I want to start a business in an industry I know nothing about. Am I mad?
Wednesday, November 17, 2010/
Yes, you are mad… but it shouldn’t stop you. Some of Australia’s best entrepreneurs start businesses in areas where they have no expertise.
Take Graeme Wood, founder of Wotif. Wood was a public servant who went on to start six businesses all with different degrees of success until he hit on the big idea while talking to a client about his problem with vacant hotel rooms.
It was too expensive to sell them at a discount rate through traditional media outlets and suddenly the idea for Wotif was born. Wood had almost no experience of the industry yet has been incredibly successful.
The other great example of course is the Bassett brothers who founded Seek. Paul Basset was looking for a house and wondered why on earth he couldn’t do it all online.
But on investigation of the idea, he realised that recruitment made more sense and Seek was born. He had no experience about the industry and knew nothing about classifieds or recruitment.
But now for the warning. If you don’t know the industry, it will certainly be harder to build a business. Same goes if you lack experience.
Wood might have lacked knowledge of the industry but he was an experienced businessman and had learnt a lot from previous entrepreneurial activities.
The Basset boys were smart. Paul had a law/commerce degree and had been working as a lawyer for some well-known entrepreneurs. His brother Andrew was a Booz Allen Hamilton management consultant who had a law, computer science degree and an MBA.
They were incredibly well connected to rich and powerful individuals who put in five rounds of investment and helped them quickly build their brand and market share in the online recruitment classifieds market.
While they are two great examples – and there are others – you do need to know that most of Australia’s very successful entrepreneurs started businesses in the industry in which they worked.
They thought they could do it better than their boss or they spied a new opportunity. Knowledge of the industry meant they could access money, attract great staff because of their reputation and could start with clients signed up which lessened the risk.
So yes, you can make it work. But when an entrepreneur starts a new business targeting familiar clients and staffed by people who know the market well, the business has a much greater chance of surviving and thriving.
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