As we study industry and industry terms, we will first look at terms of knowledge. And we'll start by talking about industries. Broadly defined, industry is a type of economic activity.
So there is agriculture and education. There is construction, retail, accommodation and food services. There is healthcare and a variety of other industries.
When we talk about a specific industry, this is a landscape and the scale we are talking about.
A business, or a large category of economic activity, is what we mean when we talk about the term industry.
Choosing the “right” industry
So choosing the right industry is easier said than done. Its success depends largely on your understanding of the industry.
And an industry where there are some opportunities for you. This may be an industry you already have some experience with.
It is important to focus on identifying the industry, this is suitable for newcomers.
And if it's not favorable, that's fine, but you'll have to work even harder, to be successful in this industry.
So the knowledge and demand terms. Or the first two that we'll look at.
And what we really want to understand here is the relative attractiveness of an industry based on the level of knowledge, the level of demand that that industry offers.
Knowledge and terms of demand
Knowledge, what we mean by knowledge, is the amount and type of knowledge. This is required within the industry. Industries that require specific expertise.
Or does success depend more on your financial capital, your location, or your relationships? We want highly knowledgeable industries.
Why do we want high knowledge industries for new projects? Well, we don't want whoever has the most money to win, because someone will always get more money than you.
We don't want whoever has the right position to win, because it is also just a race for this position and whoever holds it is the winner. We don't want to just rely on relationships either.
Unless you are the one with the relationship, otherwise you will lose luck. But knowledge. Knowledge is a rare thing. Knowing something is something that takes some work to develop, and also some work to maintain.
And knowledge-based industries are uniquely beneficial to startup companies.
One of those companies is SQUARESPACE, which is a company we might have mentioned before, and this was a software startup from the University of Maryland.
Which costs very little to get started If you are a computer programmer, or if you can put together a team that includes some computer programmers, you can create a website tool.
It costs eight dollars a month. Add it online.
The market depends on the revenue it generates. And that slowly grew into several $100 million projects. Which he was able to do. So we love knowledge based business.
It really depends on what you know, what you can learn, and what you can implement.
Benefit from your knowledge
To capitalize on your knowledge, or to explore ideas that best match your education or professional experience, make good use of what you know.
Look for ideas that align with your experience, align with your interests and hopefully align with some social capital as well.
What do you know?
What you know is affected by a variety of things. Consider the element of what, you know now, as well as what you want to know in the future.
So pick something, when you think about startups, that you are passionate about.
Choose industries you're interested in and want to spend many days, many nights, and work with it. Look for opportunities, too, that prefer unique ideas.
What do you want to know?
Now if you have a concept that is not in a field you may not have the education or experience in it today. Okay. But make sure it's something you really want to know.
And you are ready to make time. Maybe months, maybe years of building the educational and work experience that would be required, to truly be an expert in this industry.
So you'll play some catch-up against others who might be in that space. We want to acknowledge that, and we want to be prepared to do so.
So you need to expand on what you currently know, if you are looking to enter an industry that is new to you.
You can also participate. You can partner via co-founders or partner via early executive appointments. Continue to build your expertise in industries that may be new to you.
So this is another way to do it instead of building this experience yourself or supplementing it.
Summary
We encourage you to explore ideas that enhance your expertise. You will benefit from the knowledge.
We want to realize that you can build that knowledge or you can make a team.
You can collaborate with co-founders. You can work as a team by bringing in executives who bring in some complementary knowledge, and they may also bring in some social capital.
They may know some people you don't know in the industry, that would be very valuable as we look into this.
We want to keep in mind that knowledge-based conditions are uniquely valuable in creating new ventures.
See: Entrepreneurial Behaviors