(Un)Sexy Business
My second job (and the real start to my career) was an amazing opportunity, when one of my best friends offered me the chance to help him and his brother build up their family office, investing in startups (also how I fell in love with startups and venture capital).
Being a family office, I was also expected to pull my weight helping them with their traditional business lines, the biggest being selling diamonds (literally).
When I first started doing that, I was in awe. Diamonds. Shiny, sparkly, a handful worth more than a car, a bagful more than a house.
I quickly learnt my lesson. When it came down to selling diamonds, it was the very real challenge of sales. Sitting in a room with a potential buyer, drinking endless cups of masala chai (yum) and haggling over the price.
It could have been rice, coffee beans or almost any other (slightly differentiated) commodity that we were negotiating over, not diamonds.
My very first lesson in unsexy business (and negotiation) was when my friend let me sit in on one of his negotiations, where him and the buyer (and me) sat in a room for nine hours!! All of this to find that quintessential mid-point, where neither were extremely happy but both felt they got a good deal.
When I later asked my friend about the time spent negotiating, he laughed and explained “Every hour brought the price up by one dollar. When you look at the final sale, we just made an extra 15%, enough to cover all our expenses for this month”.
Till then I imagined sales meetings being 15 minutes of work and LOTS of champagne. Boy, was I wrong…..
Unsexy and Awesome
A lot of us crave attention and success, ideally on a fast track.
This leads to a lot of focus by first time entrepreneurs on “Sexy” businesses. Visible, flashy, trend-focused.
I have heard a thousand startups pitching the next “Insert popular (mostly tech) company here”.
I fell for this trap hook, line and sinker. Within the very first startups I evaluated were ‘a booking platform with curated menus for fine dining’ and Sparsh Nephrocare, a specialized dialysis chain spreading across India
I leapt at the booking platform (luckily not investing) while ignoring the unsexy dialysis business, which sold for $10mn within 5 years of starting (a fairly great exit at the time).
The next amazing unsexy business I came across was Compology, at the time raising a small $300k round at an extremely attractive valuation.
They were literally chasing garbage, building a tool to improve the efficiency of dumpster pickups by garbage vans.
While I didn’t end up investing (for various reasons), they ended up raising $33mn from some amazing investors and are on track to become the leading player in a growing industry focused on reducing waste (and carbon emissions).
It ain’t got no glamour
Unity: Not the concept (that seems fairly alien to the World at present) but an amazing company you probably never heard of (unless you’re a techhead)
Quick question, have you played Pokemon Go? Fall Guys Ultimate Knockout? Call of Duty: Mobile? Hearthstone?
They all have some things in common. They have been massive successes, generated piles of cash, then slowly trickled away (still ticking though)
The other thing they have in common is they are all built on the Unity engine.
Unity started it’s life out trying to jump on the bandwagon of game-makers, launching their first game, Goofball, in 2005. The game failed.
But the founders realized they had something big on their hands in the tools they had built to create the game, and decided to focus on offering these tools to other developers.
Their current market cap (value of shares in the market) is 28 billion USD
Tech? No thanks!
Patagonia: While it feels like every big company out there is tech, Yvon Chouinard quietly built a company built around his greatest passion, the outdoors.
Yvon spent the better part of his twenties climbing mountains, hiking, sleeping in the open and occasionally eating squirrels, living on 50 cents a day at times.
He realized he needed some way to fund his passion (and get access to better equipment) and started Patagonia, selling climbing equipment and outdoor gear.
After visiting Scotland for a climbing trip, he quickly became enamoured with a rugby shirt that was perfect for climbing.
He began importing jerseys, followed by gloves, hats, shorts and finally the signature Patagonia Vest (hello VC wardrobe).
Today, Patagonia does over $1 billion in sales, wholly owned by Yvon.
So What?
You don’t need to be the next Facebook. You don’t need to raise $$$$$ in funding or have beanbag office chairs (they are awesome though).
Some of the most amazing (and valuable) companies out there have built on these principles
- Solve a problem. Find something that you truly needs solving and create a solution to it, this creates value
- Forget flash. Do something if it needs to be done. Big billboard in Times Square? Does the projected ROI justify it? DO IT! Want it for vanity or to show those college buddies you’ve made it? DON’T
- Never forget your customers. They are the ones who are paying you their hard earned $. Keep finding ways to delight them and they will reward you with $$$$$$.
Lastly, let me know what you think! Drop me a message on my LinkedIn here
