Maybe you’ve heard this one before: as a graduation present, a father gave his daughter a car he had bought many years ago. She already had a car, it was cash she needed. So he asked her to take the car downtown to the used car lot and see how much they would offer for his car.
She came back and said “they offered me $1,000 because it looks very worn out.”
The father then said “take it to the pawn shop, and see if they offer more.”
She went and came back, saying to the father “they offered me $100 because it’s very old.”
Then the father asked her to go to a car club and show them the car.
When she returned she told him “they offered me $100,000 because it’s a collector’s item.”
The father smiled and said:
“The right place values you the right way. If you are not valued, do not be angry, it means you are in the wrong place. Those who know your value are those who appreciate you. Never stay in a place where no one sees your value.”
This is not only a powerful lesson on life, it’s a powerful business lesson too.
And here’s some good news: no matter who you are or what you do, there is always a group of people looking for exactly what you offer and who you are. And they’ll pay a premium for it. There are seven billion people on this planet, why would you ever think that there’s not 10 or 100 or 1,000 people willing to buy from you or hire you?
And if you knock it out of the park with those people, they will bring you another 10 or 100 or 1,000 of their friends to buy from you too.
So you see: The most important job for someone starting a business is to pick the right people to sell to. The right target market.
The riches are in the niches.
It’s the concept of finding your tribe. Anytime you’re moving outside of your tribe you’re getting less-than-optimal results. Your niche is your domain, and your actions have more leverage there.
To pick the right niche, just focus on the two most important marketing questions and answer those:
Who’s it for? And what’s it for?
These are not meant to be general, you must answer them very specifically.
Seth Godin wrote about a friend of his named Satya who sells hats. But she can’t just say, “I make hats,” and be done with it. She has to ask it this way:
Are these hats for people who are already shopping for hats?
Are they a gift item for someone who is looking to please a friend that wants something new? Proven? Cheaper than it looks? Rare?
Are they a shopping experience maybe? Or a bespoke process that is exciting and filled with possibility, just for the person who values both the process and the hat?
Or, are these hats for women who appreciate beauty in any form, and who have already bought all the scarves they can handle? Or perhaps for people who want to buy what the people they admire are buying?
When you can answer the who’s it for and what’s it for, it becomes much easier to find the right people to get in front of.
A great exercise to do is to go through the process in reverse with something that’s already successful.
For example, let’s do it with a product I consume every day: music. My $10 Spotify subscription is something I happily pay every month. I use it so much.
One of the biggest songs on Spotify is Eminem’s song “Lose Yourself.” Eminem has made hundreds of songs, but why is this one his most popular?
Simple. Because it does the best job answering the “Who’s it for and what’s it for?”
It’s not for hip hop fans who like good rapping. There’s a lot of those already. “Lose Yourself” is for people who need workout music. So someone like me plays it three or four times a week every week. That’s why the song is so big. It nails the “Who’s it for and what’s it for?”
Hit songs get mileage because they have a clear Who and What.
Mariah Carey’s “All I Want For Christmas Is You” gets played by those who need to set the Christmas mood. This can happen at stores, in cars, and at family dinners. She dominates November and December.
Elon Musk answered these questions when he created Teslas. He didn’t just create an electric car. He built it for people who made good money and wanted to get props for being thoughtful. It wasn’t about being green, it was about showing off in a different way. It became a status symbol within a specific peer group.
Listerine started out as a way for surgeons to prevent infection during procedures, but didn’t see success until it was marketed as a mouthwash. Those are two very different “who’s it for and what’s it for?” But it made all the difference.
A similar situation happened with Viagra. It was originally intended to lower blood pressure, but during trials a side effect surfaced—male participants were getting erections. Pfizer changed course and made a fortune.
The examples are endless, but the lesson is the same: success depends not on changing your product, but on simply finding those who value what you already have.
Because value doesn’t exist as something external that you can physically touch, it’s found in the mind. And it’s nearly hopeless to change someone’s mind once they have an impression of you. It’s much easier to simply look for a different mind to sell to.
When you find a situation—or people—you have leverage with, that’s where you need to put your efforts.
This applies in all areas of life.
When you find that you have leverage with someone, it’s a sign that you need to dedicate more energy into that person or situation.
I wrote about it a few episodes ago in “one big score covers all small losses.” An outsized reward with minimal effort is a clue that there might be a big score near. Develop your radar for sniffing out the big scores in your periphery.
This is the Universe’s plan for you, it’s always trying to lead you in the direction of abundance. Sadly, most of us are too distracted to pay attention or execute on these clues from the world.
But there’s a group of people who do pay attention.
And trust me, they’re exercising leverage over you right now.
When you go to your favorite artists’ concert and spend hundreds of dollars on a ticket, then you buy the tour merch for a huge markup, then you’re spending hours of your life watching and re-posting their content on social media, at this point, they are exercising their leverage over you. They know you’re a big fan, so they will sell you as much as you’ll buy. This brings you happiness though, so you gladly support them.
This is what good business and relationships are all about. You invest into them, but what you get feels much more valuable than what you gave up. Everyone wins.
Your price is never too high, just misdirected.
Success happens when the product and the audience are in perfect alignment. So this should be everyone’s first priority.
Sergey Faldin put it this way:
“The only thing you need to do if you want to achieve success in anything—is to find your audience.
It doesn’t matter how smart you are.
It doesn’t matter whether you’re the best.
It doesn’t matter whether you’ve got competition.
If you have your audience in place, you will succeed.”
And the reason your success hinges on finding your audience is because it takes massive courage to do so. It means you’ll have to say no to lots of so-so customers in order to say yes to the highly-targeted population that is your ideal market. This is both scary and inconvenient. It’s a bit of a gamble to shut some people down hoping to find better customers.
But there’s a certain magic in this approach.
First, having a specific avatar of your ideal buyer—instead of picturing the whole population as your customers—helps you hone your message. You now have more clues as to where they hang, what they like, and how they talk. So your sales pitch becomes crisp and sticky. You become irresistible.
And secondly, focusing on a smaller group of customers makes them feel more special. So they’ll be willing to pay even more for your product or service. And they’ll feel so good about it that they won’t be able to keep it to themselves. They’ll brag to their friends about how cool this new thing is. This is free, built-in marketing that works for you while you sleep.
Al Ries calls this Positioning, a narrowing down of your market and messaging. This is what he wrote about it in his book:
“You must be willing to sacrifice.
The essence of positioning is sacrifice. You must be willing to give up something in order to establish that unique position.
Nyquil, the nighttime cold medicine, gave up the daytime market.
In positioning, smaller may be better. It is usually better to look for smaller targets that you can own exclusively rather than a bigger market you have to share with three or four other brands. You can’t be all things to all people and still have a powerful position.”
Go where there is abundance. Abundance is a by-product of leverage. That’s a sign that life is increasing there.
That’s what is in accordance with the Universe.
When you play along with this rule your price can never be too high. Because there your worth is even higher.
