Last week I was in Euro Disneyland Paris. A dream come true.
Like many in Europe, I was raised on their colorful commercials. My favorite Disney characters were yelling at me to convince mom and dad to sell their kidneys and buy tickets. I tried. God I tried. But my parents wouldn't budge. They were happy with their life savings in one piece thank you very much.
But how things have changed. As a 25 year old who's making decent money, a romantic trip to Paris with my girlfriend was suddenly in the realm of possibility. My girlfriend put her foot down. Being a massive Disney fan, she told me a trip to Disney was a mandatory part of the itinerary.
And so on a dreary Saturday morning we arrived at the happiest place on Earth. Tickets in hand, we entered the gates, walked through Main Street U.S.A., took a hard left at the Cinderella’s castle, and got in line for Big Thunder Mountain.
The line went relatively smoothly. We joked around. We enjoyed the atmosphere. But queueing sucks—fancy landscaping be damned. But as we were mere moments away from boarding, we were suddenly stopped. A family dressed head-to-toe in Gucci was whisked in by an attendant dressed in a full valet suit. We had to wait for the next train. And then I realized something.
That ticket we bought only entitled us to one thing. To stand in line.
Want the full experience? It'll cost you extra.
Disney isn't stupid. If they love one thing, it's money. They know that the $95 entrance fee is a pittance to some. As a result, your Disney experience can vary massively, if you're willing to pay for it.
Want to skip the line? There's a modestly-priced Fast Pass ticket you can buy with just one click in the Disneyland app. For one glorious ride, you get to skip the line and laugh at the plebs standing for hours in the normal line. That'll be $14.95, please.
Oh, your 2-minute ride is over? Well, thank you for riding and back to the queue with you, peasant.
But are you the type of person who likes to have their family bedecked in head to toe Gucci? If so, you need to find a personal stylist, first of all. But that's besides the point. Second, you might want to consider the private VIP tours Disney offers.
But what if you're the Gucci type? If so, you need to find a personal stylist, first of all. You can probably afford it. Second, you might want to consider a private Disney tour. For just $295 per person, a valet-suited private attendant will whisk you through all the lines, arrange one-on-one visits with your favorite cast members, get you reservations at the most glitzy (and overpriced) restaurants on the property, and provide enough useless Disney trivia to win at Trivial Pursuit for the rest of your life.
But Mickey ‘Moneybags’ Mouse isn't done yet. At Disney World, you can get the Premiere VIP Tour. The cost? Up to $850 per hour with a minimum duration of 7 hours. Thereby setting you back about six grand. Oh, and the tour doesn't include tickets to the park. Yeah, you'll have to pay for that too.
Disney turns out to be no exception to the general rule: there's always room at the top of the market.
No matter what industry you're in, odds are that people are willing to pay top-dollar for the very best they can get their hands on. I don't care how obscure your industry is. Whether you're selling bongo drums or bottled water, there's probably someone with more money than sense who's happy to pay exorbitant prices.
And with big-ticket items often comes a big fat profit margin.
Making profit as a business comes down to two things: how many people you can sell things to and how much you charge them. With lower prices, there are huge market. Higher prices, smaller markets. That's Economics 101 for you. At the end of the day, your earnings are made up of how many people want your product or service, multiplied by the price you're charging them.
Selling a product to billions is the dream of many. It's the Silicon Valley playbook: capture the biggest market you can find, develop a competitive moat, and then figure out how to milk it for every penny you can. I'll admit it's attractive. If successful, it can be ridiculously lucrative. Even with tiny margins, profits can be eye-watering once multiplied by millions or billions of customers.
Easier said than done. Everyone is trying to build the next Facebook. Or Apple. Or Uber. Or Stripe. Or Notion. You catch my drift.
But another strategy is to focus on a small market and charge them top-dollar. Why sell to millions of average Joes when you could appeal to the 1%? Your margins will be bigger. Not to mention that in times of economic uncertainty, the rich usually keep spending like nothing's going on. As a result, there will almost always be a market in the ultra-premium segment.
A friend of mine owns a luxury travel agency. He creates the most unique and exotic travel experiences for high net-worth individuals and their families. Arctic expeditions, cruises through the Amazon, hiking through Nepal, or going on wine tours in French wine country, the list is endless. The more unique, the better. And business is booming.
Discretion and secrecy are the prime directive in the world of the super rich. As a result, my friend has been quite secretive about his clients, their travels, and its costs. But he did admit he won't even consider a client with a budget that's under a quarter of a million dollars. Yes, some people spend more on a trip than most do on their house.
As for the biggest one, he's a little more forthcoming about that one. It involved a 2-week cruise on an explorer yacht with 13 guests. First stop, McMurdo station in Antarctica before moving onto Patagonia for skiing, hiking and fishing. It was the organizer's bachelor party. To make sure his meals were just the way he liked it, he had a two-starred Michelin chef flown in. The total cost? Just under three million dollars.
When it boils down to it, it's very easy to sell to the ultra-wealthy.
A few months ago, I was grabbing some beers with this friend of mine at the local pub. Nothing fancy, unless you're a connoisseur of toilet-door graffiti.
We were chatting about his business and how the industry has been booming since the pandemic. I asked him why he started a luxury travel agency of all things. I was astounded. He'd never worked in the travel industry. He'd never left Europe, barring a honeymoon trip to New York. I don't think he had ever even set foot in a Michelin restaurant. And he sure as hell had never been on a yacht.
So why luxury travel? His response was something I’ll never forget and taught me more than my 4-year business degree.
“The ultra-wealthy will spend lavishly on anything that saves them time, makes them money, makes them feel good, or gives them a good story to tell.”
Time is money. And so buying time is an absolute no-brainer. Time is everyone's most important asset, after all.
I witnessed this first-hand in Disneyland. The Gucci-gang family, no matter how tasteless their attire, decided paying a premium was worth not standing in line. The rest of us plebs in line obviously made a different choice.
But the world of aviation takes the cake. Private jets are the ultimate time saver. Be driven up to your plane, because you obviously have a chauffeur, get in, and take off in minutes. It sure beats having to show up at the airport two hours before departure, making your way through security hoping you don't get a cavity check, stand in line just to stand in line some more, and finally be packed into a flying tube like a can of sardines. Yeah, I get the appeal.
Not to mention that private aviation allows you to go anywhere, anytime. No more layovers, just go.
Help some overworked millionaire save an hour of his day and you can bet he's willing to pay handsomely for it.
You know what wealthy people love most? Becoming more wealthy. After all, how do you think they became wealthy in the first place?
As such, there's an entire industry out there dedicated to managing and growing the fortunes of the ultra-wealthy. Whether it's hedge funds, family offices, or asset managers, about half of the financial industry is made up of firms exclusively catering to the 1%.
But you can do more than move their money around. Take Tony Robbins, for example. The world-famous guru and performance coach is paid millions of dollars for his one-on-one coaching work. What's more, he'll often get a cut of the upside, should his clients suddenly find themselves becoming a lot more successful.
When you try to calculate his per-hour rate, your eyes will start to water. Especially when you consider that he probably only spends a couple of hours per client per week. But that's not what it's about.
It's about performance-optimization. His clients are paying him to achieve better results. And that's worth a hell of a lot to them. If spending millions on coaching results in them making tens of millions of dollars, that's the easiest investment they'll ever make. That's the simplest cost-benefit analysis ever.
It's simple. If it ends up making them money, or if it makes it that much more likely that they'll attain even greater success, it becomes a worthwhile investment then and there.
We all desire easier lives, with greater leisure and less stress.
Despite what the stereotype tells us, the lifestyle of being ultra-wealthy doesn't just consist of lounging on a beach, Pornstar Martini in hand. With great wealth come huge demands on increasingly scarce amounts of time. With grueling schedules and massive responsibility resting on their shoulders, stress is a common companion.
Luckily the richest of the rich have plenty of money to throw at their problems until they disappear. Money is nothing but a tool to make their lives easier.
Self-conscious about your looks? Some plastic surgery and a personal stylist can take care of that for you.
Feel overwhelmed? Meet your army of private assistants, who'll meticulously organize every aspect of your life with surgical precision.
Want to get in shape? Don't go on a diet like the regular folk. Just recruit an army of private trainers, chefs, and nutritionists so that you'll be in the shape of your life without ever needing to lift a finger.
This principle applies even when you're not marketing to millionaires. Peloton saw enormous growth by appealing to the inherent laziness of thousands of high earners. Who the hell pays more than two grand for a stationary bike? The answer, it turns out, is quite a lot of people. And it works. With Peloton, there's no need to think about what workout you're going to do. You just follow your instructor. It takes the thinking out of it and makes getting in shape an absolute breeze.
As long as you can improve someone's quality of life or free them from worrying, there will always be men and women frothing at the mouth to drop big bucks on it.
What do you give a person who quite literally already has everything?
To the richest of the rich, the hedonic treadmill is well-trodden. After a while, even the most glamorous or excessive experiences begin to lose their luster.
Visit the Monaco Grand Prix? It'd be the fourth time in as many years. Go to the Four Seasons in Bora Bora? That's so 2020. Dine at the best sushi place in Japan? John from the country club had the head chef flown in to cater for his birthday party.
The rich want something new. This is where my friend's travel agency comes in. They'll move heaven and Earth to bring the most unique experiences to life. Nothing's too far-fetched or crazy. Want to have dinner on a sand bank that disappears after 8 hours? Piece of cake. Want to have the pope officiate your wedding? It'll be tough, but they're not likely to tell you no.
Novelty has become a status symbol to the rich and wealthy. It's nothing more than a game of oneupmanship. Who's got the best story at the cocktail party and who can boast about the most unique summer holiday?
As my friend says, “If you've already got everything, spending $100,000 on a good story to tell friends suddenly becomes reasonable.”
Sell to those who've got the most to spend. It's a foolproof strategy. In a world of rising wealth inequality, selling to the top 1% can be your ticket into that selfsame 1%.
Tyler Cowen, from Marginal Revolution fame, once said that in the future there will be two classes. The rich and those whose job it is to make the lives of the rich more comfortable. In some ways, that future is already here.
There's an insane amount of money out there for the taking, if you just know where to look.
Every entrepreneur wants to be a big fish. Everyone wants to have the next globally-recognizable business. But while it's tempting to go for broke and target massive audiences, focusing on the ultra-premium segment can be a lot more profitable.
In pretty much any industry or vertical, there's probably a product or service out there that's ten times more expensive or exclusive. Or if it doesn't exist, you can create it.
Just follow the money.