Authors: Chris Guillebeau
The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future (12 page)
*
The specific pricing model that Brandon chose for his business is an important factor in its profitability. We’ll look at pricing and how it relates to overall income in
Chapters 10
and
11
.
†
Bernard, the “Spreadsheet King,” is a different guy from Purna, “Mr. Spreadsheet.” Lesson: At least in the world of spreadsheets, there’s always room for one more.
‡
One frequently cited example is Barry Eisler, who turned down a $500,000 offer for one of his books. However, he has a sizable following and an established track record that new authors lack.
§
Technically, there was no English-language manual; more than a dozen books or guides on Evernote already existed in Japan. This suggested the strong marketability of the project
and
revealed a gap in the English-language marketplace that Brett was able to fill.
IN COMMON, BUT IT HAS NOTHING TO DO
WITH OLD-SCHOOL CATEGORIES
.
“Business opportunities are like buses;
there’s always another one coming.”
—RICHARD BRANSON
T
he frequent references to customers and clients lead to a good question: Who are they? And just as important,
where
are they and how do you find them? As you consider these questions, it may help to fit your ideal customers into traditional demographics—things such as age, gender, income—or it may not.
While I was writing my first book, different people in the publishing industry asked me about the “target market” for the community that was rapidly growing. I’d been in business for a while, so I knew what they meant, but I couldn’t figure out how to explain the diverse group of people who read my blog. We had artists, travelers, high school students trying to decide whether to go to college or strike out on their own, retired people making plans for a new chapter in their lives, and everyone in between. There were a number of entrepreneurs and self-employed folks but also a lot of people in traditional jobs. The gender ratio was split almost evenly between men and women.
Finally, I realized that the target market had nothing to do with demographics in a traditional sense—the group simply consisted
of people from all backgrounds who wanted to live unconventional, remarkable lives. They were “pro-change” and interested in pursuing a big dream while also making the world a better place for others. In other words, I didn’t have to segment or label them according to irrelevant categories.
You may not want to be a writer, but as you explore different possibilities on the road to freedom and value, it helps to think clearly about the people you plan to serve. There are now at least two ways to group them together.
| Traditional Demographics: | | New Demographics: |
| Age, Location, Sex/Gender, | | Interests, Passions, Skills, |
| Race/Ethnicity, Income | | Beliefs, Values * |
In Arcata, California, the husband and wife team of Mark Ritz and Charlie Jordan own the Kinetic Koffee Company. KKC is a gourmet “microroaster” that makes great coffee … but these days there is no shortage of great coffee, so they needed something more. KKC found its legs and became profitable by targeting a specific group: cyclists, skiers, backpackers, and “pretty much anyone who enjoys the outdoor lifestyle.” By focusing on enthusiasts, they immediately set KKC apart in a crowded market.
Mark and Charlie’s connection to the outdoors is natural. Before starting the business, Mark had spent most of his career working in the cycling industry. Charlie was vice president of a kayak company, and both of them were active in the local racing and recreational communities. They were also coffee addicts, so combining the two passions seemed like the right approach. “We weren’t the first coffee company to target the cycling market,” Mark told me, “but we
were the first to look at the market from the perspective of the bicycle shops and outdoor dealers. We have now outlived a number of better-financed companies who have since left the market.”
Outdoor enthusiasts are KKC’s people, but to reach them, Mark and Charlie work with bicycle shops and outdoor stores. Maintaining good relationships with the distributors ensures access to almost every store in the country, and Mark complements this strategy by visiting trade shows and consumer events. Donating 10 percent of profits to outdoor causes every year, KKC is a low-six-figure business.
The Internet has made it much easier to connect with people through shared values and ideals, but it’s not strictly an online phenomenon. More than thirty years ago, long before Facebook, a band with an underground following figured this out. Here’s what Jerry Garcia said about the Grateful Dead’s followers:
There’s a lot of that stuff with people bringing their kids, kids bringing their parents, people bringing their grandparents—it’s gotten to be really stretched out now. It was never my intention to say, this is the demographics of our audience. It just happened.
Tom Bihn, a bag manufacturer from Seattle, Washington, gives us a similar idea: “We’re consistently and pleasantly surprised by the diversity of our customers. People have a natural desire to categorize and quantify, but we’ve always felt doing so with our customers would be pointless. They’re students, artists, businesspeople, teachers, scientists, programmers, photographers, parents, designers, farmers, and philanthropists.” (Read more of Tom’s story in
Chapter 13
.)
A busy working mother from Hudson, Ohio, Kris Murray saw an opportunity in helping child care providers run their businesses more effectively. For years she dutifully worked at building relationships one by one with day-care centers, only to get frustrated with their low prices and lack of interest in developing the business.
Despite the challenges, Kris knew it could be a good business. Families will always need child care, and child care providers are usually more focused on providing quality service than on managing the business side of things. How could Kris break through with a successful offer, and how could she boost her income as she served her clients? The early days were discouraging. She was exhausted, overwhelmed, and ready to quit.
Then something changed. First, she streamlined her services, making them more oriented to what her clients clearly wanted—she learned to give them the fish. But the second change was also important. In Kris’s words, she found a way to “change the WHO”: the clients she worked with. Many day-care centers were microbusinesses themselves, run by one or two people. Although these centers may provide good child care, they tend to be wary of investing in services and therefore aren’t the best fit for Kris’s consulting practice.
Pivoting to a more desirable market, Kris created a new division of products and services targeted to multilocation center owners. These owners had a much larger investment in their businesses and could afford to pay more for marketing help. The change made a huge difference on the bottom line. Kris went from “doing OK” to making more than $20,000 a month. In the early days, she tried to sell something that her clients weren’t ready for. She fixed the problem by changing two things: what she offered and to whom she offered it.
Disaster and Recovery:
CULTURE SHOCK EDITION
Ridlon Kiphart, AKA Sharkman, has one of those jobs everyone envies—he’s a self-titled CAO, or chief adventure officer, of a small company called Live Adventurously. After previous career stints as a trapeze artist, divemaster, charity founder, and “watersports dude” on a cruise ship, he now runs his own show, hosting trips to exotic locations. I asked Sharkman about his greatest challenge in the new business, and here’s how he tells the story of a misadventure in the South Pacific.
The best and worst days were the same day. We had finished the first half of the first trip in Fiji, and the guests were raving. We returned from a day spent diving turquoise waters to find a long white linen-draped dinner table sitting on the sand at water’s edge. It was surrounded by tiki torches and set beautifully. With the sun setting and island music playing in the warm air, we gathered with our friends for one of the most spectacular dinners in history … right up until the phone call came in
.
The experience was like listening to a beautiful song and then abruptly hearing the needle from the record player rip across the album. The news was that the paramount chief from the neighboring island we had planned to visit the next day had died, and the mourning ritual required that everything be shut down for the next 100 (!) nights. We had nine exultant guests and nowhere to go
.
This was when doing our research earlier and really knowing the area paid off. We managed to extend our stay where we were by one night and spent the time feverishly cobbling together plans. We chartered an aircraft (dubbed the flying coffin for self-explanatory reasons); contacted numerous hotels, resorts, and dive operators; got recommendations; did some more research; and booked the group into a newly opened property on a remote island. The transition went smoothly, the entire rest of the
trip came off without a hitch, and it was as if it had been planned that way the entire time
.
In the end, the resort we were originally booked into kept half our money despite being in breach of contract. Their attitude was if you want us, you’ll have to come and get us. That showed us how worthless contracts can be overseas. Our guests rallied to us and offered to pay the additional money, but we declined and ate the loss. It wasn’t our guests’ fault, and they shouldn’t have to pay. It was a hell of a way to start a new business—taking a big financial hit—but it was the right thing to do. That’s the way we’ve chosen to operate, and I believe it always pays off
.
How can you follow in the footsteps of Tom Bihn, the Kinetic Koffee Company, Kris Murray, and even the Grateful Dead?
Strategy 1: Latch on to a Popular Hobby, Passion, or Craze
Popular diet plans come and go, but a few of them stick around. The Paleo diet, which encourages its followers to eat a lot of some things (meat and uncooked vegetables) and very little or none of other things (grains, dairy, sugars, etc.) looks like it’s here to stay. Like all strict diets, Paleo attracts a passionate following in addition to a passionate group on the other side that questions its scientific basis. Situations like these—an industry or movement with lots of lovers and haters—always present a good business opportunity.
Enter Jason Glaspey, who had adopted the lifestyle after reading
The Paleo Diet
, a popular manual for Paleo followers. Jason noticed a big difficulty with trying to follow the diet: It was complicated. “Eat natural food and avoid grains” sounds simple enough, but adhering to the whole diet requires a fair amount of ongoing planning. This is another sign of a good business opportunity: when lots of people
are interested in something but have a hard time implementing it in their daily lives.
Jason got to work creating a solution. He understood that the demographics for hardcore Paleo followers were more male than female and tended to fall in the age range of twenty-five to thirty-five. More important, however, Jason noticed that people of various backgrounds were attracted to the Paleo lifestyle but weren’t sure they could devote much of their time to planning for it. Thus the opportunity: Provide a comprehensive resource that “gave them the fish” (no pun intended, although Paleo followers do eat a lot of fish) by telling them exactly what to buy, cook, and eat each week. Jason started Paleo Plan, a one-man business, in three weeks with $1,500. Within a year, the business grew to earn recurring income of more than $6,000 a month, requiring a grand total of two hours’ work to update the site each week.
Strategy 2: Sell What People Buy (and Ask Them If You’re Not Sure)
As you focus on getting to know “your people,” keep this important principle in mind: Most of us like to buy, but we don’t like to be sold. Old-school marketing is based on
persuasion
; new marketing is based on
invitation
. With persuasion marketing, you’re trying to convince people of something, whether it’s the need for your service in general or why your particular offering is better than the competition’s. A persuasion marketer is like a door-to-door vacuum cleaner salesman: If he knocks on enough doors, he might eventually sell a vacuum cleaner … but at great personal cost and much rejection.