Home Strategy Roundtable: Open Opportunities in Cloud Computing and Rural BPO

Strategy Roundtable: 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 U.S., 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 last 15 years. Whether it is credit or equity, funding is very, very tight. VCs ONLY want to invest 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 just 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 equals 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.

Kir Devries

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 and 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, with creative or professional interests, contemporary lifestyles, and residing in urban areas. Average income is $60,000 a year and a large percentage are unmarried or childless.

She also has a secondary audience who shop for gifts. These are women in their 40s to early 60s, often shopping for younger women.

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

Her main questions were around 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 came to the 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 software to capture how employees are spending their time in order to help manage and monitor productivity. Especially for companies that have 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 and 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 5,000-plus employees over the next six months, and close full-on enterprise deals with at least a dozen of them over the next 12 months. I advised him to avoid spending money to sell to the US 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 $1M 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 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. 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.

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 takatuka

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