By Srama Mitra
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.
Sramana Mitra is the founder of the One Million by One Million (1M/1M) initiative, an educational, business development and incubation program that aims to help one million entrepreneurs globally to reach $1 million in revenue and beyond, build $1 trillion in sustainable global GDP, and create 10 million jobs. She is a Silicon Valley serial entrepreneur and strategy consultant who writes the blog Sramana Mitra On Strategy, and is the author of the Entrepreneur Journeys book series and Vision India 2020. She has a master’s degree in electrical engineering and computer science from the Massachusetts Institute of Technology.