Are you ever approached by people wanting your advice on how to start a business? They see you running a successful company and think, “Wow, I’d like to do that.”
Their only stumbling block is that they don’t have an “idea” for a business. They refer to an idea like it’s this mythical creature that comes along every thousand years. They mix up the role of inventor with that of entrepreneur. They spend months thinking about starting a business but never get around to pulling the trigger. They blame their inaction on their lack of an idea.
Yet the idea is the easy part.
It wasn’t Howard Schultz’s idea to serve strong coffee in a bar-like environment. Schultz saw it being done while on vacation in Italy and decided to bring coffee bars to America. Schultz got rich because he built Starbucks into a global juggernaut by executing the idea well. The idea was the least of his achievements.
More recently, you may have seen the news that iD Tech, an online training company that teaches high school kids how to code, was recently acquired by Emeritus for $200 million. Given the way traditional media covers these kinds of deals, you may have assumed that the iD Tech founders “got lucky” and came up with a killer business idea at just the right time, when parents were looking for something for their house-bound kids to do during the pandemic.
Nothing could be further from reality.
Back in 1998, siblings Pete and Alexa Ingram-Cauchi started iD Tech to offer summer camps for kids who wanted to learn about computers. Pete and Alexa’s parents were both educators and, collectively, the family realized that kids were not learning about computers in school. The siblings decided to offer summer camps so children and teens could learn about coding in a fun environment.
In the early days, the business wasn’t glamorous. During a recent Built to Sell Radio interview, Pete recounted his days spent dropping off brochures at high schools around the Bay area. He remembered getting a hardware donation from Apple one day. Keen to put the new gear to work, he decided to drive the computers over to a local camp. The only problem was that Pete had left the gate of his truck open, which he realized when he saw the brand-new Macs tumbling down the highway behind him.
Despite their inauspicious start, iD Tech grew each year, and by 2019 the business was generating $70 million in annual sales hosting camps from Stanford to MIT and beyond. And if that is where the story ended, you’d be right to chalk up iD Tech’s journey as yet another example of a bootstrapping success.
But Alexa and Pete were about to experience yet another twist. In March of 2020, iD Tech was expecting its best summer ever. They had paid deposits at hundreds of universities, had hired thousands of contract instructors, and were readying their full-time staff for the summer blitz. Then COVID-19 struck, making in-person summer camps impossible.
Again, the siblings had to act. They decided to use the pandemic as the impetus to reinvent themselves as a digital training company, shifting their camps and content online. Within months, their online courses were gaining traction. By 2021 iD Tech was back and expecting $45 million in revenue—mostly from online camps and tutoring. Their reversal of fortune did not go unnoticed by Emeritus, an ed-tech giant who offered to acquire iD Tech for a cool $200 million. The deal closed in May 2021.
Despite having lower sales than the year before the pandemic, the new and improved iD Tech that was focused on online courses was worth much more than the old summer camp business. Acquirers pay a premium for companies with Growth Potential, one of the eight drivers of value we measure over at The Value Builder System™. Online content has the potential to grow much faster than in-person camps, which is one reason Emeritus was willing to pay more than four times revenue for iD Tech.
The irony is, all the work Pete and Alexa did to build their summer camp business was the raw material they needed to create a digital learning company. Had they not taught thousands of students in person, they never would have understood how kids learn and would never have been able to make an online course stick.
Had they placed all the focus on coming up with the perfect idea for a company, they probably would never have started the messy, seasonal business of running summer camps on university campuses. But it was that experience that enabled Alexa and Pete to create one of the world’s best ed-tech businesses.
Lots of people think they would like to own a business and spend years on the sidelines fine-tuning their idea before launch. However, it is those who act—and continue to take bold action in the face of market changes—who put themselves in the best position to succeed.