I believe that a major key to success in entrepreneurship is strong familiarity and experience of the industry. And it doesn’t require a MBA or a JD to know that market. I find the best example is in the founder of GoPro. A sports enthusiast from surfing to skiing, Nick Woodman, the founder, began his camera business as a means to support his outdoor activities. He wanted to record his enthusiasm and events to show to his friends. He was not a trained professional photographer or electronics engineer. Yet he designed a portable camera dedicated to recording an activity, whether underwater or in the sky. Now his net worth is about $2.3 billion, and he is still treats this business as a support to his sports.
I had the opportunity of meeting another entrepreneur-surfer through Wing Lam, a co-founder of a very popular chain of restaurants called Wahoo’s Fish Taco. As a surfer, Wing went as far south as Ensenada, Mexico, where he discovered the fish taco. He was a surfer, not a restaurateur. He brought the recipe North to Santa Ana, California. Since he followed the weather and other surfers, he needed a means of support to cover his primary interest, surfing. Now the company has over 40 restaurants predominantly in the Western states and Hawaii.
None of these guys claimed to be financial or engineering savants. However, they do have something very much in common: both know their markets extremely well. They understood what a sports enthusiast or surfer would enjoy to have. They knew their markets. Both men had years of experience understanding their colleagues and fellow sports enthusiasts. They knew which photo equipment the market needed and what food they enjoyed.
Why am I using them as examples? Silicon Valley extols the benefits to entrepreneurship. Many investors look at where they received their Ph.D., M.B.A.s. Some believe that technology is everything. And that fact that the product or service is technologically derived, that adds value to the company.
I myself that marketing is paramount to any success, and to market any product well one has to know how that market operates. And just to underscore that difference I use a recent introduction to a tech sensor company in healthcare.
The founder was an electronics engineer with no healthcare experience, and his company received half a million dollars in funding. The primary focus is to use inexpensive sensors for the healthcare industry. What made me skeptical about his company’s strategy is the lack of senior managers coming from healthcare. All are electronic engineers designing a small card that measures EKG. I asked about standards such as the FDA would require as to the reliability of the product and its accuracy. He replied that there were no standards. I also inquired whether anyone had been testing the device in a control environment. He related that various students working in the hospital were involved in assessing the product. Not quite the requirements demanded within the U.S. And not all of the engineering in the World is the best substitute to understanding the market.
All of these points I had raised during our meeting were rebuffed. I had my misgivings that he clearly understood the healthcare market. On the other hand, I myself have considerable experience in healthcare and the many strict regulations imposed in the industry from the FDA to HIPAA compliance. I knew that market well, he did not. I know that any product being purchased by a hospital has to pass various regulatory standards. But I concluded that this founder was a neophyte to the healthcare industry. And whatever he was developing would never pass the regulatory muster in the United States. Nonetheless he raised half a million dollars.
Without understanding the target market well, a company cannot prosper or even survive. And this important aspect of any business strategy seems lacking among technology companies. Know your market well!!