However, I took the path less traveled. I began a barbell company. I considered:
- A market growing marketplace,
- A passionate customer base,
- Repeat clients,
- The potential to build a new,
- Defensibility from the Amazon.
In this post, I will examine each of these variables. I will share my ideas from eight decades back, when I started FringeSport, and how those ideas have developed.
Passion. I once told a friend in business school that I needed to work for a business I was passionate about. He responded to me, “That’s terrible. I’d hate to work in that sort of business.”
I was shocked, and I asked him why. He said,”What if I ended up hating my organization? Then I’d hate my enthusiasm.”
That’s a fantastic critique, but it doesn’t apply to me. Another good critique is that you may get passionate about whatever makes you money. But to be the very best in the world at my occupation, I had to be enthused about it.
I still think that way now.
Margin. Before launch FringeSport, I worked for an ecommerce company that brought 20 to 30 percent in gross margin. Anything better than that, I believed, would be terrific. Thus I looked for a company wherein gross margins are at least 35 percent. The barbell business, I surmised, could do that.
I’ve changed my views. If I were starting a company today, I’d find a much bigger markup. I’d buy something for $1 and sell it for $4. Or possibly a distributor sells it for $4, and I sell it to the distributor for $2. Both would create gross margins much greater than 35 percent.
To put it simply, it cost much time and money to construct a brand. I prefer a product with high gross margins to manage to build this brand.
Niche but growing economy. I could see a trend with practical fitness, such as CrossFit. I thought it would increase. The barbell market was originally very market. The competition was reduced, and the market would eventually become viable as it climbed.
I agree with this approach. If I were starting over, I would look for a niche that is growing. Cases are obstacle course racing and Ninja Warrior competitions. That type of training and racing will probably grow in the next five decades.
Passionate customers. In launch FringeSport, I wanted to sell to clients who cared about the products and the brand.
I still feel that way. Although with the growth of Amazon, it is easier — but not better, arguably — to make brands and products that have less passionate clients.
Repeat customers. I did not expect the development of subscription box businesses. If I were starting over, I’d try out a product to market via subscriptions. It would offer a high lifetime customer value since the company model assumes repeat sales at fixed intervals.
Branding potential. This one is ironic. While I believe I chose a fantastic market with much branding possible, I have learned that I am not the best brand-builder on the planet. (Eric Bandholz of Beardbrand, by contrast, is a magician at building his brand.)
However, I choose a market where the brand things to clients. I’d do it again and select a niche with a high branding possible.
Defensible against Amazon. Eight years ago I was paranoid about Amazon taking my organization. It turns out that I was right to be paranoid — but not paranoid enough! Nowadays I think of Amazon as both a sales channel and a rival.
What do you think? What factors did you consider when you started your own company? Tell us in the comments below.