The $5 Trillion at the Base of the Pyramid

It’s easy to see long-tail distributions at the top end, where hedge-fund managers

make $2

billion per year and apartments sell for $200

million. Luxury goods manufacturers and many others are chasing

that market, which is partly

responsible for the continued surge in New York City real estate. But there’s

a long tail at the other end of the spectrum as well.

PSDBlog

points out that the bottom 80% of humanity, living on an average of $700 per

year, has about $1.7

trillion to spend each year, while, to use another metric, the 4 billion

people living on less than $3,000 per annum represent a $5 trillion

market. That’s big by any measure.

And yet, we’re told, "only 50 or so multinational companies (there are

63,000 worldwide) have tried to penetrate the base of the pyramid". Obviously,

this isn’t the kind of long tail that can be tapped by setting up a website

– although m-commerce

and m-banking

are growing very fast in many emerging markets.

All the same, the way to make real money is to zig while everybody else zags.

So for an interesting long-tail play, it might be worth thinking not about houses

which sell for $200 million, but rather about houses which sell for $2,000.

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