Ask HN: What are the least competitive consumer and enterprise markets?
My experiment in working backwards from market to problems to solutions:
1. Start with listing markets that have a low degree of competition, but don't have a mega-monopoly owning them. These will mostly be small markets.
2. Examine the problem space within each and see if new technology (SW / HW) can deliver 10x improvements.
3. Determine whether these markets are a short enough hop away from deeper ones.
It's surprisingly hard to get a "map" of existing markets, but am curious about those the community can readily identify.
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[ 7.0 ms ] story [ 290 ms ] threadSometimes it is niche until technology catches up with a need.
Sometimes it is niche until an un-suckful product is actually offered.
Sometimes it is niche until a sudden shift in the entire economy or market.
The shift from horseshoe-clad transportation to a new thing was rapid only after about 20 years of "niche" gas-powered automotive vehicles.
My first thought was, someone who makes a hard-to-find part for a low volume vehicle. Take, for instance, the original Tesla Roadster. It sold about 2500 units. Maybe they have a problem that happens in 10% of units. You have a maximum of 250 customers, assuming none are scrapped and you provide the only potential solution.
These are the sorts of situations in which you’ll find very little competition. For a lot of people with niche interests there’s always “that one dude on the forums” who is the only person with the solution.
The same kind of situations arise often in enterprise too, and it’s the kind of things that internal teams or contractors might one-off. But, if you make an off-the-shelf product for it, you’ll be the only game in town!
yes and -- informing someone that the term is more widely used than they might otherwise have known is indeed useful
I once got excited about what I thought was a cool idea (I can't remember what it was, but something along the lines of "black swan theory"). I didn't know how established it was, so I started inserting it in talks with the assumption people didn't already know about it. I belabored its definition and dwelled on it, when in fact people in academic communities had already discussed it in depth, and have moved on to other ideas. No one said anything, but no one engaged with me after my talks and I wondered why.
Looking back, I wished someone had nudged me and explained the context of that idea in those communities. I must have come across as a pseudointellectual (in that particular context). Feedback matters and is helpful when given kindly.
(on "regulatory capture" specifically, I admit I had not heard the term until about a year ago when it came up several times on Tyler Cowen's blog and on HN)
Yes there might _have_ been a reason for a the market to be competitive, but something might have changed in the past few years that has removed or minimized that reason.
These are the marketing that are ripe for competition.
But the essence of the comment is spot on, these apparently barren landscapes of competitors often have a cause, and so just finding such a market is only the start of analyzing WHY it seems to be so noncompetitive.
[1] Two economists are walking down the street and one sees a $20 bill on the ground and picks it up. The other asks, "Why did you pick that up? It's clearly counterfeit, if it were a real $20 bill someone else would have already picked it up."
You can throw as much business intelligence and automation to, let's say, an Ice Cream truck. It will still be an Ice Cream truck. Nobody is becoming a millionaire with it.
Would THAT be worth it then? Maybe not to you, but to the guy who came from a third world country and built his company from nothing and now he's living an upper middle class lifestyle? To that guy it's the essence of the American Dream.
Get a self-driving truck, and add some sort of people-sensing system that allows potential customers to intuitively flag it down. Then add a self-serve ice cream vending machine.
Now you can build a fleet of ice cream trucks that don't need human operators. I think you could make a few millionaires with that.
My point is not that automated ice cream trucks are the future. My point is that "small" improvements amortized across enough units can be significant.
Now, there's probably a pretty hard ceiling to the amount of income one of these trucks can bring in, so investing in business intelligence or a snazzy customer experience probably isn't a good investment. (Which is probably what parent was imagining.)
But don't underestimate the power of shrinking costs. If you sell a billion screws a year, a one-tenth of a cent improvement in unit manufacturing cost is a million dollars a year.
You can become a millionaire by scaling up almost any business. I doubt you’d become a billionaire but who cares?
That's probably what people said about coffee and cafes prior to Starbucks.
Only in a place where coffee is generally awful, and VC money easy, could the concept that became Starbucks ever come into existence.
But that's all beside the point. I'm not saying an Italian would be able to replicate Starbucks in Italy. What I'm saying is that there are countless opportunities staring us right in the face, every day, and 99% of people see a cafe and think "it can't scale, it's local demand only, there's no point, why bother", the remaining 1% see Starbucks.
Luigi Zingales, an economist at UChicago, once said, "the fact that Starbucks is not Italian is hurtful. The extreme agency problems of Italy make it difficult to scale firms.".
1. There is a decent chance that existing entrants are tied down by a focus on meeting the regulations rather than on delighting users.
2. You might be able to significantly scale-up and thus improve the unit economics.
While the market of people who can pass the means-testing to qualify for whatever government-subsidized benefit exists might be small, the nature of bureaucracy means there is often a MUCH wider pool of people who are "quasi-disabled", either permanently or temporarily.
Note that there are a few disabilities which are so overwhelmingly common that the market is already saturated. The classic example is eyeglasses.
3. The specific disabled population is a ready-made population of early adopters IF you identify that you can keep your focus on delighting users and just use the regulations to remind yourself of risks and edge-cases. (This really will depend quite heavily on the quality of the regulations -- notice the difference between Japanese zoning and SF-bay housing-approvals) Lots of legacy disability tech:
* Has a pretty frustrating maintenance cycle, so you can win on a strong customer service brand IF you can innovate on operations.
* Can be pretty frustrating to use, so you can win big on design.
A focus on delighting users rather than ticking boxes is naturally going to produce a naturally better product. Here is the key tactic though: lean on the early-adopters for high-detail feedback. This problem occupies a much larger proportion of their lives than the average user of a product.
This higher-strength signal of user needs is known as the "Curb Cut Effect". https://thingofthings.wordpress.com/2014/11/15/the-curb-cut-...
This also seems to hint at a good trick to turn any regulatory box-ticking exercise into purpose-driven-design. After all, a focus on privacy-by-design is better than a focus on the letter of GDPR-compliance, right?
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Hilariously, I used to work for a YC company unwittingly building assistive tech for my particular disability. Their Curb Cut effect was so ridiculously strong, they've occasionally written ad copy with reference to a symptom I've experienced and I'm pretty sure they still don't even realize it. Looking back, I now really wish I had been self-confident enough to explicitly disclose -- especially when their CEO started using a wheelchair.
That's the problem Dean Kamen had with his iBOT wheelchair. They were very cool and their users loved them, but they went for something like $25,000 each and likely needed frequent maintenance.
If you want Medicare to pay for a product, you need a positive Coverage Determination. And if you get it, you just opened up a 50M person market (obviously a subset, since not everyone will need it) and all you need is the patient to say to their doctor “I want that” and it’s paid for.
It’s a heavily front loaded business, but if can get reimbursement, it’s basically paid for, you just need customers to ask for it (I’m obviously simplifying, since it varies by product type, but medical equipment is a great example).
This is where most of the bizarre "as seen on TV" products come from: The inventor made a tool for people with disabilities, found that the target market wasn't large enough to sustain a business, and frantically tried to pivot. Pivoting is hard when you already have a large inventory of hard products.
If you can build something that able-bodied people are not only willing to use but willing to pay extra for, then you're good to go.
I've found there are a lot of secondary markets that get overlooked by VC. Typically, these markets have (1) a lower ceiling so they're overlooked by VC's needing an outside return. They can still be massively profitable for a bootstrapped or lean company. (2) Require deep knowledge of two non-overlapping subjects.
Sometimes I hear, pejoratively, a "lifestyle" business.
But then on researching it deeper I discovered the basic problem with the market is that doctors won’t pay enough on a monthly basis for a high-touch sales process and they still mostly insist on one or more personal visits before buying the product. So, you basically lose money on every customer for the first year or two, meaning it is really hard to build a sustainable business. I got access to the financials of two of the existing players, and they were not good. They did the minimum investment into the product they could get away with because the market wouldn’t allow for more than that.
I've been researching medical market a lot. There are many reasons why appointment and practice management software isn't a great business. But the number one reason is that it doesn't create a great value for doctors. Patients will still come and use the same doctor, insurance companies will still pay them the same, it won't bring new patients, it will not make it easier for doctor to manage his practice since he still has to have a nurse which does this.
On another hand, it makes it easy for their patients to go somewhere else since EHR need to be completely available to patient. This is an unnecessary risk.
[1] https://www.defmacro.org/2013/09/26/products.html
So if one wants to make an appointment/booking software, would have to look for things that would bring new customers. Helping with discovering places.
People bash bad UX and buggy software all the time, like "those developers are sooo bad".
What they mostly don't realize that software is only as good as much someone is willing to pay for.
This doesn't necessarily help you come up with new software, but it is something I've spent a lot of time thinking about since I'm also trying to start a business.
* Go for people that work primarily commercial. You'll pay more, but they tend to be much more professional.
* If you can't get that, start with a small job. Take something that you _know_ you can do and hire it out. See what comes out of it.
I'd suggest building a backoffice for tradies that automates as much as possible. Payments, chasing payments, reminding them of people waiting for quotes, etc. A CRM app that all their incoming enquiries go directly to, etc. Otherwise they have quote requests coming into their phone messages or emails and getting lost along with everything else. I run a small business and have 200-500+ unread emails at almost any time. If something slips off the first screen of G-Suite, it is much harder to remember it.
[1] https://www.servicetitan.com/
I figured it's actually easier to sell this service, at least to start with, to small and medium sized businesses which don't need fulltime staff for some trades oriented work, but have enough of that kind of work for it to be worth setting up a business relationship. But of course the issue with this is it's just a small business idea - you'd need to figure out how to add value to differentiate yourself from the thousands of contractors already doing this if you want to scale beyond the lifestyle level.
That backlog is absolutely necessary for the business to function though. Without the backlog there is idle time and since professionals work for a salary that idle time has to be paid for by passing costs onto customers.
[1] https://www.urbancompany.com/
A sample scenario is one of his senior colleagues takes a PDF and writes in some comments -- almost like a teacher grading an essay with a red pen, change this x to y, etc. This goes to my friend, who reviews, edits, and returns the draft by email. And there will be a lot of back and forth, plus other people making edits in real time.
watching this i can't help but notice how remarkably similar it is to programming, minus all the convenience of programming tools.
i don't know what the product or barriers are here, but these people could easily 10x if they knew about version control and markup languages.
Plus for people in the first few years, there's pressure to meet a billable hour quota - work like this pads the numbers.
https://www.techcrunch.com/2020/03/03/atrium-shuts-down/amp/
Most law firms are fully integrated into the MS Office ecosystem. Even with emailing things back and forth, the Track Changes feature in Word does a decent enough job. (Although transactional lawyers will say it's the bane of their existence.) More advanced firms will use a document management system to save and back up documents to the cloud, and such a system usually also has built-in version control. So, the main technical problem with lawyers emailing back and forth has to do with the fact that no standard exists for the industry for document management, so these document management systems don't talk to each other. Even if the firms are using the same system, the functionality that would allow collaboration between opposing lawyers is terrible, at best.
More importantly, the real barrier to innovations in the legal industry has to do with economics. Lawyers get paid by the hour, so there's almost no incentive to become more efficient. Large clients can demand efficiency in the form of slashing the final legal bill by up to 40-50% sometime.
Finally, even the smallest changes introduce professional liability risks, so lawyers tend to stick to well known and understood processes that have withstood the test of time. Unless there's a concrete, nontrivial incentive for a lawyer to try something new, you're not going to find one voluntarily sticking his neck out in the name of innovation.
If there's an industry that massive savings [to the client] can be had with technological innovations, the legal industry would undoubtedly be it. But for the reasons stated above, startups working in this space will run out of money long before they could introduce meaningful changes.
Read up on Atrium if you want to understand more about the Tech x Legal space: https://techcrunch.com/2020/03/03/atrium-shuts-down/
Not that there isn't room for competition - there is. But the barriers are not what people expect. And the easy answers that coders tend to see aren't the real problems.
[1]mkjung.com/contracts
No, it's not. It might take more than a Google search.
You can extract what you want from US business census data. See "data.census.gov". Look for NAICS codes with a small number, but greater than 3, companies, and high dollar amounts for the category.
"Mobile video editing software" is a product type, not a business type. If you want product categories, you need a different data source. Such as Amazon's, or Google's or Alibaba's product tree. Here's Google's product hierarchy.[2] Google category 4953 is "Software > Computer Software > Multimedia & Design Software > Video Editing Software".
If you want such results handed to you without much work on your part, you may have to pay a company which collects such data. NAICS or D&B or some of the mailing list companies could make you a list.
[1] https://www.naics.com/code-search/?naicstrms=video
[2] https://www.google.com/basepages/producttype/taxonomy-with-i...
Not to beat this example to death, but there is a market for mobile video editing applications and I have no idea of its size. Wikipedia only lists one iOS product. I feel there would be a lot of value in providing this kind of information easily to people. I personally don't want to engage with a market research firm during the exploratory phase.
It's easy to see how many apps are in the store. It's a lot harder to know how much money they are grossing.
What's the value of a good "map" of an existing market? What are you willing to pay for one?
There may be an expectation that there are higher profit margins in non-competitive markets, so you may have an advantage there that any innovation will allow you to capture more excess profits as it will take longer for those excess products to be eaten by increased competition you triggered.
On the other hand, there’s an expectation that the incumbent(s) in a non-competitive market has a lot of funds at its disposal (due to years of capturing producers excess profits in a non-competitive market) to hamper innovation.
To me, this illustrates that whether the market is competitive or not is not very relevant. The question is whether you are able to outcompete the market by reducing costs and/or improving your offering compared to your market, whether that’s a single monopolist or 1,000 highly competitive companies.
> SCI then retains the funeral home's original name, often along with former owners who are kept on as management. A typical funeral home that is owned by SCI will not contain advertisements or logos for SCI
https://en.wikipedia.org/wiki/Service_Corporation_Internatio...
Edit: actually that doesn’t seem to be correct.
Eighty-nine percent of funeral homes in the U.S. are owned by individuals, families, or closely held private corporations. The remaining 11 percent are owned by corporations whose stock is publicly traded.
From Wikipedia:
In the 1960s, a push for large companies acquiring smaller funeral homes and cemeteries occurred.[18] Although there has been a consistent push for consolidation, the majority of the industry still consists of small, family-owned businesses.[18] Experts and analysts of the industry have estimated that the top six funeral operators control 25 to 30% of all funeral services in North America, with the top four owning between 15 and 20% of all funeral homes.
I definitely believe this could be the path to carving out small lifestyle businesses.
Letterbox drop around existing clients and parks to find more close by. Offer volume discounts for referring neighbouring dogs.
Take said dogs to park and let them run around while you operate your other businesses from your phone.
This doesn't sound like responsible dog handling.
Licensed Banking: a there hasn’t been a new chartered banks in a decade
Also Clearing Brokerage. Credit Bureaus. US Core banking software, KYC providers(Eg:lexis nexus), bill pay providers
- home services: lawn mowing, pest control, firewood delivery
- vehicle services: mobile oil change, mobile tire sales, locksmith
- event/seasonal services: catering, event management, tent rentals
- entertainment: bike tours, party rentals, hunting guides
- personal care: mobile haircuts, mobile makeup, mobile massages
- training/coaching/consulting: pet training, college application consulting, credit repair consulting
- trades/construction: electrical, plumbing, carpenting
- business services: videography, bookkeeping, junk removal
- real estate transactions: moving services, realtor, vacation rental management
Source: https://sweatystartup.com/businesses-i-love/
the only things which might remotely be well paid (trades/construction) generally have some relatively high hurdles in most countries.
You're assuming that people in these jobs get paid minimum wage and that the only way to be profitable is to undercut their wages. By offering better service, you can raise your rates and pay your employees better. But something tells me you knew that already and you're just saying toxic things to discourage people from trying.
You want medicine, you need to pay someone who's part of the Physician cartel, a pharmacy, a pharmacist, and whoever has the patent.
With computers and science you often need 0 of these except the manufacturer of the drug.
If you're not, it's worth it's weight in gold when evaluating markets and looking at how do build your business model.
The incumbent players are ignoring massive swaths of the addressable market at a time when, judging by my social media feed, there is renewed interest in labor issues.
A big reason for this is their reliance on a high-touch, manual onboarding process and slow, high overhead contract negotiation techniques. Prime for marketing automation, SaaS tools, chatbots, etc.
Additionally, for purely historical reasons, they have segmented the market by trade. There's no particular reason for you to follow this path, may as well help everyone get a better deal from their employer (and a cut for yourself!).
If you're interested Jane McAlevey's book Raising Expectations and Raising Hell is a good introduction to union organizing.
It might be worth looking for evidence of attempts at building such businesses, since often such domain expertise doesn't pair with business-building expertise. So if you're trying to build such a map, then maybe look at all the businesses (including all the failed ones) that served each market.
As an example, think of TSMC's upcoming 3nm process. It has a density of 300 million transistors per square millimetre. A Canon 5DS R has a 50 MPix resolution, which works out to about 60K photosites per square millimetre. That's a "budget" of 5,000 transistors per photosite!
That's more than enough to do "digital sensing". That is: accumulating photons in a digital counter instead of using an analog capacitor, allowing unlimited dynamic range. There would be no such thing as sensor saturation, allowing unlimited "electronic ND filter" effects without the colors being distorted even in a long time-lapse. It would allow "steering" of the data to nearby accumulators through an on-chip network at megahertz rates, providing near-perfect digital shake reduction without having to physically move the chip. Shake reduction could track moving objects and avoid blur even for very long hand-held exposures with cars or people in the scene, the same as what the Google Pixel does, but at a far higher quality. The motion vectors could be fed into a video compression stage, improving picture quality to above what the compressors can normally achieve by "guessing" the motion from 24fps still frames.
Etc, etc...
If you're talking about "cinematography using chemical film", it's not clear to me that there is much of a market for that. Film looks amazing, but it's a huge headache to work with and expensive to process. If it was what filmmakers wanted (where "want" takes cost into account), I don't think they would have abandoned it.
There is software for translation management, which is essentially project management, but because of the intricacies of the business there is specialized software for it. There are maybe 2 or 3 main competitors, all of which do the job but are fairly awful to use. Then there are a handful of products which come from computer-assisted translation (CAT, which is different from machine translation), and try to capture the project management part as well. Because their focus is on CAT, they're also not excellent in the management aspect.
If you want to capture the whole spectrum with all the edge cases, it's going to be a very complex product which will require a lot of user research and take a fairly long time to build. But there might be an opportunity to go to market earlier, with a subset of the functionality, and build from there.
[1] https://learn.blueoceanstrategy.com
I work in the small-bussines and before in government. have done some stuff for some of the biggest companies in my country (Colombia).
To say ALL of them are like 20-10 years behind is not say enough.
Today, I'm integrating with cobol and other stuff that only have text-based files as interface.
A problem is that not many investment are in this long tail, so when talking about solutions for this market is possible to NOT get excitement for it.
I'm building on the side a relational language that eventually could be an Access+Excel tool, but everyone is interesting in the markets that reach billons :).
(original audio segment: https://smashnotes.com/p/y-combinator/e/92-ryan-petersen/s/h...)
Here's another example of using a landing page to validate demand, and one where the product ended up being a very successful company: https://sumo.com/stories/80-20-business-idea-validation
I recently played around with the landing page method for an idea I had and ended up not getting much traction. That negative feedback was really useful in helping me decide whether to actually code up the app. Wrote about here, if anyone's interested: https://abiraja.com/the-landing-page-method/
1. Start with markets with high competition. E.g. paid alternatives to Google forms.
2. Get a list of 50+ products competing in the space. If < 50 go back to step 1.
3. Google to find what people, who are on the paid tiers of those products, complain about. This is easy as I am now Googling brand names so should get laser targeted results (v.s. googling "problem I had creating a form" -> Stack Overflow user who'll never pay for a form!)
4. Interview them to dig in further. If you can't get any of these people to even spare 5 minutes to talk, then it might be an indicator that you wont get them to buy.
5. Based on this, derive a hypothesis for a MVP that would solve the problem, along with the market it serves and where to find these people.
6. Presell to people in #4. If they say no - dig in further as to why. If they say yes, aim for maybe $1000 monthly revenue presold, then build.
The reason for this approach is it filters for the "are people motivated enough to spend money" which I think is the biggest risk for the ideas I come up with. Since they are (they already use the "competitor" product"), can I carve out a niche where I do something better for a specific group of people? Can I reach them easily without spending crazy money on ads? And am I solving their problem?
Caveat is this is designed as an idea generator for an Indie Hacker style project, not a startup!
I think 6 only works if you can manually complete the process behind the product to give the buyer the illusion that the product is a real product.
5.5. Derive a hypothesis for why the 50 other competitors have not already solved this problem or couldn't do so quickly once they discover your solution.
If you don't have a good answer for this, then the odds are one of two things will happen:
1. You will waste a bunch of time only to discover that you were ignorant of some deep constraint of the problem area.
2. Your competition will re-implement your feature and crowd you out.
I think the ideal answer would be "if they tried to solve this problem it would be bad for them. Too distracting, and they'd half ass it because it isn't their focus".
Rather than "oh that little feature is on the backlog".
Most markets with existing companies serving them are big enough to support a small indie company. And there are things you can offer as a small company that's difficult for big company's to offer.
So I think your expectation, assuming you are in the US, is that your business has one of a few trajectories:
* You deliberately aim for a market with many small businesses and forces that go against consolidation. There are fewer of these over time, but anything explicitly local, has few economies of scale, or where consumers specifically target variety is a good place to look. Think restaurants, luthiers, and other "craft" businesses. Then you can have a long moderate term success while staying small. You probably won't get rich but you might like your life.
* You try to grow very rapidly to get to be a big fish before the other big fish eat you. You take a ride on the VC train and if you're lucky escape with your soul intact.
* You aim to get bought. You lose the experience of it being your business but you might get rich in return.
* You get crushed or bought against your will. Short of simply fading away from lack of success, this is probably the most likely outcome.
Oh, and allow me to filter out reviews with over x emojis and over 0 animated gifs.
I’d say those are my main complaints/missing features for goodreads ;)
This is something I've been thinking about since my HOA sent me an email a month ago warning me that the sidewalk outside my property may be damaged and in need of repair because if someone tripped I'd be liable for this. Of course the email had a bunch of red and gold text.
Luckily for me they already had a concrete cutting company come by and survey the area and provide estimates for each plot.
My bill would be about $200 to fix the sidewalk. I looked outside and it was totally level and no edges exposed.
In really small print at the bottom of the email was information telling me it was optional to do, but again I might be liable if anything happens.
Today I saw this person outside doing the concrete repairs. It was a guy with a small trailer and grinding down the sidewalk with an angle grinder and a vacuum to suck up the dust.
This basic concrete cutting job is pulling money in if he can go around and tell all the HOAs about the urgent need to fix sidewalks and HOAs pass that along to all the residents.
How many people paid the $200 "to be on the safe side"?
Now you repeat for all the other services you can think about for home maintenance and repair and contact HOAs with estimates they can pass along.
My neighbor mentioned something about bylaws and the requirement for HOAs is only 20 years. That is up in December. However, I have to confirm that.
isn't the sidewalk the city's responsibility? Also, wouldn't your homeowner's insurance cover it?
>In really small print at the bottom of the email was information telling me it was optional to do, but again I might be liable if anything happens.
Honestly the arrangement seems rent-seeking(ish) to me. At the very least it leaves a bad taste in my mouth. They're not providing any real value, just scaring people into paying with an (arguably) misleading letter.
Shady.
There are plenty of cities where the homeowner is responsible for maintenance of the sidewalk and street trees. My city will cover 50% for city trees replacements and root damage to sidewalks. I last year replaced two old trees and it cost me just under $1k after splitting with the city. To make it worse, the contractors raised the prices when the city started offering the 50% cost sharing.
Unfortunately there are plenty of business built exactly like that.
One anecdote: there was a group of lawyers that would hire people in wheelchairs to go into stores (e.g. local Verizon dealer) and ask to use the restroom, then once inside the restroom measure everything and take notes. Apparently businesses are not required to make their restrooms available to the public, but if they do, they need to be up to code. So these guys would target chains of businesses that normally didn't allow public into their restrooms, hence the restrooms were usually not up to code. After gathering enough data they would then sue the companies and offer to settle for an amount very close to what it would cost the company to deal with the case in court.
In areas with an HOA often the HOA or homeowners are responsible for things the government is in other places, roads, street lights, sidewalks, storm drains.
As a society, we should really spend more time and effort doing this.
So the comments referring to this being a shake down are pretty much on point. I mean it isn't much of a surprise.
There's real value to what this service offers, people do want to fix mangled sidewalks, but the shakedown side of the business is where the money is at unfortunately (or not depending on your morals).
Also I was off on the costs, in the email it said there were 2 spots affected and the estimate was $280!! It took the guy ~2 days to do the whole neighborhood, each section took maybe 15mins at what looked like a comfortable pace. So the $/hr is very high.
food for thought