I hope everyone had a great weekend. I bought a new car this weekend after waiting forever for it to come in (pretty exciting). Here’s a picture of me in it right after I drove it off the lot:
So safe to say today’s topic hits a little bit harder than normal.
And look, I know eggs are expensive, but we’re not talking about anything related to inflation today because I’m sure everyone has heard enough about that recently.
“It’s just so expensive”
I came across an interesting tweet recently talking about “criminally overpriced” items:
For the most part I agree. There are times where I go to check out and say to myself “How on earth is this so expensive?” … then shrug it off and buy it anyways, but that’s not the point.
The point is, identifying everyday problems that occur in life – in this case things that are too expensive – is a great place to start when it comes to brainstorming ideas. And it doesn’t necessarily have to be related to price.
For example, when going through this whole car buying process, getting the title of my current car switched into my name so I could trade it in gave me more of a headache than all 4 years of college combined. The DMV sucks.
When I looked at the list from that tweet, I lumped the items into 3 “buckets” that were primary drivers for why they were so expensive.
- Lack of competition/only one option
- Expenses you just can’t get around
- Luxury items for external signaling
Let’s break them down a bit further.
Lack of competition/only one option
Long story short, these are the items you associate with monopolies. Not literally, but you know what I mean. Where there is really only one place you can get them, or only one kind of them.
Things like Ticketmaster, which we talked about here, or insulin.
I think this bucket would be a difficult one to penetrate, because it mostly includes large corporations or heavily regulated industry. For example, the heavily regulated and monopolized industry for insulin is just now being targeted by Mark Cuban Cost Plus Drugs.
So, I’d probably steer clear because disruption would require a change in regulation/law…or billions of dollars if you’re Mark Cubin.
So that knocks the first two off the list, onto the next.
Expenses you just can’t get around
These are the things you HAVE to buy. Not literally, but you know what I mean. These often come along with the unavoidable things in life: death and taxes (plus a few extras sprinkled in).
Look, everyone is going to die, which makes funerals and the things that typically come with it unavoidable. I’m not saying everyone holds a big funeral procession, but simpler things like a casket or an urn are fairly standard. Along with funerals, are items like healthcare (that could lead to a funeral if not addressed), and my favorite: tax returns.
Everyone dreads taxes. Even the people doing your taxes dread busy season. But it’s something that everyone must do unless they want the IRS to come knocking. So, I’m not surprised that so many tax-prep services have popped up with the arrival of electronic tax filing. I actually kind of applaud them for saying “Hey, everyone has to do taxes, but nobody knows how so let’s just make some software that does it for them and charge a few bucks.”
For us, taxes suck, but TurboTax, HRBlock, etc. have been able to capitalize on the market and create huge businesses off of this “expenses you just can’t get around” bucket.
And it’s not just death and taxes, even smaller items like cap and gowns for graduation would make the list. Sellers make up for the fact that you’ll only ever need one or two by gouging you for them.
But again, you kind of have to buy it if you want to attend the ceremony.
This was my favorite “bucket” to research because it seems like the easiest to identify problems and think of solutions for.
Luxury items for external signaling
Lastly, is the idea of buying something “criminally overpriced” to signal or convey status. This is literally everywhere, and I feel like everyone is guilty of it to some extent.
This “bucket” contains the weddings (how big and nice they are), cars, and pretty much all other consumables.
Let’s focus on the consumer products for now. Nearly all consumer items fall on a spectrum from “value/bargain item” to “high end/luxury item”. In fact, I was hard pressed to find any sort of item (ever) that didn’t have a respective nice version and cheap version.
- Cars: Mercedes vs. Chrysler
- Clothes: Designer vs. Hanes
- Watches: Rolex vs. Fossil
Even something as trivial as suitcases, which is the one I find most annoying/surprising. The amount of unwarranted confidence and stuffiness of people who use the Away suitcase as a status symbol is laughable (especially when it’s just going to be tossed around by everyone).
Yet, the brand is rumored to be looking for an exit to the tune of several billion dollars.
Rant from,matt aside, whether or not the luxury goods are actually of higher quality is heavily debated, and I personally view it as a case-by-case basis. For example, I can see where a Mercedes may be of higher quality and utility than Chrysler on one end but can’t say the same for something like a watch.
Bottom line, I think this “bucket” is heavily saturated with too many big players. If you’re not one of the first players to market or don’t know the ins and outs of the consumer, I imagine it would be hard to succeed given how much competition there is on the broader market.
Tansky Sawmill Toyota
Like I said, I just bought a new car! And there’s no better place to go than Tansky Toyota. Car dealers can be slimy sometimes, but not Tansky, they gave a detailed run down of the car and it’s features, as well as a full tank of gas when I left. Go check them out, ask for Malik Patel, and tell them Matt sent ya. #ad
What would Matt do?
Eh, given the framework I just laid out, I’d probably look deeper into highly expensive transaction you just can’t avoid more so than trying to create the next big thing.
I’ve already laid out several from the start of the website, but solutions like:
- Streamlining death
- One-stop-shop for changing your last name after marriage
- Improved pricing/rental options for MCAT, LSAT, and GRE study materials
- Company that audits and negotiates every healthcare bill
- A mechanic service that will go with you to inspect a used car if you don’t know cars, so that you don’t get screwed with the non-refundable, big purchase
Just a few to spark some more thoughts.