A magic business model: Help someone sell leftovers
As the old saying goes: One man’s junk is another man’s treasure…
Like many businesses, Uber and Airbnb exist to make something easier. For Uber, it’s making getting a ride as easy as possible. For Airbnb, it’s all about easily finding a place to stay.
But if there are so many businesses that make something easier or better, why do Uber and Airbnb standout as being ‘revolutionary?’
Apart from being significantly better compared to alternatives, one of the reasons why Uber and Airbnb stand out is their business models are built on an ingredient that feels magical: they help people sell their leftovers.
Jason writes about one example in the lumber industry where lumber businesses have figured out how to create revenue sources from selling their leftover sawdust and other by-products after they cut wood.
Selling your by-products, or leftovers, means selling the leftover things lying around after you made your core thing.
Finding by-products in your process and packaging them up for sale not only saves you time but it turns something you might have thought was waste, into something of value.
Basecamp has made a living selling leftovers.
Their best-selling books were leftovers created from the experience they went through while building their company. The popular programming language, Ruby on Rails, was a leftover from creating their product. Even their blog is a leftover that has turned into significant value. Basecamp has never paid for any marketing. Instead, they’ve partially relied on selling their leftovers to build a multi-million dollar company.
The beautiful thing about the businesses models behind companies like Uber and Airbnb is they help lots of people sell their leftovers. They allow almost anyone with a car or home the opportunity to get something from nothing.
With Uber, you can make money from the leftover space in your car.
That costly car or home, can become a cash machine overnight. And this feels like magic.
Why you feel like you get more from selling your leftovers
Selling a leftover feels special because of how you perceive the gain.
Here’s an easy example:
Let’s say you had a pretty table you wanted to sell. You thought it was worth $200, but you didn’t know who to sell it to and you didn’t want to take the time to sell it.
Then, a business came to you and said they’ll help you sell that table for $400. In exchange, they keep $100. You get $300.
If the table sold, you’d be happy. You didn’t have to take care of selling it and you got $300, $100 more than what you thought the table was worth. You’d feel like you came out on top.
Now let’s say you had a table you thought was so ugly that you were going to throw it away in the garbage tomorrow.
Then, a business came to you and said I’ll help you sell that ugly table for the same thing, $400. They keep $100. You get $300.
This might seem like the same deal but because you valued your ugly table at $0, you perceive this second deal as better. Three times better to be exact.
Pretty table deal:
$300 (What you made from the company who sold your table) — $200 (What you thought the table was worth) = $100 perceived gain
Ugly table deal:
$300 (What you made from the company who sold your table) — $0 (What you thought the table was worth) = $300 perceived gain
Though you make the same $300 whether you sell your pretty or ugly table, your perceived gain is three times more when you sell your ugly table.
How would this make you feel? Most likely, you’d have more positive emotions attached to the business that was able to help you make money by selling your ugly table and you’d be left thinking about that business, wondering how they were able to help you make something from nothing.
You’d probably come back to this business to see if they could help you sell more of your stuff you were going to throw away. You might even tell your friends to do the same thing, too.
Selling leftovers can have a bigger impact than selling more efficiency
These ‘Wow moments’ — the positive feelings people get from your product — are what makes you stand out in our hyper-competitive market today.
If you’re offering a better product but it’s still not good enough to produce ‘wows’, people likely won’t feel strong enough about you to switch from whatever they’re currently using to get the job done.
Mentally, our brain wants to do what gives us the biggest reward with the least amount of work. So if you’re not making things easier, why would anyone choose you?
This is a wall companies often run into.
They may have built a better product but they haven’t built it better enough to make up for the cost people perceive of switching from what they are currently doing and starting something new.
You have to build something so good that switching becomes obvious.
Multiple ‘wow moments’ in a product experience aren’t easy to produce. They can often take years to get right.
People were blown away by the original iPhone but it took 5 years to build right.
This is why figuring out how to help someone sell their leftovers can be an easier road to produce a ‘wow moment’ than selling someone more efficiency through better or more features.
When someone realizes you help them sell leftovers, that can stand out more than a feature.
Though not easy, thinking about how your product could help someone sell their leftovers will bake a ‘wow moment’ into your product. One that may leave an impression as strong as multiple ‘wow moments’ created by the features you build.
I’ve seen the impact firsthand.
Unsplash is a photography website we started that offers hi-resolution photos for free that you can do whatever you want with.
We primarily built Unsplash because we didn’t like any of the alternative stock photo options but it was also built on helping sell leftovers. Our leftovers.
We started Unsplash because we had leftover photos from a photoshoot that we weren’t going to do anything with. Rather than leave them in a folder and let them go to waste, we decided to give them away for free.
We thought if people found our photos useful, maybe we could get some exposure for our core business, Crew.
Because we weren’t using these photos anyway, in our mind, they were worth zero. So when tens of thousands of downloads of these photos happened, along with substantial exposure and sales for Crew, we were blown away.
Today, our aim with Unsplash is to do this same thing for lots of people: turn what may be leftover photos into value. Based on this model, we’ve seen Unsplash take off, growing to over 50,000 contributors, almost a billion photos viewed per month, and a lot of good vibes.
When you help someone sell their leftovers, it can be easier, yet more effective, than trying to sell someone another feature in a slightly better product.
In order to work, a business needs to be better than existing alternatives. But if you can somehow mix helping someone sell leftovers into your model, you’ve added a dimension to your business that will help you stand out even further.
If you help someone sell a leftover, more people will be struck with an ‘OMG, that’s amazing’ feeling toward you.
One of the best ways to figure out how you could help someone sell their leftovers is to look at your own leftovers.
What do you have sitting around creating no value?
What do your customers have sitting around creating no value?
For us, it was photos.
For the lumber industry it was sawdust.
For Basecamp it was books, a programming language, and a blog.
There are opportunities everywhere to build a product that helps someone package up a leftover and sell it.
Figuring out how to help someone sell their leftovers can have a bigger impact than selling someone more efficiency.