Ajarn Mark Caldwell Blog

Bringing Business Sense to the IT World…

Go Big or Go Special

Watching Shark Tank tonight and the first presentation was by Mango Mango Preserves and it highlighted an interesting contrast in business trends today and how to capitalize on opportunities.  <Spoiler Alert> Even though every one of the sharks was raving about the product samples they tried, with two of them going for second and third servings, none of them made a deal to invest in the company.</Spoiler>  In fact, one of the sharks, Kevin O’Leary, kept ripping into the owners with statements to the effect that he thinks they are headed over a financial cliff because he felt their costs were way out of line and would be their downfall if they didn’t take action to radically cut costs. He said that he had previously owned a jams and jellies business and knew the cost ratios that you had to have to make it work.  I don’t doubt he knows exactly what he’s talking about and is 100% accurate…for doing business his way, which I’ll call “Go Big”.  But there’s a whole other way to do business today that would be ideal for these ladies to pursue.

As I understand it, based on his level of success in various businesses and the fact that he is even in a position to be investing in other companies, Kevin’s approach is to go mass market (Go Big) and make hundreds of millions of dollars in sales (or something along that scale) while squeezing out every ounce of cost that you can to produce an acceptable margin.  But there is a very different way of making a very successful business these days, which is all about building a passionate and loyal community of customers that are rooting for your success and even actively trying to help you succeed by promoting your product or company (Go Special).  This capitalizes on the power of social media, niche marketing, and The Long Tail.  One of the most prolific writers about capitalizing on this trend is Seth Godin, and I hope that the founders of Mango Mango pick up a couple of his books (probably Purple Cow and Tribes would be good starts) or at least read his blog.  I think the adoration expressed by all of the sharks for the product is the biggest hint that they have a remarkable product and that they are perfect for this type of business approach.

Both are completely valid business models, and it may certainly be that the scale at which Kevin O’Leary wants to conduct business where he invests his money is well beyond the long tail, but that doesn’t mean that there is not still a lot of money to be made there.  I wish them the best of luck with their endeavors!