Mistake-Driven Business Model

Oct 12 2018

A coworker of mine this summer pointed out how much free advertising Starbucks gets through misspelled names. The word of mouth and Instagram promotion must be incredible. Worst case those hearing think “silly Starbucks.” Best case they crave it. All for the price of not caring?

The more I thought about it, when you relax some constraint on a business, you open up possibilities. Starbucks saved time and money figuring out how to spell names right and earned free advertising.

Foot Cardigan is a monthly sock subscription service. But unlike other subscriptions, such as Blue Apron or Netflix, you dont pick your socks. You get a random pair.

The potential user sees this as exciting and is more likely to buy in. They save costs dramatically. Rather than an extensive inventory management system to make sure they give everyone the exact pair they want, they can have a vat of socks if they want. As long as there is enough variety, it is super unlikely anyone will get a duplicate pair. Even if 0.5% of users did, the costs they save makes it so worth it.

Foot Cardigan relaxed the constraint that users need to pick what they want. It won’t work for every business, but they are making a killing from it.

It almost looks like you can monetize mistakes. By having less strict standards on less important dimensions, there is opportunity to learn how you can provide more value and save money.

As a quick final analogy, think about how fun it was as a kid to get two Goldfish fused together. And imagine if Pepperidge Farms spent money on finding the misfits and throwing them out because they weren’t “Goldfish.” They would unknowingly destroy value for you and them!