I’m constantly asked by younger investors and entrepreneurs which products and companies they should invest in. Often, it’s challenging to find the products that stand out and even harder to find ones that can grow to the point of mass distribution, whether on Amazon, big-box retailers, or other means of ecommerce.
Recently, my company invested in LuxPro. Did I ever think I would be invested in a fast-growing lighting company? No. But, I’m sure my younger self would have been thrilled, as someone who played many rounds of late-night flashlight tag. However, it wasn’t my love for flashlight tag as a kid that led me on this path. It began with my business partner finding a brand they loved at Tractor Supply Company. As someone who has primarily worked in the marketing world, I know that good products can be out-marketed, and not-so-good products can be great at marketing, and from that fact, that product will become an industry leader.
However, what excites me the most is when a product has a line of both quality and tech that customers love. This investment started with a business partner’s love for the product. To me, this is the first step – since an investor or entrepreneur’s appreciation for a product is a large contributor to the product’s success. Below is a simple step-by-step guide on finding great products and evaluating which ones to get behind.
1. Begin With The Leadership
It’s impossible to find a unicorn leader who is skilled at managing products, technologies, people, marketing, sales, and everything else that needs attention in a business. However, the two most important things to me are that they are good people and know their strengths.
Consider asking yourself, “Is this a good person I can trust to help the company on its best path? Are they aware of their strengths and the opportunities someone else can bring to the table?” With LuxPro, I quickly learned that the founder was a brilliant person with a product-focused mindset. However, I also saw clear opportunities for marketing and expanding partnerships. In addition, a seasoned executive was interested in joining the leadership team, which would perfectly complement a product founder.
2. Identify What Truly Differentiates The Product
As a business leader and investor, I’ve seen countless friends and peers try to sell me on how their product is different, even when it’s not. Over time, these companies have almost always gone out of business. In my LuxPro example, I highlighted how the founder was an innovation-focused person. But, I think what differentiates the company’s products is their unique functionality and designer patterns.
For example, consider all the remotes or other devices that wouldn’t work unless all batteries have charged. This is not the case with LuxPro flashlights. Its other features, for example, the grip, became a key customer experience factor. Knowing this, the founder then implemented additional pattern options for customers to choose from. The brand’s differentiating qualities were first noticed by my business partner, and when he started getting to know this brand, the clear differentiating factors stood out.
When looking at products, consider asking the customers what they love about them. Recently, my business partner and I learned about another company called Surface Sunscreen. It just so happens that the wife of one of my close friends was using the company’s products. Because of my lily-white skin, I asked her about it. She transparently said she liked the Surface packaging. While it may sound silly, the packaging really matters to my business partner and me, so we always ensure that a company prioritizes quality packaging or at least has plans to improve it. However, the feedback that stuck with me was how much the kids like the sunscreen and how she personally prefers it over other brands. This wasn’t the type of online review that could be gamed or bought; It was a transparent, straightforward review from a trusted source.
3. Know Which Channels Are Working And Why
The funny thing about sales is that once one channel works correctly, it can attract other channels. The lighting company example above gained traction by being noticed by a couple of big-box stores that loved the product. Consequently, that paved the way for additional possibilities. With companies like these, sometimes clear growth opportunities present themselves, whether on Amazon, Walmart.com, or other online retailers.
Moreover, it can also fuel other big-box stores to express interest in the product. Big-box retailers typically would rather be one of the first couple of stores to have the product on their shelves or at least one of the stores that stock the product within a reasonable amount of time. Consumers want to frequent retailers where the brands being recommended to them are in stock. Being last to stock products inevitably makes retailers late to the party. Plus, it can affect long-term buying for the big-box stores. This is why the example of my business partner liking a product and talking to customers led to him speaking to a few friends at big-box retailers.
Applying These Strategies
Overall, these are the key strategies I use to learn more about companies I’m considering investing in. This information gives me a deeper understanding of a company’s purpose and impact, so I know how my support will truly contribute to its growth. While each strategy involves critical thinking and asking thoughtful questions, they are my top recommendations for leaders to consider and implement when seeking industry-leading products to invest in.
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