There is one company I want to introduce to you today. It is named Stance. It makes socks. Yes, socks, the wear you use for your shoes. The startup is hot, raising $110 million from legendary venture capital firms like Kleiner Perkins Caufield & Byers, August Capital, and Shasta Ventures. Yes, Silicon Valley wants to disrupt the socks sector, a highly low-scale and dreamy sector. But as it seems, that is where the money could be found.
Venture capitalists like the company, too. Pedigreed investors, including Kleiner Perkins Caufield & Byers, August Capital, Shasta Ventures and others from Silicon Valley, have put $110 million in the sock business. “No one had thought about this category,” says Tod Francis, co-founder of Shasta Ventures. Trudeau, who attracted attention in May for a different pair of Star Wars socks made by Stance, is a fan but not an investor.Sales should exceed $100 million this year, and it’s looking to turn a profit next year, according to two people with knowledge of the finances, who asked not to be identified because the information is private. Stance says it has spent more than half of the money it raised from investors. The company may need to tap more capital as it expands beyond men’s socks and underwear. Women’s lingerie debuts this month, and subscriptions for regular shipments of its products are also in the works.
There is a huge lesson for us here: it does not have to be extremely complicated to find opportunities in markets. You do not need to master software, AI, robotics, 3D and other those esoteric things before you can build a business with potentials to create great value. The markets we have today especially in Africa are not at full maturity. That means, we can still find value in them through improved business models. You can make money in making juice. You can hit big in packaging palm oil and exporting same. You can create immense value in finding better ways to preserve and transport vegetables. You must not be a techie before you can find your moments. Stance has taken socks and the company is expecting to hit $100 million in sales this year.
The following are other dreamy startups, which are not necessarily in technology, that have done well
- Casper – makes mattresses and has brought fun in the business of selling mattresses
- Hubble – sells contact lenses. It is finding huge value in that business which everyone will think has no opening
- Brandless – food and household goods.
Find the Ideas
I get this question always: I am looking for business ideas. Typically, I tell the person to check in his or her environments for things which are not done perfectly in the ways he/she will like them done. Why there are many factors one has to consider before investing, the process of arriving at a business vision does not have to be extremely complicated. If no one is having pain points in the area your solution is developed to fix, it is very possible that no one will buy the product when you launch.
As you see the opportunities in the markets, you must examine the ones you have interests and capabilities to execute. It does not make sense to be living in Lagos, and be asking someone in London to give you a business idea for Lagos. Such insights could result to products and services with zero possibility to succeed in Lagos.
Always remember that business is about fixing the friction between buyers and sellers. If you do not see any friction (or someone has drastically reduced it) in the relationships between buyers and sellers in that sector, it means that the possibility of a business succeeding may be limited. But where frictions exist, that is where the money is and that means you can establish a business to fix the frictions.