Story
The 8% everyone dismissed was 30 million customers
A dentist pitched Jeff Harmon's university class on selling his OraBrush tongue cleaner. The class said only 8% of people would buy it online, so he should license it to a giant; Harmon pointed out 8% of the US is about 30 million people and argued for focusing on them.
“And the group got up and just said, you can't really sell these, and nobody wants to buy these online, like 8% of people wanna buy them on the internet, and you need to go do a partnership with Procter& Gamble or Johnson& Johnson or somebody. And I interrupted them and said, 8% of people is like 30 million people just in the United States. Why wouldn't you focus on them?”
Steal thisWhen a market is dismissed as a small percentage, convert the percentage into absolute people and ask whether that's enough to build on.
Framework
Find your glitch: be first on an underpriced new ad channel
OraBrush's $500 video worked because YouTube had just launched ads at under a penny per view, letting the company spend $1 to make $2-3. Harmon calls this 'finding your glitch': cheap early traffic buys the data to optimize, so you stay efficient as costs rise, giving you a beachhead (a term he credits to Paul Ahlstrom).
“So it's like the early days of AdSense. And so we were able to spend $1 and bring in $2 or $3 now. a dollar in total costs, both the ads, the shipping, and the brush itself. And so that glitch of being the very first on YouTube is what allowed us to find enough data to take action, to be able to optimize and then become more efficient. And then as the cost of advertising on YouTube started to climb, we were able to just get more and more efficient because we had the traffic coming in now to be able to make those changes.”
Steal thisWhen a platform launches a new ad product, get on it immediately while attention is underpriced, and use the cheap traffic to collect optimization data before prices rise.
Framework
The user method: the best businesses solve the founder's own problem
Harmon's first rule for finding a winning product is to solve a problem you personally have. OraBrush began as a dentist's superglued prototype to fix his missionaries' bad breath, and Airbnb began as founders renting air mattresses to cover their rent.
“So he was solving a problem for himself, and it happened to be something that many, many other people wanted to solve. There's a book called The User Method by Jeff Schwarting, and Jeff Schwarting goes through and explains that out of the top businesses, the vast majority of them were made by founders who were just solving a problem for themselves. The Airbnb founders were just trying to pay rent in San Francisco.”
Steal thisStart from a problem you personally live with; if you'd hack a prototype for yourself, others likely want it too.