In this episode: This episode begins a run on the business side of entrepreneurship: how to start, scale and build a company for an eventual exit. Jon Peyton explains the difference between crowded “red ocean” markets and untapped “blue oceans.” He shows why the smartest move is often a product that bridges the two, and why you need to know who feels enough pain to switch.
Key insights
- Red oceans are crowded, competitive markets. Blue oceans are spaces where customers should be but competitors aren’t yet.
- Creating a brand-new market requires costly customer education. A “bridge” product that pulls customers out of a red ocean is often the smarter path.
- Success attracts competitors. Every blue ocean eventually turns red, so you have to keep innovating to stay ahead.
- Knowing the market wants something isn’t enough. You have to position the product so people understand what it does for them.
- People switch only when the pain is real. If the current option is merely inconvenient, they’ll stay where they are.
Episode timeline
- 0:00 Shifting to the business side
- 1:05 The next stretch of episodes: start, scale and build to sell
- 1:52 The entrepreneur’s ocean
- 2:46 Red oceans: crowded, competitive markets
- 4:34 Atkins, keto and the opportunity switch
- 6:30 Blue oceans: where competitors haven’t gone
- 7:25 The cost of educating a market
- 8:31 Building a bridge product
- 12:36 Why every blue ocean eventually turns red
- 13:05 How gyms pivoted online
- 16:30 Keeping the ocean blue, or at least purple
- 16:50 Listen to the market and build feedback loops
- 19:42 TiVo: the right product, positioned wrong
- 21:59 Is there enough pain to make people switch?
The episode in brief
From the personal side to the business side. The coming episodes focus on what it takes to start, scale and build a business that could one day be sold. Later in the season, Jon ties it back to the personal struggles that come with building. Most people think about only one side of the coin, and the other side gets lost.
Red oceans and blue oceans. A red ocean is a bloody, competitive market. Weight loss is the example Jon returns to, with its supplements, coaches, gyms and programs all chasing the same result. Niching down, from gyms in general to specialty studios such as cycling, barre or CrossFit, helps you carve out a corner. A truly different approach can open a blue ocean: a space where customers and competitors ought to be but aren’t yet.
New markets are expensive. When something is genuinely new, you have to teach people why they need it, and that education is costly. Rather than building an entirely new ocean, Jon suggests a blue product that sits inside the red ocean and acts as a bridge. A performance gym might offer a free trial to people at traditional gyms who already love lifting. Once they try it, you’re explaining a product, not an ocean.
Every blue ocean turns red. As your space grows, competitors notice and spin off their own versions, just as yoga, barre and indoor cycling studios multiplied. To stay ahead, keep listening and innovating. Jon points to gyms that moved classes online during the pandemic and found a second audience that preferred working out at home.
Listen, test, iterate. Ask the market about its pain points, find what no one is solving, and build to that. Then create feedback loops: let customers test it, validate it and tell you what to change, within reason.
Positioning still matters. Jon was an early TiVo owner and loved it. But the company struggled to explain the practical benefit, like pausing live TV and picking up without missing a beat. Even when the market says it wants something, you have to show people exactly why it’s for them.
Is there enough pain? Find out who in the market has the problem, whether they’ll pay for an alternative, and whether their pain is strong enough to make them switch. If what they use now is only an inconvenience, they won’t move.
Key action items
- Map your ocean. List your direct competitors and how crowded your space is, and write down whether you’re in a red ocean or near a blue one.
- Design a bridge. Identify one offer, such as a trial, an entry-level product or a niche service, that could pull customers from the crowded market toward what you do differently.
- Measure the pain. Ask five prospects how much their current solution frustrates them, and whether they’d pay to fix it.
- Build a feedback loop. Set a regular way for customers to test what you’re building and tell you what to change.
Listen next: Episode 10: Build It and They Will Come? Maybe Not
This episode is educational and isn’t legal, tax or financial advice. Speak with your own attorney and advisers about your situation.