Why The Blue Ocean Strategy Is Bullsh*t

Why The Blue Ocean Strategy Is Bullsh*t Summary

  • Blue ocean strategy comes from a book about starting a business in a new market with no competition
  • As compared to a red ocean swimming with sharks and hypercompetitive
  • Examples would be Uber, Facebook, AirBnB and others
  • Entrepreneurs who literally invented a market for their product/service and made a lot of money in the process
  • I congratulate these entrepreneurs but I think in terms of probabilities
  • The failure rate for business is already 90% (or 60% depending on what stats you look at)
  • Launching a successful business is hard enough as it is let alone reinventing the wheel
  • And the businesses that do succeed, only 5% to 30% (depending on whose numbers you use) make more than 6 figures
  • Meaning the bulk of businesses are small sole proprietorships that don’t make much money
  • Reality is entrepreneurship is no joke and just succeeding means you’re beating the odds
  • And that’s usually in tested, proven markets
  • Blue ocean business is you trying to succeed in an untested and unproven market (hence no competition)
  • For every Facebook there are a a million failures
  • Sure it would be great to invent the next Uber, but it would also be great to be a movie star
  • The odds are about the same
  • I’m speaking from experience here, I spent a lot of time and money trying to reinvent the wheel
  • You can get six figures out of the vast majority of online businesses and 7 figures out of some if you can scale and teambuild
  • Your highest probability of 7 figures is the big three of real estate, insurance and financial services
  • With the big 3 you’d probably be better starting out selling for someone else before you go out on your end
  • Yes the markets are competitive but that’s because there is so much money out there, real estate is a trillion dollar industry
  • If you go hard and service the hell out of your clients, master branding, marketing and advertising you can make it
  • And on top of that you can actually model other successful people
  • Tons of sales programs on a broad level as well as a niche level (ie. can find real estate sales training on Youtube)
  • In a blue ocean business you can’t model success because your market doesn’t exist
  • You can only model approximately based on other blue ocean entrepreneurs – crossover isn’t full model though
  • Don’t spend your savings and time on product dev to find no demand for your products and your blue ocean was actually a mirage

3 Exceptions

  1. You’re a VC with a lot of money, connections and previous success. VCs can choose the best startup ideas, throw money at 10 of them and have 2 big successes (obv doesn’t apply to most people reading this)
  2. You’re already a wealthy and successful entrepreneur. This means you have the business acumen, leadership ability and cash to take a shot. You can sink 500k into a blue ocean business, pay for the marketing, build a team, and not have to rely on investors. And you have a big financial safety net as well as multiple sources of income so you can afford to take the loss, in return for a shot at massive success (still probably not the best use of your cash, seeing as how you have high profit businesses to reinvest in)
  3. You have an exceptional IQ and rockstar programming skills 

Narrowing The Competition In Your Market

  • While it’s not a blue ocean strategy, I do have a client in a service business in a relatively new and growing market as an industry leader (although with competition and without creating the market). These are hard to find at the right stage, but possible. Would be difficult to give you a roadmap to duplicate though.
  1. Within a broad competitive market you can niche down your market to reduce competition, for example you have a marketing company but you only do marketing for dental clinics, and your site/channel is dentalclinicmarketing.com. This way you’re an expert, your pitch is easier, closes for dentists is easier and your competition is smaller (but so is your pond to fish in).