This was originally published in my free weekly newsletter, How It Actually Works.
What I’d Work on If I Weren’t At Lambda School
One of the most exciting industries right now is CPGs: consumer packaged goods.
These are the daily things we buy that we don’t really think about: toothpaste, ice cream, mayo, makeup, razors, etc. etc. Practically everything you buy at a grocery stuff is considered a CPG.
Historically companies like P&G have been the powerhouses in CPG. One-size fits all worked because they could advertise to everyone via mass media. (Read a great intro to CPGs and the Internet on Stratechery). P&G’s products were good, sure, but their power really came from owning supply and distribution. Customers had to choose between the 4-5 products available because that’s all there was.
And as the saying goes, with the Internet all of this changed:
- Selling to customers is now open to everyone.
- We can all Google our way to figure out how to source or manufacture almost any product, i.e. most CPGs are commodities.
- Therefore the real differentiation becomes the attention of the customer. The product they find out about first is the one they buy.
For example: Colgate doesn’t have an advantage because they know how to make good toothpaste, but because everyone knows who they are.
Which is why Facebook is so valuable and captures so much of the value. They sell customers’ attention to the highest paying companies, thereby capturing most of the profits. (And good for them!)
And yet some CPG startups find a way around Facebook and are doing really well.
Companies like Halo Top. The tastes-great-low-calorie-won’t-make-you-feel-guilty ice cream.
Because customers seek out Halo Top on their own, the company doesn’t have to pay for attention.
The simple-but-not-easy source of differentiation is to make something that people really want.
Halo Top and other successful CPG companies have spread because of word of mouth. That’s so cliche as to be almost devoid of insight, but the point is the focus it brings on making something people really enjoy and desire.
And, in CPG products, a huge part of what the person is buying is the packaging and the brand. They heavily influence how the customer perceives & feels about & experiences the product.
This isn’t controversial. Entire industries (luxury bags?) are built on this premise.
So if I were doing something totally different today, I’d invent “A/B testing for CPG packaging”.
How do you quickly and cheaply test whether people like your thing. How do you design packaging and get feedback from a lot of people fast?
You could sell it to other people or, if it actually works, use it to create the next big CPG company.
The Links
Advertising can help you be your best self (article)
If your product is something someone actually wants, it is in their best interest to be advertised to.
This happens to me all the time on Facebook & Instagram. I regularly find products that I wouldn’t otherwise know about, that I want to know about, because FB advertising is so effective at matching people to what they’re likely to be interested in.
Travis Kalanick’s 2008 guide on hacking CES (his blog)
“Some of the most bootstrapping-hacking-fun I had was with CES. The Consumer Electronics Show is the yearly post-New-Year’s mecca for the techset. If you’re in the game you’ve got to be there. The problem is that it is a f*#king chaotic inefficient time-sucking, money grubbing melee (if you’ve been there you know what I’m talking about) with huge CES-gouged costs, and massive time sinks at every turn. With hardly any money in my pocket, my goal was to do CES for as cheap as humanly possible (<$100/day all in), while also making myself TWICE as efficient as all the chumps who were doing CES the conventional way.”
Travis is probably one of the most incorrectly maligned entrepreneurs of the 21st century.
How to change a habit (tweet)
“Changing habits:
Pick one thing. Cultivate a desire. Visualize it.
Plan a sustainable path.
Identify needs, triggers, and substitutes.
Tell your friends.
Track meticulously.
Self-discipline is a bridge to a new self-image.
Bake in the new self-image. It’s who you are, now.”
The Profile (newsletter)
Great year-end summary of one of my favorite new (to me) newsletters (by Polina Marinova of Term Sheet newsletter fame.)
You can read all the most popular posts at the full archives.
This was originally published in my weekly newsletter, How It Actually Works.