1.3 Startup R&D

Rip Off and Duplicate

Rip Off and Duplicate, Refine and Design, however we look at R&D for entrepreneurs one thing is clear; the majority of successful entrepreneurs don’t look to change the world with new-to-mother-earth ideas, they look to change the world by making small, important modifications or tweaks to current products. There are several reasons successful entrepreneurs take the R&D approach.

1. Startups must obtain funding from investors to launch their new business. Funding is a lot easier to get when the new product is competing in an established market generating hundreds of millions of revenue dollars. For example, the quick-concentrated-shot of 5-hour Energy drink is a small, but important modification of other energy drinks which have many more fluid ounces as well as calories. The small tweak in the large energy-drink market paid off. 5-Hour Energy drink put its founder on the billionaire list only a few years after it launched.

2. Startups don’t have the financial resources to create a new product category on their own. Successful entrepreneurs have learned to piggyback on successful product categories. For example, we are all familiar with kitty litter and litter boxes. The successful startup CitiKitty uses a disappearing litter box to train kitty to use the toilet. The product now earns over a million dollars a year in revenue.

3. Startups don’t have the financial resources to do traditional research and development. In addition, even if they had the spare cash, they can’t take the risk of failure, and traditional research and development often does fail. For example, DuPont spent fifteen years and an estimated $500 million to develop and commercialize Kevlar. DuPont hoped Kevlar would be used as tire cord, but the market didn’t develop as expected. Unfortunately, DuPont had a product in search of a market and spent years chasing small applications working towards making the Kevlar venture profitable.

R&D Tweaks and Tactics

Many successful products come about from making simple tweaks and tactics. Great R&D doesn’t cost great big dollars.

• Add a feature. Kellogg’s cashed in by adding raisins to bran flakes to make Kellogg’s Raisin Brand.

• Delete a feature. Coca Cola and Pepsi created new product categories by taking caffeine out of a cola drinks.

• Combine features in a new way. Create new benefits by combining features in a new way. For example, make a breakfast bar by combining cereal, nuts and dates.

• Use a product in a new way. Pillsbury’s Toaster Strudel broke into the breakfast market by transforming a high-end dessert into a tasty breakfast.

• Try cool-hunting. Look for successful products in one region and introduce your own version of the product in another region. For years, a successful frozen Mexican food company identified new food ideas in California border towns and then successfully introduced their own versions of the products in the US.

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