Specificity drives results

As I learn more and more about the start-up world I am beginning to see a widening gap between what is public and what is true. The engines that propel the press focus on a niche of the world and repeatedly comment on it. Sex, drama, and celebrities are the first that come to mind. This leads me to believe that there exists a vault of information about how things work that is hidden. What does the un-obvious look like? Its a much larger conversation than I currently have time for but lets explore a brief example and we can come back to it later.

The topic is cats.

I. The Set Up
CatTV is a business that was started in 1989

Core insights:
- People spend a lot of time with their pet
- People spend a lot of time watching TV

Need:
- How can owners deepen the meaning of their relationship with their cat?

Solution:
- TV programing for cats. Pictures of birds and squirrels.
- Owner will feel useful and needed by their pet

This sounds ridiculous. I know. Lets face it, it is ridiculous. How could this ever work? Wouldn't someone have already figured it out if it worked?

But lets get into the details of the operation and think about why its actually a very good business to test.

II. The Detail
1. Target segment is extremely specific. United States cat owners. Easy to study target, multiple established marketing channels, large volume of potential customers.
2. The production costs to get the business up and running are nothing. Video tape some birds, put a few adds out and set up a phone number/website
3. No competition. People frequently flock to popular or fantastical markets because they've shown explosive growth (including me). Well, why not go where no one is? The end game is to win with customers. Isn't it easier to win when you're the only option?
4. Speedy arrival at the margin. All of these components combined get the business owner to the point where he/she can test their product and success very quickly

III. The Result
So here's the nuggets. What actually happened.

The production costs where actually relatively high: $25,000 and took 4 months to produce. Thats a good amount of money for a cat video. (Twice as expensive and twice as long). Only 400 videos were sold in the first year and half. (Have patience). As soon as one newspaper article was published sales jumped to 30,000 a year. (Don't be an idiot, market your product where people who are interested will see it) Sales stayed at 30,000 a year for 10 years!

The videos were priced at $14.95. The math? $4.5 million in revenue. Oh yeah!