Interlude - Index of

The Stupidest Business Plan
Hypergrowth | 77
The basic argument of the Stupidest Business Plan goes like this:
“Coca-Cola sells $30 billion a year. If I could convince 1 percent of
those people to buy my product, Koka-Kola, that would be $300 million.
That’s a major company!”
It sounds good at first but ignores the question of how to get 1 percent
of Coke’s shelf space or customers. Why would happy Coke customers
switch? Targeting an entire giant market makes no sense. You should
either target an unhappy subset, or a group that isn’t buying at all. That’s
the dollar figure to talk about.
Ben & Jerry’s did this in the ice cream market. They didn’t try to
grab 1 percent with an identical product. Within the niche of especially
rich and tasty ice creams, they found a subniche that was willing to
pay more for ice cream made by a company with high social values.
Identifying a tiny new niche is better than trying to take on a giant
market with a me-too product.
The rules are different for the market share leader. In a meeting
with Coca-Cola, I asked how they can possibly expand, given that every
store, cafeteria, and break room already has a Coke machine. The
response: “Our CEO says our mission is not complete until every sink
on the planet has Hot, Cold, and Coke.”
hire well in advance, because new people can take six months
or more to get fully up to speed. To double revenue, you double
the sales force. We operated like this for seven years in a
row. The problem is, when the end arrives, you will almost
certainly overshoot. Slowing too soon is dangerous, so you just
keep going. Thud.
We survived the crash because a few years earlier we had
begun selling to several new market areas, like banks, telephone
companies, and the federal government. To recover, we