Power Niche Marketing: Competition Is Evil

I start this article with an incredibly powerful quote from Peter Thiel. Mr. Thiel is a very smart fellow who started, and then sold, PayPal and became a billionaire. Now he is a professor who teaches at Stanford.

Thiel coined the phrase “Competition is Evil” in his book Zero to One, which should be on your reading list.

What Thiel means by this short phrase, is that your goal is to avoid being commoditized and similar to everyone else (which destroys your pricing power). Instead, you should create your own little baby monopoly that you really “own.” In other words, Thiel advocates creating a smaller “niche” that is absolutely your own.

Once you follow Mr. Thiel’s advice — once you become a monopoly in your niche — you aren’t “competing” anymore within your niche. And the best thing about being a monopoly is that monopolies have pricing power. Note the use of the word “power” just now.

Keep this thought in your mind. When a client or customer asks you: “How would you compare yourself to [name your number one competitor]?” —  you have probably already blown it because in your client’s/customer’s mind he sees you as “competing.” The essence of competing implies your products are “comparable” and so the client or customer could easily ask you:  “Why are you more expensive?” And then it is likely that you and your competition will end up in a race to the bottom of pricing and you lose all pricing “power.”

You want to be able to say something like. “We’re not actually competitors. The other party you mentioned is really great at [X]; however, when it comes to [Y] we are the top/only game in town, because….”

Thiel’s point, at heart, is a statement that you have to be “different.” It is important that you outperform in your smaller niche — it is the first thing you must do — be different!

And Thiel is not the only one making this point. Indeed, all the smart thinkers are saying the same thing:

Peter Drucker says you have to “innovate” which means do something differently.

Michael Porter says that the biggest mistake companies make is trying to be “better” than their “competition” (which only enriches the customers, employees, and other related parties), when instead they should be striving to be “different” from their competition.

Seth Godin, who wrote some brilliant marketing books, including Purple Cow, which should also go on your reading list, touts the virtues of standing out (i.e. being different), like a purple cow would stand out.

And of course yours truly, that incredibly intelligent, and arrogant-in-a-nice-way, columnist writing this article, is pushing that view hard. There is literally nothing worse than being indistinguishable from the “crowd” — you have to be different and thereby avoid the “evil” of competition.

Power Niche Marketing: If You Want to Get Rich, Own A Power Niche

My whole column is about Power Niche Marketing – but this article is the “big” article – it is about how you can “own” a Power Niche.

By the way, I have written a manuscript on this subject – hopefully for publication later this year. Does anyone know a literary agent for me?  Yes – that is a serious question.

In any case, in my first article of this Power Niche Marketing column, I explained the essence of a Power Niche and the importance of developing one if you want to have a successful career.

As a reminder, for it to be what I call a “Power” Niche, as opposed to just a plain old niche, you have really be top dog in that niche.

In order to truly own a niche, you need several characteristics that are important:

First – the niche should be an area in which you already have some expertise and should be in the industry you are already working. However, I will admit that this isn’t 100% needed, as you can decide to acquire the expertise, and change jobs and even industries, if the job or industry you are in just isn’t that robust. Then you would be starting from scratch, which is very tough and fraught with the risk that you will find out, after investing a lot of time, that you have hit a dead end. Without belaboring this, I suggest we presume that you are picking a niche in the industry in which you are already working and have a least a modicum of expertise.

Second – it needs to be something that no one else already owns. If you think about what this means, it typically means something that no one has thought of yet. As a quick example, if you are selling houses, perhaps you say that you are a real expert in selling houses for people who have a physical or mental handicap, as you have an understanding of the special requirements and needs.

As an aside, it is not 100% necessary that you be the sole player in a Power Niche, as sometimes there could be room for two people in a niche. In that situation, your power would be somewhat diminished, but depending on the niche and the circumstances you might be okay.

Third – it should be something pretty small so that you can become the dominant force within it. But of course it can’t be so small that it is useless.  This is a judgment call, of course.

Fourth – it should be something for which you can hold yourself out as the world’s greatest expert, perhaps by becoming a thought leader, writing (super short) articles, webinars, even mass-mailings and whatever else you can think of.

In the law business, the Power Niche is by far the most powerful technique. Let me give you a perfect example of the power in a Power Niche.

I will talk about my firm’s litigation practice. I have ten litigators, and the practice is led by a really talented superstar lawyer. He hails from one of the most prestigious law firms (Cravath, Swaine & Moore) and one of the most prestigious law schools (Harvard Law School), and he is a former Assistant U.S. Attorney in the Southern District of New York City. This guy is “the real deal” in litigation! And he has nine partners and associates to boot, so we have a ten-lawyer litigation department led by my talented partner.  Pretty good, huh?

Not so fast. There is another law firm that I have a lot of respect for.  It is a global mega law firm with a powerhouse brand. I have a good friend there, and we had lunch last year. He told me they have 750 litigators. Yikes – that is a lot of litigators!

Using my math major, I calculate that we are down 75 to 1. How could I possibly “compete” with this firm in litigation?

To avoid this competition that I don’t really have a hope of winning, I use the power in my Power Niche. As you recall, I have branded my firm as The Pure Play in Real Estate Law, thereby trying to establish ownership of this niche as much as possible. The global firm I mentioned has a real estate practice and a really good one too; however, whether they like it or not, they are known for being one of the top litigation firms in the world. That is what they are and that is their Power Niche. And we are known for being one of the top real estate law practices in the world.  That is what we are.

So, if the litigation at hand is just general litigation, then unless price is a consideration, which it often is whether I like it or not, the client will likely go with the other law firm. But what if it is real estate litigation? Could I maybe say something like the following?

Well Mr. Client, I can’t say we are comparable to [the other firm] in general litigation. They are just much bigger than we are. However, if you are talking about real estate litigation, it is a much different story. We are the largest real estate law practice in New York City – dramatically bigger than [the other firm’s] real estate group. We have a zillion real estate clients – including a Who’s Who of blue chip institutions doing billion dollar deals — and we know everything about the real estate world from all angles of the capital stack. Our vaunted real estate group often works with our litigators, thinking up unusual and creative legal angles and advising on how to obtain advantage. If this were just a general litigation matter, well maybe [the other firm] is a logical choice. But this is real estate litigation, and no one is better than we are here!

So, what do you think? Believable? Maybe yes – maybe no – but it is a lot better than my alternative, which is only to say that “we are smaller and cheaper.”

Sticking with the legal world for a moment, it is interesting if you look at the statistics. If so, you will see that a fair number of the most profitable law firms in the world – especially the ones that rose to prominence in recent years – are largely pure plays.

So if you want to get rich, own a Power Niche!

Power Niche Marketing: The Third (Marketing) Threebie – Knowledge Is Power

In my last two articles, I explained that when I need to remind myself of the most important basic marketing things to do, I am mindful of the three basic items, which I call the “Threebies.” In my last two articles, I wrote about the first two Threebies”:

The importance of “being enthusiastic”when marketing and meeting new people.

The importance of “getting out and about.”

In this article, I will talk about the last Threebie, which is:

Knowledge is Power

Ultimately, you have to have knowledge of something, or you aren’t that useful. Indeed, when you get right down to it, people, whether or not they are really thinking about it analytically, generally want you around if you are useful or potentially useful to them, and generally don’t really care that much if you are around if you aren’t that useful.

Consider when you were a kid. You were someone everyone wanted to be with because:

You always knew where the party was.

You were smart and could help with homework.

 

One way or another, there was something useful about you that made people want to be with you.

Obviously, what we are talking about here is much more sophisticated; however, you are trying to create something of use that makes you worth talking to or having around. For marketing purposes, that “something” is your “knowledge” of a topic that is of interest — or of use — to the people you want to have around you.

How do you get knowledge to have power? I will say now that you should pick an area of the industry in which you work and learn everything there is to know about it, so that you are a complete compendium of useful and cutting-edge information. This of course is what I call a “Power Niche,” as per the various articles I have written and will write.

For example, I am a real estate lawyer. So I read every single thing I can put my hands on pertaining to the real estate industry. Of course, I read the Wall Street Journal, but I also read books, publications, blogs, magazines and everything else I can find that deals with the real estate industry and/or the players in that industry. For example, I have my assistant send me any article on real estate that appears anywhere. That way, I am a wealth of information about real estate. It is astonishing how much I know and keep learning in my real estate niche. I have made myself very useful to be with because I know what everyone is doing and what is going on.

So if you are one of my clients, or someone I hope will be my client someday, it is obvious after speaking to me for a short period of time that I know a ton about the real estate industry and that I am able to provide value to you and I will be an extremely useful source of information, guidance, and advice.

Also, just to be clear, I am not out for “power” in the classic sense, to have the ability to push people around and lord it over my subjects. That simply isn’t my style, and it is not at all what I am talking about here. I am referring to the “power” to be useful. Indeed, it is great to have “power” to help your friends and your clients achieve their goals.

So, the next time you decide to market, remember to “Get Out and About,” to “Be Enthusiastic,” and to relentlessly seek knowledge because “Knowledge is Power.”

There may be a special fourth step or a “Fourbie” as I call it, so stay tuned…