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Summary:

One of entrepreneurship’s great maxims is that it is vital that a founder know his/her market. But I’ve recently met a couple of really impressive entrepreneurs who have very little–if anything–in common with the markets their businesses purport serve. One of them is a cool Denver-based […]

One of entrepreneurship’s great maxims is that it is vital that a founder know his/her market.

But I’ve recently met a couple of really impressive entrepreneurs who have very little–if anything–in common with the markets their businesses purport serve.

One of them is a cool Denver-based startup called Zwaggle. Live since August, it’s a community exchange where parents swap toys and clothing for their children, for free. The two guys who founded it, Andrew Hoag and Adam Levy are both single swashbucklers with no parenting experience.

This might give pause to a weak-spined VC. But these two guys are smart as all get out, and–based on the response from my own friends and family who are parents and have checked out the site–Zwaggle has the potential to be very successful.

It’s really expensive to raise children: you have to buy all this high-priced stuff that the kids outgrow in a matter of months or weeks. Which is why parents have always recycled the big-ticket baby gear with one another, like car seats and cribs, and of course, clothes. It’s usually a friends and neighbors sort of thing.

But as Andrew put it to me recently over a dinner:

“Zwaggle just helps parents do something they’re already doing, only much more efficiently. We’re pounding the ebay model.”

Zwaggle makes it possible for parents to exchange car seats, cribs and much more — even a breast pump, which sounds gross, until you realize that this model costs upwards of $280 and likely won’t be covered by insurance. And as a durable good, it gets very little wear by each user. So why not extend the life of the product by passing it on? Best thing here: certain of the plastic pieces (tubbing, nipples, etc.) have to be replaced by each user for hygienic reasons = a nifty peripherals market for Zwaggle.

I think an efficiency model looks especially smart in a lagging economy. Who says you have to be a parent to comprehend a parent’s needs?

Zwaggle isn’t the only example of a founder demonstrating insight into a market he or she ought to know next-to-nothing about. (If you know of others, send us a note.) For now, this notion prompts our

Question of the Day: How important is it–really–for a founder to “know” his market? Under what circumstances can this old adage be abandoned? How do you know, when you “know enough” about a market? And if you’re like Andrew and Adam, who do you position this as an advantage to potential investors?

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  1. You don’t have to be part of a market in order to understand it.

  2. Of course you need to know your market! As Tobias says, who says you need to be part of the market?

    You need to know where your market is. I’ve met startups that have a product but don’t know who their potential customers are.

  3. I agree with Tobias, there is a big difference between knowing a market and being in a demographic. It sounds like Adam and Andrew understand their market quite well – likely better than most parents. In some ways being outside the demographic is an advantage since you tend to focus on common problems instead of your personal problems which may or may not be common.

    While it is possible to get started without knowing your market, the minute the market becomes competitive the companies that know their market will rise above the rest.

  4. Alexander McMath Monday, November 19, 2007

    Personal, experiential knowledge of a market isn’t absolutely necessary. Hardly anything is, of course.

    The caveat there, though, is that personal market knowledge is a big help in understanding the customer profiles and patterns that are underserved in that market, and thus being able to find ‘product-market fit’. Fair warning, though: failed ventures that don’t hit the mark may be founded by people who attempted to ‘think their way into’ the mindset of customers without having been there. Not always, depending on the ‘sympathetic’ qualities of the market, but it’s a risk.

  5. You can understand business without understanding a specific market and do well. It’s just harder.

  6. Hmm, so basically this article was an add for zwaggle and didn’t really have anything to do with the actual title topic. Well linkbaiting is alive and well. Any chance of getting a real post about this topic?

  7. Great idea! My guess is that they do know about the market if they have kids. It is expensive to have kids. Ebay has shown there is a need to get stuff you want for a reduced price so why not build a forum where people can exchange kid stuff for free? Yes, breast pumps are expensive and just to let you know they advise that you do not exchange those primarily for Hep B possible transmission. However, I’d say most people do not have Hep B and those how have it probably know by the time is baby is born because they test for it.

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