Today, they talk about eliminating the very idea of “waste,” drawing inspiration from the way that natural systems function. They are laser-focused on the much bigger mission of turning hard-to-recycle materials into something useful.
Tom’s unique-and-controversial rationale: He didn’t want TerraCycle to be known as a one-product wonder and it was on its way to becoming just that.
Hence the pivot.
He wanted the organization to address a much larger category — no matter how painful that revelation might be in terms of revenue hiccups and employee turnover.
It was time to burn the boats.
And it was tough: TerraCycle had to close a factory and lay off workers in order to invest in that change. It takes courage to be legendary.
Tom explained how he thinks about his favorite “problem” during an interview with Heather, who has covered TerraCycle for close to a decade:
“The primary purpose was solving a major issue, and for me garbage was the issue. It’s a fascinating topic. First, and this is a fun thing, it’s the only industry in the world that will one day own all of your possessions without an exception. No other industry can say that.
“It’s also the only industry that has negative raw-materials costs. In other words, people are willing to pay you to take the material. That’s what defines garbage as garbage
“The third, for how big it is, and how everything one day will be in it, it’s one of the most un-innovative industries. Per increment of revenue in the industry, it has one of the lowest levels of innovation. And a big part of that is it’s not sexy; people don’t like dealing with it. We flush it down the toilet, we put it in our trash, we don’t like thinking about it.”
The roots of Tom’s fascination with garbage actually stretch back to his early childhood in Budapest.
When his family emigrated to Canada, they were astonished by the sorts of things people would leave in the street as trash — like perfectly good television sets that were considered obsolete, but that were otherwise usable.
Contrast that mindset with communist Hungary, where you actually had to apply to the government to become a TV-set owner. In the western world, the Szakys saw no shame in becoming avid garbage pickers.
Tom’s decision to reconsider the waste problem through a much larger, yet more focused lens catalyzed a huge expansion starting in the 2007 time frame: TerraCycle’s businesses now include a “sponsored waste” service that helps consumer brand giants like Unilever and Procter & Gamble collect hard-to-recycle packaging and an R&D group dedicated to figuring out how to repurpose stuff that is considered “non-recyclable.”
Massive companies like Waste Management are copying its ideas.
In fact, category designers always attract competitors. And that’s a great thing. Competition validates that the problem you solve is important. And most of all, by copying you, your rivals are telling the category that you are the leader.
By laser focusing on one specific problem — finding new value in what most people consider to be “waste” and upcycling it into other things (basically giving it a second life) — TerraCycle created a niche that didn’t previously exist.
It’s now a $30-million company, with more than 200 employees on the payroll — and that doesn’t include the thousands of other allies and people in the field that are part of its ecosystem. (More on that later in Chapter 4, where we’ll talk about how legendary entrepreneurs evangelize their world view and build ecosystems of disciples that help spread their gospel.)
Here is a little more on Tom’s philosophy about focus. In his own words:
“I completely agree with focus being ridiculously important, but for entrepreneurs like me who like dealing with many different topics, garbage allows me to do both: focus very cleanly on one simple idea, which is to eliminate the concept of waste, but that actually gives an opportunity to do just about anything.”
It’s one of the great crazy dichotomies of life: By niching down, you get to play more broadly.
Let’s unpack that theme with another example.
Our friend, Jen Groover, (she answers to “Groover”) had her entrepreneurial breakthrough with a one-hit product in a very specific category that she envisioned and designed. That moment came during a stressed-out experience in a checkout line.
Groover recalled her epiphany for the “Storytelling for Entrepreneurs” blog17: “I was in the grocery store one night with my girls in their car seats. I put them down on the floor, and I was looking for my credit card. They both began wailing, screaming, crying. I was holding everybody up. I was panicking. I dumped my bag full of stuff in front of the cashier to find my credit card, and I thought to myself, ‘I cannot believe, as far as innovation has come in our society, that we, as women, accept a bucket for a handbag.’ Like, literally a bucket. I could put a lining, a mop, and water in it and it’s a bucket. ... There has to be a better way’ was all I kept thinking.”
So, Groover set off to create one.
Her now-famous Butler Bag is considered the world’s first “organizer bag.” It’s a stylish, feminine bag that is also super functional. No compromises on style. No more endless hunting for keys, wallets and other mysterious objects. Today, major retailers and Avon carry it, and the Butler Bag is a multi-million-dollar product line.
From there, the woman who was once tied down to her chair as a schoolgirl for being too curious turned herself into a wardrobe advisor, lifestyle brand, best-selling author, motivational speaker and television celebrity.
She’s also a partner in Thuzio, an executive and entrepreneur networking organization started by former NFL star Tiki Barber and investor Mark Gerson.
In fact, Jen’s list of achievements is fucking exhausting. She is what Success Magazine calls a “one-woman brand.”
She got there by niching down to become the category queen in “organizer bags.” And then, she played bigger, parlaying her experiences as an entrepreneur into a series of books that help others find ways to reach their best potential. (Sorry, we had to drop at least one reference to Christopher’s first book, Play Bigger. We promise it won’t be the last.)
Once you open your mind, like Jen and Tom did, you’ll realize that we are surrounded by “problems” just begging to be considered from a different point of view.
Here’s another example you’ll appreciate, especially if you’ve ever flirted with the idea of opening a neighborhood watering hole or restaurant.
Paul Kermizian, Pete Langway, and brothers Kevin and Scott Beard are four guys who appreciate craft beer, classic rock and old-school video games. One day they had an “a-ha” moment — what if they could create a place where like-minded individuals could find and enjoy all of the above?
In an article for Mashable18, Kermizian, who holds the title of CEO, recalled, “I was a collector of arcade cabinets and had four games in my apartment in Williamsburg, Brooklyn,” When my partners and I decided to open a craft beer bar back in 2004, we thought lining it with classic games might be fun, as we hadn’t seen that before.”
And with that insight, the “arcade-bar” category — a contemporary twist on the local dive bar — was born. Kermizian and friends dubbed their concept Barcade and selected vibrant Brooklyn, New York, as the place to plug in.
Their idea to create an entirely new concept with little to no “market research” worked. Even in a business-startup category with one of the highest known failure rates,19 restaurants and bars.
Close to 15 years after that opening, there are seven Barcades in the New-York metropolitan area in urban neighborhoods with similar nostalgic, beer-appreciating demographics such as Jersey City, Philadelphia, Newark and New Haven, Connecticut. Each location features about 45 video games from the late 70s to the mid 90s, something like 25 beers on draft (including some that are exclusive to the location), and a full bar and full kitchen to appeal to tag
-alongs.
We don’t know these guys personally, but here’s what we do know: Paul and his video-playing business partners are intuitive category designers.
Think about this:
If you had hired a bunch of khaki-pant-wearing management consultants in 2004 to do category research on the potential for establishing a new restaurant niche, is there a snowball’s chance in hell they would have come back with a recommendation to start the world’s first arcade bar?
That would be a big NFW (no fuckin’ way).
Yet, somehow, like so many other legendary entrepreneurs, the Barcade boys were able to see the problem of “where do I get craft beer and play classic video games without lying on my couch” from a unique angle. And they intuitively understood that they had to tell the world what made their bar different.
They did not leave describing and defining their category to chance. They shaped the conversation. Because every legendary entrepreneur is also an evangelist.
They told people they were an “arcade bar”, and then they set about showing customers what arcade bars do, and sell, and look like. And just to make sure no one forgot they were different, they named the place Barcade. Not Paul, Pete, Kevin and Scott’s Bar or some other non-differentiated name. They locked and loaded their new category and tied their brand to it.
Today their tag line is, “The Original Arcade Bar.” Because, as is the case with compelling new market categories, there were plenty of people following in their footsteps.
Legendary.
The Mothers Of Reinvention
Legendary category designers never stop reminding the world that they created the category. That they are the standard by which all others must be compared. And that they haven’t stopped looking at the original problem from new angles.
Take the story of GOJO Industries. You might not know this privately held company’s name, but you’ll recognize the name of its most famous product.
In 1997, GOJO, with its introduction of the consumer edition of Purell20, convinced millions of parents and germaphobes that we should use “hand sanitizer” before and after we touch anything. Refuse to do so at your own peril!
In 1996, none of us even knew we needed hand sanitizer.
Today, millions of people carry the stuff with them everywhere.
Hospitals and doctors’ offices worship it via dispensers hanging on the walls. You can find bottles scattered on hotel check-in counters and at the start of restaurant and cruise-ship buffet lines.
It’s even tough to make it through boot camp without being exposed to the brand: the military is a huge customer.
At its height, Purell owned21 an estimated 70 percent of the hand-sanitizer-market category. (There was a brief change in ownership, but that’s a story for another book.) Its name is the one to beat for mindshare22. The brand that all other hand sanitizers are compared to.
There’s a corollary: The bigger and more urgent the problem, the more time and money people will invest to solve it.
You don’t want to be walking around with unsanitary hands now, do you?
The “overnight” success story behind Purell maker GOJO actually began almost 40 years earlier, in World War II-era Akron, Ohio, with a simple problem identified by tire factory worker Goldie Lippman — it was super difficult to get carcinogenic substances like graphite, carbon and tar off her hands with regular bar soap after a production shift.
You had to use benzene, which was irritating. Women, in particular, were interested in an alternative23 because who wants red, smelly hands?
That problem inspired Goldie’s husband Jerry, who invented a formulation that was less harsh and that was delivered in liquid form. The two entrepreneurs mixed up the product using a washing machine and packaged the soap in pickle jars pilfered from local restaurants.
Yes friends, GOJO (the company’s name is a mash-up of the founders’ first names) was also the designer of the “liquid-hand-soap” category! Before GOJO, most individuals used “bar soap” to scrub their hands, faces, feet, clothes.
And the venture also came up with a way of controlling portions, so that it was more cost-effective for business owners to buy the product.
Today, more than 70 years later, GOJO’s identity is still synonymous with the hygienic benefits of keeping your hands clean.
That’s true in large part because it has never stopped thinking about the original problem and new ways of addressing it. “You don’t go up against the giants unless you have a category-defining brand,” GOJO’s current CEO, Joe Kanfer, (the Lippmans’s nephew) told The New Yorker24 for a corporate profile published in 2013.
Where do entrepreneurial epiphanies come from?
The corollary to the Einstein observation that opens this chapter is this second life lesson from the legendary physicist:
“We cannot solve our problems with the same thinking we used when we created them.”
For a sense of what that means, let’s peek inside the weird* (we love weird!) brain of Sara Blakely, the former fax-machine salesperson who founded Spanx and who became the youngest self-made billionaire25 of any gender in the United States at age 41.
All because she turned her personal clothing habit — cutting the feet out of her pantyhose — into a wildly successful new undergarment category.
Sara worked on her idea for two years (while still selling fax machines and spending more than $5,000 of her savings on research) before she would discuss it with anyone.
That’s partly because she was afraid her family and friends would try to talk her out of it and partly because she wanted to make sure she could defend it unequivocally and enthusiastically when she got around to blabbing about it.
It’s a superstitious habit she still embraces today.
And it’s not because she is afraid of failure.
As a child, Sara’s father would be disappointed if she and her brother couldn’t name at least one thing they had flopped at weekly. She would literally get a high five for falling flat on her face, literally or figuratively.
“Failure for me didn’t become about the outcome, it became about not trying,” Blakely told serial entrepreneur and angel investor James Altucher on his podcast.26 (A note from Heather: Run, don’t walk, to find headphones and listen to this interview. And then listen again. Actually, don’t bother with the headphones, everyone should hear it!)
Sara knew that she wasn’t the only woman frustrated with the problem of getting pants and skirts and dresses to hang “just so” without bulges or clings or whatever. She envisioned her new undergarment as the “invisible canvas” upon which great designs could be displayed.
She didn’t need fashion or retail or business experience to tell her that, which is good, because this former stand-up comedian and saleswoman didn’t have any.
“What you don’t know can be your greatest asset if you let it,” she observed during the podcast. “So if you’re sitting there right now in your life, and you have an idea or you imagine a different life for yourself, but you’re like ‘I didn’t go to school for it’ or ‘I don’t have any contacts in this’ or ‘I don’t have money to do this’ – those things, if you allow them to, could become your competitive edge. They could be what gives you the opportunity to do something amazing. If you don’t know how it’s supposed to be done, then it’s pretty likely you’re going to do it differently.”
What she did have, in spades, was persistence and an infectious enthusiasm for her idea. Sara’s a missionary, not a mercenary. Category designers are on a mission to solve a problem, to get the world out to be different and to make a difference. They are possessed. They would crawl through glass to make it happen.
And, they recruit others in their mission.
Sara’s enthusiasm stuck with the mill operator who handed Sara her first big production deal. It also won over the skeptical Neiman-Marcus buyer w
ho followed the eager entrepreneur into the ladies’ restroom for an impromptu, visual demonstration of how Spanx works. Won over in 10 minutes, that buyer subsequently placed orders enough for a trial in seven stores.
Almost 18 years later, Sara spends an hour every weekday letting her mind wander during her morning commute. Even though she lives just five minutes away from the Spanx headquarters, she leaves an hour early. Behind the wheel, she records random thoughts and questions that pop into her head. Her running list of ideas is more than 50 pages long.
That’s single-spaced.
Here’s Blakely’s view on perpetual ideation, as told to James Altucher:
“As far as products go, I look at everything, and I like to ask why. You could look at the table sitting in between us and ask, ‘Who invented the table? How interesting. And, who is the first person who did that? What were they thinking? Is that that right way it should still be created? When’s the last time tables changed? And, Is there a better way?’
“I find things really interesting. Like the men’s undershirt. The undershirt is part of the reason I went into men’s Spanx,” Blakely told Altucher.
The men’s line wasn’t the result of some overwrought business plan or months of focus groups. Blakely just wondered: When was the last time someone actually thought to redesign the simple cotton T-shirt hiding under a men’s dress shirt? And then she empowered her team to answer that question. “I operate very much from gut and very much from product. If I can create a product that is going to change lives or make your life better or be a better option, that is where I get my energy. And, I let the rest work itself out.”
No Problem Too Narrow
When Tim Rhode, a dear friend and Legends & Losers guest (Episode 727), started his real-estate career as a young man, he wanted to distinguish himself from other agents in his community. His motivation was simple: close enough contracts to keep two kids under the age of four in diapers.
To make his name, he niched down!
Tim narrowed the problem, picking a simple and specific niche in which he could specialize: He would only work for people who wanted to sell their homes quickly.
Niche Down Page 4