Don’t be better. Just be different
How to stand out in an overcrowded market
The Internet and globalization have made competition more intense than ever – especially for tech businesses. Your competitors can come from anywhere in the world, and customers can instantly compare your product to a hundred alternatives.
This leaves many entrepreneurs wondering:
“How can I stand out in an overcrowded market?”
The answer is to stop striving to be better, and just strive to be different. As an example, let’s look at Happy Socks.
Happy Socks: what if socks weren’t boring?
“Socks are an everyday garment that no one cares about.”
That was the accepted dogma until 2008 – when two Swedes, Mikael Söderlindh and Viktor Tell, turned the stale product category on its head with Happy Socks. The company ushers in socks in the most vibrant, colorful (and yes, somewhat crazy!) patterns you can imagine.
Fried eggs, anyone?
Maybe a sunny beach resort?
Or why not plaster beer cans all over the socks? 😂
But this craziness is also their source of strength. They transform socks into a source of joy. They made socks gift-worthy. And yes, they made socks fun!
The result? The company sold $1M of socks in its first year. Today, Happy Socks can be found in 10,000 stores across 90 different countries, with annual retail sales of $100M+.1
So are Happy Socks “better”?
No. Their socks are not of higher quality. They tend to be more expensive. And they only appeal to a select few customers who love to be unabashedly joyful.
But are Happy Socks different?
You bet! And it’s being different that makes Happy Socks better. Difference is what makes people notice, take an interest, and pay a premium to buy from them rather than from Amazon.
Why different = better. The world of “too much”
The internet has certainly made life better for customers. But it has also made customers’ lives worse in a very dramatic way:
There’s just too much.
There is too much to pay attention to. Too many options to choose from. And too many look-alike products with no “soul”.
Different is the solution to “too much”.
The companies who will win in the internet age don’t need to have the best products. They just need the most different products. Because different is how you stand out in a world of “too much”.
Specifically, you want to be different for two reasons:
Reason 1: Be different to earn the customer's attention
You can buy ad space. But attention must be earned by doing something interesting.
Something unexpected.
Consider Volkswagen's 1959 ad for their Beetle car:
This tiny car and the title “Think small” is so unexpected that you can’t help but stop skimming through the paper to read what they have to say.
Reason 2: Be different to help customers pick you
The Volkswagen Beetle was not for everyone. Its tiny size made it impossible for large families, and a laughing joke to high-incomers wishing to display their status.
But for people with small families, who just wanted the most low-maintenance car possible, the Beetle was a no-brainer!
In fact, the Beetle was more than just a cheap car. It was a rebellion! As the advertising expert, David Ogilvy, wrote:
[The Beetle was] a protest against the vulgarity of Detroit cars in those days thereby making the beetle a cult among those Americans who eschew conspicuous consumption.
If you were someone who hated pointless consumption, the Beetle was the most obvious choice in the world. It became one of the top five most-sold cars in history, totaling 23 million units.2
How do I make myself different? The 4 principles
There are endless ways you can differentiate yourself. But most of them can be sorted into one of four main principles:
1. The Costco principle – Push one factor to the edge
Costco has become one of the world’s most successful retail empires by obsessing over just one single factor:
Low price.
Let’s compare what makes Costco so unique from other retailers:
Large packages and very limited selection
Costco sells just 4,000 items compared to a typical grocery store with 40,000 items.3 And at Costco, monster-sized packages rule. The store has no small packages because small sizes cost more per unit, and fewer items also require less staff.
Warehouse-like shelves
A Walmart store has two parts: a backend warehouse and a customer-facing store with neat shelves. At a Costco store, the warehouse is the customer-facing part. Like IKEA, customers pick their goods from the same shelves as employees load them onto.
Membership fee
To even shop at Costco, customers must first pay an annual membership fee of $60. Costco makes 80% of their profits on membership fees.4 They only mark up their products to cover rent and wages. This membership fee gives Costco two unique advantages:
Customers shop more at Costco to take advantage of the membership.
Costco gets all their profit before selling a single product. As soon as they launch one store, they have enough cash from their customer to launch a second store, which raises the cash for a third store… and so on. Costco can expand without taking a dime from investors.5
Insisting on the lowest price has forced Costco to do many things differently from Walmart. And all this makes it a very different company. Even if customers end up paying as much with Costco as with Walmart, we are more likely to believe Costco is cheaper because Costco is different.
Focus on just one factor, and push it further than anyone else.
That’s the Costco principle of differentiation.
2. The Cronut principle – Combine two popular things that often are separate
“What if you merged a croissant with a doughnut?”
That question led the French chef, Dominique Ansel, to combine two pastries we all love – croissants and doughnuts – into something new. And voila, dus ze Cronut was born!
Two days after Ansel introduced the new pastry, he woke up to a line of 100+ people outside his shop, all eagerly waiting to try the Cronut.6
The Cronut story hits a fundamental truth: you don’t need something new to be different.
Croissants and donuts had been with us for a century. What was different was the combination of two popular things that used to be separate.
2.1 The Cronut principle for skills
The Cronut principle applies not only to physical elements, but also to skills. As Scott Adams, creator of the popular comic Dilbert, said:
If you want an average successful life, it doesn’t take much planning. Just stay out of trouble, go to school, and apply for jobs you might like. But if you want something extraordinary, you have two paths:
1. Become the best at one specific thing.
2. Become very good (top 25%) at two or more things.
The first strategy is difficult to the point of near impossibility. Few people will ever play in the NBA or make a platinum album. I don’t recommend anyone even try.
The second strategy is fairly easy. Everyone has at least a few areas in which they could be in the top 25% with some effort.
In my case, I can draw better than most people, but I’m hardly an artist. And I’m not any funnier than the average standup comedian who never makes it big, but I’m funnier than most people.
The magic is that few people can draw well and write jokes. It’s the combination of the two that makes what I do so rare.
The Cronut principle for skills is also called “Skills Stacking”. This post captures the concept beautifully in the image shown below.
Both colored cones show how talent is distributed among the population for each skill. Most everyone is at the bottom, which is why the base is so thick. The tall spikes represent the insane amount of work it takes to be in the top 0.1% in the world. The small overlap between the cones is the share of the population with both skills.
But see that little person in middle?
She is in the top 10% of both skills. And she is the best in the world at her own peak! No one else can beat her at this game. And the best thing?
She worked less to be the king of her own hill than those who are top 1% in just one skill. And those top 1% are still getting their asses kicked by the top 0.1%. Our little hero has one vast hill all to herself.
Combine two popular things that often are separate.
That is the Cronut principle of differentiation.
3. The Tesla principle – Add many small differences together
Ask ten people who the most innovative car company is, and nine of them will likely say “Tesla”. But why is a Tesla Model 3 so different from a Volkswagen Golf?
Is it because a Tesla’s:
Fully electric?
Excellent performance?
Software can be updated?
Glass roof?
Unique and stylish door handles?
One iPad as interface vs 101 physical buttons?
Purchased online vs physical store? (and get greeted by a cute hedgehog 🦔)
If Tesla had been different in just one of these ways, it wouldn’t be a remarkably different car. But add many small differences together, and the sum is remarkably different.
Tesla is not unique because they rethought one aspect of the car. They rethought every aspect of what a car should be – and ended up with something completely new.
One difference is iteration. But ten differences is innovation.
That is the Tesla principle of differentiation.
4. The Dove principle – Say who your product is for
What if your product is not really that different? No problem. Just zero in on a specific customer group with a specific need, and say your product is for them.
Dove is arguably the best example of this. Their soap isn’t unique in the slightest. But Dove’s advertising agent, David Ogilvy, made the product different by explaining who it was for. As Ogilvy said:
“I could have positioned Dove as a detergent bar for men with dirty hands, but chose instead to position it as a toilet bar for women with dry skin. This is still working 25 years later.”
Dove’s ads are clearly aimed at women. They also highlight the skin moisturizing effect of the soap rather than its cleaning capability. Dove is thereby transformed from a bland soap to a beauty product for females.
Positioning your product is an intelligent sacrifice of sales. Yes, you turn away many potential customers. But you sell even more to the customer group you chose to target. If the needs of two customer groups are different – like men and women are for soap – then choose one customer and sell a specific benefit they care about.
Say who your product is for.
That’s the Dove principle for differentiation.
The Patagonia principle – Plant your WHY flag
We have now covered four principles – four pillars – you can use to build your temple of differentiation. But no pillar can stand firm without a foundation.
Your foundation is WHY you are different. What belief do you stand for? Only teenagers rebel for the sake of rebelling. The truly great companies march to their own tune regardless of what the competition does. They are different for a reason.
As inspiration, let’s look to Patagonia.
Patagonia is an outdoor clothing retailer with the single purpose to make capitalism sustainable. Many companies can claim that vision. But few plant their belief flag with such missionary zeal as Patagonia. Here’s a sample of their commitments:
In 1970, Patagonia decided to kill their most profitable product (iron pitons for rock climbing) after discovering how harmful pitons were to rocks. They instead replaced them with eco-friendly aluminum chocks. 7
In 2011, the company took out a full-page ad in The New York Times with the title “Don’t Buy This Jacket”, actively discouraging people from buying more than they need. 8
Also in 2011, Patagonia launched Common Threads – a promise to repair their products for free, partner with eBay to give secondhand products a new life, and let customers return worn-out products for free recycling.
What kind of company does all this?
Only a company with a reason for being beyond business. Patagonia aren’t different because they want to sell more clothes. They are different to blaze a new path for what a company can be – and damn well pull the entire business world with them!
Just having a WHY makes you different in itself, because so few companies are willing to take a stand. Your WHY doesn’t need to be unique. You just need to be uniquely disciplined in adhering to it.
Patagonia’s WHY isn’t special. It’s their commitment to sell products that are sustainable, or to not sell them at all, that inspires us.
Plant your WHY flag.
That’s the Patagonia principle – the foundation – for differentiation.
You need a WHY as foundation
The first four principles – Costco, Cronut, Tesla, and Dove – represent four kinds of building blocks for creating a differentiated company. You can use just one, or several of them.
But no matter how you choose to be different, planting your WHY flag should always be done.
You don’t need a WHY from the start. Many great companies set out just being different, and only later find words for WHY they do WHAT they do. But the sooner you find your WHY, the common thread that weaves all your differences together, the sooner your company can go from good to great.
Finding difference – it hides in sameness
The five principles won’t make you different by themselves. They only work if you:
Find a position free from good competition, and
Push that position harder than anyone else
Tesla could become the world’s most innovative car company only because the rest of the car industry was so set in the past. And Tesla still had to push manically hard to establish their position. So how do you find those open lanes of differentiation?
Look for what everyone else is doing, and then do the exact opposite.
Take job application letters as an example. What does every applicant do? They talk about how great they are and how their past experiences align perfectly for the role. This left the door wide open for one college student to write what some Wall Street bosses called: “The best cover letter ever”:9
Dear (BLOCKED)
My name is (BLOCKED) and I am an undergraduate finance student at (BLOCKED). […]
I am writing to inquire about a possible summer internship in your office. I am aware it is highly unusual for undergraduates from average universities like (BLOCKED) to intern at (BLOCKED), but nevertheless I was hoping you might make an exception.
I am extremely interested in investment banking and would love nothing more than to learn under your tutelage. I have no qualms about fetching coffee, shining shoes or picking up laundry, and will work for next to nothing. In all honesty, I just want to be around professionals in the industry and gain as much knowledge as I can.
I won’t waste your time inflating my credentials, throwing around exaggerated job titles, or feeding you a line of crap about how my past experiences and skill set align perfectly for an investment banking internship. The truth is I have no unbelievably special skills or genius eccentricities, but I do have a near perfect GPA and will work hard for you.
What qualifications does this person have? Almost none! And yet, he got more job offers than almost everyone else. Humility was such a rarity in application letters that, when it finally showed up, this applicant stood out like a peacock in a chicken yard.
The more sameness there is, the more you stand out when taking the opposite approach.
Be different – even when it’s not better
Most people think you should be different in a way that’s better. I disagree. You should strive to be different even when it’s not better.
Wait WHAT?! How can being worse possibly be better? Two reasons:
1. When you are different, you are at least interesting.
Being interesting is a tremendous value in itself. Nothing kills startups as much as indifference. Interesting drives attention. Interesting sparks curiosity. And when you mix attention and curiosity together, you will soon smell the delicious scent of sales! 🤑
2. What some think is bad, others think is brilliant
Happy Sock’s goofy designs look horrendous to most people. But they are perfect for the unabashed optimists.
Volkswagen’s Beetle car is a laughing joke to the upper class who want to display their status. But it’s perfect for the cost-conscious individual who despise wasteful consumption.
There is no definite “better or worse”. There is only better and worse fit for a certain customer. If people don’t like your product, just tell them: “You are right, because it’s not for you.”
Closing
The internet age has already brought thousands of more competitors onto the battlefield for customer dollars, and the war is only going to get more intense from here. This leaves every startup with two choices:
Option 1: Fight in the grand arena of sameness, or
Option 2: Build your own tiny paradise of difference.
The enormous pile of gold in the grand arena may look attractive. But you have no edge here. Even if you do manage to fight your way to a few coins, you must then battle through yet another legion of competitors who will try to take them away from you. And even if you succeed at that too, the resulting bill on advertising spend and discount deals will likely leave you in the red anyway.
The alternative is to design your own game where you make the rules. To leave the arena behind, build something completely different, and do it so well you have no competition.
Let’s say it together:
Don’t be better. Just be different!
John Mullins and Randy Komisar (2009). Getting to Plan B, Harvard Business School Press, Boston, MA, 2009. page 149