The Tokyo Effect

24 April 2022

Tokyo has ~14M people, making it the largest city on Earth. It has thousands of unique stores, like Ma-suya Azabu-Juban—a shop that only sells salt. A store like this couldn’t exist in an average city (like my hometown of Grand Rapids, Michigan) because the place wouldn’t get enough foot traffic to find customers interested in its niche. When a business in Tokyo has 40 million people within a short train ride, there’s a good chance a few thousand of them will be customers.

The Internet is like Tokyo. All users can walk by your storefront on the Internet—even if you’re only peddling collectible lawn gnomes, manual nose hair trimmers, or bespoke Lego bricks.

The “niche at scale” is a fundamental change for 21st-century business: A shift from the general to the specific. Opportunity abounds for niche creation and dominance—everyone can be the best in the world in their narrow domain.