In startup land, “building to scale” is a hot button. Everything must scale. If it doesn’t it dies.
So when building to scale, which percentage of a prospective audience do you build your business model around? The top 80, or the bottom 20?
It’s a valid argument on both sides of the fence. The top 80, theoretically, is attractive to the larger masses. It’s a product or service that many, many people need. It’s just short of being a household utility. Like Q-Tips. The top 80 needs them. It’s satisfies an assumption that most everyone will need to clean their ears. And it isn’t even short-lived. It’s a necessary evil that needs (almost requires) a product to step in on, every single day.
Whereas the bottom 20 can potentially monetize well, but well, isn’t something that everyone needs. It’s like American Express and the Centurion Card. Yes, there is a market for this high-end, exclusive credit card. Someone, even many will benefit. But is the average credit card bearing citizen able to qualify? No. Nor is that the intention. It’s a product specifically designed for the top 20 (or maybe top 1%, in this scenario).
But worth noting is that AMEX didn’t start in credit cards, or even Centurion. They started with express mail, then moved to railroads, financial services, investment banking and eventually had built such a strong (and elite) following that they launched the Platinum card on the heels of the Diners Club Card, which then transpired into more business and mainstream consumer credit cards. Short story – AMEX was an evolution that started with mass appeal, then moved to a profitiable niche.
So whether Q-Tips or AMEX, “Don’t Leave Home Without It”. (a.k.a. provide value to the many versus the few)