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>How sustainable is the business in the face of cheaper competition? This is where branding and marketing come in. Ask Apple, BMW, Mercedes, Luis Vutton, etc e

>How sustainable is the business in the face of cheaper competition? This is where branding and marketing come in. Ask Apple, BMW, Mercedes, Luis Vutton, etc etc. These businesses all sell their products for much more than comparable products, and they do quite well. Why? Because there are two types of consumers that are sold by their marketing: those who appreciate high quality, and those that want to be seen as appreciating high quality. You don't have to appeal to everyone.

davidw 19y ago
Right, good examples. But those are all physical products. Can you think of online brands that have that kind of power? I can think of some negative examples, like AOL, that most hackers wouldn't have been caught dead using. ... Indeed, thinking about it a minute, a lot of my experience with 'branding' online is that small and independent is cool. How much cooler is it to have a @yourowndomain.com email address than @hotmail.com? Remember geocities? Another thing that was sort of the lowest common denominator. Maybe Google has a positive brand at this point, but I pay for very few things there. I suppose I might pay a little bit more to them for some things in the future to have everything 'tied together', but that's getting away from 'branding'.
- run4yourlives 19y ago
  As for brands with power, off the top of my head: 37 Signals Salesforce Flickr (picasa is free, and people still use flicker) expedia/travelocity (not startups anymore mind you)
  - deleted 19y ago
    [deleted]
    - run4yourlives 19y ago
      >With Flickr, you have to be careful because there are also network effects because of the community, That;s the brand right there. At least my definition of it. > people use because they know it (which is one kind of branding), or because they want to be seen using it, as with your previous examples? Point is, they're using it and not phoning a travel agent. They're getting something from it, that much is given.
      - davidw 19y ago
        Oops, you responded pretty quickly... I wasn't satisfied with my answer yet:-) In any case: Branding definitely is not network effects, though. Branding is what your earlier examples are about, like Apple. Network effects can be present even if you're not really that excited about the company - like eBay or Paypal. Actually, in some cases, where there's some exclusivity in the brand, they may actually work in opposite directions. Network effects push you to 'go with the crowd', whereas, say, Apple says to 'think different' and get a computer that not everyone else has. I think expedia is a good example in terms of advertising/marketing, where people use it because they get out there and sell it. So perhaps that's part of the answer to keeping a DHH style company out front - sell it lots and sell it well. That's not something 37signals has ever shied away from. However, something like expedia is also probably not likely to ever be completely commoditized/open sourced, so there's always going to be some scarcity there.
adbachman 19y ago
> "You don't have to appeal to everyone." I thought that idea was one of the highlights of the presentation. If you can sell 400 accounts at 40 USD a month, you're going to live very comfortably. If you can't find a market niche where 400 people would be willing to pay 40$ (or 4000 people pay 4$), you might need to reconsider your idea. This was a big point in the Italian restaurant analogy as well. You don't have to redefine Italian cuisine, you just have to build a restaurant far enough away from the other guys and make good enough food (among other things) to attract a large enough customer base to meet your goals.

davidw 19y ago

Right, good examples. But those are all physical products. Can you think of online brands that have that kind of power? I can think of some negative examples, like AOL, that most hackers wouldn't have been caught dead using. ... Indeed, thinking about it a minute, a lot of my experience with 'branding' online is that small and independent is cool. How much cooler is it to have a @yourowndomain.com email address than @hotmail.com? Remember geocities? Another thing that was sort of the lowest common denominator. Maybe Google has a positive brand at this point, but I pay for very few things there. I suppose I might pay a little bit more to them for some things in the future to have everything 'tied together', but that's getting away from 'branding'.

run4yourlives 19y ago
As for brands with power, off the top of my head: 37 Signals Salesforce Flickr (picasa is free, and people still use flicker) expedia/travelocity (not startups anymore mind you)
- deleted 19y ago
  [deleted]
  - run4yourlives 19y ago
    >With Flickr, you have to be careful because there are also network effects because of the community, That;s the brand right there. At least my definition of it. > people use because they know it (which is one kind of branding), or because they want to be seen using it, as with your previous examples? Point is, they're using it and not phoning a travel agent. They're getting something from it, that much is given.
    - davidw 19y ago
      Oops, you responded pretty quickly... I wasn't satisfied with my answer yet:-) In any case: Branding definitely is not network effects, though. Branding is what your earlier examples are about, like Apple. Network effects can be present even if you're not really that excited about the company - like eBay or Paypal. Actually, in some cases, where there's some exclusivity in the brand, they may actually work in opposite directions. Network effects push you to 'go with the crowd', whereas, say, Apple says to 'think different' and get a computer that not everyone else has. I think expedia is a good example in terms of advertising/marketing, where people use it because they get out there and sell it. So perhaps that's part of the answer to keeping a DHH style company out front - sell it lots and sell it well. That's not something 37signals has ever shied away from. However, something like expedia is also probably not likely to ever be completely commoditized/open sourced, so there's always going to be some scarcity there.

adbachman 19y ago

> "You don't have to appeal to everyone." I thought that idea was one of the highlights of the presentation. If you can sell 400 accounts at 40 USD a month, you're going to live very comfortably. If you can't find a market niche where 400 people would be willing to pay 40$ (or 4000 people pay 4$), you might need to reconsider your idea. This was a big point in the Italian restaurant analogy as well. You don't have to redefine Italian cuisine, you just have to build a restaurant far enough away from the other guys and make good enough food (among other things) to attract a large enough customer base to meet your goals.