Domestication

The Michelin brothers came to dominate the tire market.
Sam Zell grew the market for REITs from a few billion to hundreds of billions.
Steve Jobs made personal computers and our daily lives synonymous.

What’s the common idea they used to win?

Domestication.

An idea I’ve recently grown obsessed with.

I learned about it from the Founders Podcast by David Senra. He’s touched on this idea a few times, and again in his most recent episode on the Michelin brothers.

At the time the Michelin brothers invented the air-filled tire, every bicycle was running on either solid rubber or wooden wheels. No fun.

The process to replace a solid rubber tire would take an entire day, and it was outlined in a manual that was 60 pages long!

How long would it take to replace a Michelin “detachable”? 10-30 minutes.

Speed of replacement wasn’t the only advantage to these Michelin tires - the ride quality was also superior.

The Michelin brothers then displayed this advancement to the entire world through their own bicycle race.

A race they rigged.

How?

By littering the entire course with nails.

The Michelin brothers were such geniuses at marketing, that when their tire was first used to win a race, they only had 12 in stock.

One year later … they sold 10,000.

This concept of domestication wasn’t only useful when bicycles were on the cutting edge of personal transportation.

In the 1990’s, Sam Zell “made the REIT (Real Estate Investment Trust) dance”.

Without the REIT, owning real estate took a lot of time and money.

You’d have to identify a piece of property within your price range, ensure it would be a good investment, then find and deploy the capital necessary to purchase the property.

And that’s just to get started.

Now you’ve got to find tenants and maintain the property for as long as you own it.

Want to sell?

Now you’ve got to find a buyer.

With the REIT, owning a neighborhood became more like buying/selling stocks.

Much more liquid and less capital intensive.

By identifying and capitalizing on this lower barrier of entry to invest in real estate, Sam Zell helped grow the REIT market from ~$7 billion in 1991, to ~$438 billion when he sold his company in 2007 (talk about great timing)!

Domestication can also be used to lower the knowledge barrier needed to use technology.

Apple accomplished this with the personal computer by popularizing the GUI (Graphical User Interface) with the Macintosh.

This technological marvel allowed the user to click and drag a file into a folder.

Before the GUI? It looked like this (AI generated, this was before my time):

MOVE filename.txt directory_name

Users were required to know each of these text based commands to make their computer perform the task they wanted.

By lowering the knowledge barrier required to use computers, Steve Jobs was able to expand the personal computer market from tech geeks, to everyone and their grandmas.

My startup is also applying this principle of domestication.

Many of my competitors in payments have User Interfaces (UI) developed by banks (or similar) that seem like they haven’t been updated in decades.

They’re ugly, bulky, slow, and worst of all, hard to use.

One of the clients we had (when I was working in the dental space) was using one of these softwares (before the company transitioned them to a proprietary solution).

The dental office asked me a simple question - how do we set up one of our patients on a recurring plan that charges them every month?

It took me FORTY FIVE MINUTES to figure out how to do this.

Me! A technologically savvy 20 year-old who not only grew up using tech, but also spent the last 3 years working with these payment “solutions”.

That’s ridiculous.

No wonder one of the biggest objections I face as I transition businesses to a new software is “we don’t want to learn how to use a new system.”

Especially when the users aren’t 20 y/o tech-savvy kids; they’re 40, 50, 60+ and often technologically challenged.

As I’m developing my own solution, the guiding UI principle I have is making the thing so simple and user friendly that anyone can use it - no training required.

And then, of course, we’re going to train everyone so well and white-glove their onboarding experience so that the only logical outcome is “Man, working with those guys is great!”