Aug 15, 2022 4 min read

The Ansoff Matrix: A Growing Share of a Growing Pie

A Lesson in Strategic Growth: Coachella There are few industries as challenging and competitive as the music festival industry. Spend an entire year planning, booking, and advertising for a single weekend to ultimately determine your financial fate. Even in the cut-throat restaurant industry, a new

A Lesson in Strategic Growth: Coachella

There are few industries as challenging and competitive as the music festival industry. Spend an entire year planning, booking, and advertising for a single weekend to ultimately determine your financial fate. Even in the cut-throat restaurant industry, a new venture at least gets more than one annual shot to refine and improve its operations and offering.

What seems like the result of exceptional curation and trend awareness is actually a well-tested business strategy. Goldenvoice (the promoter behind Coachella) works on several fronts to seed opportunities and grow profitability like no one else.

Harder, Better, Faster, Stronger

Increased ticket sales:

after several years of sold-out events, Coachella doubled its capacity by adding a 2nd weekend in 2012 at the same venue with an identical lineup. This was considered risky at the time as many industry veterans questioned their ability to move an extra 95,000 tickets at such a high price point. To succeed they'd need to first grow the potential pool of attendees. Coachella had to go global in some form.

Increased global brand awareness: In 2011 Coachella broadcast its entire 3-day program for free in a partnership with YouTube (after testing the concept on a smaller scale in 2010 via Facebook). The move paid off. The stream was viewed an estimated four million times by a global audience and engagement across all major social media channels was off the charts.

New product to share overhead costs: Putting on a music festival is like building a temporary mini-city. It's a huge logistical feat for a short amount of utilization. Getting more out of your fixed overheads (infrastructure costs) is one way to boost profitability. In 2007, Goldenvoice launched a country music festival—Stagecoach—that would occupy the same venue immediately after Coachella, without competing for the same demographic.

Licensing: Now that Coachella had established itself as desirable, there was money being left on the table. Their audience was willing to buy more than just a once-per-year experience from them. H&M fashion lines, Fortnite skins, co-branded BMWs, etc., the opportunities for brand extensions have been endless.

And just like that Coachella redefined what a music festival brand is capable of. They first grew the pie, then positioned themselves to take the biggest bite.

But, as with every business, there are factors that pose threats and by no means is Coachella immune. Will there come a time when Coachella’s throne is usurped? Probably. Will that be happening anytime soon? Probably not.

Igor Ansoff

In 1957, a Russian American applied mathematician wrote a paper outlining a set of growth strategies for a given product and/or market. More than 60 years later those same ideas are central to the strategies of hundreds of companies and brands worldwide.

Often referred to as the father of strategic management, Ansoff's framework outlined the alternative strategies for growth available to a given organization in regards to either developing a product and/or market. In short, there are four main strategies:

Market Penetration: increasing adoption/saturation of an existing product in an existing market.
Product Development: launching a new product in an existing market.
Market Development: taking an existing product to a new market.
Diversification: launching a new product in a new market.

What does any of this have to do with bitcoin?

Bitcoin's growth can be best explained by this framework. Sound money is a necessity for most people on Earth. They do not need to be sold on the concept, it is deeply entrenched in their minds through years, decades, and sometimes, generations of suffering.

For sound money to be productized under "bitcoin" as a recognizable brand is perhaps one of the least appreciated aspects of the adoption curve.

The impact of bitcoin's white paper and the majority of initial educational resources being in English makes it understandable that adoption would begin in English-speaking (Western) countries. Couple this with high rates of internet access and computer/smartphone ownership, and we can see that reaching certain markets would happen gradually (even if they would have a greater need for bitcoin).

While bitcoin offers savings technology as a product by way of continued fiat debasement, the Lightning network offers payments technology for bitcoin. While one is dependent on the other, they are distinctly different in the eyes of users. One primarily protects your wealth from seizure, dilution, and censorship (competing with a central bank and retail banking system). The other enables you to send and receive micro amounts of value to others anywhere in the world, without account verification requirement, and in a somewhat privacy-preserving way (competing with remittance providers, payment processors, and physical fiat currency).

Let's now take a look at the Ansoff Matrix for bitcoin.

For bitcoin to reach saturation, it not only has room to grow in terms of global adoption (horizontally), but it has room to grow in terms of the allocation within existing portfolios of both individuals and companies (vertically). While debasement-proof and immutable money is the key driver, do not underestimate the sources of demand for such a tool.

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