Roundtable Recap: February 10 – When Keywords Are Competitive

For this week’s One Million by One Million roundtable, we discussed an important topic that many entrepreneurs are facing. Google PPC is a key channel for customer acquisition for many e-commerce and online businesses, yet keywords have become quite competitive, and the costs of campaigns for certain keywords tend to be extremely high.

Michelle Herbert and Amy Wright pitched Amy Michelle Go Totes, a company selling multi-purpose tote bags that serve as diaper bags, purses, etc. Now if you do the research on the keyword groups that are relevant for this category of products, for example, diaper bags and related keywords, you will find that the query yields millions of searches. However, with the large search volume comes a highly competitive scenario where etail advertisers like Babiesrus, Zappos, and Diaperbagboutique have locked up the top spots.

So what would you do in that situation?

I advised Amy and Michelle to sell their products wholesale to those same etailers who have top spot in the PPC search results, and go to market through them.

Also, Kimbra Orr with Kimbra Studios presented an interesting business selling photo jewelry that is already at $750k revenue. Kimbra has just started some OEM relationships. The one that is especially interesting is Kodakgallery, whereby, if you have a photo on the site that you wish to turn into a photo locket or a bracelet, the order would go to Kimbra Studios. Naturally, the other OEM targets include Shutterfly, SmugMug, etc.

Kimbra asked questions about building out her team to accommodate the enhanced workload of a growing business. We discussed how she should go about building the team, hire for the positions, structure compensations, including whether or not to offer shares in the company, and other team building issues. In general, a key point that I encourage entrepreneurs to consider is whether or not you are building a cash business or an exit business. Do you really want to give shares if you are building a cash business? In that case, does it make sense to just offer a base salary and a good bonus?

We also heard from Deepak Singh presenting his web method to execute a remote server. Basically, Deepak is trying to solve the problem of making rich client apps inside an enterprise accessible by people in the extended enterprise. He got close to the problem while working inside a bank, and needs to go back and validate whether the same bank’s IT organization is willing to buy his solution, and what they’re willing to pay. In addition, he needs to go talk to a few other banks, or even other IT organizations in general with a similar challenge. As such, Deepak hasn’t really ventured out of his shell yet to incorporate the voice of the customer. He needs to. ASAP.

Before I close today’s recap, I want to point readers to a blog post from last week explaining how 1M/1M differs from YCombinator and other such programs. It’s a question that we’re getting often, so I felt that it would be worthwhile to discuss it at length. There’s one absolutely fundamental philosophical premise that you need to understand: 1M/1M is an inclusive program, and we are happy to work with you even if you are building a really small, niche business. Most incubators, accelerators, or angel groups won’t be willing to work with the smaller TAM businesses. But we believe that if you build a $10M business with 30% profit, and pull $3M in cash every year for yourself, there is absolutely nothing wrong with this picture. We are very happy to help you build such businesses.

You can listen to the recording of today’s roundtable 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