There is a fascinating article online this morning from the San Francisco Chronicle’s Tom Abate in which he profiles Raymond Lei, a 19-year-old Berkeley student and entrepreneur. While still in high school Lei founded ooShirts.com with just a computer and an idea. A few years and just a couple thousand dollars in capital later, Lei runs a successful 2.5 person team set to earn over $700,000 in 2010. Abate dubs ooShirts an “ultralight startup,” but is Lei’s bedroom business any different from a lean startup?
In recent years, lean startups have become a popular sector of Internet businesses that look to push a product at “low burn.” A lot of what makes a lean startup lean, according the man who coined the term, Eric Ries, is when the company strives to create value for customers. “Every activity that does not contribute to learning about customers” should be defined as “waste,” Ries says.
But Lei’s company seems leaner than lean, with almost no “burn” whatsoever. According to the ooShirts.com homepage, less than 0.5% of the company’s revenue goes to advertising. Instead the company relies on referrals and repeat customers to help spread the word. By working with over a dozen suppliers, ooShirts keeps its shipping costs low – savings it passes on to its customers in order to undercut competition.
ooShirts is part of a unique subset of Internet companies. While many startups one might categorize as “lean” are developing applications and tools for the Web, ooShirts is playing in the co-creation and mass customization space. These companies serve as intermediaries between customers and manufacturers who can create customized products, and thus can afford to run at a “low burn.”
Because of this business relationship, mass customization companies may need to be set aside from lean startups, which by nature are highly iterative product companies. But perhaps there is some intersection between lean startups and the low burning mass customization companies. Or maybe Abate’s term “ultralight” is a new class of startups? Either way, running thin is certainly a growing trend among startups, and ooShirts is a fine example of how the Internet is enabling the success of these businesses.
