Following in his father's footsteps, Jim Jannard attended the University of Southern California's pharmacy program. But it wasn't long before he ditched the text books and certain future in favor of a motorcycle and a job selling auto parts out of his car.
Jannard understood motorcycles, and he had a vision of how they could be improved. In 1975, with just $300 dollars and a plan to make products that not only work better but look better, Jannard started his own business. A company he would name after his dog, Oakley.
The brand new company would start by reinventing handgrips, then goggles, and in 1985 strike gold launching the first Oakley sunglasses. Oakley went public a decade later, and Jannard would eventually sell the business to Luxottica (maker of Ray-Ban sunglasses) for $2.1 billion. Today, Jannard's net worth is an estimated $3 billion.
Jannard's success relied on a little bit of luck, a lot of hard work, and three essential strategies that can help anyone thinking about starting their own business or looking for great investments. These strategies were: focusing on a niche, being mission driven, and exclusivity.
Focus on a niche
The first $300 dollars went toward "a bunch of little stuff" that Jannard had a supplier stamp the Oakley logo on. Something he admitted was dumb, but it was an important symbol of his new business. Jannard sold the merchandise and began working on his first project, a better motorcycle grip.
At the time motorcycle handgrips were cheap and slick, and while this wasn't a big issue for your average person, for extreme athletes it was a huge problem. This was the key.
Long before Jannard began making his first prototype he knew exactly who his market was. Dedicated athletes not only demand quality, but they're willing to pay a premium for it. At the time, however, high quality extreme sports accessories wasn't deemed a big enough market for larger companies like Nike to pay attention -- this created the perfect opening for Oakley.
"Everything in the world can be made better ... the only questions are, when and by whom?" --Jim Jannard
The new grip was the company's launching point, but hidden beneath athlete's hands Oakley wasn't gaining any exposure. Jannard went back to the drawing board and designed a goggle.
Mounted on the athletes head the O Frame MX took center stage. The new design not only improved fit, but the lens was made from Lexan -- the same substance used in bullet-resistant windows -- to enhance visibility and durability.
The goggle design would create a template for the sunglasses that would shoot Oakley into the stratosphere. Selling for well over $100 per pair, everything from the sunglasses being designed to absorb a shotgun blast from 15 yards away, to the glasses case which could withstand being run over by a truck, screamed quality.
Despite making only 22 products in the company's first 20 years, by the mid-1990s Oakley's yearly sales were rising toward $200 million. Jannard had a passion for quality -- that was his mission, and that's what was customers were buying.
Early on Jannard made sure to do two very smart things: patent his designs and technology, and restrict distribution.
Every great business has something proprietary, or something that keeps other companies from copying what they're doing. Oakley's brand and designs are exclusive to who they are; patents help keep it that way.
Second, as a niche retailer to some of the greatest athletes on Earth, Oakley is cool. In late 1980's, Oakley attempted to maintain that image by restricting who could and could not sell their products. The company's mission was one of quality, therefore, having their sunglasses in a retailer that did not meet that standard devalued the brand.
Ultimately, the combination of a mission-driven approach, understanding the company's key market, and developing unique and quality products is what helped turned Jannard's initial $300 dollar investment in to one of the most popular sunglasses brands in the world.
Dave Koppenheffer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.