David Friedberg was stuck in traffic on his way home from his job at Google on a rainy afternoon. He realized that there was a roadside bike shop for tourists. The shop was closed. Friedberg, who looked into this shop in particular for the next day and weeks, noticed that the shop was always closed and concluded that this shop was literally catching flies.

But when you think about it a little more, you think of something like this: "If the owner of this shop does business or not, it is a big problem if it is up to rain."

Moreover, Friedberg learned that 70% of companies are affected by rain, frosty, blizzard, snow, extreme heat in one way or another, and the idea of an insurance company that compensates the companies' losses due to weather conditions came to mind.

Friedberg, who had no experience in insurance and meteorology until then, opened an insurance company called Weatherbill, which also focused on this issue, and sold it for $ 1 billion.

Known today as Climate Corporation, the company protects countless farmers from bad weather every year.

Now let's look at the details of this process.

Forget the idea of ​​"I want to start up"

According to Friedberg, the main issue is not to establish a company or a startup, but to solve a problem. Therefore, when you consider starting your own business, you should definitely consider removing a problem.

"Playing entrepreneurship without knowing what to do or what kind of value to produce is equivalent to jumping off a cliff."

The essence of entrepreneurship is to make a positive and meaningful impact on the world about a subject you are passionate about. You must find a problem that affects people's lives and provide a product or service that will solve it.

Friedberg saw many companies large and small in San Franciso that suffered millions of losses due to weather conditions. As we mentioned at the beginning of our article, one of these companies was a bicycle rental company.

When Friedberg founded his insurance company, he struggled for his own idea for years to hold on to the market and persuade investors.

"Your probability of establishing a company worth one billion dollars is 0.00006% (6 in 10 million). The probability of not winning anything is 67%. So if you are thinking of starting a startup for financial purposes, it is best to give up your entrepreneurship passion and enter a job with a fixed salary. "

You may have understood that Friedberg was a man of numbers. Because his job is to work on big data and analyze this data.

Let's take a look at his company formation process.

Don't attribute your business to luck

“If you claim you are lucky, it means you have no idea about the future. In other words, when you know how your business will follow, there is no chance factor, uncertainty or risk. In this respect, your goal should always be to plan your next move. If you want to establish a company, you must first identify things you do not know and then focus on them. "

If you understand this logic, you will get real data and concrete information at the end of the day. You have a solid understanding of how the company is progressing and how the next goal will be achieved. Of course, this situation expresses the ideal picture, but still it is necessary to make an effort in this direction.

Every company has certain risks. You may not even know many of these risks.

For example:
What course will the market take?
What are your competitors' projects?
Will people buy your product?
Can you reduce costs to increase profit margin?
Do you add value to people's lives?
Will your customers recommend you to their spouse and friend?
Can you hire a few more engineers to build a better product?
“These are some of the uncertainties you may encounter in the early days of the company. But over time, the more you learn to identify these risks, the easier it will be to make the necessary moves. Try to detect the unknown. Minimize uncertainties. Only then can you get the results you want, then you can increase the value of your company. "

"When establishing a business, you should determine what you know and what you do not know."

Open an excel file to detect ambiguities. Write down any questions you have in mind. Write down what you know and don't know about these topics. Ask your investor and mentor any questions you may have. Then produce and test your products and services. Find out how customers can benefit from these products or services.

Uncertainties Need to be Eliminated

Going back to the Weatherbill case, the first uncertainty that Friedberg faced was what kind of business model he should adopt. First of all, the business idea was not simple enough.

“Weather conditions can negatively affect companies. However, the weather can be analyzed statistically. Therefore, losses incurred by companies due to adverse weather conditions are covered by the insurance company. "

To test this theory, Friedberg purchased 30 years of weather data from 200 different cities and came up with a formula on the prices the insurance would cover. Even this was an important research to get a seed investment of 300,000 dollars. At this point Friedberg saw the business idea had potential and left Google to start his own business.

But Friedberg has yet to find a way to get further investment. People told him that the business model was not sufficiently tested, that it was moving across a wide range, it had to be a little more specific. With the help of some of his friends at Google, he made the necessary arrangements on these issues.

“We founded the company in 2007. We were sleepless for months. We worked 18-20 hours a day. We have built a great website. “Finally, a service just for me. We thought they would say "I should buy it now." However, nothing like that happened. Nobody bought the service we offer. "

So what was the problem? Do they not have large enough data? They reached a database of 400 cities from 200 cities. There was no movement again.

They went to sectoral meetings, met with energy companies. They talked to potential customers personally.

"In the meetings we attend, to the contractors and farmers directly" Does conditions such as rain and storm cause disruption of construction works? " We asked questions like.

It is very important to call people one-on-one to introduce your products. You have to do this to understand what your customers want.

At the end of this process, our team removed another uncertainty. We understood what kind of service people wanted and we made sales of about $ 2 million. “We were selling through our own website to people who would not normally enter our website. Because we were convincing these people with our technological infrastructure. "

Finding the Target Audience Means Everything

The next issue was market adaptation. Freidberg realized that after meeting with travel agencies and service companies and introducing the service, they could not deepen enough in the market. The entrepreneur sums it up with the following words: "We had many customers from many different sectors, but we could not go deep enough to meet the unique wishes of each customer."

After hundreds of phone calls, Freidberg and his team found the main target industry: ski resorts! However, it was understood that the ski facilities were not very dependent on the weather. Ski facilities could produce snow artificially when necessary. At this point, Weatherbill reviewed its business model. They had to find an industry that was more clearly affected by the weather.

“In 2009, we decided to focus entirely on the agricultural sector. I told my team to focus on the farmers. I decided it was the most suitable sector to grow the business, as farmers could benefit from our service over and over again.

Consequently it took two years to fill the right gap in the market. Friedberg expresses that he is pleased that this process has been difficult and sometimes ignorance can be an opportunity.

“The more transparent you are about what you know, and especially what you don't know, the better your team knows what to do. If all employees know the general situation of the company, everyone will concentrate better on the main goal. In addition, since you can analyze the situation clearly, you can convince the investors more easily. "

In other words, leaving the luck factor aside and doing business based on concrete data is one of the main pillars of establishing a company. The second is not to be afraid of difficulties; not avoiding sweat and sleep deprivation.

Learn to Take on the Challenges

When Weatherbill caught the eye of the agricultural sector, it produced a product by taking into account the needs of this mass. Changes were made from 400 different weather forecast points to 1 million different forecast points.

“Nobody cares about the rain 200 kilometers away. People want to know the weather in their city. Therefore, we increased the number of our weather forecast stations. Thanks to Doppler radar and satellite images, we can monitor the weather of a specific point live. "

We can say that moving the company from one point to another took a lot of effort. Friedberg and his team worked hard in insurance, agriculture and meteorology. Because nothing will happen without this team working hard and sweating; He knew well that efficient work would pay off.

“None of us were experts in agriculture and insurance. Farmers also did not buy our products and services when they realized that we were not an insurance company. For this reason, we first learned the intricacies of the insurance business. We worked on everything one by one to the finest detail. Unfortunately, there is no other method for this. "

The Weatherbill team also knew the importance of adapting their customers to technology slowly and sparingly. Of course, they were getting customers through the website, but as they learned about the insurance business, their trust started to build even more.

In 2010, the company launched the Total Weather Insurance Program. Accordingly, people started to take out insurance to protect their agricultural lands against every seasonal situation.

“We finally produced something that appealed to all farmers. For this reason, huge money entered our safe in a short time. "

You Should Know Yourself Well

When Friedberg started this business, he knew there was a billion dollar potential in weather insurance. But after Weatherbill took up this business, the real scene came to light. In the insurance business for farmers, there was a $ 20 billion market in the US alone. However, half of the farmers who heard about the company's products bought software, data services and insurance from Weatherbill.

Friedberg states that what was missing so far was self-awareness.

“If you want to go through this process, you have to know yourself well and be very honest with yourself. Throughout this process, we changed methods many times. If you get stuck in one point, you cannot move forward. "

“To be successful, you must hire well-equipped people who can support you in matters that you cannot do alone. In order to do this, you must see what you are good at and what you are missing. Teamwork is very, very important. "

The company was renamed Weatherbill and changed to Climate Corporation as the company continued to grow massively.

“You should see every day as a new challenge. This is the law of development and progress. That's why I don't like the adjective "founder". Today I am the CEO of the company, but tomorrow this role may change. Adjectives and seats should not be attached too much. "

There is change in the nature of development. As a company grows, change gets harder, but it doesn't lose its significance.

“At first you take risks about new things. And when you take risks, you are more likely to fail. Naturally, successful people hate to fail. Therefore, taking risks, in a sense, noses people and allows them to make maximum effort. There are few things as motivating as taking risks in business life. "

Innovation Is The Only Competitive Advantage A Company Has

“We can talk for hours about the bankruptcy of companies that do not care about innovation. Blackberry, for example, could not hold on to the market as it was not as innovative as Apple. Startups have opportunities to start from scratch and go bankrupt quickly. However, when they start growing, they must continue without any braking. You can think of it like the Wright brothers invented the plane. "

Start with a big problem: You have to fly. How do you do this?

Cut it into small pieces: You find that you are ignorant of wing design and friction, and you study these issues.

Try new things: The Wright brothers learned engineering principles on their own. They designed different types of wings. They tried nearly 200 wing designs in a wind tunnel designed by themselves. They finally found the best wing design. There are no miracles here. There are thousands of tireless trials, a solid will and effort here.

The Number of Problems to be Solved is Endless

Friedberg disagrees, although there are various opinions that innovation is ending in Silicon Valley.

“I hear a lot around me:“ We can make a photo sharing app for students studying at Stanford! We can create something like application B for mass A "

“I think it's called infertility. So innovation is not dead. Only people find it hard to look in the right place. We are facing problems that have never been seen in the history of the world. If we look around with a clear mind, we can see these problems. "

“If you want to change the status quo, you can examine today's markets well and diagnose problems in industry-based business models. What are the problems in the operation of this sector? Where do companies go wrong? What are the factors that reduce productivity? What is the state's share in this sector? If you approach the issue this way, you can create thousands of different opportunities for yourself. "

More importantly, it's time for young and smart entrepreneurs to tackle such problems. Today, knowledge has become more valuable than thought. Because the information returns faster. This has put us in a loop. This situation points to a society that does not need big thinking.

“We are experiencing a global economic development problem. Innovation is the only way to eliminate this problem. "

If we look at the issue in the context of the entrepreneur Friedberg, who has achieved real success, Climate Corporation started out with a big and ambiguous idea. However, in the end, it contributed to the lives of hundreds of thousands of people. The easier lives of farmers mean that the lives of millions are easier. This is actually a very important example of how large ideas can have wide-ranging effects.

Entrepreneur Friedberg: “There are tons of problems waiting to be solved in the world. Solving these problems benefits both you as an entrepreneur and millions of people. If you have this type of business idea, first analyze the topics you know and do not know. Then work hard to learn topics you don't know. And never forget this: There are some gaps in every industry, every market. You can only fill these gaps with innovation. " he ends his words.

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