Innovation Needs Product-Market Match

Most people define innovation as a new combination, or simply something new. Try it. Ask your neighbor for his definition and I bet he will say, “something new”. But innovation is more than that. The real definition of innovation demands the element of a product-market match, i.e. innovation needs to satisfy the needs of your market. You can make a new mouse trap that’s shinier, faster, sharper, cooler, and sleeker. But if customers won’t buy it then your innovation is a waste. The world doesn’t always need a better mouse trap.

EE Interview: Isaac Childs of Rustico Leather, LLC

RusticoI interviewed Isaac Childs, Founder and Manager of Rustico Leather. His experience is a compelling story that any entrepreneur can learn from.

Isaac, describe your company for me.

Rustico Leather is a Utah-based designer and manufacturer of leather goods. We have 9 employees and average just over a million in annual sales. We are currently in over 600 retail locations across the country ranging from resort town boutiques like the Sundance General store to larger distributing retailers like Barnes and Noble. We also do a lot of custom projects in the entertainment, corporate and promotional industries. Some of these clients have included Disney, Oprah, Philip Morris and many more. We also sell direct to the public through our online website and are constantly providing unique custom leather products for individuals across the country.

Rustico specializes in hand-crafted leather journals, photo albums, binders, presentation covers, pad folios, satchels and accessories. All our products are proudly made here in the USA. All our products are Handmade to order. This allows us to create individuality in each one of our pieces, creating a “one of a kind” type feel to our products. We have our leathers specially designed so that they wear into a beautiful patina with use and age. All our leather and paper is all purchased here in the US. We have roughly 84 great standard products to choose from, and we are constantly creating new and unique custom products for individuals and companies.

Okay, Isaac, let’s dig a bit deeper. What’s the value proposition?

Custom products with very small or no minimums, short lead times and surprisingly affordable prices. They are hand made in the USA. Each product is made to order by skilled artisans ensuring a “bespoke” style of service and product. This increases its value as a keepsake or gift item and is meant to last a lifetime. Our best value is that we work with a company or client to create a product that will not only attract attention to the receiver but also be kept and used for many years to come.  All our products can be personalized with names or logos of companies for added effect.

What motivated you to launch Rustico? How did it all begin?

After creating the initial journals and having pretty good success selling them to family, friends and one local shop (Sundance general Store), several friends from college and I launched a website with the intention of selling these online. Shortly afterward, Disney gave us a call to help with a press kit for their upcoming series storm stories. From there we just launched forward, never looking back.

What is the mission and vision for Rustico?

We will be the premier custom leather goods maker. Ideally, we would like everyone in America to carry or have a Rustico Leather journal sitting on their desktop, bookcase or nightstand. We want people to turn to us for high end custom projects that require great quality and workmanship.

What would you say is an entrepreneur’s greatest or most valuable resource?

Passion. Passion for the plan, product, vision or business model is probably the most important resource an entrepreneur can have. Next would be a great mentor. Unguided passion can spell disaster pretty quick.

What is the biggest challenge you’ve faced as an entrepreneur and how have you overcome it?

The biggest challenge I faced would probably be learning how to manage people effectively. I am not sure if I have overcome this completely but I have read a lot of books, watched others that I felt where great managers, picked their brains for info, gone to trainings and hired others that have more experience than I do.

What motivates you to overcome your challenge with managing people? What gets you out of bed in the morning?

My inspiration comes when I travel. I’m able to get a breath of fresh air and then come back and dive back into the thick of it even stronger. I really love what I do. I honestly can’t think of another thing I’d rather be doing. When the challenges seem to come in waves I just have to remember that perspective and then I’m good to keep moving forward.

What role has innovation played in the development of Rustico?

Every project we do is a variation of something we’ve already done–continuous innovations. Many of our products have been developed due to problems that needed to be solved or a necessity that required some smart solution. So in that regard, innovation is very key. While many of our products are based off old world standards (i.e. leather, paper, handstitching) being able to create and produce such labor intensive and raw products in a larger scale and affordable takes 21st century planning and ingenuity. Without constant innovation and reinvention of our products and processes we would not be competitive.

What do you wish you had known before launching Rustico? Any regrets?

I wish I had a better understanding of forecasting and knowing what to look for in a balance sheet or P&L in order to see what is happening with the business. At the same time, had I known everything I know now, I’m am not sure if we would have continued moving forward; my naivety pushed me to move forward when conventional training would have told me to stop.

Got any advice for rookie entrepreneurs?

Be passionate about your idea. Remember, bigger is not always better. Develop a process. Have a healthy tolerance for the unknown. Constantly be ready to change. Improve. Innovate.

Response to “The New Silicon Valley” Posting

I got a great comment on a previous post about Salt Lake City becoming the next Silicon Valley and wanted to respond to it here:

“Interesting. So what does this say about the job market and economic growth (particularly during this current recession)? Will SLC become saturated with small start-ups or is that even possible (a la the common argument: you can never have enough entrepreneurs!).

Is SLC competing against other demographics for the title of “New Silicon Valley”? Meaning, are there other areas with similar growth in the country?”

Great questions. The job market in SLC is apparently very strong, especially in comparison to other smaller markets. Take a look at this article. According to Forbes, the job market in Salt Lake City, “in all its tech-job abundance, looks like it will remain No. 1 since Forbes most recent ranking (2008).” Salt Lake is an enigma, really. In some ways it’s a microcosm. But it’s job market is not as strong as that found in more established markets, like certain pockets in Texas. According to the forecast data from Moody’s Economy.com, Austin, Fort Worth, Houston and San Antonio all rank very high. But I suppose it depends on the industry you’re looking at. For example, it used to be that California was the place to be for construction jobs. There are still a few areas that have retained that demand. But as the state has grown and become more saturated, demand in other industries began to replace the demand in construction.

As for technology and tech start ups, there is no arguing that SLC is a growing hot bed. I’m sure there are many more tech start ups in other markets like CA, especially the Bay Area. But if you’re comparing apples to apples then SLC is on track to become another silicon valley. The key to such a successful evolution is not in the rate of new start ups, it’s in the success and size of the firms. Silicon Valley has a lot of tech start ups and investors. And many of these, like Google and McAfee have crossed the chasm and become very successful. That hasn’t happened yet for SLC on the same scale as Silicon Valley. I mean, not many people have heard of Idealy.com or NLE beyond the Salt Lake Valley. In fact, not many within SLC that have even heard of them or many of the other 5,200 tech companies listed on siliconslopes.com.

Still, increased entrepreneurial activity serves to stimulate any economy, which obliges a great need to ensure that entrepreneurs and the small business community have the resources they need to succeed. Therein lies the danger of Obama’s “stimulus” package.

Post-Idea, Pre-Launch Entrepreneurship for Entrepreneurs

The process of taking a business concept to reality is all too familiar to serial entrepreneurs. They have an idea or hear of a great source of innovation and they launch or source the capital needed to launch. Inherent in this process is a gap that represents a great need. The ambiguous period of time between the enigmatic birth of a good idea–that point in time when a business concept is conceived–and the submission of those ideas to a prospective investor is assisted by few comprehensive resources that ensure the success of a business post-launch. Innovators need an all-encompassing solution for vetting and qualifying their ideas. It must allow them to develop their concepts and, at the same time, connect with needed talent and resources. Incidentally, Peter Drucker would call this source of innovation a “process need”. All of this activity, of course, occurs pre-launch. It even happens before capital is committed to the project. This process need is real and represents a great opportunity for entrepreneurs. Call it entrepreneurship for entrepreneurs.

Yes, entrepreneurs have fragmented solutions that have satisfied this need, but never one single solution. They know where to go to for market research. They know where to go to develop an effective business plan. And they know where to go to connect with talent. But all of these solutions are not located in a single location. If I’m wrong (and I have been wrong before) then I’d love to know about it.

Salt Lake City: The New Silicon Valley?

Salt Lake City Skyline

Salt Lake City Skyline

Looking for a place to start a technology company? Utah, particularly the Salt Lake Valley, is a growing economy and it is quickly developing a reputation for its innovative technology and tech start ups. In fact, Fast Company recently named Salt Lake City one of the 30 fastest cities in the world for its urban innovation. I recently went to siliconslopes.com, an online networking hub for Utah-based technology companies, and found “more than 5,200 tech-based companies” listed in its directory. And since investment capital tends to follow growth in technology it was not surprising to see such a large number of equity investors, as well. While there is only a handful of Utah-based investment firms, I counted well over 200 nationally based angel, VC and private equity firms that have done a deal in Utah.

So why is Utah such an attractive region for technology innovation and private equity? Siliconslopes.com lists some highlights about Utah:

  • The U.S. Census Bureau projects that Utah’s labor force will increase at twice the national average between 2003 and 2030.
  • One-half of the U.S. population is located within a 2.5-hour flight of Salt Lake City
  • Utah’s cost of living is well below national levels, according to most indicators.
  • In 2003, USA Today ranked Utah the best-managed state in the country.
  • Utah’s unemployment rate in 2007 was 2.8 percent, compared to the national rate of 5.0 percent
  • Southern Utah has the nation’s greatest concentration of national parks: Arches, Canyonlands, Bryce, Zion and Capitol Reef.

E Corner: Marissa Mayer, Google Creativity Loves Constraint

I found this video on Stanford’s E Corner. Marissa Mayer argues that innovation happens under conditions of constraint. This has implications for new product development. When limitations and constraints are imposed on entrepreneurs and intrapreneurs, it fosters creative thinking. Counter intuitive, no?

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The Bad News of January’s Unemployment Report

The bad news keeps coming. The Department of Labor just reported that nearly 600,000 jobs were lost in January. Unemployment rose from 7.2% to 7.6%. Big deal? Absolutely. Think about this for a second. About eight people in every 100 US citizens are out of a job. Or to put it a different way, 11.6 MILLION Americans are unemployed. Of course, things could always be worse and history has actually seen much worse. But history should serve as a preventative medicine for our present ailment.

I am still convinced that entrepreneurship and innovation are the key to our country’s ability to crawl out of its economic sludge hole. They drive the capitalism we need to get back on track. Unfortunately, too much emphasis is placed on government’s role in that process. Turn on the news. You’ll hear about Obama and his stimulus package. You’ll see Senators and Representatives debating about its effectiveness. And you’ll certainly get an ear full from pundits and spin doctors about who’s right and who’s up in the night. But little attention is being paid to (small) businesses and their capacity to help improve the country’s situation. After all, government is not the only system that is responsible for fixing the economy; there is plenty of blame to go around.