The importance of having "experience in the market" when starting

[Stan_]

How important is it to have some prior experience in a market (experience as a client, a business owner or even just through osmosis from constantly hearing about it from friends / family) when deciding if you should pursuit an idea?
I've heard things such as investment banks or people who fund startups first look for "prior experience" of the entrepreneur in that market when deciding to invest in a startup. I'd guess if that is true then experience must be quite a good indicator of a successful future business.

I'll give myself as an example.
As I client I have a lot of experience in the language learning space. I've been trying to learn languages for over 5 years from now and I would say that I have experience as a client in that space.
But maybe I have some other business idea in let's say real estate (which I have 0 experience in).
Maybe the real estate business might look a lot more unique, appealing, maybe it fits the CENTS model better at a glance.

Basically I am trying to ask how much importance would you give to prior experience in a marketplace in starting a business in that area? (from being a must to being irrelevant)

 

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[Strategery]

Experience may or may not help. It’s going to come down to how much value you can provide to whatever industry. Just because you’ve done something for X amount of years doesn’t mean you can do anything unique in the space. It’s arguably even better if you have a fresh perspective on an industry, and aren’t stuck in pedantic thinking.

Edit: but if you know absolutely nothing about an industry, you won’t know where the big needs are

Edit 2: Don’t let inexperience stop you from taking action on something. If you have something people need, they’ll buy it, regardless of your experience.

 

[Raedrum]

I would say this is not essential but indeed very useful and a undeniable advantage

For example the familly osmosis you are talking about can really set the difference when beginning is business (children of entreprenneur's mindset familly have incredible advantage)

But if you don't have that, it is one more reason to take action and get this experience/osmosis yourself

It will take longer but nothing is impossible, it's all a question of mindset and perseverance and if one is clever and hard working he may catch up

 

[Antifragile]

Imagine a tailor who has little experience with suits making a one of a kind suit for you. Imagine he had to get it right the first time! It's not going to end well. And that's just a suit.

That's how most people approach business. They have this big spark! Great idea that launches them and then they must create this big thing.

Basically I am trying to ask how much importance would you give to prior experience in a marketplace in starting a business in that area? (from being a must to being irrelevant)

Specifically addressing your Real Estate question, the answer is - to provide value you must have experience. But it doesn't have to be yours. Just like money, you must have money but it doesn't have to be yours.

I've written a thread that you may find useful:

IDEA - SCALING - SUCCESS! - Antifragile's take: The secret to scaling up.

The secret to scaling up. Imagine a tailor who has little experience with suits making a one of a kind suit for you. Imagine he had to get it right the first time! It's not going to end well. And that's just a suit. That's how most people approach business. They have this big spark! Great...

www.thefastlaneforum.com

Edit: one either thing…
you’ll have the experience you need the most right after you needed it.

 

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[Kak]

Every person on earth was born with no skills or experience. Yet some of them some how end up with “the” experience. How? It wasn’t magic. They weren’t destined to have it.

The answer to not having skills or experience is to get skills and experience. And contrary to popular belief, freelance copywriting doesn’t count.

 

[Edgar King]

I believe if you're really passionate about the field and the pain point, getting the experience or skills should just be seen as part of the journey in providing a solution for the marketplace. Prior experience and skills can be a sort of booster though, but the execution still matters.

 

[MJ DeMarco]

Every person on earth was born with no skills or experience. Yet some of them some how end up with “the” experience. How? It wasn’t magic. They weren’t destined to have it.

The answer to not having skills or experience is to get skills and experience. And contrary to popular belief, freelance copywriting doesn’t count.

https://twitter.com/i/web/status/1679238091469463553

View: https://twitter.com/MJDeMarco/status/1679238091469463553?s=20

 

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[Black_Dragon43]

It’s extremely important to have experience. Experience is THE key to getting results.

I can get results for scaling digital agencies because I have experience having done it, doing it again, seeing it, being around people who are doing it.

Without experience, you can’t deliver results. Nor can you hire and manage people to deliver results for you very well.

As a wanna-be business owner you get experience NOT by getting a job, but rather by optimizing for FLOW rather than MONEY.

Which means you want to do “your thing” whatever that is, as often as humanly possible. Don’t let money get in the way of that. If you have to, work for free, but work, with the sole aim of improving results.

Most newbies want to charge $5K, so they spend 6 months finding 1 fool to give them $5K, instead of finding a large company, doing a deal for free, and then having an awesome case study and massive credibility that makes it a no-brainer for anyone to say yes to them.

 

[Black_Dragon43]

The answer to not having skills or experience is to get skills and experience. And contrary to popular belief, freelance copywriting doesn’t count.

So working for Agora isn’t getting skills and experience? Rewriting an ad campaign to beat controls by 50% isn’t getting skills and experience?

Copywriting is a good place to start if you wanna learn how to make money ONLINE!

 

[amp0193]

How important is it to have some prior experience in a market

Totally depends, experience in market could be an asset or liability.

Experience can lead to operating within pre-define frameworks, doing things conventionally, intimately knowing and calculating all the risks (so you never get started at all, or you play it too safe).

Ignorance can lead to outside the box thinking (because you didn't know there was a box), and your own naiveté gives you the confidence to dive right in... whereas others didn't take the plunge.


You hear plenty of success stories on both sides of this coin.

 

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[Stan_]

I understand that putting time into something will ultimately give you the experience required.
My question was something more about this :
which one would be in the end a better business on average:
starting a business in a marketplace that is rather saturated with a little bit of a twist (in my case let's say a language learning app for some specific demographic)
or
starting a business in a marketplace that is completely new but with a great opportunity (let's say that I can create a software for real estate businesses that in my mind is amazing and fixes a giant problem).

How expensive is it to pay the ignorance debt for switching to some market you don't know?

 

[Antifragile]

I understand that putting time into something will ultimately give you the experience required.
My question was something more about this :
which one would be in the end a better business on average:
starting a business in a marketplace that is rather saturated with a little bit of a twist (in my case let's say a language learning app for some specific demographic)
or
starting a business in a marketplace that is completely new but with a great opportunity (let's say that I can create a software for real estate businesses that in my mind is amazing and fixes a giant problem).

How expensive is it to pay the ignorance debt for switching to some market you don't know?

It’s your decision.


I am biased. I went after the biggest, highest profit margin and hardest business I knew little about: real estate development. Why? Because I felt the right approach for me was what @Kak always says: “think big then think BIGGER”

I was the “unlikely to succeed” written all over me when I started. For obvious reasons: No network, no money, no experience… yet, like a damn bumble bee who’s not aero and should not fly, I managed to start a development company and it’s been profitable so far.

Look, I figured in simple terms that even if I fail I’ll be 10x further ahead having tried than not. Even if I had to find a job later, with the experience of doing what I was attempting, my skills were growing exponentially and I knew I’d command a salary that’s multiple higher than your typical career path. I am so fortunate that so far it worked, created wealth for me and my confidence grew with it. Now I know deep down that I’m capable, that I can do it.

But this thread is about you! Not me. Not other readers. It’s about what is right for you.

What does your gut tell you?


Edit: more of quoting myself lol:
Thread 'I believe in magic, and why you should too.'
GOLD! - MINDSET - I believe in magic, and why you should too.

 

[Kak]

I am biased. I went after the biggest, highest profit margin and hardest business I knew little about: real estate development. Why? Because I felt the right approach for me was what @Kak always says: “think big then think BIGGER”

Absolutely. Put me down for someone who has consistently taken the more difficult/rewarding route in life.

Any time I do “the easy thing” it might be rewarding but it’s usually temporary.

The ventures that seem to stand the rest of time are the difficult ones.

 

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[Two Dog]

I've heard things such as investment banks or people who fund startups first look for "prior experience" of the entrepreneur in that market when deciding to invest in a startup. I'd guess if that is true then experience must be quite a good indicator of a successful future business.

Agreed that private equity and investors generally believe this to be true. Reality doesn't necessarily agree.

Keep in mind that very, very, very few startup investments are successful as defined by generating more investor cash than they consumed. Financial success for a lifestyle business owner is very different than for investors. The owner is content with paying the bills, growing comparatively slowly and having ample leisure time. Those kinds of businesses are almost always based on the domain expertise of the founder.

Exceptional startup founders buy domain expertise in the same way they buy everything else needed for the company.

Edit: but if you know absolutely nothing about an industry, you won’t know where the big needs are

This is true. However, you don't need thirty years of experience in any specific industry to figure it out. That's the real value of the internet and books. The amount of quality information available from industry experts along with the ability to speak directly with the market flattens the learning curve dramatically. I think 2- 6 months is plenty of time to become an "expert" in any field - not remotely enough to actually practice in the field, but ample to evaluate potential hires for doing the actual work and make strategic decisions for the business. Forty dedicated hours makes you more competent than most people in almost anything.

How much did reading MJ's one book alone reduce ramp up time for aspiring entrepreneurs?

 

[Stan_]

This is true. However, you don't need thirty years of experience in any specific industry to figure it out. That's the real value of the internet and books. The amount of quality information available from industry experts along with the ability to speak directly with the market flattens the learning curve dramatically.

Can it though?
Can you actually get something that is close to experience in a marketplace from reading books and through just surfing the internet?
I understand the whole buying of experience but it seems a little too hopeful to say that the internet and reading drastically flattens the experience curve.
I'm not saying that you're wrong I'm just saying at first thought it seems to me a little too much

 

[Two Dog]

Can it though?
Can you actually get something that is close to experience in a marketplace from reading books and through just surfing the internet?
I understand the whole buying of experience but it seems a little too hopeful to say that the internet and reading drastically flattens the experience curve.
I'm not saying that you're wrong I'm just saying at first thought it seems to me a little too much

Internet and books - not even close. Add in speaking directly with the users and industry INSIDERS - absolutely.

Exactly what I've done myself with RE, fundraising, online marketing and home services over the years.

For real estate, I spoke with, met and worked with: listing agents, prospective buyers, home services companies, mortgage companies, hard money lenders, banks, appraisers, title companies, insurance agents, attorneys and countless other investors along with attending at least a dozen local events over the first few months. That was in addition to reading books and relevant courses. Full immersion takes you a very long way to becoming an expert.

 

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[Jeix]

Personally I've found it to be crucial.

For example, although I love pizzas I know nothing on how to cook them or the food science behind it. I wouldn't start a venture like that without digging through a few books at least, then working for a pizza chain for a few months and experience it first hand.

All my successful ventures (so far) had some sort of experience behind them, usually as a long time consumer of the product/service I started offering, knowing exactly what I wanted and knowing there were other people out there who wanted it too if I offered it.

All my unsuccessful ventures (so far) were stuff I did without following the above framework, such as an app about fashion when I know little about coding and have little interest in fashion or various other money-chasing shortcuts that obviously led nowhere (and even if they did they wouldn't have been sustainable long term).

To me, you do need knowledge and experience. The good news is that (unless you want to be a doctor or something) you don't need to spend 5 years in university to get it, you can just live your teenage and early 20s years normally and you'll naturally acquire it in fields you'd want to spend the whole day working in anyway.

Imagine a fishing enthusiast who starts a competition and scales it to be the most reputable one in its niche. Now they get to fish all day, which they loved doing to begin with, but also get paid for it by sponsors and attendees. Naturally many of the steps in between will have nothing to do with fishing but rather with managing a business, so you'll need to study up a little bit on that (or be passionate about which naturally comes with an inclination on wanting to know more on the subject).

This is basically my life but with card games. Now that I own a store, I get to play cards all day and get paid for it. However, it's dangerous to settle now because I'm not yet at a point were I can be financially free without the store, so it's still a job. This is the part where I need to push the hardest to grow the business into something much bigger, so I can truly do whatever I want all day every day with no consequences or financial complications.

Ultimately, I think the world is full of niches and it pays to be an absolute expert in one, rather than a generic catch-all that bounces around a million small things and can never build anything worth growing.
Again, this philosphy has worked for me so far but there's definitely people out there who have seen success following a different framework. The only thing you can truly know is yourself, everything else will have a degree of speculation to it.