The China Syndrome

A common flaw in businessplans is what I call The China Syndrome. It is a line used just as much by starting entrepreneurs as by big businesses. Once you know about it you will find yourself regularly thinking “Ah, the China Syndrome”.

It starts like this:

“We have this fantastic product which will make us rich. The ONLY thing we have to do is reach a large audience. So we need funding for marketing”

And then it comes…

“But if ONLY 1% of all people start using our services this is going to be a huge success…”

They are right AND wrong about that.
They are right because the number match.
They are wrong because they will never reach 1%.

The reason why I call it the China Syndrome is because a lot of (big) companies had similar ideas in the 70s and 80s about China. They made a product, heard about China and started playing with their calculators.

One bar of soap ($1)
X
profit ($0.90)
X
once a month
X
1% of 1.000.000.000 Chinese people (10.000.000)
=
Wealth beyond our wildest dreams! ($9.000.000!)

In reality it will cost you $9.99 to reach every prospective buyer. You will never reach 1% and your plan is doomed.

Which is very odd because according to Excel you would be a billionaire after 111.1 months? And Excel is never wrong, is it?

The trick to launching a successful product depends just as much on your marketing strategy as on your product (Okay, AND your team, timing and every other ‘detail’ you can think of).

If you don’t know how your product will actually find its way to those 10.000.000 customers you might as well forget the whole thing.

In fact, if I would have received a dollar for 1% of the times I have heard someone use the China Syndrome line I would have had…

Oh forget it.

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