Ultralight startups: little capital, just computer(sfgate.com)
sfgate.com
Ultralight startups: little capital, just computer
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/09/06/BUKQ1F7CM4.DTL
43 comments
I've been wanting to hear more about this type of business, but don't really know a good source that covers it. For example, the other day there was a story on here about a site that had just reached 200 subscribers paying $10/month after I believe 2 years. It was a lot of work and more successful than most apps will ever be. It was a really interesting read, but got me thinking: wouldn't it have been easier/more profitable to get into e-commerce?
It's difficult and usually becomes more about managing business finance than the products in my opinion. It seems like this type of business is mostly covered in Entrepreneur magazine, or Inc, but they're always feel good success stories.
I helped build a fairly successful online business that sold a single laptop accessory which we had produced, packaged by hand, and sold directly to consumers. The site generated 60k in yearly revenue on somewhere between 5-10k (Christmas peaked at 20k+) unique visitors per month. The margins were really good since we had it produced ourselves and priced high. It was great business while it lasted but I ended up walking away from it because of partner issues.
My old partner still operates it today and it's nearly 4 years later! She tells me that it still generates about half of what it did at peak, but it's slowly fading away because of bigger companies that deliver a better, and cheaper product.
It's great experience and takes time but isn't hard to do.
I helped build a fairly successful online business that sold a single laptop accessory which we had produced, packaged by hand, and sold directly to consumers. The site generated 60k in yearly revenue on somewhere between 5-10k (Christmas peaked at 20k+) unique visitors per month. The margins were really good since we had it produced ourselves and priced high. It was great business while it lasted but I ended up walking away from it because of partner issues.
My old partner still operates it today and it's nearly 4 years later! She tells me that it still generates about half of what it did at peak, but it's slowly fading away because of bigger companies that deliver a better, and cheaper product.
It's great experience and takes time but isn't hard to do.
I've read both magazines and agree that there is not much depth to their coverage (or most business magazines for that matter). My background is in math/business, so I do enjoy the logistics and finance aspects. The interesting challenge seems to be the initial market research/product development. Finding the right thing to sell and then putting together that thing seems to be the toughest part (someone correct me if I'm wrong because I have no experience in this).
The web in general is flooded with stores selling the same dropshipped products, so to stand out I believe someone has to take the path you did and have something unique produced, otherwise you're just competing with Amazon and the like.
I remember reading an article in Business 2.0 about "micro-multinationals" [1] and the thought has always been in the back of my mind to try creating a completely distributed company, with ecommerce being the initial distribution channel. Work and grad school kept me too occupied to give it much thought, but reading about things like this always reminds of the article.
[1] http://money.cnn.com/magazines/business2/business2_archive/2...
The web in general is flooded with stores selling the same dropshipped products, so to stand out I believe someone has to take the path you did and have something unique produced, otherwise you're just competing with Amazon and the like.
I remember reading an article in Business 2.0 about "micro-multinationals" [1] and the thought has always been in the back of my mind to try creating a completely distributed company, with ecommerce being the initial distribution channel. Work and grad school kept me too occupied to give it much thought, but reading about things like this always reminds of the article.
[1] http://money.cnn.com/magazines/business2/business2_archive/2...
I battle with this every day. I've done e-commerce in the past, and would say I did pretty well (over £70,000 turnover in the first year). I've also built dozens of e-commerce sites for other people and advised them on how to achieve success. With my existing code, I could probably build an e-commerce site by this time tomorrow, then spend a few hours populating the site and bang... with PPC advertising I could have orders coming in by the end of the week.
The problem is, it's too easy - there's no challenge there for me and running an e-commerce site is a lot of hassle, especially if you ship products yourself, hold inventory etc etc.
That's why at the moment, I'm focusing on my stock photo startup, it's more of a challenge, and if it works how I hope it will, it should require less physical work on my part (no shipping products etc).
The problem is, it's too easy - there's no challenge there for me and running an e-commerce site is a lot of hassle, especially if you ship products yourself, hold inventory etc etc.
That's why at the moment, I'm focusing on my stock photo startup, it's more of a challenge, and if it works how I hope it will, it should require less physical work on my part (no shipping products etc).
Fulfillment is relatively cheap and you benefit from significant postage discounts. There's no reason you should be shipping products yourself.
I think this is the sad reality of the world we live in today. The job market sucks. Salaries are consistently dropping. People are being squeezed from every direction. And there's no such thing as a long term job anymore. The market is basically telling every highly skilled worker to start their own business or get in line at the welfare office.
"Sad reality"? I see the biggest opportunity for US growth since the Great Depression. When that struck, people became reflexively wary of investing in markets, blaming Wall St. and scorning robber barons. So, they sold apples on the street, or built scrap metal businesses, or little collective cottage industries, or invented the better mousetrap or dish detergent or soda or milk delivery service.
The Obama administration has the chance to change the narrative away from the WPA-type government works, consumer stimulus and all these other FDR/Keynesian tricks that tea partiers liken to Soviet Russia and instead focus on the biggest driver of employment and b2b consumption: Small business.
I think it's well passed time for us to really soak corporations who in the early 2000s took every tax break and still continued outsourcing, offshoring, right-sizing, and "pivoting toward core competencies" or whatever that hell the new PHB term is today. Tax the s--t out of them. What are they doing with that cash, anyway? They're definitely not hiring here and they're not reinvesting except outside of the US, where the growth is larger and the market less stagnant. Tax them until they hurt or move to Dubai or wherever the hell they go nowadays. Don't believe their narrative in the press that they're the biggest driver of employment. SMBs have _always_ been the big hirer; larger than the Fed, larger than the megacorps.
Obama's administrative focus should be almost laser-like on small business and entrepreneurship, and not just Green ones. ALL of small business should get every damn tax break his administration can give. That, added with tax incentives for SMB purchase of health care, can make working for an SMB even more attractive to potential hires.
This is the moment for the SBA to become one of the most important departments in the Government during this recession. They should be flush with cash, doling out loans at-cost or at lower rates than the stingy big banks that won't lend to Main St. anymore. Let them sit on the sidelines while the government guarantees the survival of the US economy. They'll come around eventually and drop their CDO and leveraged funny money games and start focussing on lending money to fuel growth industries again.
Hey, one can dream.
The Obama administration has the chance to change the narrative away from the WPA-type government works, consumer stimulus and all these other FDR/Keynesian tricks that tea partiers liken to Soviet Russia and instead focus on the biggest driver of employment and b2b consumption: Small business.
I think it's well passed time for us to really soak corporations who in the early 2000s took every tax break and still continued outsourcing, offshoring, right-sizing, and "pivoting toward core competencies" or whatever that hell the new PHB term is today. Tax the s--t out of them. What are they doing with that cash, anyway? They're definitely not hiring here and they're not reinvesting except outside of the US, where the growth is larger and the market less stagnant. Tax them until they hurt or move to Dubai or wherever the hell they go nowadays. Don't believe their narrative in the press that they're the biggest driver of employment. SMBs have _always_ been the big hirer; larger than the Fed, larger than the megacorps.
Obama's administrative focus should be almost laser-like on small business and entrepreneurship, and not just Green ones. ALL of small business should get every damn tax break his administration can give. That, added with tax incentives for SMB purchase of health care, can make working for an SMB even more attractive to potential hires.
This is the moment for the SBA to become one of the most important departments in the Government during this recession. They should be flush with cash, doling out loans at-cost or at lower rates than the stingy big banks that won't lend to Main St. anymore. Let them sit on the sidelines while the government guarantees the survival of the US economy. They'll come around eventually and drop their CDO and leveraged funny money games and start focussing on lending money to fuel growth industries again.
Hey, one can dream.
I prefer that David fell the Goliath, with no help from the government or anybody else.
If small business have merits, than they should be able to thrive on the free market.
If small business have merits, than they should be able to thrive on the free market.
Me too, but the problem is starting up. There is no cash to start. If you've got an idea and it takes some capital to bring it from PoC to finished product, you're stuck because banks _are not_ lending to small business, full stop.
That's why I see the SBA coming to the forefront with direct microlending and guaranteed super-low interest rates for mom and pop loans.
Not everyone has a business idea that can get the attention of YC or TechStars. It sometimes takes a nudge to get things going. It's a big country, with people that have varied skillsets, education levels, and means of opportunity. If we want to encourage entrepreneurship, we need to either empower them directly with tax dollars, or we give those dollars to banks who may or may not do it for us.
What we obviously can't do is cut taxes for the rich and corporations and hope they hire the unemployed, because I'm sure you'll agree that it obviously hasn't happened.
That's why I see the SBA coming to the forefront with direct microlending and guaranteed super-low interest rates for mom and pop loans.
Not everyone has a business idea that can get the attention of YC or TechStars. It sometimes takes a nudge to get things going. It's a big country, with people that have varied skillsets, education levels, and means of opportunity. If we want to encourage entrepreneurship, we need to either empower them directly with tax dollars, or we give those dollars to banks who may or may not do it for us.
What we obviously can't do is cut taxes for the rich and corporations and hope they hire the unemployed, because I'm sure you'll agree that it obviously hasn't happened.
I am not sure if I want to use coercion to achieve said goal of encouraging small business and entrepreneurship.
I prefer the method of cutting down regulations and coercions put out by government then see if it help small business stack their advantages against big business' disadvantages.
I also dislike favoring anybody, even the little guys.
I prefer the method of cutting down regulations and coercions put out by government then see if it help small business stack their advantages against big business' disadvantages.
I also dislike favoring anybody, even the little guys.
Well, in a fair world, we'd have zero regulations or need for taxes or government at all (except for enforcement against personal abuse like murder, rape, theft and invasion), and as an example, oil companies wouldn't ever have spills because of the extremely high potential to be sued by the people living in the regions where spills occur and actually _lose_ these lawsuits, which effectively means going bankrupt and forced out of business paying back all the damage awards. That's the ideal Libertarian solution to the outsized hand of big business on both market and customer. It's similar to the Xeer stateless government, as adopted in Somalia. Maybe it can scale to a country of 305 Million, but that truly is a "grand experiment" likely left as a thought exercise for now.
In reality , though, the solution is a simple matter of tax revenue arbitrage. Instead of providing tax breaks to the lethargic corporations that will take those tax breaks but won't hire anybody anyway, give it as a guaranteed loan to a small business who will use it to directly hire workers and consume products and services expressly for business continuity and growth. Spread thinly enough, while the failure rate outpaces the successes, the succeeding companies have the potential to hit it _really_ big, spurring ancillary and supporting feeder companies sprouting around it and possibly creating a new industry.
In reality , though, the solution is a simple matter of tax revenue arbitrage. Instead of providing tax breaks to the lethargic corporations that will take those tax breaks but won't hire anybody anyway, give it as a guaranteed loan to a small business who will use it to directly hire workers and consume products and services expressly for business continuity and growth. Spread thinly enough, while the failure rate outpaces the successes, the succeeding companies have the potential to hit it _really_ big, spurring ancillary and supporting feeder companies sprouting around it and possibly creating a new industry.
As OP points out, some things like outsourcing might save big business money, but they turn around small businesses from impossible to possible.
1) Punitive taxation will result in layoffs and makes no sense if you're trying to revive the economy
2) Many small businesses want to be big someday. Whatever threshold you set at which "good" small business/startup morphs into evil megacorp, it will be arbitrary and result in a piling up of businesses near that line, staying at 199 employees (or whatever) to avoid the fist of the state. In other words, putting the brakes on the rapidly growing startup
3) Finally, any big biz worth it's salt can afford platoons of tax lawyers to set up LLCs and shell corps which each have 199 employees.
Except that the unemployment rate for those with a college degree (IE: the "highly skilled") is only at 4.6%.
http://www.google.com/hostednews/ap/article/ALeqM5hDbvr90jK7...
I need to do some more digging for salary implications...anecdotally I know that salaries for top-end software folks are still very high.
http://www.google.com/hostednews/ap/article/ALeqM5hDbvr90jK7...
I need to do some more digging for salary implications...anecdotally I know that salaries for top-end software folks are still very high.
Ultralight startups: there's one of them mentioned and it survives by SEO and reselling.
Is this much different than opening up a local McDonalds and advertising? Is this really relevant to HN?
Is this much different than opening up a local McDonalds and advertising? Is this really relevant to HN?
I can't tell which you loathe more- SEO or a real business model reselling actual products.
This is an article someone who created a very successful startup at a young age by "hacking" the traditional clothing value chain and business model.
This is exactly hacker news. If it doesn't strike your fancy, there's an article about pants that I'm sure you would enjoy more right over there <--.
This is an article someone who created a very successful startup at a young age by "hacking" the traditional clothing value chain and business model.
This is exactly hacker news. If it doesn't strike your fancy, there's an article about pants that I'm sure you would enjoy more right over there <--.
It's hard to say which I loathe more. Perhaps what I loathe the most is that the startup atmosphere and the skills that one acquires in tech allow you to do incredible things and make the world better (or at least cooler), but here's something that adds friction to the world economy.
If by "hacking the traditional value chain and business model", you mean cloning another company's site and calling it his own.
I agree. This type of SEO business is nothing new and mainly monetizes naivete of web users. It does not add real value to the world.
He connects sellers and buyers, just like a grocery store does.
He gives business to t-shirts producers who wouldn't necessarily be able to chose what t-shirts to make, to market them, charge for them, etc. And he helps buyers by giving them a convenient way to order and pay for t-shirts.
He gives business to t-shirts producers who wouldn't necessarily be able to chose what t-shirts to make, to market them, charge for them, etc. And he helps buyers by giving them a convenient way to order and pay for t-shirts.
The next two weeks will tell if it's real, but this article might have kicked me into doing a nice little niche webapp :)
ooShirts appears to be a fairly direct rip-off of a company I used to work for, CustomInk.com.
Compare: http://www.ooshirts.com/ vs http://www.customink.com/.
Maybe it doesn't take too much money to start up a company that is more or less ripping off another company.
This isn't to say that competition in providing tshirts is a bad thing. But a profile of a company that lavishes praise on the cleverness of starting up an ultralight, while discreetly ignoring that his web application is a page-for-page knockoff of a larger company is fairly disingenuous.
It's possible that the reporter didn't know about CustomInk. But that doesn't excuse Raymond Lei's profiting by stealing the inventiveness of another company.
Compare: http://www.ooshirts.com/ vs http://www.customink.com/.
Maybe it doesn't take too much money to start up a company that is more or less ripping off another company.
This isn't to say that competition in providing tshirts is a bad thing. But a profile of a company that lavishes praise on the cleverness of starting up an ultralight, while discreetly ignoring that his web application is a page-for-page knockoff of a larger company is fairly disingenuous.
It's possible that the reporter didn't know about CustomInk. But that doesn't excuse Raymond Lei's profiting by stealing the inventiveness of another company.
So, how is customink.com different from, say, cafepress.com, which launched before? Or spreadshirt for that matter. Making your own custom t-shirts is not really a novel idea.
And, it's not the idea that the story is focussing on anyway, it's the fact that it's basically a two-man shop with a 19 year old founder completely bootstrapping it while waiting to declare a major in college, and the grim economic realities nurturing these "ultralight" businesses.
And, it's not the idea that the story is focussing on anyway, it's the fact that it's basically a two-man shop with a 19 year old founder completely bootstrapping it while waiting to declare a major in college, and the grim economic realities nurturing these "ultralight" businesses.
As a business, making and selling tshirts is no great innovation, I agree.
But when the web application is a painstakingly detailed clone of another company's, I think that the virtue of "completely bootstrapping it" to be undermined, and reduced to little more than a "me too" business.
I think that if someone started up a company called MacRonald's, specialized in selling cheap hamburgers, and had a clown mascot who wore a funny tophat, it wouldn't be praised much. Even if the founder was a 19-year-old.
But when the web application is a painstakingly detailed clone of another company's, I think that the virtue of "completely bootstrapping it" to be undermined, and reduced to little more than a "me too" business.
I think that if someone started up a company called MacRonald's, specialized in selling cheap hamburgers, and had a clown mascot who wore a funny tophat, it wouldn't be praised much. Even if the founder was a 19-year-old.
What is the difference between me-too and competition? Or is competition suddenly unhealthy. If the original company is so much better than the upstart, they don't have anything to worry about.
Google search for "custom t-shirts":
1. customink
..
6. ooshirts
Obviously, ooshirts is not doing anything revolutionary, but that 6th ranking must have come somehow, not by just ripping off customink.
Would be interesting to see, how Lei did it.
Obviously, ooshirts is not doing anything revolutionary, but that 6th ranking must have come somehow, not by just ripping off customink.
Would be interesting to see, how Lei did it.
TShirts online? Didn't take much to reinvent that. They all pretty much HAVE to end up looking the same.
A startup can have three kinds of IP: new product niche; new customer niche; new marketing niche. Innovation in all three is risky. Its safer to change just one.
If this guy out-marketed the others, that's a fair win. Like Subway beat McD's.
A startup can have three kinds of IP: new product niche; new customer niche; new marketing niche. Innovation in all three is risky. Its safer to change just one.
If this guy out-marketed the others, that's a fair win. Like Subway beat McD's.
The two sites look pretty different. May be it's my lack of design sense that can't tell the difference.
I like the concept of "ultralight startups" but there have to be better examples out there that are, yanno ... actually startups.
This is just someone middlemaning an affiliate program - something that's really old hat in the ecommerce world.
This is just someone middlemaning an affiliate program - something that's really old hat in the ecommerce world.
I think he qualifies as a startup more than many "startups" taking rounds of funding never achieving revenue
nice work! I love seeing businesses which don't rely on big capital.
I have no idea what's up with all the hate in this thread. Code is both a means to and end and an end in itself. Hacker News attracts people of each perspectives, and also some people like me who share both perspectives. Can't we all just get along AND give this guy some credit for a massively resourceful accomplishment, and a nice contribution to the global economy?
He hired programmers in India to code for him. Albeit, there is nothing wrong with that, but if he ever tries to update the code himself, he is going to be in for a rude awakening.
I too think this article isn't HN type material.
I too think this article isn't HN type material.
So no Indians can produce quality code? I find my experiences suggest the opposite.
I think the comment was less about looking down on off-shored coding tasks and more about the guy not being able to maintain his own site. HN readers would generally take full responsibility for a task like that.
Sure - but you won't generally find them in the outsourcing departments.
I just don't think he's such a 'big' entrepreneur relying on other peoples code/work. I have nothing against any programmers nationality. Sorry if I offended you.
"Programmer" and "entrepreneur" aren't remotely coextensive. And hiring someone to code something for you is a very particular, entrepreneurial species of "relying" on someone.
I think you'll find a LOT of entrepreneurs that rely on others to do the coding...
What defines a 'big' entrepreneur is not the ability to code...
He is cash flow positive and didn't rely on anyone else to do it. What is wrong with that? For those that think he is lesser because he didn't do his own coding, what do you think about people that don't do their own graphic design? or their own taxes? Be happy that someone made it, with an idea and a little bit of luck and determination.
I'm trying to do something similar right now as a side project. I'm not selling t-shirts, but the economics are similar. If you actually research it, it takes very little startup capital(several thousand dollars) to go to a manufacturer and create your own product, even professional-looking consumer packaged goods.
These types of business may not attract investors or get acquired, but it's a great way to generate easy, automatic income streams while you work on something bigger.