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Pat Weaver, you have not heard of him (maybe his daughter). But if you are a small business and have ever run an ad on TV or Radio you have him to thank. Pat created a new business model that changed everything. He did this by looking outside his industry and learning from others. And this ain’t science fiction. That’s a clue by the way.

David Young:

Steven, you wanted to tell the story of Pat Weaver today. Tell me about Pat Weaver.

Stephen Semple:

Well, we’re going to take a little departure because Pat Weaver’s not a business and Pat Weaver was not an entrepreneur. But the interesting thing is, sometimes people come along, even inside corporate environments, where they change entire industries and build new business models. And there’s something to be learned from those insights. So, Pat Weaver worked at one of the big advertising agencies. He worked at Y&R, Young & Rubicam. And in 1949, he headed over to NBC. So you got to remember, in 1949, that was the very, very, very early days of television.

David Young:

Yeah.

Stephen Semple:

Yeah, like the really early days of television. And how television used to operate back in those days was they used the model that radio ran on (which is even the model that radio doesn’t even use anymore). But they looked at themselves as, “Well, we’re a broadcast media, so we’re like radio, so we’re going to operate like radio,” and how that happened was the advertising agencies would actually create a show.

So the agencies created a show then went out and found a sponsor for the show. So you create the show, and then you would go out to Ivory Soap. You’d go, “This is a great show for Ivory Soap,” and Ivory Soap would say, “Great, we’re going to sponsor it.” Then you would go to the television station, or the radio station, and go, “Here’s money to broadcast the show. Here’s when we want the show broadcast.”

So the television station was, “Great. We just make money for broadcasting this,” and this is how the whole thing worked. It became a hot mess in a lot of ways because the most popular shows weren’t airing in primetime. What aired in primetime is who had the biggest bag of cash.

David Young:

Right.

Stephen Semple:

Right? The biggest bag of cash ends up going on at primetime. And then the other problem with it is only big advertisers could afford to do this. All the little guys were all shut out of radio. We’re all shut out of television because you had to be able to sponsor the creation of a show.

David Young:

And they’re blocking out entire blocks of time. Right? There are not two or three spot breaks in a half-hour show, all of a sudden it’s the Ivory Soap hour or half-hour. And that’s it.

Stephen Semple:

And that’s the reason why I picked that one, is that’s why they call them soap operas.

David Young:

Right!

Stephen Semple:

These shows were created and were all sponsored by soap companies. So that’s why they’re referred to as soap operas. But the thing that’s crazy about it is, you think about… There’s no recording, no PVRs, no VCRs, none of that stuff. And the most popular show might be being shown at one o’clock in the afternoon because the sponsor for that show doesn’t have a lot of bucks.

David Young:

So what did Pat Weaver do?

Stephen Semple:

So what Pat Weaver did is something we often talk about doing, it’s looking to other industries for what they’ve done. And what he looked at is he looked at the magazine industry.

David Young:

Okay.

Stephen Semple:

When a magazine gets printed, it’s not sponsored by a single advertiser. There are pages through the magazine that each advertiser gets, and magazines had a much broader advertising base because they’re also able to appeal to smaller businesses. They could do local publications with local advertisers. So he looked at the magazine business and he went, “Huh! I think television should be run more like a magazine.”

So what they started to do — and think about it this is a high-risk play — because up until this point, there was no risk, no content risks to the television company. The advertising agency created the content and found the sponsor. So all of a sudden, they said, “No, we’re going to start creating content.”

David Young:

Got you.

Stephen Semple:

So what they started to do was what magazines do: create content. Create the content and then sell. He could break it into little 30-second slots, right?

David Young:

Yeah.

Stephen Semple:

And make the price lower and broaden who his customer base was. And all of a sudden that was how we started to run television. And it was so powerful that guess what? The radio suddenly looked over at television and went, “Well, geez, we’ve got to do it the way television does it.”

And it’s how all television was being done up until Netflix and all this other stuff coming along. But for 50 years that was the model. Create content, sell advertisings to different advertisers. And guess what? Pat Weaver is in the Television Hall of Fame for changing the model of that business. And he did it by looking somewhere else. He did it by looking at magazines.

David Young:

We call it business topology mapping, problem topology mapping, right? Who solved this problem before and what are the common characteristics, the shape of the problem, if you will.

Stephen Semple:

Yeah.

David Young:

It’s funny that nobody before him figured that out by looking at magazines. Advertising was a part of radio and television from the start, but they just didn’t figure that out. And it may be a factor too, of breaking it into the smaller pieces. In the early days they didn’t have a way to record commercials or shows for that matter.

Stephen Semple:

Right.

David Young:

Right? You could Cinescope, like you could show the film on TV by pointing a camera at a film projector, that sort of a thing, but videotape didn’t exist. And so, all those commercials, the Ivory Soap and Westinghouse and the appliances, they were all done live by the actors on the show.

Stephen Semple:

I know it’s incredible when you think about that. But there was probably a bunch of technological reasons and there were business reasons. Look, it’s an easier business when you’re not running the risk on the content with the hope of selling the advertising space. But what he recognized was the power dynamic. The television station was constantly at the whim of the advertising agencies.

And what he figured out was, if I can create a show that attracts lots of eyeballs, I can sell the advertising. And that giggle has been repeated over and over again. Google figured out if we can create a search engine that attracts a lot of eyeballs, I can charge for advertising.

David Young:

Yeah.

Stephen Semple:

But who now is in the driver’s seat is the person who’s attracting the eyeballs. Which then allowed NBC to start charging premium prices and all these other things, because they were in the driver’s seat, controlling the eyeballs.

David Young:

The smart local television stations took it a step further because most of their programming then was coming from networks that were using this model. And that’s why a lot of TV stations, if they’re smart, right, they’re doing four or five local newscasts a day because they don’t have to give up that network inventory to the network, which is selling these in-show ads. And the stations don’t necessarily get a great deal of that. So if you produce a local newscast, it might be expensive to produce, but you get to keep all the money from all the ads.

Stephen Semple:

Yeah.

David Young:

So what’s the lesson here for a small business owner that’s trying to build an empire?

Stephen Semple:

The lesson here is that the person who attracts the customer is the person who has the power. So we think about what Pat Weaver recognized when he stepped in was, the advertising agencies had the power because they controlled the content. He then said, “I’m going to take control of the content because the content is what attracts the customer. That gives me the power.”

Today, if you are in the hotel industry and you’re relying on Expedia, or if you’re renting your home and you’re relying on Airbnb, or you’re a home services business, and you’re relying on HomeStars-

David Young:

Or Angie’s List, or all the aggregators.

Stephen Semple:

… or all the aggregators, who’s got the power? They have the power. They can cut you off, they can increase the price. They can do all of those things. Abdicating being the one that is doing the attraction of people puts you in a weak position in terms of being able to control your destiny.

David Young:

All right, well, that’s a great lesson. And I think-

Stephen Semple:

Hey and for people who recognized the name Weaver, he had a pretty smart daughter as well. Pat Weaver is Sigourney Weaver’s dad.

David Young:

Oh, how cool.

Stephen Semple:

So I thought that that was kind of fun because I remember reading the name Weaver and going Weaver, Weaver, television, why does that ring a bell for me?

David Young:

Very cool, indeed. And of course, if you own a brand like that, that’s trying to get away from those aggregators, trying to get away from the people that are controlling the access to you, hook us up, connect with us. And let’s talk about that and talk about some of the ways that you can get out of that kind of rat race.

Stephen Semple:

Absolutely.

David Young:

Thanks for listening to the podcast. Please share us. Subscribe on your favorite podcast app and leave us a big, fat, juicy five-star rating and review at Apple Podcasts. And if you’d like to schedule your own 90 minute Empire Building session, you can do it at empirebuildingprogram.com.

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