Once upon a time, no one wanted Facebook.
That’s because before Facebook existed, there wasn’t anything like it, so how could consumers know they wanted to share pics of their lunch with friends?
Because Facebook had no market when it was invented, inventing it was a big risk. Venturing where no one has ventured before takes guts. You’ve got to be willing to invest your time, energy and money into something no one wants yet.
But as we all know, the risk Mark Zuckerberg took paid off. Big time.
When you CREATE, rather than enter, a market, you reap the rewards of zero competition.
In part, Facebook is so successful today because it enjoyed an early monopoly. The same goes for similar products and services that were the first of their kind:
- The iPod, iPad, and iPhone
- Red Bull
The list could go on and on. The point is, when someone takes a big risk inventing a brand new product, there’s the potential for big rewards as they absorb 100% of the demand.
This concept is called “market risk.” You’re taking a market risk when you’re not just inventing your product; you’re inventing your market, too.
Market risk contrasts against “competitive risk.” That’s the kind of risk you’re taking when you enter an existing market.
For example, if I were to start a fast food chain, I’d be taking a competitive risk against McDonald’s, Wendy’s, Burger King, and Taco Bell.
As you might imagine, competitive risks are safer, because you know for sure there’s demand for your product. In fact, historical data could show me exactly how many Americans eat fast food each year, the best ways to advertise to them, and much more.
BUT I’m going to have to compete with all of those big players.
Competitive risks may be safer, but you’ll only be stealing a slice of the existing demand—if you’re lucky.
So ask yourself: what kinds of risks are you taking as a real estate agent? Are you playing it safe, or are you going after the big rewards?
But by sticking to the tried and true, you’re losing out on the bold and new—and the payoff that could potentially come with it.
So, how to create a new market, rather than just compete in an existing one?
Think about your everyday life on the job and try to intuit what’s missing. Could you provide specialized service to an underserved group (new buyers, divorcees, retirees, etc.)?
Could you invent a service your clients seem to need, but no one seems to offer?
Finding ways to tap these untapped markets may be risky, but unlike in competitive markets, the rewards are still boundless.
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Matt Mittman and Eric Rehling are the owners of RE/MAX Ready in Conshohocken, PA. See articles from them about the real experience of being a real estate agent, communication styles, building an audience, learning something new, building relationships, Freakonomics, simple business planning, generating leads, Zillow, the weather, Chip Kelly, RESPA, and more.