Hot Chocolate and Elephants.

A conversation on product market fit.

Some mornings are easier to write than others. I think they call it “Writers Block.” To me it’s the equivalent of trying to poop and having no idea come out of your brain. Oh, come on! All I said was poop, and if you can’t take a poop joke every now and then, this newsletter is not for you. Heck, there are entire paper companies that make their paper out of elephant poop fiber: https://www.amazon.com/Paper-High-Elephant-Notebook-Large/dp/B00512F4NU. Good save Adam.


It’s not the lack of ideas that make the morning difficult actually, I have a lot of ideas - right now I’m debating three:


  • What does it cost to change a habit?

  • Why VR and Crypto have started to be combined in products?

  • What does product market fit mean?


I’ve stared at these topics for around 15 minutes and lost valuable time trying to imagine which one would be better than the others. At the end of the day thinking about how I feel on each of these topics could be valuable for me, but none of them are screaming at me in the way that ideas sometimes do, where you are possessed to get it out into the world. So instead, I’m going to write about hot chocolate. I could have chosen poop as the topic, in fact now that I found that elephant poop paper, I sort of want to research how big that market is, and corner the market on elephant dung. But it’s the holidays, so let’s keep it clean and talk about hot chocolate.


It’s Christmas time (And many other holidays), and even in California it get’s below 60 degrees every now and then during the holidays, and one tradition I love is to hang Christmas lights.


Last night my family went down “Christmas tree lane” in San Carlos, where every house on the street has an amazing display of lights. As you walk down the street, you hear constant conversations:


“I bet their electricity bill is high this month.”

“Look at this house… what a grinch.” - for the ones where they didn’t put any lights up.

“I wish I had some hot chocolate right now.”


We were a family that talked about the latter. We exited the car and as we felt the frosty California air, my wife said very eloquently:


“Oh crap, we should have stopped and gotten hot chocolate!!“


And that conversation continued for a while.


Halfway through the loop of houses, at the end of a driveway was a 10 year old kid, with a hot chocolate stand.


So rewind:


  • It’s cold, so we are all thinking about getting warmer.

  • Holiday lights are everywhere.

  • My wife has already mentioned the desire for Hot Chocolate.


This is product market fit. Sell something at the right time, that everyone knows they want. This ten year old kid has solved a problem that thousands of businesses fail at, but why? Why is it so hard for some businesses to figure out market fit when this ten year old with no business degree did it without thinking.


Consider for a moment - What if the brand of a crisp winter eve didn’t represent Hot Chocolate. What if no one had ever heard of chocolate being blended with milk to create the perfect blend of texture and taste? This ten year old, selling chocolate flavored milk, would be sorely disappointed by the lack of sales (don’t worry about him, he was printing money last night).


Hot chocolate has been branded into our brains to represent something, so years of leg work done by brands like Starbucks, Swiss mix, Hershey’s and whatever other chocolate shilling businesses to build the brand of hot chocolate. They did the branding for this ten year old, years before he was born.


Now if you are a tech company, building something that is useful, and solves a need for someone. The money you will be spending will be on education and brand. Education leads to product market fit. The world needs to know there is a need, otherwise you are just selling chocolate flavored milk. The most expensive parts of a business are people education problems, not technical.


Long story short, if you go to Eucalyptus street in San Carlos and forget Hot Chocolate, there’s a kid printing cash down there for 2 bucks a cup… a cup is about 4 ounces. I estimated that his tank was about 3 gallons of hot chocolate, which means that there is around 384 ounces of hot chocolate, which means 96 cups per tank. Which means he’s making around $200 a night during the 25 days leading up to Christmas.


Some ten year old is going to make $5k in December. How much money is your company making?

By Adam Draper

I ponder as a VC.

It's a quick one minute read to make you think, smile, or laugh.

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