Fred Wilson tells a story about an early job he had with a venture capitalist named Bliss McCrum. McCrum had a favorite expression he would use whenever a company’s stock price was falling and it drove Wilson crazy. McCrum would explain the drop as, “more sellers than buyers,” and nothing else. In time, Wilson realized the wisdom of that phrase. It applies to us too – and well beyond the daily chaos of stock prices.
At the time, Wilson got frustrated because he had more questions. “Did the company post weak earnings? Did a competitor enter their market? Was the CFO fired?” Whatever he asked, all he heard was, “more sellers than buyers.” There had to be more to it.
What makes the expression more than just a cop-out, is that it sheds light on the reality of the market’s structure. In any market we have two key elements:
1. The thing being bought and sold
2. The people doing the buying and selling
Whether its shares of a trillion dollar company on the NYSE or Beanie Babies on eBay, any person can look at the underlying thing and assess its worth. The difficulty arises when we try to act on it. If we want to buy at a certain price, we’ll also need a seller at our price. We can want our favorite stuff to be on sale for a penny all we want, but (most of the time) the market itself is going to say “no.” Our subjective opinion doesn’t exist in a vacuum.
If there are more sellers than buyers, their collective opinions are going to drive the price lower. Conversely, if there are more buyers than sellers, the price is going to go up. McCrum understood the questions Wilson was asking and that they mattered, but he also understood that the current market dynamic was deciding the price on the day.
We can apply the same logic to thinking of how we market (“sell”) our services. Beyond whatever we think we’re worth lies the actual market structure. Who are the buyers? What do they want? What do they need? How we get into a position where we are in front of competing buyers and not competing sellers?
Understanding markets is the key to understanding marketing. McCrum got it. When we think about who our clients and prospects are, how they’re engaging with our services, and when we’ll be seen in various ways, we can think about which markets we do and don’t want to be active in.
From there, as the old trader proverb (ought to) say, “May you always find more buyers than sellers.”