.com/ 

Segment four

• Where can you find more work from Joe Pine and his book The Experience Economy? He’s working on his next book and is sharing his work in progress on Substack https://transformationsbook.substack.com/ 

• Rate this podcast at RateThisPodcast.com/TSOE. If you write a review we are happy to read it on the air - good, bad, or indifferent

• Geraldine Carter — a show sponsor and listener — is working on a new book called Down to 40 Hours. Watch her website closely for more info https://geraldinecarter.com/ 

Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode #482: Subscription-based legal services - Interview with Scott Reib

Ron and Ed are joined by Scott Reib who is known as “America’s Legal Coach.” For the last two decades, Scott is a firm believer that legal advice doesn’t have to be expensive or intimidating. His passion lies in changing the way we view legal counsel: from “emergency” situations to “primary care provider” relationships. Scott is shifting this perspective via Access Plan, his groundbreaking subscription-model legal service, where he helps clients understand their legal questions before they find themselves in a legal emergency.

About Scott Reib

Scott Reib (pronounced “Reeb”) is known as America’s Legal Coach. He’s the official Zig Ziglar Small Business Lawyer, a Ziglar Legacy Certified Trainer, and he has over 20 years of experience as an attorney. For the last two decades, Scott has been helping business owners, entrepreneurs, coaches, and service providers to “shatterproof” their businesses and succeed in the professional world.

Use these show notes to follow along with the audio:

Segment one

• Scott was in sales during the beginning of his career. He ran into a contract issue and “did what any sane person would do” - he went to law school.

• Scott had a vision in 2012 for a different way to practice law. An on demand system with a set monthly fee so that they could ask any question they want without worrying about the bill. The access plan was born https://www.reiblaw.com/access 

• Even though Scott didn’t have a partner in the firm that he “needed to convince” about a subscription billing plan, he did have stakeholders. Mistakes were made and lessons were learned around the idea that he could have communicated the subscription idea better

• People coming back to Scott that made a mistake they could have avoided was his motivation for moving to a subscription model. They thought they couldn’t afford him and didn't ask but ended paying large amounts to “win” in court.

Segment two

• Typically you call your lawyer when your house is on fire (so to speak). Scott wants to shift your thinking to a more proactive role as your lawyer.

• Scott had a mantra a few years ago that will resonate with many of us, “The billable hour is dead. Lawyers just don’t know it yet.”

• “Lawyers are paid not to finish if they are charging by the hour.” —a Verasage colleague

• One of Scott’s biggest advantages: In running a business you are constantly being presented with contracts to sign. You could be making a mistake and, with a subscription based lawyer, there is no additional fee to have a contract reviewed. 

Segment three

• Scott’s pricing model as a subscription law firm includes revenue ranges. That’s just a guide to help you understand where your business might fit. More here: https://www.reiblaw.com/access 

• I would rather apologize for the price today than for the lack of quality and your unhappiness forever.” —Zig Ziglar

• Our now! “The Shatterproof Entrepreneur: Building an Unbreakable Business Legacy” by Scott Reid with the forward written by Tom Ziglar https://www.amazon.com/Shatterproof-Entrepreneur-Building-Unbreakable-Business/dp/B0CWS84LVV 

• Ed referenced “swallowing the fish” today during the show. This link is a good refresher for those that have read the book, Subscribed… https://www.zuora.com/2020/01/23/swallowing-the-fish-a-short-term-reality-for-subscription-businesses/ 

Segment four

• What are some of Scott’s main KPIs as a subscription lawyer? New members each month, number of paused plans, cancellations, MRR, and projections for the year

• What are some of the technologies Scott uses to run a subscription law firm? Asana for project management, Zapier for connecting various platforms, Slack for internal comms, and Sync as a cloud server

• Is the first 90 days of a subscription business critical? Of course. Scott is focused on making sure that his law firm “WOWS” customers in the first 30 and 90 days. Re-education of customers around new processes is definitely a hurdle. 

Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode #481: Private Equity in Accounting — Michael Breit, CEO, EisnerAmper

Join Ed and Ron for our interview with EisnerAmper’s Chairman and CEO, Michael Breit, for a discussion of private equity in accounting, including how EisnerAmper’s changed its governance structure. We'll also discuss the advantages and disadvantages of these alternative structures, and how private equity will impact the future of firms.

About Michael Breit

Michael Breit is Chairman and CEO of EisnerAmper LLP (attest firm), and a Partner at Eisner Advisory Group LLC. With more than 35 years of public accounting experience he has held leadership positions throughout his career at EisnerAmper, including Vice Chair –Strategic Relationships, Regional Managing Partner, Partner-in-Charge of the New York office, and Audit and Assurance leader. Prior to joining EisnerAmper, Michael was a Partner at a Big 4 accounting firm. Michael has extensive Securities and Exchange Commission experience and has been involved in the initial public offerings of several premier broadcasters and cable TV operators. He has participated in numerous due diligence efforts relating to the formation of programming ventures and acquisition of sports franchises. Michael has also led cable TV defalcation investigations, serving as an expert witness in several arbitration and litigation matters. In addition, he possesses significant retail experience. Over the years, Michael has led or participated in numerous leadership programs including an Executive development and leadership training program at the Harvard Business School. Michael served a two-year residency in the national office of a Big 4 accounting firm where he monitored the profession’s standards setting bodies and followed a wide range of accounting and reporting issues. Michael is a frequent guest speaker on sports and entertainment issues on national and regional radio and television programs.

Use these AI generated show notes to follow along with the audio:
(Our social media guy was on PTO — he asked us and filed the request in triplicate)

Accounting and Private Equity Conversation

The meeting involved a conversation between Ed, Michael, and Ron, focusing on private equity and accounting. Michael, who is the chairman and CEO of EisnerAmper and a partner at Eisner Advisory Group, shared his professional journey and experiences in the accounting industry. The participants also addressed technical issues such as microphone settings and adjustments to audio inputs. Towards the end, the discussion shifted to the topic of private equity and accounting.

Private Equity Investment in Accounting Firms

Ron and Michael discussed the attractiveness of accounting firms for private equity investment, with Michael highlighting the steady cash flow, low risk, and year-round revenue. They also explored Michael's firm's deal with a private equity firm, Eisner Amper, which was structured through an alternative practice structure to navigate independence concerns. Michael shared the advantages of this partnership, such as increased technology investment and access to capital and know-how. He also noted the recruitment benefits, as the deal offered a new narrative for potential hires. Looking ahead, Michael mentioned the potential for a future monetization event, but was uncertain about the specifics of the exit strategy.

Technology and Independence in Auditing

Michael, Chairman and CEO of Eisner Amper, LLP, discussed the company's plans to leverage technology for innovation, particularly in auditing. He mentioned the development of a new audit methodology called the Dynamic Audit Solution Ordaz, which incorporates AI components and aims to move away from a traditional checklist mentality. Michael also mentioned the implementation of a new ERP system, SAP, and the company's commitment to continuous auditing. He addressed concerns about maintaining independence in the auditing process, emphasizing the company's strict guidelines to ensure independence and independence in appearance. Additionally, he discussed the company's growth and the benefits it brings to their clients, such as greater resources, technology advancements, and a wider range of services.

Accounting Talent Attraction Strategies

Ed and Michael discussed the challenges faced by the accounting profession in attracting new talent. Michael suggested that adjusting the 150-hour credit rule and increasing starting salaries could help attract more students. They also discussed the potential of allowing for career changes into the accounting profession, especially for those without an accounting degree. Michael emphasized the importance of addressing concerns about compensation to retain talent. The conversation concluded with a discussion about the potential benefits of private equity involvement in the accounting sector, with Michael highlighting the importance of maintaining a strong firm culture.

Private Equity, AI, and Accounting Standards

Ron and Michael discussed the influence of private equity on accounting firms, including an increase in billing and realization rates. Michael explained that private equity raises the bar for firms to perform at their highest level and expects results, but also provides support and guidance. They also touched on the use of AI in auditing, with Michael mentioning that their CIO is leading a significant AI initiative. The topic of employee stock ownership plans (ESOPs) came up, with Michael revealing that it was not considered by Eisner but recognized as a beneficial strategy by other firms. They also discussed the state of the auditing profession, with Michael emphasizing the importance of maintaining a high standard of excellence. Lastly, Michael shared his advice for young individuals considering a career in accounting, highlighting the diverse nature of the profession and the opportunities for advancement.

Sports, Business, and Family: A Lively Discussion

The conversation primarily revolved around sports, with a particular focus on the Islanders. Ed and Michael discussed Michael's 2018 blog post about the future of sports, which included predictions about UFC's potential growth. They also shared personal anecdotes about family members involved in sports. The discussion then shifted to the business of sports, with topics such as esports, sports gambling, streaming, virtual reality, and the potential impact of the Covid-19 pandemic. They also explored the possibility of individual team subscriptions and the future of 360-degree cameras in stadiums. The conversation concluded with a light-hearted debate on the designated hitter rule in baseball.

Upcoming Show, Accounting Conferences, and Political Speculation

Ed, Ron, and Michael discussed their upcoming show and possible guests, including a suggestion to use 360-degree cameras for recording sports games for VR viewing. They also shared plans to attend accounting conferences and engaged in a wide-ranging conversation about politics and the upcoming election. They speculated about potential vice presidential candidates, expressed concerns about the extremism of the candidates emerging from the primary system, and discussed the potential of Aaron Rodgers and Rand Paul being considered for the position. The conversation concluded with concerns about RFK's views on the role of government in business.

Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode #480: Leveraging Logic, Unleashing Magic — The Art of Subscription

In an engaging email exchange between Ron and Reilly Newman, a Brand Scientist, Reilly shares his insights and challenges while reading the book "Time's Up!" He is particularly interested in applying the subscription business model to his brand creation business but faces difficulties in transitioning from a consultancy approach to a subscription-based service. Through their conversation, they explore creative solutions and strategies, including the idea of offering a "brand transformation program" and incorporating ongoing value into subscription packages. Join Ed and Ron as they discuss these ideas and how they apply to professional firms.

Use these show notes to follow along with the audio:

Segment one

• Reilly Newman helped prompt the idea for this show with an email exchange between him and Ron. He wrote a really beautiful looking book called “Brandy”. Check it out here https://www.amazon.com/Brandy-Wisdom-Attaining-Successful-Brand/dp/B0C9S7Q7Q8 

• Reilly is a brand scientist and Ed thought this was interesting because your brand is not a static thing. It requires a constant investment which is an interesting perspective when thinking about a subscription business.

• Our Verasage colleague Tim Williams (@timwilliamsicg) often talks about the difference between magic and logic. Check this link out: https://www.ignitiongroup.com/propulsion-blog/magicians-logicians-professional-services 

• Hey. Guess what you can do at RateThisPodcast? Yep. You can rate the podcast in 15 seconds RateThisPodcast.com/TSOE

Segment two

• Let’s talk about the smile curve. It’s an important mental model that we have talked about before. Check out the image

• We discussed the smile curve WAAAAAAAAAY back on episode 18 with pricing expert Dr. Reed K. Holden https://www.thesoulofenterprise.com/18 

• “The easier it is to quantify, the less it’s worth.” —Seth Godin

• Did you know we have a Patreon channel available with bonus episodes where everything is commercial free? Yep. https://www.patreon.com/TSOE/posts 

Segment three

• What does your “A” stand for in CAS? Ed and Ron tied this back to leveraging the logic and unleashing the magic in segment three of the show today. 

• Skim, penetration and neutral pricing are an important part of the conversation today. Fortunately, we have an episode on the three — and only three — pricing strategies https://www.thesoulofenterprise.com/128 

• Important point from Ed today: Penetration pricing requires that you are careful about the design of your offering. Strip away the high value stuff so that it can be offered later.

Segment four

• Costco’s theft rate is a fraction of the industry average https://www.barrons.com/articles/costco-has-been-on-a-tear-a-low-rate-of-theft-is-one-reason-51613160503 

• Target Circle 360 is a higher tier membership that is launching in the United States on April 7th https://corporate.target.com/news-features/article/2024/03/target-circle-loyalty-program 

• Astonishingly, full-time employees at The Container Store receive close to 300 hours of paid training in their first year.

Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.

Click the “FANATIC” image to learn more about pricing and member benefits. 

Episode #479: Growth Grief - Guarding against the glitz and glamour of scale

Growth for growth's sake is the ideology of a cancer cell, not a sustainable business. Yet, the myth of growth and market share persists. "Grow market share! You must be scalable!" We are told over and over, and profits will follow. "Horse hockey!" as Col. Sherman T Potter would say. This week Ron and Ed will share their thoughts on why this pernicious myth does far more damage than good especially in the professional service space.

Use these show notes to follow along with the audio:

Growth vs. Scalability: A Debate

Ron and Ed discussed the value of growth and scalability in businesses. They challenged the conventional wisdom that bigger is always better, citing examples of successful companies that chose to stay small. They pointed out that market share does not necessarily lead to profitability, and that growth can be a strategy, not a goal. The discussion was based on their disagreement with the widely held belief that businesses should always aim for growth and scalability.

Small Business Growth Strategy

Ron and Ed discussed the growth strategy of a firm, O'Byrne and Kennedy, and how they successfully reduced their customer base to focus on advisory services. They emphasized the importance of profitability over volume and shared experiences of companies that failed due to unprofitable growth, such as Starbucks. The conversation also highlighted the advantages of staying small, including the ability to pivot, build profit, and avoid bureaucracy. They encouraged listeners to question the growth mindset and consider the benefits of staying small.

Balancing Growth and Personal Life: A Conversation

Ron and Ed discussed the importance of balancing personal life with business growth. They highlighted the potential of "Mompreneurs" and the success of a company that increased prices without losing customers, resulting in a 9x increase in company valuation. Both agreed on prioritizing value over growth for sustainable business practices. They also discussed the success of Dr. Paul Thomas, suggesting that scalability was due to strategic addition of more doctors. However, they also emphasized the potential problems of company growth, including increased complexity and strain on relationships. They ended the conversation discussing the potential issues of over-investing in a company and the potential benefits of constraints driving innovation.

Embracing Constraints for Growth

Ron and Ed discussed a book titled "A Beautiful Constraint," recommended by a guest on their show. They talked about the concept of embracing constraints as opportunities for growth and improvement, using examples from a podcast they listened to and a book they considered. They also mentioned a third party who picked up their show on LinkedIn and a podcast about customer tax.

Small Company Advantages in Tech Era

Ron and Ed discussed the advantages of being in a small company in today's world. Ron emphasized that the benefits of being in a small company are far greater now due to advancements in technology and changes in government regulations. They also highlighted the potential of crowdfunding to generate significant funds. Ed pointed out that technology has made accounting more efficient and accessible for small companies. They both agreed that being a one-person outfit doesn't mean having to be alone and that many small business owners work with a portfolio of people and organizations. They concluded by expressing their opposition to occupational licensing and regulation.

Small Business Advantages and Customer Satisfaction

Ed clarified the author of a previously mentioned book, "Unreasonable Hospitality," and discussed its content. He and Ron had a conversation about the advantages of smaller businesses in customer retention and acquisition, criticizing larger businesses for neglecting retention. They also touched on the importance of measuring customer satisfaction, employee satisfaction, and cash flow. The conversation explored the concept of market share, the lifespan of businesses, and the balance between personal passion and economic viability. The segment concluded with a focus on strategy and not feeling pressure to rapidly scale a business.

Value Creation vs Market Share: Focus on Future Potential

Ed and Ron discussed the importance of value creation over market share for business success. They emphasized the need for businesses to focus on the future potential and innovation rather than just static market share. The conversation also touched on the potential loss of human interaction in technology-dependent businesses and the importance of face-to-face interactions. Towards the end, they discussed the concept of a long-lasting company as exemplified by many Japanese businesses. They also emphasized the importance of pursuing one's passions in business. Furthermore, they announced the upcoming guests for their show, including discussions on private equity in accounting and subscription-based legal services.

Bonus Content is Available As Well

Did you know that each week after our live show, Ron and Ed take to the microphone for a bonus show? Typically, this bonus show is an extension of the live show topic (sometimes even with the same guest) and a few other pieces of news, current events, or things that have caught our attention.

Click the “FANATIC” image to learn more about pricing and member benefits.