This weeks show gives insight into a serial entrepreneur and the cycles he went through from starting, pivoting and selling his past companies and his current start-up that has gone through its pivot to find its place in the market. What's the secret of pivoting your company so that its a better chance of success?
Guest: Jeff White – Founder and CEO of Gravy
Never short on ideas, Jeff is the Founder and Chief Executive Officer of Gravy. Prior to founding Gravy, Jeff founded several companies and led them to successful exits.
Though a kid at heart, Jeff has built successful companies for over two decades. Named the D.C. Technology Entrepreneur of the Year in 2011, he founded and led mySBX to growth of over 100% annually. Jeff also founded Blue Canopy, twice named to the Top 500 Fastest Growing Private Companies in America.
Jeff is passionate about building real products for real people and loves to start with a blank canvas (he’s a whiz with a whiteboard).
Jeff currently lives outside of Washington, D.C. with his family and mentors other D.C. area entrepreneurs.
You can connect with Jeff at:
Price is king, right? “Build ’em cheap and stack ’em high” is practically the motto of most segments of the tech industry (naturally, there are some notable exceptions). It’s certainly a core assumption about what the majority of customers want.
For example, $320 is a huge sum of money for a middle- or lower-class Indian family, but it hasn’t stopped sales of DreamScreen – a product aimed at the India market. Our customers saw the value that DreamScreen brought to their lives. The price, though steep, makes sense.
Never kill an idea because you assume your customers can’t afford it. If the value the product brings to their life justifies the cost, they will find a way to make the purchase. Your first concern should be to make it relevant; your second, to make it affordable.
Remember that in many cases the customer is not evaluating the perceived worth of your product solely on price, but more on value. They ask themselves, “What do I get for the money that I spend?”
If you’re getting tripped up in trying to understand if your customer will perceive your product as “expensive,” ask yourself if you are confusing price and value as being the same thing. Price and value are not the same thing; if there is sufficient value in the product the customer will find a way to save for or finance their purchase. People will find a way to pay for the things that are important to them, and important is a purely subjective thing.
Look at the organic food market. Vegetables that are certified as organic cost an average of 50 percent more than non-organic. Organic milk and meat are almost twice the price of conventionally raised products. Now, everybody benefits from healthy food, but there is still no definitive study showing that an organic head of broccoli is dramatically healthier than its conventionally raised counterpart. Yet millions of people regard the extra cost of organic food as part of the cost of doing business, or raising their family. Organic matters to them, and they’ll prioritize it, even if it means cutting out other items from their budget.
There are other ways to give a customer access to products that are theoretically too expensive for them to purchase.
In the last five years businesses that allow women to rent luxury items for monthly fees have become a huge trend. Bagborrowandsteal.com com allows a user to rent a Chloé handbag for $225 a month. At the end of the month, the customer returns the bag and receives a new designer item in its place. The bag would cost her more than $1,500 to buy new.
Other companies rent designer dresses for roughly ten percent of the purchase price. The woman rents it, wears it, and returns it a few days later.
There are questions here about whether these smaller rental companies are harming large luxury brands by devaluing the products they rent, or benefiting them by extending the brands’ reach to a new audience. There are good reasons why Gucci, for instance, does not rent their dresses and bags directly to a customer. The person who purchases a dress for several thousand dollars does not want to see it worn by her assistant for a tenth of the price. However, if that assistant then goes out and buys the perfume to go with the rented dress, and begins a longer-term relationship with a brand like Chloé or Gucci or Louis Vuitton, then maybe it ultimately benefits these brands.
Either way, it’s an interesting and innovative way to tap into people’s desires, and provide them with the things they need and want.
- Is the expense of your product in some way central to how your customers think or feel about it?
- Would you benefit from having more people able to afford what you sell, or does its exclusivity magnify your potential customers’ desire to buy it?