In the age of Google, shippers with narrow interests can be profitably marketed, served
By Ryan Skinner (email)
For this third instalment in the series inspired by Jeff Jarvis' excellent book What Would Google Do? (previous instalments here and here), I found the perfect example to illustrate Jarvis' third precept - "the mass market is dead; long live the mass of niches." Who better to talk to than Franck Kayser, the rebel shipowner who defied the market and launched The Containership Company in the teeth of a recession?
I talked to Kayser at length about the business plan that drove him and his partners to found their company last year, and much of that will come in an article later this week. But here I'll look at how he's managed to prize away a market segment with specific needs, from the grips of the big container lines, and how this tactic can be exploited in the age of Google.
"Our question was this: How can we give customers something they're interested in? So we talked to 80 potential customers. They wanted everything gold-plated, of course. Finally, we found a product that appeared better than what they were getting today. And we outsourced everything where we weren't adding value," said Kayser.
One of the powers of the Internet (a power Google has dramatically enabled) was to unite a disperse group of people who share a very narrow interest. Once such a group coalesces, that specific interest can be profitably served. There are countless companies using the power of the Internet to serve extremely narrow markets - a service for foundations wishing to offer cell phone recycling, the world' s leading skating rink contractor, or the world's leading provider of automobile sun-roofs. (These often qualify as "hidden champions").
Kayser and The Containership Company found out that a small but significant group of cargo-owners were willing to pay a slight premium to lock up a certain amount of transoceanic containershipo capacity. So they made a product that fit the needs of less than 1 per cent of the market just right, and they're making money doing just that.
Another value of the Internet is the ease with which companies can link up with service providers for everything non-core. This boils down to the web 2.0 mantra: Do what you do best and link to the rest. Kayser's outfit has hit this to the T; his company's IT systems, documentation, accounting and technical ship management are all outsourced. By focusing only on its area of expertise, Kayser and The Containership Company can go out and add ships to its fleet with a slim staff.
"We strive to be transparent, simple and flexible. Customers can see right through us. Our business you can figure out in 20 minutes," said Kayser.
Kayser and his company have ruffled feathers and made waves in a weak market. He described the contempt of a long-time player in containers, and the fealty of ports and services desperate for business. "Everybody concluded that we were total idiots. But we saw this big hole in the wall. This was now. We couldn't wait. And what we saw wasn't even discussed in the press until six months later," said Kayser.
Kayser reports that the company is raising USD 50 million, and plans to increase its business to 40-50 ships running 5-6 services. He believes that this size is the maximum of the business idea. After that, they would need to start a sister company. Kayser believes however other companies will jump up to fill the hole they found.
What would google do - if it was in shipping? It would strive to serve those like Kayser who have the skill and awareness to spot narrow interest groups with niche needs. How do you tap into the same logic? Keep asking your customers what they really want. Keep your entrepreneurial spirit alive. Experiment. And serve people who, in turn, serve the narrow interests of specific groups. Those narrow interests often run deep...
For more on Kayser's and The Containership Company's story, come back to this blog later in the week.
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