Roundtable Recap: August 19 – Niche E-Commerce Is Great For Bootstrapping

This week’s roundtable had entrepreneurs ranging from e-commerce to mobile apps to video collaboration, some of which are already doing significant revenue. First up was Judy Schmitz presenting an e-commerce company focusing on luxury yarns. Fabulous Yarn is already doing $500,000 in revenue and has positioned itself as a niche site for high-quality yarns catering to women passionate about knitting. Judy has successfully implemented SEO and social media strategies to be able to drive good traffic to her site. She is now wondering where to go next and what kind of financing she should go for. She is also considering whether to broaden her range of products to include lower-priced, lower-margin products. My advice to Judy at this point is to preserve equity control of her venture, but potentially take some inventory financing that would help the company grow faster. [We will introduce her to companies willing to offer such financing.] In addition, I encouraged Judy to review my Web 3.0 framework and focus more on building content and community engagement on the FabulousYarn site, inviting her customers to guest blog, teach classes, and so forth, which would create much stronger brand engagement and drive higher volumes of SEO traffic if she does this right. Finally, I asked her to stay away from diluting herself by offering low margin products, because she would have to still service those customers, and it would eat away her margins rapidly, making it harder to grow organically, the way she has succeeded in growing so far. I love niche eCommerce companies because they are easy to bootstrap. Some of my favorite examples are: Blinds.com, Sheet Music Plus, Waterfilters.net, Shopforbags.com, and many others that I have covered on Deal Radar, Incubation Radar, and Entrepreneur Journeys.

Next, Jesse Maddox discussed theInteract. What the audience and I found really cool was that Jesse is traveling in India for two months while thinking through and pulling together this venture. Jesse is trying to build a video chat–based social network where he will have topic-specific public rooms where strangers can meet and engage, as well as private rooms for groups to meet and interact. He offered One Million by One Million as an example: “Wouldn’t you like to gather your community for a video chat session?” he asked. Well, my answer is no. Whatever community engagement we do needs to happen on our site, not on a newly minted third-party site. While I am willing to set up Facebook pages and LinkedIn groups because Facebook has 500 million users and LinkedIn has 70 million users, I am certainly not willing to do so on a random new site. In fact, I am evaluating technologies for creating a private roundtable for 1M/1M, and that is something that will need to be “technology” to support my community, as opposed to some other social network being built using my community members. I suggested that Jesse check out what companies such as Paltalk and Vivu are doing to be able to position his offering better. And in general, I thought Jesse had done an inadequate job of his competitive analysis. Every day, Paltalk is downloaded over 25,000 times and registers over 15,000 new users. Jesse dismissed the company by saying that no one has heard of it. Instead, he needs to study the company, as well as other competitors in the space, and come up with a compelling positioning that is much more interesting than just another social network. I am sure Facebook will offer video-based interaction features in due course, so whatever Jesse decides to launch needs to have defensibility against such market moves.

Then, Ashok Jaga presented MyLivingRoom, a software program to make the television experience interactive and social. Ashok’s game plan is to OEM the software to various box manufacturers, but he also asked whether he needs to build his own box. Now, this is an intensely competitive space. Apple TV, Google TV, Netflix, Comcast, Hulu, and so many others are already gunning for the space, not to mention that Xbox, PlayStation, and Wii are trying to add more and more capabilities into their consoles. I don’t like the idea of a small startup entering this space to address the market from a user experience point of view.

Then Mohd Amin Kamis spoke about his mobile content social media business in Malaysia. Amin wants to develop proprietary multimedia content for Generation Y and Generation Z mobile users and distribute through the twenty-odd content distributors in Malaysia. I am not convinced of the validity of this business proposition either, and the lack of traction confirms my reservations. Nonetheless, I asked Amin to work with his distributors to get more clarity on how to market the content by using the distributors’ channels.

Up last was Gilbert Corrales, presenting Discovr, a mobile app for travel being incubated inside a university in Korea. Interesting tidbit – Gilbert himself is from South America. Discovr has received government grants to develop an application for tourism in South Korea and is getting ready to launch it in collaboration with the country’s tourism department. Gilbert is also trying to figure out a freemium model based upon which a company may be spun off from this university project. This, in many ways, is an ideal scenario to experiment with ideas – the university and the government are funding the research and the experiments, and Gilbert gets to take his time to gather market validation. In fact, he now has fifty international travelers in South Korea testing the software, providing him with good feedback. I encouraged him to continue the process and launch the application as well as define the paid application which would determine whether or not there is a business here. I also encouraged him to review what Jean-Marie Hullot is doing with Fotopedia, one of the top iPad applications right now in the travel and photography category. I am running Jean-Marie’s interview on my blog. You can read From Steve Jobs’s Soulmate to Founder of Fotopedia.

In addition, for those of you working on cloud computing and related businesses, I strongly encourage you to read our Thought Leaders in Cloud Computing (TLCC) series where we have interviews with the CIOs of IBM, Novell, BMC, and so forth and great insights on entrepreneurial opportunities in diverse domains, including legal services. Here are some examples: Pat Toole, CIO of IBM, Mark Settle, CIO of BMC, José Almandoz, CIO of Novell, Nati Shalom, CTO of GigaSpaces, Fred van den Bosch, CEO of Librato, and so forth. TLCC is our concerted effort to draw out entrepreneurial opportunities in the cloud space and bring entrepreneurs close to these thought leaders.

I started doing my free Online Strategy Roundtables for entrepreneurs in the fall of 2008. These roundtables are the cornerstone programming of a global initiative that I have started called One Million by One Million (1M/1M). Its mission is to help a million entrepreneurs globally to reach $1 million in revenue and beyond, build $1 trillion in sustainable global GDP, and create 10 million jobs. In 1M/1M, I teach the EJ methodology, which is based on my Entrepreneur Journeys research, and emphasize bootstrapping, idea validation, and crisp positioning as some of the core principles of building strong fundamentals in early stage ventures. In addition, we are offering entrepreneurs access to investors and customers through our recently launched our 1M/1M Incubation Radar series. You can pitch to be featured on my blog following these instructions.

Recordings of previous roundtables are all available here. You can register for the next roundtable here.

This segment is a part in the series : Roundtable Recap
. March 25 – A Mixed Bag Of Advice . April 1 – Bootstrapping Tips . April 8 – A Focus On E-Commerce . April 15 – Small Is OK; The Goal Is Profitability . April 22 – The Original Runners . April 29 – Finding The Right Direction . May 6 – Defining Value Proposition . May 20 – Validation, Validation, Validation . May 27 – Is The Venture Worth Your Time? . June 3 – Defining Market Segments . June 10 – Efficient Targeting . June 17 – Online Education Startups . June 24 – Three Startups That Can Hit One Million Dollars . July 1 - Get Your Pricing Model Validated . July 8 - The EJ Methodology . July 15 - A Market Of Late Adopters . July 22 - Bootstrap Using Services . July 29 - Startups In Malaysia . August 5 - Paying Customers =>Validation =>Valuation . August 19 - Niche E-Commerce Is Great For Bootstrapping . August 26 - 85%-90% Of Search Traffic Comes From Organic Search . September 2 - Find High Velocity Channels . September 9 - Open Opportunities In Cloud Computing And Rural BPO . September 16 – 5 Cloud Computing Opportunities for Entrepreneurs . September 23 - Do Not Spray And Pray . September 30 - Investors Don't Fund Broad Ideas . October 7 - Try To Get At Least $2M Pre-Money In Seed Round Valuation . October 14 - Professional Investors Do Not Invest In $20 Million Markets . October 21 - Bootstrapping Comes In Many Flavors . October 28 – Convert Potential Competitors To Partners . November 4 - Premium Lounge Sneak Preview . November 11 - African Tech Entrepreneurs Emerging . November 18 - Not Coming To The Rescue Of Victory . December 2 - Niche Marketplace Businesses Can Be Interesting . December 9 - Where Should You Raise Money? . December 16 - Top 10 Tech Trends To Watch . January 6 - Top 10 Vertical and Social Web Trends For The Decade . January 13 - Top 10 Online Advertising Trends For The Decade . January 20 - Personalization Remains An Open Problem . January 27 - Non-Dilutive Financing Through Revenue Sharing . February 3 - Indian Entrepreneurs Are Maturing . February 10 - When Keywords Are Competitive . February 17 - Indian Company Plugs Gap In Google’s Enterprise Solution . February 24 - VCs, Angels, Incubators, Accelerators – What Are You Doing With Your Rejects? . March 3 - Spotlight On The Northwest . March 10 - Spotlight On India . March 17 - Spotlight On Latin And Central America . March 24 - 75th Session Spotlights The Midwest . March 31 - Microsoft’s $100,000 India Startup Challenge Grant . April 6 - 1M/1M Announces Important Partnership With MAD Incubator, Malaysia . April 9 - 1M/1M Announces Partnership With TiE Chennai . April 16 - 1M/1M Partners With Indian Angel Network Incubator . April 17 - High-Octane Energy In Pune . April 21- Incubators Are Reaching Out To 1M/1M . April 28 - Guerrilla P.R. & SEO Most Profitable Customer Acquisition Strategies . May 5 - Ownership Matters . May 12 - Two Really Cool Companies . May 19, Making Money From Blogs . May 26 - Twitter, LinkedIn - Why Not Affiliates? . June 2 - 1M/1M And Incubators - What We Have Learned . June 9 - Silicon Valley . June 16 - Exciting Companies Lined Up For Microsoft Startup Grant Finals . June 23 - New Assessment Tool For Entrepreneurs . June 30 - Continued International Participation . July 21 - Crowd Sourced Funding Exchanges - An Emerging Trend . July 28 - Investors And Incubators Need To Look At Pre-Incubation . August 4 - How Do You Bootstrap Freemium Ventures? . August 11 - Menlo Park And The Silicon Valley Renaissance . August 25 - How To Use Twitter For Lead Generation . September 1 - Fall Call To Action . September 8 - A View Into Israeli Start-ups . September 15 - Do Your Homework First . September 22 - How Do You Catalyze A Region’s Entrepreneurship? . September 29 - From Poland To Argentina . October 6 - Dedicated To Steve Jobs, Reinforcing Mission To Restructure Capitalism . October 13 - FREE Is Not A Business Model . October 20 - Non-profits And For-profits . October 27 - Check Out Stanzr . November 3 - VCs Are Not Always Right . November 17 - Business Schools And Early Stage Entrepreneurship . December 1 - 1M/1M Premium Company Freshdesk Wins Funding From Accel Partners . December 8 - Three Open Opportunities For 2012 . December 15 - Web 3.0 And Social Dancing; Romania Emerging . December 22 - Free Apps, Ad-Supported Business Models => Dangerous! . January 5 - ERP Galore . January 12-13 - Spotlight On IIT Kharagpur, India . January 19 - Are Media Sites Fundable? . January 26th - Spotlight On Jacksonville, Florida . February 2 - YCombinator vs. 1M/1M