Strategy Roundtable: Find High Velocity Channels
First up at this week's Strategy Roundtable was Cheryl Yeoh presenting CityPockets, an online destination, and an app for managing daily deals across a wide range of sites. The daily deal and group buying market has really heated up, with numerous sites offering variations on the basic value proposition. But for Cheryl, the problem is that she needs critical mass.
I asked her not to assume that investors will be investing in this business idea, at least not until she can acquire some level of validation, which means tens, if not hundreds of thousands of customers, and several partnerships with daily deal sites.
Venture capitalists today don't exactly practice venture capital. Investors are investing in proven concepts - they call those "momentum investments." As a result, the expectation is that you have to figure out a way to get to some level of momentum on your own (by bootstrapping) or with small doses of angel money - "drip financing" so to speak. To be successful, you need to understand this basic philosophy, and work within its constraints.
Next Anuj Mishra with Gnosis India presented an idea of doing highly technical workshops (CAD, Robotics) for students all around India, including rural India. I asked Anuj who would be teaching these workshops, and who would be paying for them. In today's India, people with high-end engineering skills are in high demand. They make a lot of money, and nothing in Anuj's business model convinced me that these people have any interest or incentive to go around teaching, especially in rural India. I asked him to abandon this idea and find a better one.
Solution for E-commerce Vendors
Last up was Manish Jha pitching his inventory management, fulfillment and customer service solution for e-commerce vendors, with which he has already built a $500,000 a year business. Manish wants to explore how to get to $2 to $3 million in a couple of years. I advised him to strike OEM partnerships with the e-commerce shopping cart vendors like Volusion, BigCommerce, etc. Such OEM deals may cost him 50% of his product revenue, but would be the fastest way to reach a large number of customers, nonetheless.
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.
In addition, we also have a Deal Radar series in which we profile entrepreneurs who have successfully reached $1M in revenue. Many investors monitor this series as a source of fundable businesses that have achieved a certain level of validation, and we encourage you to pitch [following these instructions] to be featured in the series as well. Some recently featured companies include Appssavvy, MobileIron, Mashery, Clickfree, BullionVault, 3dcart, BrightEdge, FootzyRolls, LendingClub, Blacksocks, Merkle.
Sramana Mitra is a technology entrepreneur and strategy consultant in Silicon Valley. She has founded three companies, writes a business blog, Sramana Mitra on Strategy, and runs the 1M/1M initiative. She has a master's degree in electrical engineering and computer science from the Massachusetts Institute of Technology. Her Entrepreneur Journeys book series, Entrepreneur Journeys, Bootstrapping: Weapon Of Mass Reconstruction, Positioning: How To Test, Validate, and Bring Your Idea To Market Innovation: Need Of The Hour, as well as Vision India 2020, are all available from Amazon.
Photo by wax115