The most well-publicized startups these days are in the technology sector. In fact, recent economic studies show that U.S.-based tech startups grew by 47 percent in the last decade. It’s no surprise, then, that plenty of hopeful founders have jumped on this train, but the reality is that the industry you choose to disrupt may not define your company’s ultimate success.
Sophia Hutchins decided to test this idea by founding Lumasol, a beauty and skincare company manufacturing namesake suncreen with a bit of a tech-savvy twist (its packaging prompts users about reapplications). I recently had the chance to chat with Hutchins, who shared three basic principles that helped get her company off the ground.
1. It’s not always about “attactive” industries.
Industries are generally judged based on their popularity within media and their perceived growth potential. Age-old industries are generally passed over as being too well-developed or too competitive. Hutchins went against the grain when she started her business as a way to address the growing problem of skin cancer in America.
“There are four times as many Americans diagnosed with skin cancer every year than all other cancers combined,” she explains. “And for me, that’s an alarming statistic that nobody is really innovatively tackling.”
To do just that, she and her team developed a sunscreen product designed to be applied on your face following the application of makeup. Now, that might not sound as eye-catching as blockchain or drones, but Hiutchins anticipates a market size of $12 billion.
2. Pay attention to market gaps.
It can be daunting for a new business to compete with large companies that have cemented themselves in their respective markets. After all, how would you even approach going up against a company that has been around for many years more than you have and boasts a wealth of resources?
The answer is it isn’t always necessary to compete head-on for the same customers big corporations have already worked with for years. In Lumasol’s case, the team developed an SPF product that targets women looking to protect their skin without the hassle associated with smearing or smudging makeup.
“SPF is not sexy,” Hutchins admits. “It’s not cool, it’s gross. But there is a huge market gap, and going in there and totally shaking that up is an opportunity that we’re excited about.”
She advises focusing on a smaller, niche audience. You won’t take all of your competitors’s market share all at once, but you can carve out a space you might not have initially known even existed.
3. Interact with gatekeepers.
In the process of building a business, there are certain powerful forces that have the ability to decide your fate. The gatekeeper that many businesses must get through could, for example, be a regulator that ensures your business is following all the rules. In the beauty space, this gatekeeper is the FDA. In financial services, it’s the SEC.
For Lumasol (and other beauty companies), approval from the FDA is crucial to their success, because it is needed to legally market their product claims. When investors first asked Hutchins about her biggest challenges, she mentioned that she didn’t know how to navigate the FDA gatekeepers, which led to Lumasol being passed on. But as a result, she subsequently “surrounded [herself] with intelligent people that knew how to formulate drugs and get through the FDA approval process.”
In regulatory scenarios, it is not likely that you will have control over who the gatekeeper is, but receiving approval and navigating regulations are roadblocks any business must face. So make sure you are constantly looking out for said gatekeepers, and start building relationships with them as soon as possible.
Follow Hutchins’s example and advice, and you may be en route to a breakthrough of your own.