How can a 25 cent product turn into billions?
A: Product arbitrage + equity.
This is the twist of “biz magic” behind the 50 cent Vitamin Water story.
Rapper Curtis Jackson (Aka 50 CENT) understood this well when he invested in Vitamin Water and earned 100 million after Coca Cola bought it for $4.1 BILLION.
In one of his songs, he raps:
“I took quarter water sold it in bottles for 2 bucks. Coca Cola came and bought it for billions. What the fuck?”
For those who don’t know, quarter waters are 25 cent Kool-Aid type drinks found at your local bodegas.
(Corner stores).
Say it with me
Bo-de-gas.
Yes, very good.
You see, Quarter waters and Vitamin water are nearly identical.
The Difference?
Presentation.
(You Vs. The Guy She Tells You Not To Worry About)
Quarter waters come in a cheap package.
Vitamin water comes in a premium display.
- Same product.
- Different angles.
- Different audience.
This concept is so powerful, it allows for a 8x+ markup.
And Billions in profits for the exit *event*.
As you’ve realized, value is determined by what the market is willing to pay.
The markets have both products available to them, yet some choose Quarter Water and some choose Vitamin Water.
(The reason often comes down to identity).
Other Notes
Vitamin Water usually comes in exotic flavors such as:
- Acai Blueberry Pomegranate
- Dragonfruit
- Lychee
etc.
However, 50’s market wasn’t familiar with any of that.
He chose grape as his flavor because that’s what his market (urban inner city) prefers and has strong associations with.
A more exotic flavor wouldn’t have been as successful.
Conclusion
- Get equity / ownership
- “Dropship” a proven product into a higher end market
- Premium branding allows for premium mark-ups
- Value is determined by what the market is willing to pay
- Use associations your market already prefers and has strong associations with
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