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Arrucha Post
We studied 28 bootstrapping entrepreneurs who pulled it off. They had one important ingredient in common.
Forbes 13/05/11
By Dileep Rao, Ph.D.
Innovation is an excruciatingly popular buzzword. Making creative new products--with or without a small letter "i" in their names--is clearly a powerful skill. But it's not the only path to building a $100 million business.
Some burgeoning markets are big enough that you can ride them to riches simply by jumping in quickly and executing well. Other growth opportunities are but one subtle observation away--no dramatic innovation required.
I studied 28 super-achieving entrepreneurs who built some of the world's largest companies. (For the full analysis, check out Bootstrap To Billions.) They did a lot of things right, and the work yielded many valuable, industry-specific takeaways. But there was one overarching lesson that emerged in nearly every case: You don't have to create a market from scratch--instead, spot a trend early and ride it for everything it's worth.
Consider these three examples:
Glen Taylor, CEO of Taylor Corporation:
As a teenager Taylor started working at a small printing company near Minneapolis that he would eventually build into a powerhouse. Wedding invitations were always in demand, but Taylor had plenty of competition in New York and Chicago. He needed an advantage, so he studied closely how his customers ordered cards.
He noticed that they often didn't order products in the catalog, but instead wanted custom designs, wording and colors--and they didn't mind paying a premium to get them. Taylor went to bridal fashion shows to get a heads up on the coming season's colors, and coordinated his paper products to match. About the same time, Taylor met a supplier of party paraphernalia for school proms.
The new concept: songs and movies of the day to replace tired themes, such as Hawaiian hula parties. Taylor applied the same thematic approach to wedding invitations and sales took off. Suddenly a commodity business became something a lot more--and all because Taylor followed the trends.
Dick Schulze, founder of Best Buy:
By the mid-1970s Schulze had built a modest retail electronics empire, with nine stores. Then the federal government lifted the ban on transshipment of consumer electronics, meaning that consumers could buy calculators and boom boxes from mail-order vendors with lower overhead and lower prices. Meanwhile, warehouse stores like Wal-Mart ( WMT - news - people ) and Sam's Club were starting to take off.
The folks at Circuit City ( CC - news - people ) noticed this and applied the warehouse concept to electronics. No matter: There was plenty of room in that blossoming market for another big box. Best Buy ( BBY - news - people ) now sports a $12 billion market capitalization. Schulze's net worth: $2.5 billion.
Stephen Shank, founder of Capella Education Company:
By the early 1990s Shank had about enough of the toy business. Over the years he spent considerable time in China and Korea, which were producing hordes of ambitious, skilled young people.
Shank realized that American workers, whether they liked it or not, would have to continuously educate themselves (at a price they could afford) to remain competitive. Meanwhile the University of Phoenix had met with early success delivering undergraduate classes over the Web.
There was clearly room for competition, but Shank wanted to set his operation apart, so he focused on graduate-level education for working adults, also provided online. His 900,000 shares of Capella ( CPLA - news - people ) were worth a recent $46 million.
Innovation is sexy. That's why Apple ( AAPL - news - people ) is worth $320 billon. But before you try to get rich building a new market out of thin air, know that there's a more feasible path--that is, if you’re paying attention.
Credit FORBES: http://www.forbes.com/2011/05/12/build-a-hundred-million-dollar-business.html?feed=rss_entrepreneurs#
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