5-hour Energy - A stupid startup idea

Entrepreneurs often hear, “Your startup idea is stupid. The market is saturated. Move on.”

Of course it’s tough to work on products when you have oodles and oodles of people trying to compete. It looks daunting. If you fail, it’s easy for people to armchair quarterback the experience and point out that you went the wrong way, the market was just too saturated.

So what really excites me are the companies that figure out how to show everyone around them that while, yes, it is a crowded market, you’ve been looking at everything all wrong.

There’s a much better way.

Often cited examples you’ll find in a lot of books on innovation are Cirque du Solei, Southwest Airlines, Whole Foods. And of course Apple. Where they defy the fact that computers are coming out of our ears. The mp3 player market was totally saturated. The cell phone market was completely owned by Nokia and Blackberry. And who knows what’s next for Apple. TVs? Everyone already has 3 of them. Shit’s been done before man.

I love finding more examples of this.

5-hour Energy caught my eye as a product that had the “market was too saturated” challenge and fingers pointed at them, but showed everyone how they were making the wrong assumptions.

I imagine you’ve probably heard of 5-hour Energy. It’s an energy drink. Jesus, another energy drink? How could that possibly work. Everyone and their brother (if your brother owns or works at a softdrink company) had energy drinks before 2004, when 5-hour Energy was introduced. You not only have Red Bull who just completely owns the market, but you have other big players like Monster, Amp from Pepsi, and Hansen’s. You can’t possibly create a new energy drink.

But that’s exactly what they did. And it’s interesting where they do things very differently from the rest of the market.

If you peruse the energy drink refrigerator at your gas station, you’ll find Red Bull’s 8 oz. cans. But then just next to it, you’ll see they also have 12 oz. cans. And if you want to compete with 12 oz, what do people do? Yep, there’s 20 oz. cans of Red Bull. And it’s not just Red Bull. They ALL come in these sizes.

Then there’s the marketing. They all seem to power extreme sports. If there’s a car or a bike or a stunt where someone is going to fly to extreme heights and then risk death, there’s probably a Red Bull or Monster logo attached to them. Drinking these drinks apparently gives you courage and energy to do crazy things! So let me make this flying machine and run it off a platform into Lake Michigan.

Then there’s 5-hour Energy.

You can’t even find them in the refrigerator with the other guys. And when everyone is making bigger and bigger cans of even more energy drink. These guys come out with little shots of their “beverage”. Less than 2 oz. bottles.

When everyone is trying to market to young people and athletes, these folks try and get into the heads of adults that this is a solution to their problems at the office.

When everyone has “cool” commercials, these guys put out stuff that looks like it came from a “don’t do sexual harassment” training video. They’ve been given the award for “2010 Runner-Up Worst Ad in America” by The Consumerist.

They’ve even got consultants! That will help you use 5-hour Energy to get more work done.

And is it working?

5-Hour Energy was introduced to the marketplace in 2004. Retail sales grew to over $1 billion by 2011.

Wikipedia’s page on Manoj Bhargava

It’s working.

It’s worked so well the company behind 5-hour Energy, Living Essentials, made a homemade plaque to commemorate their Worst Ad in America award, which you can find hanging in their corporate headquarters.

P.S. You can get my next post: here.


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