Becoming a billionaire: GoPro edition
Head to any surf break, mountain, rock face or even surgery and you're likely to see at least one GoPro camera. Probably five. These small, portable, and weather-proof cameras have become a phenomenal success over the past decade. And thanks to this success, founder and chief executive Nick Woodman is now a billionaire.
Total sales this year will top US$500m, and it has overtaken Sony to become the highest-selling camera brand through key sales channel US retailer Best Buy. Wow.
This is a fascinating story, and the gents at Forbes have recorded a short interview with Nick Woodman that's well worth watching.
What interests me is that GoPro has successfully carved out a niche in a market dominated by extremely well resourced competitors, such as Sony, Canon, Nikon, Olympus, Samsung and Pentax. (I'm guessing someone at Sony is feeling a bit red-faced. If they need a sympathetic ear I'm sure the guy from Coke who dismissed energy drinks would be available.)
Let's tease out a couple of interesting strategy insights:
1. Be clear about what your product isn't: A GoPro isn't a smart phone, nor is it a highly featured digital SLR camera. It's just a camera. A small portable camera designed to do one thing, really, really well: record action video.
Nailing a niche is a tremendously smart strategy for a start up. It allowed GoPro to avoid direct competition with industry incumbents.
2. Nothing beats a simple insight: Woodman got the idea for a portable, weatherproof camera to capture adventure sports while on a surfing trip to Australian and Indonesia. He was frustrated that there were no suitable commercial options so he created his own.
Successful business ideas are often a slight twist on a existing product or service (iPod, light beer). The demand for capturing life's moments was already there; people have been doing so since our predecessors started daubing pigments on their cave walls. People interested in adventure sports also enjoy sharing their latest exploits. What was lacking was a functional, affordable product.
GoPro combined existing technology with existing demand to make for a very marketable, and profitable, product.
Of course survivorship bias is probably at work here, maybe there were 100 Woodmans all working on similar ideas that failed. We'll never know. Still, whenever you see a business succeed, especially one that seems as outrageous as a new compact camera company, it's worth reflecting on what they've done to get there.
Investing is about assessing, dissecting and learning the art of business. GoPro makes for engaging cases study. Oh, and it's a great excuse to watch some seriously impressive skiing videos.