I know this can be a bit confusing.
And at one point, we see people, yes, I'd take the business.
No, I wouldn't take the business.
And when I ask them why, what framework, they think about it,
there's no solid framework.
What we want to do here in this class
is give you a very solid framework
to analyze critically important decisions in your business.
And this decision will be easy once you understand
that you need to build the company from the customer back.
Erdin's business plan targeted a group in Boston
that was underserved.
It was a persona that we have here-- it's called Giovanni.
Giovanni is in his 40s.
Giovanni makes a tremendous amount of money.
Because a Lamborghini will cost you $300,000 to start.
And then there's a whole bunch of ancillary things.
So Giovanni makes well over $1 million.
He's in his 40s.
It turns out that he's not married anymore.
He was married once, but in his pursuit
to make the most money in his hedge fund,
to become a partner in his law firm,
to become a partner in his accounting firm,
he kind of left his family behind.
He was so driven to do that.
Now he has more money than time.
He has fun with his friends by going to the hottest
nightclubs in Boston, dating models, going to Monaco.
He loves the time that he met George Clooney when
he was younger.
And it was just a very exciting thing.
What Giovanni is buying here-- and we
could go through the clothes he wears, the clubs he belongs to,
the websites, the magazines he reads, the movies he would see,
the clothes he wears, the cologne, the aftershave.
But at the end of the day, what Giovanni is buying
is not a car.
He is buying an image.
And this persona that we built up
is much different than the persona of Laura.
Laura is 40s, as well.
But she is female.
She is married.
She has a four-year-old Volvo.
So she's very committed to her kids.
She probably makes-- her family makes
$300,000, $400,000 a year-- not in the same group.
And she's thinking about, how do I pay for college?
How do I keep our home in this expensive, exclusive area?
Where does she spend her time on Saturday nights?
She spends it at Chuck E. Cheese's.
She spends mornings-- weekend mornings-- on soccer fields.
She is the typical soccer mom prototype that we think of.
Now you can say, well, that's a stereotype.
But this is exactly what companies do.
They build a persona of it.
Is it exact?
No.
But what it does is it creates, in the bell curve, the most
likely customers to buy their products.
There will be some outlying people that buy Lamborghinis.
Tom Brady buys a Lamborghini.
Well, guess what? There's only one Tom Brady.
But there's a whole bunch of people in here
who are hedge fund managers working the financial sector,
partners in law firms, accounting firms.
And this sweet spot is where we're going.
And these people are homogeneous.
They speak to each other.
They have a similar sales cycle.
They want the same message.
And that's what we're looking for.
We're looking for a target group represented by this persona.
And that persona is fundamentally
different than Laura.
Laura is actually a threat to Giovanni.
She represents the wife that divorced Giovanni
because he was so dedicated to succeeding his work.
He was so compulsive about it.
So when he sees Laura's Volvo there-- when he sees Laura--
he is likely not to come back to Erdin's shop.
And let me build it a little further is
that to attract Giovanni, he had to go out and buy a $25,000
coffee maker, which made sense.
Because he could make hundreds of thousands of dollars
off Giovanni.
On the other hand, over the lifetime that Laura would come
in, he might make $10,000, if he was lucky.
He can't afford that $25,000 coffee machine
that was imported from Italy.
Now that doesn't mean that you couldn't
make a profitable business with Laura.
But it means you have to have a lower cost structure.
This framework of having personas, and being
focused on it-- and think about how do you
get a homogeneous group so that you can give them
a great product that they go tell
other people within their customer segment--
is what makes for great companies.
And if you try to do two at the same time,
you will end up doing neither well.
You'll have an in-between strategy,
which we call the Mermaid Strategy.
It's neither woman nor a fish.
It does neither particularly well.
You can't have that type of strategy.
Do one thing.
Do it well.
This is the focus.
So in the end, Erdin had a lot of urge to take that business.
He should not take that business if he's
going to be disciplined.
He has to focus and find out, how
does he get Giovanni into his business?
How does he make him very, very happy,
and not take the short-term fix of Laura?
Because that will destroy him in the long-term.