Toilet Seat Theory
While I was working at a music store as a kid, a few employees always talked about inventions. There were usually dumb things that made no sense, things no one really would ever use. I made a statement that what we need has to be like Toilet Seat. It took others a while to understand, but eventually figured it out. What you need to invent is something that everyone needs or has to buy at some point. By doing so, you could sell it to everyone. Limiting yourself to say music instruments, you are limited to a smaller audience and it is harder to sell millions. No, we never came up with the next toilet seat, but we had some great times at the store. (The story has more but its a good summary)
First Corollary of the Toilet Seat Theory.
Once called the Mercedes theory, but due to the fact Mercedes is not the Uber luxury car I will change it to the the Ferrari Theory. If you choose not to make a better toilet seat and you are only going to sell a few you need to make something very expensive so there is a good margin in selling each one. Thus just selling a few, to the people who can afford it allows you to make a large profit. This came about while we were thinking about inventions and noting that some guitars were priced really high. Most of them were custom guitars or guitars that are made in a “limited” manner. Companies intentionally constricted supply, this kept the price the guitar artificially high, and thus knowing only a few people who want them. Selling a guitar at $5000, allows you to make more profit than at $500. Of course you can spend more on materials etc, hand make it, use better electronics, paint, get endorsements etc. The Ferrari is the perfect example, they do not need to be Ford, Ford has to make and sell millions of cars. Hence the first Corollary
The second Corollary…. The Apple Corollary
Apple found a way to sell something at a Ferrari price (Raised the price of phones from $299 to thousands of dollars) while having it be something “everyone wants”. This magic company has somehow found how to sell millions of a product and at a high profit margin. There are few people who complain about paying the “apple” tax, as there are competitor phones that can be purchased for much less, but there is something apple did. They were not the first smartphone, they just did it better. It is a master of marketing, product and feeling.
Notes: I also restyled the site a bit, and have a bunch more of things will continue to write, I have some many notes all over post-its, and notebooks, will get to it all. I also think I am going to split out the Deal site next, would be cleaner.
This was originally posted in 2016 and updated in 2020
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