Learning From Legends — When The Obstacle IS The Way: What kind of startup are you building?

Learning From Legends — When The Obstacle IS The Way: What kind of startup are you building?

In the world of business and entrepreneurship, there are often obstacles that arise. These obstacles can sometimes be seen as setbacks or challenges to overcome. However, what if these obstacles were actually the way forward? This concept is beautifully exemplified by the diamond industry giant, De Beers, and the innovative startup, Ecosia. Both companies found themselves faced with unique challenges, but instead of letting these challenges hinder their progress, they used them to their advantage and achieved great success.

De Beers, a diamond mining and trading company, faced a major obstacle when it came to advertising their products in the United States. Due to legal issues and government oversight, De Beers never had offices in the US and were prevented from directly promoting their brand or specific jewelry in their ads. However, they saw this obstacle as an opportunity to tap into the power of mass psychology and emotional currency. Instead of focusing on the stones themselves, De Beers created a campaign that positioned diamonds as a symbol of love and romance. By leveraging product placement and social proof, they created a mental framework for consumers that reduced uncertainty and increased the perceived value of their products. This strategy resulted in a ten-fold increase in wholesale diamond sales in the US between 1939 and 1979. De Beers understood that reaching consumers before they were in the market and providing them with anchor points reduced uncertainty and increased their willingness to spend more on engagement rings.

On the other hand, Ecosia, a search engine that plants trees with every query, faced a different kind of obstacle. They were competing in a market dominated by tech giants like Google and Bing. However, instead of trying to outspend or outperform their competitors, Ecosia focused on aligning their product growth with a noble cause. By championing the environmental cause and making users advocates for their brand, Ecosia created a powerful word-of-mouth marketing effect. Their product became more than just a search engine; it became a statement of support for the environment. This approach allowed them to gain awareness and attract users without relying on traditional advertising methods. Ecosia's success was built on the insight that aligning their product with a cause and making users their advertisers was a winning strategy.

When it comes to building a startup, there is often a debate about what is more important: the product or the distribution. Apple is famous for prioritizing product first, audience second. They believe in creating something so beautiful and powerful that people will go to great lengths to get it. This approach has served them well, as their products have become synonymous with innovation and desirability. On the other hand, some startups prioritize audience first, product second. They focus on building an audience or community first and then create products tailored to their needs and desires. Instagram influencers turning into fashion moguls are a prime example of this approach. They already have a captive audience, and by leveraging their influence and reach, they can easily promote and sell products to their followers.