The Four-Season Economic Cycle (And What It Means For Your Business)

What does economics have to do with marketing? Welcome to the Magnetic Marketing Podcast. Today we get to listen as Dan Kennedy talks with Harry Dent Jr. Now, you may or may not be familiar with Harry. Harry Dent is an extremely well-known economist who has a very different theory and strategy around understanding investments, what booms and what grows. This is a very unique and different angle that is extremely valuable to marketers, not just because this is how the economy is going to perform, but because of the eternal ideas that happen with what he calls the Four Season Economic Cycle. What is the Four Season Economic Cycle and what does it mean for your business? That's what we'll be talking about in this episode. Now, just as a note, this is a 10-year-old recording and as such, everything that they say is urgent or concerning right now. Obviously is not going to be concerning or urgent right now. You can absolutely follow Harry Dent on YouTube and many other places in order to be able to learn more about what is urgent today. However, the Four Seasons Economic Cycle and what it means for your business is 100% valid today, even if you've heard of Mr. Harry Dent before. Let's get started.

I don't think there's anybody that has had a bigger impact in the field of direct response than Dan Kennedy. The legend of Dan Kennedy should be be ignored at your own peril. They're not really lessons, they're kind of laws that you live by. Dan opened my eyes to what small business marketing looks like. Dan teaches strategic direct response that is timeless. His ripple effect touches people who don't even know his name.

The world as we know it was changed because Dan Kennedy became obsessed with marketing.

Welcome to the Magnetic Marketing Podcast with your host, Dan Kennedy. Hello, everybody.

Welcome to this month's Diamond Call. With us today is Harry S. Dent Jr., and if you don't know Harry, you must be living in a lead cave. He is frequently seen on television, not as frequently as some pundits because he doesn't really flack for the stock market like some pundits, but frequently seen on TV, has had one New York Times bestselling book after another, beginning with very accurately predicting in one the crash that we had in the 2008 neighborhood. He is the editor of the Boom and Bust newsletter, and I always tell people that you want to pay attention to Harry if you are an investor, but you also want to pay attention to Harry as an entrepreneur and as a marketer because demographics are destiny. Much of what we are able to do as marketers and opportunities that present themselves to us are demographics driven. And I don't think there's anybody sharper about any of that. I certainly haven't found anybody sharper about any of that than Harry. So, um, welcome to the call, sir.

Nice to be here, Dan.

And, uh, are you in Florida today or are you in some far-flung place?

I've been traveling a lot this summer, but I'm finally home for a month, so I'm in Tampa, Florida, 94 degrees.

Well, good. I'm sure despite the 94 degrees and humidity, you're glad to be off the road.

I am.

So, there's a lot going on. You know, there's no shortage of threats and opportunities. The world seems to be on fire. When I had lunch today, I believe the Dow was up above 17,000 again, merrily floating along atop probably a couple of bubbles. The Fed's stomach is rumbling. The President is doing God knows what. Main Street business is struggling. Middle class is shrinking. So there's plenty of things to talk about. So I'll start with something big and broad is how people can understand and think about economic cycles, what you list as the 80-year four-season economic cycle. Within all of the news they see on a day-to-day basis? How does this really work? What is really happening?

Well, you know, the most important summary cycle is the one you just discussed, and what it is, that 80-year 4-season cycle. First of all, everything on product life cycles, technology life cycles, human cycles, I mean, seasons every year, everything I've studied in history goes through 4 stages or cycles. So, it's a very universal principle. And this came out of what used to be called the Kondratiev Wave, if people have ever heard of that. Back in the 1920s, a Russian economist noticed that about every 50 to 60 years, which was about a human lifetime back then, we would go through these 4 seasons: a mild inflationary boom, an inflation spike and recession, and often wars, and then a falling inflation boom, which tended to be a bubble boom, and then a depression to wash out all the debt and financial bubbles from that bubble boom. What's happened is since the baby boomers came along, they've stretched this cycle and they've made demographics the center of it. So what I've done is refashioned— I can predict when generations are gonna earn and spend more money become more productive. It was a 44-year lag on the birth index for peak spending by the Bob Hope generation. That created a boom from 1942 to '68, precise 44-year lag on their birth index. Then we had a bust when they stopped spending in the late '60s, '70s, and early '80s, and we had massive inflation from the baby boomers entering the workforce in unprecedented numbers. Young people are inflationary. They cost everything and produce nothing. And they're inflationary until the first couple years they enter the workforce and start to become productive. Then they become big spenders and raise families and buy houses and buy all types of stuff, cradle to grave. So I've been able to refashion that Kondratiev Wave and it's stretched to two 40-year generation cycles of boom and bust. And then the baby boom caused a boom from 1983 to 2007, again, an exact a 46-year lag on their rising birth index, something I predicted back in the late '80s when I discovered the spending wave. And I can predict inflation from their entering and exiting the workforce decades in advance. So I can predict this Kondratiev wave cycle, and it is now much more exaggerated by the size of the baby boom. They caused greater inflation than ever, greater boom than ever, greater bubbles than ever, and predict when inflation will rise and fall. And what we're doing since 2008, we've entered the winter season. The winter season follows a bubble boom like we saw in the '90s and 2000s. Financial assets bubble up, debt grew at 2.6 times GDP from 1983 to 2008 during this boom, and that's caused a huge debt bubble. And these bubbles started to deleverage and detox, I call it, for, for people in the health industries that understand that. We're basically deleveraging debt in financial bubbles, and the Fed just decided to put a stop to it. Central banks around the world just flooded the economy with about $10 trillion globally of free money printed out of nowhere. Unprecedented deficits, except for, you know, even greater than in the Great Depression. And that has kind of caused this kind of final artificial rally and bubble. And so that's that four-season cycle, and it's made up of two booms and busts: a spring boom from 1942 to '68 with mildly rising inflation out of the Depression; an inflationary recession, which we saw from '68 to '82, rising inflation, falling economy, baby boomers entering the workforce causing the inflation, Bob Hope generation, the big spenders, no longer spending; and then we got this bubble boom with falling inflation, that's the most dynamic season. This is why you get extreme earnings from internet and computers entering the mainstream, just like automobiles did in the Roaring '20s in the cycle before it. You get falling inflation and interest rates, which increases speculation and increases corporate profit margins. So you get a bubble, and then the bubble bursts. Well, but again, for the first time in history, central banks have said, "Oh, we can't have a depression. We can't deleverage this debt. We can't let banks fail." We can't let businesses fail. This is what the economy wants to do in this winter season. It wants to take the successes and innovations from the bubble boom, like many of the entrepreneurs and businesses here are part of, and shake down the economy to the businesses that got it right. Shake out this excess debt, which is a weight on consumers and businesses after such a bubble. Shake out these bubbles in financial assets, which make housing unaffordable for the next generation. And stock investing, you know, basically no way to get return. A lot of good things will come out of this, but we're saying that this final bubble is getting ready to burst, and perhaps next week it could peak, or sometime in the next few months. We're at the point where each bubble— you go back to the 2000 tech bubble peak, and then there was a bubble after that in 2007, which we called, and most people didn't see bursting, and now there's another bubble. Each bubble has taken us to higher highs on the Dow, and each burst has taken us to lower lows. So we've been saying, uh, Dan, for several months now on the media that the Dow is going to peak a little over 17,000. Our target's about 17,200 to 300, which we could hit easily early next week, and then it's ultimately going to fall. The next new low would take us down to 5,500 to 6,000. So, so just from that And this is a very broad and very clear pattern and very similar to the top we saw between '65 and '72 when the last generation peaked before things really fell apart in '73 and '74 in that huge crash. This really, you can see the magnitude of this. If the Dow goes from 17,000, say 2,200-ish, to 6,000 or a little lower, you can imagine how deep a downturn we'll have. And what we're telling people like you, especially entrepreneurial business people, and high net worth investors. This is going to be the opportunity of a lifetime. The businesses that survive this shakeout, that see it coming, that hunker down, that get even better at marketing and increasing their market share. Cash, cash flow, and market share are going to be everything in this downturn because the economy wants to flush out the businesses that don't have it together, do not dominate what they do, do not have efficient systems and good products. And shift that market share to the people who do, and they'll be the leaders for decades to come. That's why I say it's an unprecedented opportunity, although for most businesses it's gonna be an unprecedented threat. Same for investors. We see a crash like this, if you'd have bought stocks in 1932 after the first major crash, you would have made a fortune on anything you bought. You'd have bought the market down 89% in that case. In this case, we could be down 65, 70% or more. So huge opportunities for investors. If you get out, protect yourself, and wait for crash. Even bigger opportunities for businesses that see this as the time to race past their competitors, dominate their markets, and even if your sales and profits go down despite all your good efforts, if you just basically do better than your competitors, they're gonna disappear and the leaders are gonna survive. And again, they're gonna dominate their markets for not years, decades ahead. So that's a big overview.

Take a breath. And I do want— and I want to get back to sort of where you left off and ask you about some specific advice and strategies for entrepreneurs and maybe a little bit for investors. And when you start your next answer, I'm going to set the phone down and run to my other phone and sell some stock.

Well, wait until early next week at least.

Okay. But the one thing I want to clarify for people, because I say this to people about advertising, marketing, and media all the time, and you have just said it about money and the economy, but I don't want people to miss it. A pet peeve of mine is how short people's historical perspective is and how little they know about anything that didn't happen yesterday. So I always tell people there's really nothing new. There's the same old stuff repeating with new wrappers and new labels. But most people think what they're seeing is new. They think— a lot of people who see somebody like Tony Robbins, they think they're seeing something new. They don't understand that that's a new body, but the act has been performed many, many times before. When they see a new media, they think all the rules have changed and the new media is unique when really, you know, Craigslist is the Yellow Pages. And it seems to me, and presuming you're in agreement, I'd like you to emphasize that What people are seeing today is not new. If you have historical perspective and you bother to understand what happened in 1920 and what happened in 1960 and what happened in 1980, you are able to see what is going to happen in 2016 with a reasonable degree of accuracy.

Yeah, no, no, no, it's true, Dan. What I tell people, history repeats itself, cycles repeat itself. This, uh, 4-season cycle has been occurring every 50 to 60 years, and now 80 years with this new demographic turbocharger, ever since the Industrial Revolution. And it repeats over and over again: rising inflation, spiking inflation, falling inflation, bubble boom, depression. There are no exceptions. Bubbles always occur in this fall bubble boom, like we saw in the '90s and 2000s. And bubbles always burst. And when they burst, they go back to where they started or lower. And that means the Dow has to go back, ultimately, after this first crash, to probably 3,000 to 4,000 to fully erase that bubble. Housing prices have to go down another 40% from here to be down 55,000 to 65,000 to erase the bubble. So these things do repeat. The only difference is, like you say, there's a different wrapper. There's a new twist. And what you have this time around, obviously, you have computers and internet technologies instead of automobiles and phones and electricity and radios and stuff like that. And you also have, on the economic side, you have governments. For the first time in history, ever since Greenspan and the '87 crash, every time we have a stock crash or a recession, the Fed steps in, gooses interest rates down, throws money in the economy, and basically turbocharges an already big bubble that would have happened anyway from baby boomers and falling interest rates. They're making this bubble worse, and now they've extended it. This bubble should have been over. Starting in 2008. We should have deleveraged, and the Fed just says, "No, we're going to fight this cycle." Fighting the market system throughout history is the worst thing any government can do. It has its own logic. Adam Smith in the late 1700s called it the invisible hand. It's all these consumers and all these businesses, and the key driver are entrepreneurs, the 0.1 to 1% of people who create meaningful innovations, radical innovations. In their own businesses and then everybody adopts them on an S-curve. That's another predictable thing about people that's occurred over and over in history. New products, new technologies come in the niche market slowly at first. They hit that tipping point at 10% of the market or the users or consumers and then they rush 10 to 90 exponentially into the mainstream. That's when businesses make all their money. That's the 80/20 rule, frankly, if you look over history. So you're right, all these things, all these cycles, new technology and S-curves, generations growing up earning, spending money, 4 seasons of our economy that we go through and then predictable things follow each season. And the biggest thing, Dan, I tell people is investors and businesses kind of think, "Oh, there's a certain business strategy that wins and there's a certain investment strategy." That's not true. Businesses and investors take different strategies for each season. One of the biggest reasons that businesses and investors fail, especially businesses, is if they keep doing what succeeded in the last season when the season changes. It's like running out in the snow with a bikini on or something. You've got to throw away your jet skis and get your snow skis on.

That's a very powerful point. Because certainly the business owner would logically or naturally or automatically assume that what's working will continue to work. And worse, if it starts to show signs of being troubled, most will simply try and do more to use your analogy, they'll run out into the snow in a bikini and run faster rather than understanding that the conditions on the ground are changing and not only do tactics have to change, but strategies have to change. So let me ask you to get specific. First of all, for the small business owner, not really so much the big global entrepreneur, But our brick-and-mortar friends who are on Main Street in America and they— and we go down the street and there's a dental practice and there's a furniture store and there's a restaurant and there's an insurance agency. What do these folks need to know about the season they're in and the season that will fully materialize when the Fed finally starts— finally stops trying to change the weather. What's your best advice for that business owner over the next, you know, 12 months, 24 months?

Well, you know, think of inflation like temperatures. You know, they were high and they're high in the summer and it's sluggish. That was like the '70s. Then we had this great boom in the fall. You know, the leaves all turn red and orange.

Glorious bubble.

Winter is about freezing everything over and seeing who survives. It's kind of like chemotherapy where they bombard the body with radiation and hope to kill more— enough cancer cells so that the good cells win out. That's what's going to happen in every business. The economy is going to shake it down to the people who have the best products, the most efficient structures, the lowest cost structures, who deserve to survive long-term, and then they'll boom stronger than ever in the spring, and there will be few leaders dominating dominating your industry instead of many. So what you need to do is ahead of time do everything to win this survival of the fittest. That's what it is, a survival of the fittest. It's not about growth for growth's sake. It's about who can dominate the markets they're in, grow market share relative to their competitors. Even if you lose money or your sales are going down, if you grow market share relative to your competitors— I always tell people, they say, you know, If a bear is chasing you, you don't have to outrun the bear, you just have to outrun your friend. It's that sort of thing. Whoever comes out the strongest 5 or 6 years from now, and that's probably 2020 to '23 is kind of the bottoming of this winter season. Whatever businesses are the strongest and still standing are just going to inherit their industry. And so what you do now is you look at everything you do in your business, every value-added every product or service you're in and ask yourself, are we the leaders in this or can we be the leaders in this? And this is not the time to build more stores or warehouses or things like that. It is a time to focus on things that will increase your market share, increase your cash and cash flow. That means sell off any business or assets. If you are— if you own your offices or stores and they're not totally strategic to your business, Sell them and rent and lease instead. That's going to create a bucket of cash flow. Cut your fixed costs. That's where most people's inefficiencies are. The variable costs are usually more obvious. Cut your fixed costs. Decide what really means something to your business and what is fluff and cut those fixed costs and analyze them. Most businesses can cut those 20% minimum, 50% and actually run more efficiently. That will create more cash flow and competitiveness.

You're absolutely in sync with— I mean, for the past year or so, one of the things I've been writing about a lot in our newsletters and talking to people a lot about is thinking less is more, not more is more. And, you know, the business owner's natural, again, his automatic instinct, I think, is another store, another location, another new product, another this, another that, when really that can get you stretched out so far you get killed in this thing.

Yeah, that's right. You're going to be a hostage to that. It's going to weigh you down if you take on more assets or facilities, more debt. So, yes, you're right. You need to focus on what you know you do best, what you've proven to do best. Hunker down in that and say, "I am going to dominate what the markets I'm going to focus on or the product I'm going to focus on come hell or high water." So what you do spend money on is things like you educate people in, marketing, things that will increase your market share in a variable investment. Something you can put $1 in now and on direct response marketing know you're going to get $1.50 back.. That's going to increase your cash and cash flow. Selling assets, selling off things you don't need, selling off product lines you don't think you can dominate to somebody who can dominate them and use them. These are all ways of creating efficiency, cash, and cash flow. But the end goal is you want to gain— even if your market is shrinking in this downturn, which most markets will, some won't, but most will, if you can gain market share versus your competitors in And if you can continue to be lower cost than your competitors, more competitive, you are going to survive and you're going to get rewarded with decades of growth and far less competition. So that's the game. And so it's not complicated. You just got to see it coming and not laden yourself, as we said earlier, with extra facilities and debt. Again, this is not the time to expand. It's time to hunker down and absolutely dominate what you're best at. And know that nobody can be better than you at that, especially if you see this coming. How can you not beat out your competitors because they're not going to see it coming?

So some of the advice is the same, but now let's take our bigger entrepreneur and someone that is not— their business is not necessarily tied to a geography, and so even the question of US markets versus other markets comes into play here. Do you have any extra or different advice for the bigger, broader, more expansive entrepreneur?

Well, you know, especially if you're more global, the interesting insight is there's not going to be anywhere to hide here. This is not going to be a US recession or depression. It's going to be global. This has been a global boom. It's been a global bubble. It's been global bubbles and Stocks, real estate, commodities, gold, all types of stuff. All of this is going to be washed out. Europe, Germany, if I had to pick one country to watch out for in the next decade, it would be Germany. Germany has the steepest decline in demographic trends, even worse than what we saw for Japan in the late '80s. I was the only person on the entire earth that I know of that predicted that Japan was going to crash while the rest of the world boomed unprecedentedly. Japan was the first to have a major baby boom crash, because their births peaked right after World War II. So they're ahead of us on this. But Europe's demographics get even worse than ours. East Asia, even China's demographics are now slowing, the first emerging country. And most importantly, even the emerging world, which will be the best place to do business in the future demographically and fundamental trend, but even the emerging world is suffering. And their stocks are down while the developed countries are up right now, because they are largely commodity producers and exporters, and commodity prices, as we predicted a long time ago, peaked in 2008 and are declining and will decline further. So the whole world's going to be in trouble, but the emerging markets will come out of this very strong. A lot of Europe will never come back. They don't have any demographic growth. They have no millennial generation to follow in most countries. But countries like Switzerland do, Sweden and Norway. The UK and France will do better than most of Europe, but the rest of Europe's going to be a sinkhole forever. So that is not a place to be expanding in the future. East Asia, Japan, South Korea, Taiwan, those countries have done great, but they have terrible demographics going China's not going to be as strong as it's been in the past. It's going to see the biggest bubble burst of all, so that is the worst place to be trying to expand in the next decade. But then you've got Southeast Asia, India, and South Asia. That's going to be the strongest growth corridor of the world coming out of this winter season into spring. So that is certainly a place to be investing after things crash and to be focusing as much as possible. And countries like Australia and New Zealand, New Zealand, people who deal with that. There are, you know, a number of small countries that actually have a larger millennial or echo boom generation than the baby boom. There's a number of large countries like the United States, Canada, France, and England who have an echo boom that's about the same size. So at least you got a buoyant economy going out of this. But most of the rest of the world out in the developed world has declining demographic trends for decades. And so, again, in the book, we look around the world. You can tell exactly what's going to kind of crash the most in the downturn, but more important, which markets around the world are going to grow. The other thing is we have on our website, DentResearch.com, a book called Spending Waves. It's basically a big research report, 10 years of consumer expenditure data from the government. It took that much to get enough data detail. We look cradle to grave where consumers spend money so you can see which products and services are going to boom down the road with the aging baby boom and/or on the flip side with the emerging millennial generations. And I'll tell you right now, I'll just give you an example. Housing peaks on the early part of this life cycle. Spending peaks at 46 for the average person, 53 for the most affluent. Home spending peaks by age 41, but autos are the last major durable good to peak at age 53. That is this year for the baby boom. If you're in the car sales business or related to cars and car sales, you're going to see autos fall off a cliff in addition to the economy failing in the years ahead. But you're going to see spending on healthcare and pharmaceuticals and vitamins and health and wellness and travel and leisure or a lot of sectors are going to be stronger than ever in demographics for aging baby boomers. So we look cradle to grave at which consumer sectors are going to do well. And even if you don't sell directly to consumers, the people you sell to eventually, somebody down the line sells to consumers. So decide which consumers drive your train in business and understand what's going to be stronger or weaker in the downturn, but especially coming out in the next boom. So again, we look in the book, The Demographic Cliff, demographically around the world, the winners and losers, and we look at the different consumer categories that do well or not in the spending wave book. And by the way, Dan, before I forget it, on HarryDent.com we also have a free daily newsletter. High content. It's a great way to get to know us, especially for people who haven't heard me speak a lot before, haven't read my books, and it's free. All you do is go to HarryDent.com and put in your email and you're done.

Terrific. I want to make the point, and then we're going to talk about investors. You somewhat unjustifiably, for people who are sort of superficially knowledgeable, what I hear from those people, like when we start to tell everybody I'm going to interview you on this call, is that they will— they sort of instantly pigeonhole you as a doom and gloom guy, um, and there's, there's a certain amount of ostrich in the sand, you know, reaction to that, that I don't even want to listen to him because all he's going to do is depress me. But it's clear here, at least it should be clear to people, that you and I are having a a realistic but opportunistic conversation, not a, you know, go crawl in a cave and make sure you have a suicide pill alongside you on the pillow conversation. Because business is mobile, money is mobile. Here in the United States, what you've just described globally is actually happening state by state by state too. I'm doing a lot of work right now for the Department of Commerce of the State of Oklahoma. And I mean, you know, the urban areas are dying. The low-tax states, of course, are growing. The high-tax states are declining. California is a third-world country with an economy in collapse. Other states have much healthier economies. And there's migration patterns.. And even something as simple as a national marketer who does direct mail all throughout the United States, they want to pay attention to this because they may want to not mail into some states and mail a lot more into others as these trends set in. So people ought not think about this as a quote, quote negative or a gloom and doom conversation. And I would encourage them to go to your site, take a look at the report, at least sign up for the email. Because if you pay attention to this stuff and are willing to be agile, you can adjust and move your business. So I have one more kind of—

Hey, Dan, real quick. I mean, I'd go farther than that. First of all, I've been the most bullish economist since the late '80s in the entire world, so I am not a doom and gloomer. But secondly, I'd go farther and say the winter season is the most opportune if you see it coming. The fall bubble boom will take tell you who's in the race to be leaders in the new emerging markets and technologies and products and services, but it is the winter season that decides early on who's going to win that race forever or for decades down the road. So it is the most opportune season as difficult as it is. You just have to see it coming.

So I have one more kind of business question and then I want to ask you an investor question and then we're going to let people start asking questions. So the last business question I have for you, and you were kind enough to endorse one of my books, you're aware that I have for some years now encouraged people to aim at the more affluent consumer. We've seen, I think Walmart just reported its 6th consecutive down quarter in store traffic revenues and earnings. So I talk to people a lot about price elasticity, premium pricing, your, you know, dominate a category, dominate a niche. It's my argument it's easier to dominate it when you make it smaller. And one way to make it smaller is to narrow the demographic and psychographic characteristics of the consumers in it. And best to be at the top of the food chain rather than at the bottom of the food chain. What would you add to that, expand on that? Do you agree, disagree? Where are you on essentially marketing to the affluent?

Well, you know, first of all, one of the principles in our book is in the business section in Chapter 8, you know, strategies is, you know, strategic Strategic focus. Do what you do best. Like you say, narrow the market. We're in a customization economy since the '70s. The last one was all about standardization. The businesses that can carve out more distinctive niches dominate those. Like you say, premium pricing you get for doing that are going to be the most profitable and have the strongest position. Here's the caveat. In the fall bubble boom season, what happens? Every time is the rich get richer. It's a time when innovations are moving mainstream. The entrepreneurial businesses and executives that take advantage of that change do incredibly well. The investors who have net worth to invest in a bubble boom do incredibly well, and Homer Simpson just sucks wind. So that's what happens in a bubble season. Now, when these bubbles burst, and this is farther down the road, actually you go from like in 1929 and similar to now, where 1% of the households in this country control over 20% of the income and spending and over 50% of the wealth and net worth. I mean, absolutely dominate. Like you say, the wealthy, the top 20%, control over 50% of the spending and income and 90-some percent of the wealth, you know. So the affluent sector's really done well. What happens is these bubbles burst. It brings down prices. It forces businesses to get more efficient. We're going to see this education bubble burst and runaway education, healthcare prices. We're going to see debt get eliminated. Basically, what happened from 1929 to 1975 was the average person went from— I mean, the top 1% went from controlling 50% of the wealth down to 26%. So they're still the wealthiest. They're still wealthy. They're still the best customers, but the middle class actually rose out of the Great Depression and into the spring boom of the '40s, '50s, and '60s. So the markets you're in that are more higher end, businesses should be looking— and then this is where I describe the S-curve and the stages, how you go from niche markets, you hit that tipping point where the niche markets get 10%, and then it becomes— then the mainstream starts looking at it, and then the mainstream goes on after it like a herd. S-curve. If you can find products or services you have that have gotten up or approaching that 10% of the broader market level and you can catapult by cutting prices and getting more systematic in your marketing and distribution and management and hit that 10 to 90% S-curve, and in other words, what used to be a niche market moves mainstream, then that's the big home run. And that's exactly what happened. The wealthy people in Cities got cars in the Roaring '20s, but every household got a car by 1965. Every damn household in the country almost got a car in the '50s and '60s boom. So that's the end game. Whatever starts in a niche market, if it is mainstream marketable— and some things don't ever go mainstream, and that's great. You can protect your niche. You've got to decide if you've got a mainstream product or not. But if your product shows that it's hitting that 10% of the market tipping point and starting to move mainstream, then the real home run is to dominate that S-curve growth from 10% to 90%, which will happen in precisely the same amount of time it took the product or service to go from 0 to 10%. That's the S-curve. It's very predictable. I found this at Bain and Company in 1980 consulting to Firestone Radial Tires. Took 7 years to get 10% of the tire market and then they got the rest of it, the 90%, in 7 more years. And most tire companies didn't see that shift and fell behind. And that's why, you know, Michelin and Bridgestone ended up dominating. The American companies didn't see that shift coming, that S-curve. So, you know, that— so it's important to determine if you have a niche product that looks like it's going to move mainstream. If it does, the game changes. If it doesn't, then you just keep dominating great niches. But, but if niches move mainstream and you stay in the niche, you're going to get left behind.

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