This is the story of a rich kid from Silicon Valley… with great connections.
His father and stepfather were both successful investment bankers. But this kid’s career path took a different shape.
In high school, he wasn’t much of a student. He cruised along with a B average. Most of his time and attention were spent on his true passion: surfing. He routinely woke up at 6 a.m. to catch waves before school. (I don’t know many teenagers who wake up that early to do anything.)
He went on to form Menlo Park High School’s first surf club. He sold surfing T-shirts at football games to raise money for the club. And after high school, he attended the University of Southern California at San Diego. Why? Because he could go surfing every day. He chose a fraternity with a house right on the beach.
You couldn’t call this kid a beach bum, though. In his early 20s, during the dot-com boom, he started an online gaming and marketing company called Funbug. He raised $3.9 million from investors using his Silicon Valley connections. But all the money was lost when the dot-com bubble burst.
A Life-Changing Trip
To reboot himself after his dot-com failure, this 26-year- old kid went on a five-month surfing trip to Australia and Indonesia. And he started working on something that would change his life forever.
His next project was a strap for a waterproof camera so he could take action photos while surfing. During his trip, he decided to create a product that would combine his strap with a specialized camera in a protective case. He gave himself four years, until the age of 30, to make his new product a success. If he failed, he planned on getting a “real” job.
While in Indonesia, he bought thousands of cheap belts and other items that he knew he could sell for a big markup at fairs and art shows in California. He used his profits from those sales to help fund the launch of his new camera company, GoPro. This kid’s name is Nick Woodman. He is now a billionaire, and when he was originally marketing his GoPros, he drove up and down the California coast in a 1971 Volkswagen bus to sell them.
The Birth of GoPro
With GoPro, Nick didn’t want to raise money from investors as he had with Funbug. He told The Wall Street Journal:
“Losing other people’s money was terrible. I was the guy who went around and convinced people to put their money in. They believed in us and in me and I didn’t come through. That’s why I started GoPro by bootstrapping it.”
This time around, Nick borrowed $35,000 from his mother and $200,000 from his father to get the business off the ground. He avoided any other debt.
Nick worked 18-hour days modifying existing cameras and sewing straps made of different materials. His failure with Funbug helped him develop a tireless work ethic. Here’s what he told Forbes:
“I was so afraid that GoPro was going to go away like Funbug that I would work my butt off,” he says, recalling days where he was the company’s only employee, acting as its truck driver, salesman, product designer, customer service support and product model.
“That’s what the first boom and bust did for me. I was so scared that I would fail again that I was totally committed to succeed.”
In 2004, as GoPro’s only employee, Woodman generated $150,000 in sales, mostly from trade shows. The following year he landed a spot on the home shopping network QVC to peddle his camera. He and just one other employee generated $350,000 in sales that year.
Nick took his GoPro wherever he went. He was obsessed with improving its harness, camera and case. His product improvement obsession was as intense as his passion for surfing.
And the result?
GoPro sales have doubled every year since the first camera’s debut in 2004. Action sports enthusiasts of all stripes have embraced it, regularly posting GoPro videos to social media outlets. The camera has become a viral marketing phenomenon. Today the company has more than 500 employees and it generated $986 million in 2013.
GoPro went public with an IPO in June 2014. The share price rocketed from $24 to over $64. Nick owns 46.7% of all shares outstanding. With the company currently valued at over $5.5 billion, Nick has made it to Forbes’ billionaires list at just 38 years old. As he likes to say, “GoPro was a 10-year overnight success.”
A Smart Bet
I’m not telling you about Nick’s success story so that you can invest money in GoPro stock. Instead, I want to show you what’s possible when a wealthy family invests wisely in the next generation.
As I’ve written in the past, the world’s most successful families all have a strong entrepreneurial spirit embedded in their family cultures. They know that there has to be a wealth creator in each generation so that a bigger pile of assets gets pushed forward. To make that happen, families must fund the productive pursuits of each new generation.
I’m not suggesting that you use your family’s wealth to fund every fly-by-night business idea that your children conjure up. That’s a recipe for disaster. But think for a moment about the critical decision that Nick Woodman’s parents had to make when he asked them for GoPro seed money. If he was your son, would you have loaned him the money?
After all, Nick’s first company failed and lost millions. And he seemed more passionate about surfing than anything else. But Nick’s parents also recognized that he had traits that would make him successful in whatever work he chose.
Nick was enterprising and had a strong work ethic, from selling lemonade as a kid to the T-shirts he sold to fund his surf club. He was resourceful, too. He found ways to make money to support himself, such as selling the belts he found in Indonesia. And he managed to raise millions for Funbug. He also showed dedication to and discipline for things he was passionate about, such as surfing.
Nick’s parents had no way of knowing what his future would bring. But they knew that Nick had the raw ingredients for success. Even though Nick had all of the advantages of affluent children, he never spent his time merely consuming his family’s money. He was always involved in something enterprising and productive.
One Key Question
So, how do you know if your children’s pursuits are worthy of a family office investment? There’s no easy answer. But you can start by asking one key question…
Have your kids displayed passion, ambition, dedication, discipline and hard work in the pursuit of their goals? If they haven’t, I wouldn’t count on them developing any of those traits overnight.
It’s important to remember that assessing an investment in a family member’s initiative requires the same amount of due diligence and objective analysis as any investment. You wouldn’t give your money to a stranger with a business plan but none of the personal traits needed for success, would you?
So it’s easy to see why we recommend that you get your children involved in your family office operations at an early age. It lets you see how they perform when given responsibility. You see how they manage their tasks and their time. You see how they interact with other family members. You see how hard they work. You see if they are committed to success.
Your family office is an ideal proving ground for your children. It can tell you all you need to know when it comes time to fund their pursuits.
Don’t Fear Failure
The story of Nick Woodman is a prime example of what’s possible when a family of means makes a wise investment in the next generation. Nick wasn’t a sure bet when he started GoPro. But his track record showed he could make it work if anyone could.
And remember, failure should not be feared… as long as you learn from it. Nick certainly did. His fear of repeating his Funbug failure is what fueled the tireless work he put into developing GoPro.
You want your children to make mistakes early in their careers so they can use what they learn to succeed later. And sometimes, with a little bit of luck and a whole lot of hard work and dedication, amazing things can happen. Just ask Nick Woodman.