Home Strategy Roundtable: Niche E-commerce is Great For Bootstrapping

Strategy Roundtable: 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 FabulousYarn, 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 the 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 or not 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, etc., which would create much stronger brand engagement and also 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 e-commerce companies because they are easy to bootstrap. Some of my favorite examples are: Blinds.com, Sheetmusicplus.com, 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 around our site, not at 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 at 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 checks out what companies like Paltalk and Vivu are doing, to be able to position his offering better. And in general, I thought Jesse has 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 no one has heard of them.

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 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 the question 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 Xbox, Playstation and Wii are trying to add more and more capabilities into their consoles. I don’t at all like the idea of a small startup entering this space to address the market from a user experience point of view.

Mobile Content for Social Media

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 20-something content distributors in Malaysia. I am not convinced about this business proposition either, and the lack of traction confirms my reservation. 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 that’s 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 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 is funding the research and the experiments, and Gilbert gets to take his time to gather market validation. In fact, he now has 50 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’ 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, etc., 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, Jose Almandoz, CIO of Novell, Nati Shalom, CTO of Gigaspaces, Fred van den Bosch, CEO of Librato. 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.

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 MarketInnovation: Need Of The Hour, as well as Vision India 2020, are all available from Amazon.

Photo by Charles Thompson

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