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.