Dr. Crosby: People like it.
If you're a little edgy and you're
a little opinionated, and I know
this is what you preach all day,
what's the lesson for asset managers?
Don't be afraid to have an opinion and
don't be afraid to go negative to a point.
Don't be afraid to compare and
contrast your style with the bigs.
Stacy: Hey, my name is Stacy Havener.
I'm obsessed with startups,
stories, and sales.
Storytelling has fueled my
success as a female founder in the
Toughest Boys Club, wall Street.
I've raised over 8 billion that has
led to 30 billion in follow-on assets
for investment boutiques, you could say
against the odd, yeah, understatement.
I share stories of the people behind
the portfolios while teaching you
how to use story to shape outcomes.
It's real talk here.
Money, authenticity, growth,
setbacks, sales and marketing
are all topics we discuss.
Think of this as the capital
raising class you wish you had in
college, mixed with happy hour.
Pull up a seat.
Grab your notebook and get ready to be
inspired and challenged while you learn.
This is the Billion
dollar Backstory podcast.
So a scientist and a storyteller
walk into a podcast studio.
That's how the story goes, right?
Well, that's how it goes here, my friends.
I'm super excited for this four part
miniseries with my B five Bestie.
Dr.
Daniel Crosby, chief Behavioral
Officer at Orion and the host
of Standard Deviations Podcast.
This is not the first time
Daniel and I are teaming up,
but it may be the best yet.
I've been on his podcast, he's
been on mine, and now we are
joining forces because successful
sales is art and science.
It's right brain and left brain.
It's Daniel's unique
ability and it's mine.
Together.
If you want to get good at selling,
you've come to the right place.
I don't know, it's kind of like two
rappers in the studio, freestyling.
At least that's what I'm telling myself.
So stop, collaborate, and listen.
Here we go.
Dr.
Daniel Crosby.
Thank you for coming back to the
Billion Dollar Backstory podcast
studio for something pretty special.
Dr. Crosby: It is pretty special,
and thank you for coming back to
the Standard Deviations Podcast
Studio for something pretty
Stacy: special.
I mean, which therein lies the magic.
Daniel and I came up with this
idea to do a podcast Minis series.
It's basically your two favorite
podcasters, you know, collabing
like rap artists, two of them
Dr. Crosby: cause most
wanted, if you will.
Stacy: Yeah.
In all the ways and the idea.
I'm gonna just kind of
throw this out there.
This was the idea.
Daniel, you can add to it, is that
sales success is a combination of two
things, art and science, left brain,
right brain, and the magic of successful
sales really sits at the corner of.
Narrative and behavioral, and so
obviously your unique authority, Daniel,
is in the science of human behavior,
and mine is in the art of storytelling
and together, well, obviously that's
the collab of awesome sauce that
we have here in front of us today.
Dr. Crosby: That's right,
but what's the name?
What's the name of this
Stacy: class?
Oh, well the name is so good.
Yeah.
We've actually said the name in
other promos of podcasts we've
done together, which is the
scientist and the storyteller.
Dr. Crosby: I love it.
And it takes advantage of,
uh, of a behavioral bias.
It does.
Yeah, it's called the
Rhyme as Reason Effect.
People believe things to be more true
if they rhyme or they're alliterative,
so our alliteration makes people believe
we know what we're talking about.
There you go.
Stacy: Wait, is this why I'm successful
in sales with a background in poetry?
Like did you just have
a major unlock for me?
Like this is now also a therapy
Dr. Crosby: session?
Yeah, no, that's, that's exactly why.
And it's back, I can't remember, but
in the OJ trial, the famous version
of this, Was if the glove doesn't
fit, you must acquit or whatever
it was like, I can't remember if it
does or doesn't fit, but yeah, if the
glove doesn't fit, you must acquit.
And people really do believe when
something rhymes or it has alliteration,
people believe it to be more truthful.
So the science, I mean, this is,
this storyteller is so legit.
Stacy: It's so legit.
Okay, so I'm kind of the host of today's
podcast, if you will, of our miniseries.
You know, I shared this with you in
the green room, which is I've basically
always wanted an opportunity to talk about
my behavioral biases with someone who
knows something about behavioral biases.
And so this is sort of a
dream come true for me.
Who better to talk about
that with than you and.
I've structured my questions
for you, basically in alignment
with the sales funnel.
So the sales funnel being
an inverted triangle.
Top of the funnel, middle of the funnel.
Bottom of the funnel.
And I have three favorite biases I'd like
to ask you about, if that's cool with you?
Of course.
Okay.
Can we start with the mere exposure
Dr. Crosby: effect?
Yeah, so the mere exposure effect
says that we are more likely
to buy or vote for, or select
something if we have heard of it.
Okay.
This is why Coca-Cola advertises, right?
You see an advertisement for Coke, you
know, driving down some country road
and you see some sign for Coca-Cola
and you're like, yeah, I think
we've heard of this before, right?
And you're like, why?
You know, like, why
are they continuing to.
Spend ads on some lonely country road.
I mean, it's mere exposure effect.
You really see this all over the place.
You know, notably, you see this in
politics now I'm gonna try and not
make anyone ang angry, or maybe
I'll just make everyone angry.
But you know, when you
think about how do we.
In the year of our Lord 2024, how
is it that we're going to get Donald
Trump and Joseph r Biden back again?
Like as our choice is most likely.
I mean, we'll see, but it really is
because you've heard of them and.
This is why incumbents have a, a 10%
advantage in elections over a newcomer,
and you almost never see, you almost
never see a political party displaced.
An incumbent, like, again,
I'm trying to spit facts here.
I'm not picking on you.
Yeah, no, it's good.
But like Biden's approval rating right
now is about 38%, and yet the Democrats
probably won't replace him because you've
heard of him and he's an incumbent.
And Trump has, uh, well-documented
litany of problems and legal troubles
and other things, but yet he has.
Spent his whole life plastering his
name on anything that's not nailed down.
And this is why you've heard of him.
And I mean, you know, I stayed in a Trump
hotel once many years ago, and I counted
how many times his name was written in
the, yeah, I think it was 17, right?
So, oh my gosh.
You've heard of him though.
And this is how we confuse
what we know with what's good.
And so the mirror exposure
effect is super, super powerful.
Stacy: So that's fascinating.
So you kind of did two
things there, which is great.
You broke down, what is
it and why does it work?
Mm-hmm.
And so I have a question.
If I try to take the political
example you gave and pull that down
into the investment world, do you
think that same concept applies
with like the bigs and boutiques?
In other words, if BlackRock is like
a household name, Yeah, and here's
this, you know, breakaway manager
who's super talented, whose name no
one knows, is the same effect, right?
Yeah.
Like everybody knows BlackRock.
And now you've got this startup coming
outta nowhere and it's like, who?
Dr. Crosby: Yeah.
So this is where the art and
science comes in a little bit.
Yeah, and I think we can give
some hope to boutique managers.
So I'll talk about a study.
One of the early studies on mirror
exposure effect looked at faces, and
so they would show people faces, you
know, different faces of different
people that were all of sort of
the same relative attractiveness.
And people didn't have a strong
preference for one face over another
until they were shown a face.
Multiple times in a series of faces.
And then over time, they tended
to have a preference for the
face that they had seen before.
Now it's called the mere exposure
effect though, and not the
endless exposure effect because
at about 9 19, 20 exposures, you
started to get sick of that face.
It's like, You like it for a while, right?
Like, so like, you know, up to a point,
yes, exposure, uh, beats the lack of
exposure, but there is a saturation point
and we see this and again, in studies.
And so to kind of make it more
concrete and bring it back to the
BlackRock thing, I mean, BlackRock
has an undeniable advantage.
And you know, the big three, the big
four have an undeniable advantage.
Just by virtue of mere exposure
and versus a completely unknown
and unheralded boutique manager.
But I think where that boutique
manager can have some success.
Mm-hmm.
They need some level of exposure.
They need to get out there Somewhat.
Yeah.
To get their name heard, to have
some name recognition cuz BlackRock
still benefits from the whole, nobody
ever got fired for choosing I B M.
Kind of thing.
But there is a point of saturation.
There is a point where, you know,
familiarity can breed contempt.
And I think that's something
that boutique managers can be
aware of and take advantage of.
Stacy: I love that example.
And do you think the face part
of that study is relevant?
Like the fact that it's an image and not
say a logo, like a face, a human face.
How relevant is that?
Dr. Crosby: Yeah, that's a great question.
Not one I've spent much time
thinking about, but yeah, I think
that the same rules apply though.
Okay.
Cause you see it in studies with faces.
We saw it in studies
with Chinese characters.
You know, they show, they show Chinese
characters to people in Michigan, right?
So people who are not gonna have a
lot of context for Chinese characters,
and again, they show some preference
for the familiar characters and then
at some point they get sick of them.
So I think the same rules
Stacy: apply.
So I love that.
That's super helpful and hopefully inspire
some of our boutiques to kind of take
that step to start building exposure.
This is gonna sound so basic, but
it's important, so I'm gonna say it.
You know, when you call your a prospect
and leave a voicemail message or you
send an email, And you're thinking
about what goes in your subject line,
please don't use your new company
name that no one's ever heard of.
Right?
Because if I send you an email and I say,
you know, whatever my NewCo name update
from NewCo name horrible subject line on
many levels, but nobody knows NewCo name
and so they're not gonna open the email.
You know the name of your new
company, but no one else does.
So if let's say you are a portfolio
manager that maybe has a following, but
you worked somewhere else before, put your
portfolio manager's name in the subject
line because people know that name.
So it's funny how.
Little things on this mere exposure
effect front can make a big difference.
I wanna ask you one more question about
it, and you kind of alluded to this,
but I've had advisors, you know, who are
friends, who will say things like, oh, you
know so-and-so asset management company.
Oh my gosh, that salesperson is
so annoying and it made me think
of what you said about saturation.
Like there's a certain point at
which you gotta back the F off.
Or does it actually tip
into a negative effect?
Dr. Crosby: Oh, it's decidedly negative.
Okay.
It's not neutral, right?
Like it's familiarity up to a point
and then it's negative, right?
Okay.
Then it falls off a cliff.
It falls off a cliff at
that 20 faces, right?
And again, it's like there's
no hard and fast rules.
Because for some people it was as early
as 10 faces, but you know, it was between
10 and 20, but there's at some point,
and so I think salespeople have to just
become adept at reading body language and
other cues and saying, okay, like we're
approaching the 20 faces now, you know?
Yeah.
The other thing, Stacy, I'll say with
your email header advice, which I
think is excellent, is I think there's
something that boutique managers
may need to do, which is gonna be
uncomfortable for some of them, but
it's to court controversy a little bit.
This is a form of mere exposure.
And my favorite example of this
comes from one of the world's great
marketers, uh, PT Barnum, who.
Advertised an inverted horse.
And so he said, look, you gotta come to
my circus cuz I have an inverted horse.
Like it's tails where its head should be
and its head is where his tail should be.
And what this man did is he
tied a rope around its tail,
like he turned the horse around.
And tied the rope around its tail.
Now, people, I'm not saying you should
be scammy, of course, but it is, if
you look across, you know, the best
marketers in the world, they're not
afraid to have an opinion, right?
This is one of those places
where, of course you don't
want too much controversy.
Nobody wants bombast and outrage
from their asset manager, but
you should have an opinion.
Because I think one of the things that's
true of larger and larger institutions
is that, you know, you sort of,
you sort of become neutered in your
ability to talk or, or take a stance.
Compliance kind of gets in the way, and so
to the extent that you can be a contrarian
or be sort of a voice in the wilderness
or, or have a semi controversial hot take,
I think that's something you should share
and put that in your email header line.
Stacy: Love that.
Maybe that should be one of our topics
in this mini series about conviction
and edge and real differentiation
because that topic has come up in
almost every podcast I've done.
People don't necessarily want better.
They're not looking for better.
They're looking for different.
And what an advantage for a boutique,
as you said, to lean into, yeah.
All right, let's move
from top of the funnel.
Mirror exposure in effect.
That was great.
We're, let's move to middle of the funnel
and I wanna talk about another of my
favorite biases, loss aversion bias.
Dr. Crosby: So loss aversion
is our asymmetrical, uh,
weighting with loss versus gain.
So, fancy way of saying we hate losing
more than we, we like winning, right?
So, you know, what do
we do with that though?
I think asset managers know that.
Good and well because they know they
get more calls when the market's down
than when the market's up, right?
Yeah.
They get more screaming
emails when the market's down.
Then they get fruit baskets
when the market's up, right?
I mean, that's kind of how that goes.
But there's actually a way that we
can use that in our sales process,
and I think there's a few ways.
One of the things that we tend not
to do though, is we all grew up with
these, well, hopefully most of us grew
up with nice parents who told us that
if we don't have something nice to
say, we shouldn't say anything at all.
And so when we go in and talk about our
process or our product, we emphasize
upside, upside, upside, and that's fine.
That's part of it.
But people are two and a half times
as moved by not missing out as they
are moved by getting something.
And just as surely as that
pertains to markets, that
pertains to the sales process.
And we need to become comfortable
saying, Hey, I hope you'll do
business with me because if you do.
A, b, c, good thing could accrue to
you, but if you don't, I think you
could miss out on X, Y, Z benefit.
And I'd hate to see you miss out on that.
And that sort of one-two punch is
not, not something I think you see
Stacy: much of.
So that's super interesting because
in my mind, loss aversion bias, like
my example that I think of when I
think of that is after oh eight.
Mm-hmm.
If you had a good year in oh eight,
basically for the next five, maybe even
today, 15 years later, you were marketing
the heck out of that performance.
Mm-hmm.
You were like, in oh eight, the
market did this and my peers
did this, and I was over here.
Our strategy, did you know this over here?
And that to me, So loss in my mind when I
thought of this bias until just now, I was
thinking more around the idea that people
fear losses, meaning capital losses.
Mm-hmm.
More than they want the equivalent gain.
Mm-hmm.
But you just.
Twisted things for me right there,
because let me just say this back
to you because another one of my
favorite things is capacity constraint.
And so what you're saying is that
loss aversion is also sort of fomo.
Like FOMO is is basically
playing on loss aversion.
Is that right?
That's
Dr. Crosby: exactly right.
And you're sort of, there's really
like, if, if we're talking about
it, I think there's almost three
different ways we could take it.
So let's, let's spend a
minute with, with yours.
Okay.
Which is very good, right?
If you have a product that
protects against loss, you should
market that like crazy, right?
And one of the most powerful things
you can do for an investor is
take the worst case off the table.
So my favorite example of this was
from the great financial crisis.
And if you think back, To the gfc.
Nobody's buying new cars, right?
Nobody's making big purchases cuz
everybody felt like they were on thin ice.
So Hyundai comes in, is
having a terrible year.
Hyundai comes in and says, if you
buy a new car from us, And you lose
your job will buy it back full price.
And you think like from a probabilistic
perspective, even during the
financial crisis, what did you have?
Like, you know, eight or
nine, 10% unemployment.
You got a nine and 10 chance
that whoever's buying your
Hyundai is gonna get to keep it.
And you know, some, some
amount of those who lose their
job won't take you up on it.
So you gotta, you know, you got a nine
and 10 chance that people won't use this.
And Hyundai had one of their best
quarters ever during the financial crisis.
By just putting people's minds at ease.
So if your product sort of ticks
that box for people, you should
market that like crazy because
we know that people have multiple
simultaneous risk preferences, right?
They don't wanna be poor, and
they also wanna be really rich.
And so the best, you know,
the best investment product
ticks one of those boxes.
Right, right.
Like, I'm gonna help you shoot
the lights out, or I'm gonna
help you from eating cat food.
Right?
And so if you tick either of those
boxes, you should mark it like crazy.
The second piece though, is
what I talked about, you said it
beautifully marketing, fomo, right?
Tell them what they're getting, but
also tell them what they're missing.
Because what they're missing is
two and a half times more likely to
move them than what they're getting.
Stacy: So wait, I wanna
jump in on both of those.
You said there was a third one,
so I don't Okay, so hold that.
Hold that thought.
Okay.
So on the first one was
my initial thought on it.
And what I wanted to encourage people
to realize is when you gave the
example that your strategy either
helps generate return, Or helps protect
against, like from a risk perspective.
Mm-hmm.
I really want people to hear that.
Yeah.
Because you don't have to be both.
And that goes back to the
idea of being different.
Not better.
A portfolio has more than one thing in it.
No allocator, especially not
an institutional allocator
from a very large firm.
They're not gonna have a portfolio
with like one or two things.
They're gonna have a portfolio
with a whole array of things, a
whole array of funds, a whole,
you know, slew of managers, and
what do they want from that mix.
Differentiated exposures, differentiated
risks, you know, so that the
hole is truly better than the sum
Dr. Crosby: of its parts.
Yeah.
And the sales process gets so much easier
when you can slot into the human psyche.
Yes.
Right?
Like if you're trying to market
some milk toast, middle of the
road, you know, middle of the road
product, there's no part of your
brain that's looking for that.
Like your brain's looking
for safety and sexy, and you
gotta like fit in one of those
Stacy: boxes.
Okay, so that's great.
Mm-hmm.
So, and then on the capacity
constraint, what I wanted to add
there was I think fund managers are,
they sort of are afraid to have.
A limit on how much assets they'll take.
So like for us, when we mostly work with
boutiques and startups and new funds,
and we say, okay, you know, here we
are, day $1 zero, what's the capacity?
And the managers are like laughing.
They're like, uh, it's so silly
to talk about I have no money.
Like, what does it even matter?
And I'm like, no, it matters a lot.
Mm-hmm.
Because, You know, the old kind of
classic example of this was small cap.
So small cap was sort of known and
accepted to be capacity constrained.
Mm-hmm.
And if you were good,
you were gonna close.
Yeah.
And so to your point on the fomo,
we would use that to our advantage.
It's like, look, You know, there
are certain times in my career
where small Cap was a really tough
asset class to find anyone with
capacity and anyone who was good.
So on day $1 zero, you could market that.
I
Dr. Crosby: have a hard time not
giving you a million anecdotes.
So scarcity again, is a form
of this very same thing.
Marketing scarcity is a form of
taking advantage of loss aversion.
There's this amazing anecdote, do
you know the guy, I forget his name.
He has a ponytail and he sells
the like gazelle, strider thing
on that two in the morning.
So isn't it Tony something?
Tony?
It's Tony something.
Of course it's, yeah.
Yeah.
And he's got this wild ponytail
and he is doing this crazy
like elliptical type thing.
Okay?
So early in, he is his career,
he's trying to sell this thing
and he's having no success.
And then they consult with a
behavioral scientist and they're
like, you gotta market scarcity.
Because what they were doing at first
was saying, operators are standing by,
like, if you want one of these elliptical
machines, operators are standing by.
We'll be pleased to take your call.
Well, they tweaked it
to say, give us a call.
Call volume is absolutely crazy.
So like if the phone is busy,
hang up and keep trying until
you get us now on its face.
That is a wild way to mark
something because it's like
you've got this weird contraption.
And you're gonna make it
hard for people to get it.
Yeah.
But effectively what they were
doing was marketing, scarcity,
giving the illusion of scarcity.
And it worked.
It worked like crazy.
They, they had massively improved sales.
So those constraints, first of
all, we know from the research.
That, especially in certain asset classes,
there are real constraints, like mm-hmm.
Smaller funds do better.
So I mean, there's sort of a
practical reason to do that and an
evidence-based reason to do that.
But also just from a marketing and
a sales perspective, it's a great
way to market scarcity and use
this loss aversion to your benefit.
Was that
Stacy: the third?
That's not the third, but wait,
there's another, there's more.
I can't believe all the variations
and flavors of loss aversion.
There's
Dr. Crosby: a lot of
flavors of negativity.
So the next one is negativity bias.
And you of all people
are gonna love this one.
So negativity bias.
Means a couple of things here.
One thing we know is that in the
political sphere and in the ad sphere,
negative like attack ads work, right?
We know that it's dramatically
more powerful to run a piece
attacking your opponent's political
record than it is a piece.
To run a piece with you, you know, hugging
the flag and petting a puppy, right?
Like all of these, we know time and again
that attack ads work, negativity works
because of all the things we talked about.
What's fascinating though is we see
in Amazon reviews, Amazon reviews.
Let's say damn.
Or hell get way more likes and way
more up votes than ones that don't
include sort of mild profanity.
Ones that have like hardcore
profanity and them don't do well.
Right?
Again, there's like this art
and science to it, you know?
You don't wanna be the big, bad
words in there, but people like it.
If you're a little edgy and you're
a little opinionated, and I know
this is what you preach all day,
what's the lesson for asset managers?
Don't be afraid to have an opinion and
don't be afraid to go negative to a point.
Don't be afraid to compare and
contrast your style with the bigs.
Again, don't go full blown like tacky
attack mode, but don't be afraid to
take a stand and don't be afraid to
compare and contrast the way they do it
with the way you do it, because that's
a lot more powerful than just talking
about, Hey, this is why we're great.
Stacy: So that is so brilliant.
Of course.
I wanna kind of plus one on
two things you said there cuz.
Well, I'm sort of, I'm knocking
down the attack ad, which you
just said like, don't attack.
Here's why.
You know why like a lot
of managers will do this.
They'll be meeting with an allocator
and they'll say, oh my gosh, you
invest in that thing's a piece of crap.
And it's like, okay, can
we just pause on that?
Think about what you just said.
Either this allocator or someone on their
team thought that that strategy or fund
was good enough to put in their portfolio.
So by attacking that fund, you've
actually just attacked them.
So just so don't do that.
Right.
Which is the advice that you gave.
But do talk about not what you stand
for, but what you stand against.
Not morally, just what is the thing
or things that your peers do that
you don't do, that you don't think
works that you do differently.
That's such a powerful way to get to
your differentiator and your edge.
When you say like what you stand for, you
can very easily kind of fall into truisms.
When you say what you stand against,
you can really get your edge.
Go ahead.
Dr. Crosby: That's exactly right.
And you know, the psychological term
for that is relative framing the
world writ large, and then the world
of finance in particular is just so
expansive, so large, the decisions
are so multifaceted and difficult.
Sometimes, again, be hard to know
what we're benchmarking against.
Be intentional about your benchmark.
Pick the frame or the competition
that you want, and then frame
the competition on your terms.
Again, don't be ugly, don't be negative.
But don't be afraid to have an opinion, to
take a stand and to use other approaches
as a foil for, for comparing your process.
I love that.
Stacy: There was one other thing I
wanted to say about that, which just
flew right out, so it'll come back to me.
And that was all just loss aversion.
Dr. Crosby: Yeah, that's
all just flavors of loss
Stacy: aversion.
See, behavioral biases are fun.
I
Dr. Crosby: still got more
flavors of me exposure.
Stacy: Well, we could go back to those.
All right, so let's go to,
going back to the funnel.
We just did top of the funnel.
Now we did middle of the funnel.
Now I wanna go to the bottom of the
funnel, which by the way, can be
kind of the most difficult part.
Mm-hmm.
Because now we're talking about
closing and I wanna talk about
status quo bias or inertia.
Dr. Crosby: One of the
truisms about human behavior.
Is that we are what the Nobel Laureates
called cognitive misers, which is
basically just saying we're lazy.
Our brains, uh, account for
two to 3% of our body weight,
but they account for 20 to 25%.
Of the energy that we
expend in a given day.
So we're always looking for ways to kind
of go into cruise control mode, to go into
energy saver mode and to do less, right?
There's also, there's sort of a related
concern that we regret sins of commission
more than sins of omission too.
So if I do nothing and things
don't go well, It feels less
bad than if I make a change.
Mm-hmm.
And things don't go well.
And so that's sort of another current
that you're swimming against and
so you really are up against, you
know, you, you were right to say
this is one of sort of the toughest.
Nuts to crack here.
I'll introduce a framework here
that I think is really useful.
This is from the British Nudge Unit.
The British government had sort of a
behavioral science unit, and they have
this framework for sort of compelling
action that I find super useful.
And it's east, so it's, uh, easy,
attractive, social, and timely.
Right.
So the first thing that you
wanna do to close this deal is
to make it as easy as possible.
I mean, from the paperwork to the
personnel, to the switch to everything you
can do to make that a seamless process.
Never underestimate how lazy
the person sitting across
the desk from you is, right.
You gotta make this.
Wicked.
Wicked.
Easy to speak in the
language of Stacy's people.
That's right.
Yeah.
Attractive.
You've gotta show them
what's in it for them.
Right?
I mean, salespeople have a
very obvious incentive in
making this transaction happen.
The incentive is less obvious perhaps
for the person you're talking to.
So how do you make this
personally meaningful to them?
How is this gonna make them look good?
How is this gonna make them shine?
Social is effectively just like,
what are other people doing?
You know, go back to this idea that
our brains are, are sort of hungry
and lazy, and one of the ways that
we go into cruise control is just
doing what other people are doing.
Right.
So if we can say to a prospect like,
Hey, you know, we met with fund X, Y, Z
across the street, and allocator A, B,
C down the road is doing this, and we're
excited and we hope you're on board too.
You know, looking to other people.
It's why nine outta 10
dentists choose crests.
All this stuff is just social proof.
It's why football players drink this
brand of beer over that brand of beer.
It's because they know people are gonna
see that and base their decision on that.
And then timely is just be
aware of timing factors, right?
Be aware of when you ask how you ask.
Timing is sort of critical
in these matters, and so just
keep that in mind as well.
So make it easy, make it good for
them, make it attractive, make it
social, and give some thought to
the timing as well, and you're gonna
have an easier time making that
Stacy: close.
That is, gosh, again, I go back
to our other podcast where I asked
you, why aren't you in sales?
But if you wanna hear Daniel's
answer, which was very interesting,
you gotta go back to first
Dr. Crosby: podcast.
I immediately regretted that answer.
Go hear it.
Stacy: But it was so good.
It was so good.
Yes.
Okay, so East is a great framework.
I wanna add a little art to that science.
As the storyteller, which is to say the
social proof piece is super powerful.
Mm-hmm.
And it's a great way to have
stories and they're continuous.
So I wanna explain one of the stories in
our framework is called the impact story.
And it's essentially designed to
hit the S in the east framework,
which is the social proof.
And so basically what you do is
anytime you get a new investor,
You have just, you've just received
the gift of a new impact story.
So you write the story of, okay,
who's the investor, not their name.
You can leave the name out.
How large are they?
Maybe, where are they based,
if that's relevant to your
dream client, d n definitely.
What's the problem that they had for
which you are the guide with the solution.
So you kind of tell the whole
story like, you know, we met this.
Billion dollar firm, and here's what their
situation was, and you describe it so that
the person receiving this story is like,
gosh, this sounds a lot like me, right?
I see myself in the story.
I can see myself as
the hero in this story.
So you go from, here's the dream,
the client we helped, here is the
problem, here's the solution, and
you know, here's the end result.
Every time you get a new client,
you have a new impact story.
And what do you do?
You pick up the phone and you
call everyone on your funnel
and you tell this impact story.
And this is part of our sales process.
Why do we do this?
Because, a, it works from the science
side, and B, this is information that
a prospect cannot get anywhere else.
They can't go to mornings.
Star and say, tell me about the
new investors that this fund
has just, you know, received.
So it's information that they
can't get from anyone but you.
What a great way to use
Dr. Crosby: storytelling.
I'm gonna not tell the story again.
I'm gonna send people back to our podcast.
Yeah.
But we talked about some research out of
Princeton about how telling stories in
the way that Stacy's just talked about
quite literally sinks to people's brains.
Oh, that's, go back and check out.
Stacy: Yeah, that's great research.
So I wanna just see if
there's anything else.
You know, I think the challenge, and
I don't know if you'd have anything to
add to this, but when I really think
about status quo and inertia, I guess
this probably is more relevant when
it's a larger sort of more enterprise
type of sale, where you have many
stakeholders and so you have a champion.
So let's say Daniel's our
champion and Daniel is bought in.
To using us as the new solution.
The challenge though, is that Daniel,
as the champion, has to go and convince
everybody else at his firm on his
ic, whatever, his boss, other people
that weigh in on this decision that
it's worth it to make the change.
It's worth the effort.
It's worth all the
clients they have to call.
It's worth it, and that's
really challenging.
And so I wonder if you have
multiple layers to a sale from
the science perspective, how
can you arm that champion?
Is it through story, like maybe
it's more of an art thing?
I mean, how do you give the champion?
How can you control that when
you're really at an arm's length?
Yeah,
Dr. Crosby: I just think you have to arm
that champion with things that actually.
Move the needle.
Right.
So I can't resist one more anecdote.
Yeah.
So if we go back to 2003,
the the Iraq War, right?
So we're, uh, we have our soldiers
out in Iraq and they're looking
for Saddam Hussein, right?
And they're looking for Saddam Hussein
and all sort of his lieutenants.
And so they had a couple of problems.
So first of all, they had
like 50 something guys.
They were, were trying to nab.
Well, how were they gonna get the
boots on the ground soldiers to
know what these 50 guys look like?
Secondarily, you have a lot of
American soldiers who are unfamiliar
with Iraqi names, and so they were
like having a hard time connecting
faces with names and all this.
And so the original idea was, We're
gonna publish a white paper, right?
Like we're gonna publish a big
sort of intelligence document and
we're gonna hand it out to all the
soldiers and they're gonna read it,
and then they'll be on the lookout.
Well, we know how white papers
get consumed, don't we, Stacy?
They don't get consumed, right?
And so what they did instead, Was
they put the faces of these badies
on a deck of cards and they handed
this deck of cards out to, to all of
these soldiers, uh, throughout Iraq.
Now they caught, so Saddam was
the A of clubs and his sons were
the other ACEs, and then it was
kind of on down through that.
They caught all but six.
Of the cards and when they caught them,
they didn't have to know their name.
They would say, Hey, we've got
the Jack of Diamonds, or whatever.
Right?
Because oh my gosh, they had
seen these people through, again,
the mirror exposure effect.
The Army had armed them with a tool that
they would use already when they were
sitting around the barracks playing cards.
And so what does this have
to do with the champion?
I think a lot of times we arm our
champions with the lames stuff, right?
Some lengthy, esoteric white paper
that no one's ever gonna read.
You know, some talking points
that are indistinguishable from
other talking points and opinion.
That's as vanilla as can be.
Like we need to arm them with things
that are gonna move the needle, that are
gonna be consumed and that are relevant,
that are relevant, differentiated, and
sort of pertinent to the people's lives
they're trying to influence because.
The world doesn't need
another white paper.
And I thought that was
a brilliant example.
A brilliant example of how
they met him, where they were.
That
Stacy: is unreal.
That anecdote.
So I'm gonna tell a story.
See now this is what happens
when we get on the phone.
We just start trading stories.
Yeah.
And I don't know if people probably
couldn't see that, but I just like
threw my arms in the air like I was
raising the roof when you said that
we are the people with like the worst.
Material.
And it's so true.
And I think part of that is
because we tell ourselves a story
about what the real problem is.
And I wanna explain what I mean
by that because I have an example
in my back pocket, which is there
was a, an advisor who has a very
large allocation with a boutique.
Not only is the allocation
large, it's also a large
percentage of that funds a u m.
Now, normally, Allocators are very
thoughtful about this because they don't
wanna get themselves in this situation.
But what happened here is the fund
is not doing well, and so people are
redeeming, which has left this allocator
with a high percentage of total assets.
Now, they're also, by the way, not
in love with this fund anymore.
Because obviously, I mean, people
are redeeming for a reason, so
they know that there is a better
option out there for them.
They know there's a better solution.
The real problem in this scenario is
not that they need to be convinced
that there's a better solution.
The real problem, and it came out in
little tidbits here and there, is that the
founder of the firm, that's the allocator
and the fund manager have become friends.
Hmm.
Right, and the allocator doesn't actually
wanna pick up the phone and tell this
fund manager that they're redeeming.
And so that's actually the real problem.
That's the real thing that's in the way.
It's not that there's a better
fund there, already know that.
Right?
So I mean, isn't that amazing?
And you would miss that because
you're telling yourself a story.
I.
That.
Why is this allocator in this, you
know, fund that no one wants anymore?
Why the heck won't they invest in ours?
And the real reason is people do business
with people and this person feels bad.
They feel bad.
Dr. Crosby: Great example.
You gotta solve the right problem, right?
Stacy: You gotta solve the right problem.
And I think part of it is
acknowledging that that's a
really hard situation to be in.
It also tells you behavior, at
least to me, I'm not a scientist,
the, that what's important to this
allocator is the relationship between
the founder and the fund manager.
So if you can become friends
with this allocator mm-hmm.
You're probably tapping
into something there.
This is fun.
I love our miniseries already
and this is only episode one.
In closing, I have
three questions for you.
I'm not gonna do PRUs questionnaire,
which also was a very hilarious, I had
to change my questions actually after
that first, cuz you were the first guest.
Dr. Crosby: I changed the question.
I ruined it for everyone.
Stacy: Yeah, well, you kind of,
uh, again, if you wanna hear
those, you gotta go to episode one.
Okay.
So, in closing, if people wanna
dive in on more of this behavioral
magic, the science piece, what
book of yours should they read?
Because this is, I mean, again,
this is your unique authority.
Dr. Crosby: Yeah, so the book of mine
I'd recommend is The Behavioral Investor.
If you're interested in these things
in the Behavioral investor, I take the
universe of sort of biases and break
it down into the four primary biases.
All the ones we talked about
today would fall under what
I call conservatism in there.
So yeah, go check that out.
You'll see a lot of this stuff in there.
Stacy: It's my fave of
your book, so that's great.
What about a book that you have not
written, so someone else's book?
If people wanted to geek out
on behavioral, what would you
Dr. Crosby: recommend?
Rory Sutherland is a behavioral
marketing genius, par excellence, and
his book Alchemy is just fantastic.
It is such an engaging read, and
Rory is like the funniest speaker.
He's got some great TED Talks,
so go look up his TED Talks.
You'll be dying, laughing and
learning a lot at the same time.
Stacy: Okay, that's perfect.
What a great place to end.
I have not read this book,
so I'm adding it to my list.
That's good.
Daniel, thank you for being here and I
can't wait to see what we do for episode
Dr. Crosby: two.
I'm excited.
Thanks so much.
Stacy: This podcast is for informational
purposes only and should not be relied
upon as a basis for investment decisions.
The information is not an offer,
solicitation, or recommendation of any
of the funds, services, or products,
or to adopt any investment strategy.
Investment values may fluctuate
and past performance is not a
guide to future performance.
All opinions expressed by guests
on the show are solely their own
opinion and do not necessarily
reflect those at their firm.
Manager's appearance on the show does
not constitute an endorsement by Stacy
Havener or Haven or Capital Partners.