Long Tail vs Short Leash

Long Tail vs Short Leash

The long-tail theory rests on the idea that units that don’t sell very much could contribute a lot when variable costs are very low and they are sold in massive volume. For instance, when Amazon sells millions of books that are nowhere near being bestsellers and sell 1, 5, or 20 books in total, it doesn’t cost Amazon much to keep those less popular books on its servers and to distribute them digitally to the few consumers who purchase them. Meanwhile, when it sells books for millions of these unpopular authors, it is generating a lot of revenue. Often times the less popular books sold en masse can outweigh the revenue generated by the top selling titles combined.

These top-selling titles are the short leash. Traditionally, media such as books or movies was determined to be worth being produced only if it were a “hit.” When records or books used to occupy shelf-space and had cost millions to produce, a miss was a big disappointment. The business was heavily reliant on being able to find the next best-selling author or the next hit record from undiscovered talent, hence the value that producers and A&R reps at labels used to create. Businesses that still rely on this short leash would be something that is capital intensive and/or tangible products such as automobiles. If a model doesn’t sell at all and becomes built up inventory that has to then be discounted and wrote off, it can be costly. Thus, automobile makers strive to create and maintain models that are popular and will discontinue models when necessary.

Our Long Tail

Our venture would focus on the long-tail: We are not focused on acquiring the big real estate owners and investors out there who have huge portfolios that we are looking to manage, similar to what you see with a traditional wealth management business that may have minimum asset requirements for future clients.


On the contrary, we will be more like the retail banking model that looks to get volume from all of these small customers (novice real estate investors and property managers). We will be able to do this because we will not have much overhead and won’t be putting much capital into each unit. The capital will be provided by the real estate investor cohort and most ongoing-services will be rendered by the property manager users that we have on our marketplace. We will have a broker model that links the parties together, giving the RE owner the economies of scale and a network and providing property managers or future PMs the chance to start a business. This may very well create new PMs the way that eBay created opportunities for entrepreneurs to build their own e-commerce storefronts or AirBnB let property owners venture into the hospitality business.