Niche Down

by Christopher Lochhead

  He developed a point of view (POV) that spoke to those people and then went about creating an aggressive, zany and fun marketing around the niche he wanted to own.

  His tagline, “Call Tim Rhode and start packing.”

  A brilliant “niche down.”

  Tim focused on solving a different problem and promoted himself using that POV.

  He was NOT the real-estate agent for everyone and anyone who wants to buy or sell a house.

  He was not the guy who would set asking prices artificially high to stroke the ego of a seller. In fact, he regularly turned away clients who wanted to play that game, referring them to other real estate professionals in his community.

  Instead, Tim became the agent for people who wanted to sell their house now. He solved one, focused, different, specialized problem: selling a house fast.

  And he made it his life’s mission to find eager sellers. “I’d call you about every three months. If your home expired, if it was withdrawn, if you were ‘For sale by owner,’ I’d go out and drive neighborhoods and look for homes that looked like they needed love,” Rhode recalled on the Legends & Losers podcast. “If the neighbors were out there I’d say, ‘Hey, what’s going on with this home?’ I was just really fanatical. I was like a drug addict looking for their next fix: How can I list the next home?”

  Tim was a category designer on a mission with a provocative and engaging POV. That’s how he got known for a niche he owned.

  That may sound like a very simple, personal category design (and we’d argue that it is). But executing a simple, powerful niche down made Tim a Top 10 salesperson in the United States for his company.

  He sold real estate for 18 years and closed more than 2,500 contracts during that period. Not bad for a self-described “hick from the sticks” who used to paint address numbers on curbs to make ends meet.

  Today, Tim shares many of the business and life strategies he used to achieve success through a non-profit organization called 1LifeFullyLived, which focuses on personal development, and GoBundance, which you can think of as a support group aka “master mind” for successful men. (Tim calls it a “tribe for healthy, wealthy, generous men who choose to lead epic lives.”)

  “Both groups started the same way, slowly [and] organically,” Tim told Christopher on the podcast. “We set the culture early on in both groups, and it’s just grown. … We’ve never really advertised for either of these ventures. … It’s all just word of mouth. People that come in know we’re no bullshit, we really care about humanity, and we really want to make a difference.”

  To summarize: The best way to design a category and make yourself its king or queen is to find a problem, articulate it powerfully and make sure others see the solution as you see it.

  So the key question you must consider is, “What problem do I solve?”

  Read on to learn how your unique answer will shape your niche — in life and business.

  * * *

  15Legends & Losers, “Tom Szaky – Garbage Innovation,” June 22, 2018.

  16GreenBiz.com, “TerraCycle: Eliminating the idea of waste by recycling everything,” Feb. 16, 2018.

  17Storytelling for Entrepreneurs, “Getting to ‘Aha’ — Jen Groover and the Moment that Led to the Butler Bag,” April 24, 2016.

  18Mashable, “18 Quirky, Niche Businesses,” June 6, 2014.

  19Small Business Trends, “Startup Statistics: The Numbers You Need to Know,” May 1, 2016.

  20“Our History,” GOJO Industries corporate web site.

  21Akron Beacon Journal, “Purell brand handed back to Akron’s GOJO,” Oct. 30, 2010.

  22AdWeek, “How Purell Became the Brand That’s Kept Our Flu-Obsessed Fears at Bay,” March 29, 2016.

  23The New Yorker, “Hands Across America,” March 4, 2013.

  24The New Yorker, “Hands Across America,” March 4, 2013.

  25Forbes, “America’s Richest Self-Made Women.”

  26James Altucher, “How To Get a Billion-Dollar Idea,” February 2017.

  27Legends & Losers, “How Tim Rhode Became a Category King and Started Two Life-Changing Organizations,” Feb. 28, 2017.

  3.

  BE KNOWN FOR ONE THING YOU CAN OWN

  “Those who follow the crowd usually get lost in it.”

  — Rick Warren, legendary evangelical pastor and author of “The Purpose Driven Life”

  Calculate Your Unique “Magic Triangle”

  One of the biggest, most boneheaded mistakes we encounter in the business world is the belief that the best product wins.

  Build it and they will come. My widget is better than your widget. We’ve actually heard CEOs say, “We make shit, we sell shit, and everything else is bullshit.”

  We thinks they doth protest too much.

  Frankly, that sort of thinking is for followers, not leaders. If you and your company don’t stand for something unique, you are dooming yourself to mediocrity, no matter how great your product is, or how cool your company culture.

  Legendary success requires that you design a great company and a great product and a unique category. We refer to this winning triad as the “Magic Triangle,” as first introduced in “Play Bigger.”

  What does this look like? We’re glad you asked. And, voila!

  Each side of a Magic Triangle bears equal weight in the formula for success, but many entrepreneurs spend the bulk of their time obsessing over just two ingredients: business model (aka company design) and what they plan to sell (aka product design).

  Those inputs are definitely crucial elements of success, but focusing on them without thinking long and hard through the category design is an exercise in frustration that makes for a lopsided strategy. It’s a strategy that won’t stand up for very long under market pressure.

  You can hustle all you want, but if you’re hustling to position yourself in a category that already exists, you’ll find yourself on one of those endless hamster-exercise wheels — running at full speed without really getting anywhere.

  You aren’t defining the conversation. You’re playing by someone else’s rules — rules that could change midcourse.

  Your business may become profitable (and there’s nothing wrong with that!), but it won’t ever become truly extraordinary.

  That’s why the foundation for niching down needs to be category design — with you as chief designer, coming up with the right math for your own unique Magic Triangle.

  When the right product and right company connect to a powerful category, it can catalyze legendary entrepreneurship — both for individuals and companies.

  How can you make sure your triangle’s geometry has all the right angles?

  How can you ensure that everything adds up to provide a solid foundation for your career and your startup?

  If you’re a solopreneur — or a “youpreneur” if you prefer that emerging term coined by management consultant and podcaster Chris Ducker — this might involve developing a personal set of beliefs, a way of making life decisions and a lifestyle that embodies the category you want to be known for.

  Category design on the personal level is about making your place in the world — connecting what makes you unique to a problem people care about, and then positioning yourself as the solution.

  But isn’t that just personal branding, you wonder?

  Not quite.

  Branding preaches making your name known — the more people hear or see your brand, the better. Category design is about owning a niche, based on solving a problem of importance.

  In other words, when you think of that category, you automatically think of a specific person.

  Exhibit A: When zillion-dollar movie maker Michael Bay wants to showcase flying stunts in a new film, he calls Jon DeVore and his team of f
lying athletes, whom you met in Chapter 1.

  Likewise, there was a time when most real-estate owners in Manteca, California, knew that if their problem was that they wanted to sell a house quickly all they had to do was, “Call Tim Rhode and start packing.”

  Exhibit B: If you’re intrigued by the category of impact investing, you should write a thank-you note to Nancy Pfund (our guest on Legends & Losers Episode 146). She’s the venture capitalist who pioneered the idea of backing startups that could make a meaningful social, environmental and economic impact. Her track record includes early investments in electric vehicle maverick Tesla, Solar City and healthy school meals provider Revolution Foods.

  The concept of category is equally powerful for the viability of businesses large and small.

  As Eddie Yoon, a former consultant and analyst for Cambridge Group and Nielsen, observes in one of his articles on this topic for Harvard Business Review:

  “Category creation goes beyond innovation, in that the new category shares roots with its original product class, but delivers such exponentially better benefits, experience, and economics that the new category graduates from its original product class. Another telltale sign of category creation is that it comes with a distinctive business model and profit model.”28

  Indeed, Yoon’s research suggests that within new and growing market categories, the creators of that niche capture a remarkable 80 percent of the growth.

  The Power Of Category Design

  A company’s value largely depends on three factors.

  First is the revenue or sales potential for the market category or space that it embodies or inhabits. In other words, do people really care about the product or service you’re selling?

  Second, value is pegged to the position of the company in that category, because the category queen by definition captures the lion’s share of the available revenue. And, the third factor in value is ongoing performance — proof that the organization will stick around long enough to deliver on its promises.

  As explored in Christopher’s first book Play Bigger, the Magic-Triangle philosophy has fueled countless Silicon Valley “Big E” (that’s “E” for entrepreneur, as we mentioned in the book introduction!) startups that rocketed into market dominance.

  Vivid examples include the social-networking-creator Facebook in the early 2000s, and later Instagram, which is the king of photo and video sharing as well as WhatsApp, which became the queen of cross-border and cross-platform messaging) in more recent years.

  Or Lululemon, queen of yoga clothes.

  Or Clif Bars, monarch of organic, energy-laden snack bars, with more than one-third of the overall market.

  If you’re a parent of future woman-to-be-reckoned-with, here’s another one you’ll find easy to embrace — American Girl dolls.

  Back in 1986, when educator Pleasant Rowland started the company that birthed this concept, her original idea was to help young girls learn more about the role of women in the nation’s history through the eyes of dolls like them. Why not create dolls that came with a story and maybe some clothes, so that the owner could play dress-up?

  Pleasant wasn’t thrilled with what was available on the market to buy for her nieces. No Barbies with their anatomically impossible figures or consumption-obsessed back stories for this auntie.

  In a speech commemorating the company’s 25th anniversary, Pleasant recalled the weekend she spent at her cabin sitting beside a wood stove, where she wrote the business plan: “I have done a lot of writing in my life, but never before or since, have words flowed so easily and so quickly. By the end of the weekend, I knew, just simply knew, that this was a good idea. Why? Because I would have loved it when I was a little girl myself, and as an adult I would have loved to give it to my nieces, who I knew would have loved it, too.”29

  Pleasant’s idea pulled in sales of more than $1 million for its first Christmas — almost recouping the $1.2 million she had put into building the venture. In a fitting piece of irony, Barbie’s mom Mattel bought Pleasant’s company about 12 years later.

  For the 2017 fiscal year, the division generated roughly $450 million in revenue.30

  That’s a heck of a niche down!

  We bet you can one-up us with examples meaningful to your own world in a matter of moments.

  Because here’s the thing: The category rule applies equally well to “small e” ventures as it does to the big brands as we’ve mentioned many times earlier in this manifesto.

  Here’s another story we’re eager to watch unfold.

  Once upon a time, there was a world of construction toys that played mainly to boys. Then, came GoldieBlox — a maker of toys specifically constructed to get girls interested in science, technology, engineering and mathematics (STEM) disciplines — founded in 2011 by a young woman with a personal perspective on the problem.

  Debra Sterling, who graduated Stanford University in 2005 with a degree in engineering and product design, was inspired by her friend’s habit of playing with her brother’s construction toys when she was a child.

  There was no such thing for girls. She freely admits that she barely knew about the field of engineering until a high-school math teacher suggested she give it a try. In fact, her bio on the GoldieBlox website reads: “Debbie couldn’t figure out why her math teacher thought she should be a train conductor!”

  It was embarrassing.

  And, that would become Debbie’s inspiration for designing the category.

  “I really believe in my concept — STEM toys for girls — but the toy industry wasn’t as receptive,” recalled Sterling in an interview with Forbes.31 “I kept hearing from industry veterans that my idea was a good cause, but it would never sell. I knew that if I wanted to make GoldieBlox successful, it meant I had to break down gender stereotypes that plague the industry. To this day, those outdated stereotypes continue to be my biggest challenge.”

  Her idea almost didn’t get off the ground. It was rejected by Y Combinator, an organization well-known in the tech industry for funding early-stage startups.

  Huh?

  Oh right, the VC universe is decidedly male-centric with its investments — just 2% of all the funding doled out in 2017 went to female-founded firms.32

  Although Debbie was angered, stunned and confused by that rejection, she persisted. Like all legendary entrepreneurs, she’s a missionary, not mercenary. And her intended audience has been quite receptive, even though the first Silicon Valley bros she approached for funding couldn’t wrap their heads around the idea.

  The company (the name is a wordplay on the fairy-tale heroine Goldilocks) blew away its original Kickstarter campaign, raising more than $285,000 with a mocked-up prototype and handmade book. As of this writing, GoldieBlox has sold more than 1 million toys worldwide.

  The company even helped the Girl Scouts develop a new STEM merit badge.

  “Now I hear from parents and young kids from all over the world about how happy they are to have GoldieBlox and how fun STEM is,” Debbie observes. “It’s really rewarding when I receive a letter from a kid who says they want to be an engineer when they grow up. I save every letter, every video, [and] every drawing. They literally mean the world to me and they keep me going, even when times get tough.”

  Category pull like that doesn’t happen for most companies.

  That’s because most organizations and many startups make the mistake of chasing share in existing market categories designed by someone else. They play a game in which they have no chance of winning from the start, because they didn’t write the rules.

  On the other hand, entrepreneurs who design their own playing field, who write their own playbook, will find that their services and products are in high demand. Here’s why:

  Category design = Make demand

  Branding = Fight for demand

  Rather than trying to remarket existing construct
ion toys to girls — by creating a “Legos for Girls” brand, if you will — Debbie reimagined the category by starting from scratch.

  And she did it from the female point of view (POV).

  She approached the category in a unique way — one that resonated with her personally and that she could evangelize passionately and obsessively.

  There are certain things that people can’t un-see or un-know.

  But when the world “sees” the problem the way a category designer sees it, the world view changes.

  That’s the brilliance of successful category design.

  Legendary entrepreneurs make their mark by identifying and articulating a problem — and designing and evangelizing the solution. When that strategy is well honed and executed, BOOM! The category crowns you its queen, as it did with Debbie Sterling.

  Once a category’s problem is defined by an entrepreneur, as we discussed earlier in Chapter 2, the market will demand the solution — and potential customers will turn to the consensus solution with ferocity.

  Why settle for second comers?

  No one’s hands needed sanitizer in 1995. Now, it’s everywhere. You. Need. It.

  Once you’re known as the “go-to” gal in your field, you’re made. You’ve achieved a position of value and importance — in your field, local region, neighborhood, whatever. No matter how small or big that territory.

  If you look closely, you’ll see that the businesses and brands you admire the most are almost always the ones that have designed and owned their own niche.

  “As an entrepreneur, you need to be bold,” observes Sheryl O’Loughlin, the former CEO of Clif, who identified the market need for a protein bar specifically formulated for women. That product, Luna, dominates its category.