What I’d Work on If I Weren’t At Lambda School
One of the most exciting industries right now is CPGs: consumer packaged goods.
These are the daily things we buy that we don’t really think about: toothpaste, ice cream, mayo, makeup, razors, etc. etc. Practically everything you buy at a grocery stuff is considered a CPG.
Historically companies like P&G have been the powerhouses in CPG. One-size fits all worked because they could advertise to everyone via mass media. (Read a great intro to CPGs and the Internet on Stratechery). P&G’s products were good, sure, but their power really came from owning supply and distribution. Customers had to choose between the 4-5 products available because that’s all there was.
And as the saying goes, with the Internet all of this changed:
Selling to customers is now open to everyone.
We can all Google our way to figure out how to source or manufacture almost any product, i.e. most CPGs are commodities.
Therefore the real differentiation becomes the attention of the customer. The product they find out about first is the one they buy.
For example: Colgate doesn’t have an advantage because they know how to make good toothpaste, but because everyone knows who they are.
Which is why Facebook is so valuable and captures so much of the value. They sell customers’ attention to the highest paying companies, thereby capturing most of the profits. (And good for them!)
And yet some CPG startups find a way around Facebook and are doing really well.
Companies like Halo Top. The tastes-great-low-calorie-won’t-make-you-feel-guilty ice cream.
Because customers seek out Halo Top on their own, the company doesn’t have to pay for attention.
The simple-but-not-easy source of differentiation is to make something that people really want.
Halo Top and other successful CPG companies have spread because of word of mouth. That’s so cliche as to be almost devoid of insight, but the point is the focus it brings on making something people really enjoy and desire.
And, in CPG products, a huge part of what the person is buying is the packaging and the brand. They heavily influence how the customer perceives & feels about & experiences the product.
This isn’t controversial. Entire industries (luxury bags?) are built on this premise.
So if I were doing something totally different today, I’d invent “A/B testing for CPG packaging”.
How do you quickly and cheaply test whether people like your thing. How do you design packaging and get feedback from a lot of people fast?
You could sell it to other people or, if it actually works, use it to create the next big CPG company.
If you liked this essay....
Then consider signing up for my newsletter, How It Actually Works.
It contains the best material I find anywhere – this means books, articles, podcasts, research, videos, Twitter threads... the most interesting stuff that will give you something to say.
1,000s of people read it every week and they're never published anywhere else. Once they're sent they're gone forever.