The most beautiful monopoly, is the customer.
Yes, monopolies can be good.
A good monopoly is constantly making better products at a low cost to stay ahead. They don’t shut down the competition, they beat the competition.
However a company that is acting in a bad manor like buying and shutting down greater products and such, that’s a bad monopoly. (Which is why we have anti trust laws).
Peter Thiel (famous investor and founder) speaks about this a lot, but I think his theory is incomplete.
He focuses on the monopoly of pure utility, namely. If I can make it cheaper then you and better then you then booya. I will have a majority of the market and will beat you every time.
Not so much, introducing (drum roll) the good customer.
Before getting into the good customer a quick mention of blue ocean and red ocean theory.
Red ocean: If we are in the same business, say we both own bakeries. Then red ocean is the belief that every customer you have is a customer you took from me and vise versa. We are in a fight over the same customers so now there is blood in the water hence the name red ocean.
Blue ocean: We may own the same business but we don’t serve the same customers my customers come to me because of location, special sauce, my smile, went to school together… Your customers go to you because they like a heavier dose of custard, a more sugary taste, less fluff…
Point being our services are geared to our customers specifically and that’s what makes my customers mine and yours yours.
Now to add something to this theory.
I’m a ux designer by trade and something I’ve come to believe is, every no is a yes and every yes is a no.
Example: If you had 2 doors in front of you and chose the one on the right then, you said no to the one on the left.
Deeper Example: There are 2 hallways a customer can walk through, both lead to the main lobby. One of them is quicker but only takes you to the lobby, the other is longer but can also take you to the bar.
Should I give access to both from the main entrance, or should I give access to one and if I do which one.
The answer is actually, depends on who you’re designing for. Who are the people coming to this entrance, are they people who want variety, or less to think about.
So what does this have to do with the price of cheese in china, great question.
This allows for a whole other type of monopoly, one that focuses on a customer type and is really tough to beat.
The reason they are tough to beat is because of customer experience. Customer experience is not a one size fits all, and if your making an experience for one type you are saying no to the other type.
Every apple has an android, every Trader Joes has a Kroger, every Xbox has a Nintendo, and every Star bucks has a Dunken Donuts. Point is when you build for one you exclude the other.
Enter the Good Customer.
Those that realized there are customer types, decided to choose their customers wisely.
We all heard of the 80/20 rule (that 80% of your business comes from 20% of your customers).
Now what if I told you that the 20% are actually a customer type and you can track them, let alone customize a business to them.
Apple did just that.
Some quick stats to emphasize this, in 2017 Apple had only 15.2% of the smartphone market.
Yet that same year the App store earned $17.8 billion in revenue vs Android’s play store earning only $9.7 billion.
To put in perspective how bizarre this is, that year Android had 32.6 billion downloads, apple only 13.2 downloads. They had a 3rd of the downloads and almost twice the revenue.
Heres another 2 interesting things, it is well known in the tech world that Apple users are “early adopters” meaning they will more like try your new app than Android users.
They will also pay for what they like, remeber when What’s App came out and charged $1 a year for using it. Apple users payed but when What’s App decided to go to Android no one was paying so they took the fee off altogether.
In short, apple cornered the 20%.
Who are these Good Customers, these 20%.
A sales man (a legend) once told me, bad customers aren’t worth it.
He used to sell voip office phone services to large companies. He said “the guys looking for the bare minimum I stay away from, the ones looking for it all are the ones I go too. Those guys want to pay more for never having to think about their phones again.”
He described beautifully one of the major characteristics of the 20%, namely they don’t want to exert thought or effort on products. They are not hobbyists “they want it to just work”. They would rather go the long way if it means they will be more comfortable.
Some other brands that have chosen their customer type. Starbucks (but I think they are loosing touch), Trader Joes, Juno, Walgreens, Costco, McDonalds, Nike, Cross-fit…
Total side note:
I happen to think that apple is the greatest company to ever exist, I’m a big fan. Though I think that them getting involved with Hollywood may have been a fatal mistake to their companies persona and can ultimately take them down. Hollywood is poison. They should have kept to being a platform I think, let’s see.
Btw call me stupid but I think Amazon is going down.