Roundtable Recap: September 9 – Open Opportunities In Cloud Computing And Rural BPO

I have been meaning to get to discussing blue-sky opportunities at the roundtables, and this week we did some of that. During this week’s roundtable we discussed an area that deserves a serious look from entrepreneurs: rural BPO. Whether it is in the emerging markets or in the United States, it is my sincere belief that there are numerous entrepreneurial opportunities to be tapped into. Today, I invited entrepreneurs to come up with ideas, apply the 1M/1M methodology to it, and come discuss with me at these roundtables. Readers – if any of you have ideas, I am keen to hear from you, as well as help you refine them.

As for today’s pitches, first up was Gioacchino La Vecchia pitching CrowdEngineering. This company provides a crowdsourced customer service solution to enterprises. Gio pitched it to me as a crowdsourced BPO, but I think he will have more success if he simply focuses on customer service as his core value proposition. They already have several customers including some Telcos, and are at about $350,000 in revenues. Gio expects to get to about $500,000 by the end of this year, and asked me for advice on venture funding.

I gave Gio some advice on funding, which I will repeat here for all of you. This is important, so please listen up.

We are, at this time, in one of the tightest funding environments of the past fifteen years. Whether it is credit or equity, funding is very, very tight. VCs want to invest only in momentum deals, which means you already have serious customer validation and traction, and you are looking to raise money to scale your business. Unless you are an experienced entrepreneur with a track record, the chances of your getting a VC behind a concept are very small. And even if you are an experienced entrepreneur, all but a few VCs still want to see customer validation, business model validation, and traction before they will invest.

Next comes the topic of angels. Angels tend to invest small amounts of money on somewhat validated concepts. Often, this will not necessarily get you to a significant milestone. I call it drip financing. Most entrepreneurs have no choice but to avail of this sort of financing along with the mentoring and the contacts that could come with it (doesn’t always come along, though).

In 1M/1M, our preferred financing strategy is customers. You can get cash without diluting your ownership in the company. Why? Because customer financing = revenue, not equity.

So, in Gio’s situation, it is clear to me that he is able to get customers to buy. In that case, why bother wasting time trying to raise money right now? Why not go further, develop more valuation, customer experience, and really, deeply validate the business?

Yes, venture capital is very good for scaling businesses rapidly. I personally have nothing against venture capital. I have raised VC money, and will continue to use that class of financing in my entrepreneurial work.

However, for a first-time entrepreneur, it is my strong belief, that getting as far along as possible before raising money – if you can do so – is desirable. That’s why I advised Gio to keep going with further execution on his business and build more revenue traction.

Meanwhile, I will work with him to put in place a financing strategy that helps him scale faster for next year.

Then Kristen Becker presented Kir Devries, an e-commerce site that offers a well-edited collection of unique goods for practical everyday living that have been sourced due to their impeccable craftsmanship, unique design/style, and their “good factor” in the moderate price range. The “good factor” is that extra something about the product or company like eco-friendly, or fair-trade sourcing, or something else that makes the shopper feel good.

Kristen’s primary audience is young professional women 25–45 shopping for themselves, often with creative or professional interests, contemporary lifestyles, and residing in urban areas. Average income is $60,000 a year and a large percentage is unmarried or childless.

She also has a secondary audience who shop for gifts. These are women in their forties to early sixties, often shopping for younger women.

Kristen is doing about $70,000 a year to date, and expects to hit $200,000 for the 2010 fiscal year based on her holiday sales projections.

Her main questions are about customer acquisition and financing. As far as customer acquisition is concerned, we discussed, again the power of organic search engine optimization. I asked her to go through my recent article, From Niche E-Commerce To Web 3.0, as well as the Taking On Giants section of EJ1. In that discussion, a subtle point that came to surface: Kristen has a blog that is on a separate URL from her e-commerce site.

Again, here is a piece of wisdom for all of you who are blogging and doing e-commerce simultaneously: you need to build up SEO leverage on your e-commerce site, so be sure to bring the blog onto the main site, not leave it off someplace else by itself.

As for financing, my advice to Kristen is to get to $200,000 and then she can do some inventory financing that I will help her arrange.

Next, Shirish Deodhar discussed InnovizeTech, an Indian company that has built a software to capture how employees are spending their time to help manage and monitor productivity. Especially for companies that do a large amount of time- and materials-based services work, this is an important function, and Shirish has already managed to get several pilots with Indian companies in the Bombay/Pune area.

Shirish had a pricing model question, as well as a set of go-to-market and sales strategy questions. Overall, I encouraged him to stay focused on the Indian market, generate 20–30 pilots of 50–200 employee test cases at companies with more than 5,000 employees over the next six months, and close full-on enterprise deals with at least a dozen of them over the next twelve months. I advised him to avoid spending money to sell to the U.S. and UK markets for the next year.

All three companies from today’s roundtable were promising, and I am pretty sure we can work with them to help them get to $1 million in revenue in the foreseeable future. Very encouraging!

Next week, we will delve deep into cloud computing businesses. I will also discuss blue-sky opportunities in that industry based on our extensive research. To prepare, please study the Thought Leaders in Cloud Computing trends and opportunities series.

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 1M/1M Incubation Radar series. You can pitch to be featured on my blog following these instructions. All three of today’s roundtable companies will soon be featured on Incubation Radar.

The recording of this roundtable can be found here. 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 . February 9 - Are You Fundable? . February 16 - What’s Happening In Turkey? . February 23 - Microsoft Israel To Offer 1M/1M Scholarships . March 1 - Strategy Gaps Need To Be Plugged . March 12 - Winners Of Microsoft Israel Scholarships . March 15 - Spotlight On 3 Day Startup Tel-Aviv . April 3 - Rendezvous In Bangalore . April 12 - More From Indian Entrepreneurs . April 19 - Tyranny Of The TAM . April 26 - A Rare Women-Only Session . May 3 - Some Wonderful Opportunities With Corporate Partners . May 10 - BlueSnap-Elance Contest Applications Deadline This Weekend . May 22 - Winners Of TechHub-A&N Media Battle Of The Startups Contest In London Win 1M/1M Scholarships