Startup Addict Musings

The final chapter in my Doba review case study is finally here. If you missed any of the previous segments feel free to catchup below:
Doba Review part I
Doba Review Part II
Doba Review Part III

The purpose of the case study was to test whether Doba is worth the upfront fee and/or monthly investment for an entrepreneur looking to cut their teeth in ecommerce via wholesale drop shipping.

Pros
Access to thousands of products priced below retail and you never handle inventory. I should point out this can happen with any reputable drop shipping company eliminating a competitive advantage for Doba.

Extremely large product selection. One-stop shop.

Cons
The push to marketplace feature (integrated instant push out to Ebay) works effectively but is useless because of the deep discount mentality ebayers are so typical for. Instead of Ebay focus on more profitable outlets that will garner a higher sale price but still be below retail. Go for more “retail” type outlets like Amazon, Craigslist, overstock, epier or an Adwords approach via niche keywords.

The so-so wholesale rate coupled with a flat Doba fee (usually $2.50) and a high shipping fee leaves a less than desirable profit margin for the ecommerce entrepreneur in most bargain outlets with Doba products.

A few recommendations I would throw out would be the following:

If you have experience in web development you should grab an open source solutions like ubercart (especially as part of Drupal) or Oscommerce. Take a solid month or two to build out your ecommerce solution and use Doba’s product line to fill your product coffers. Please note, whatever solution you choose CSV or XML import of the Doba catalog is paramount or you will be spending the next three years filling your ecommerce database one Doba product at a time.

If you are less savvy at web development then go for a popular licensed or hosted ecommerce solution like cubecart, agora cart pro or yahoo small business setup. All the tools will be built in for the novice and worth the investment.

When you decide on your ecommerce solution dropshippers can be used to flesh out your product lines. Shopster is another popular competitor to Doba. If you want to get more of a direct relationship with wholesalers rather than middle men like Doba and Shopster than think about visiting Worldwide brands. Also peruse through this small biz article.

In summary:

Doba is far from the panacea for a drop shipping startup especially for the “get rich” entrepreneur looking to kick back, never touch a product and clear 20% every sale on Ebay. Doba should certainly be considered for any drop shipping strategy but only in conjunction with an exclusive ecommerce store promoting successfully researched niche products.

For the average Joe, skip Doba’s upfront fees and parlay the money into an ecommerce website along with a healthy SEO campaign. When you get some real traffic you can always consider adding Doba. Like so many other startups the real success will come from research, elbow grease, passion and a little luck.

Happy drop shipping!

Tags: Drop Shipping, Startups by Startup Addict

Cuil is a new search kid on the block and supposedly the next Google Killer. The founders of Cuil, pronounced cool, (actually Gaelic for knowledge) have one good reason to tout their startup search engine is better than Google….they use to work there! Tom Costello and Anna Patterson are the husband and wife team behind Cuil.

According to Motley Fool

Google acquired the technology behind Anna Patterson’s last search engine four years ago. She spent two years at Google after that before leaving the company, gradually constructing Cuil along with a few former Google engineers.

It makes you wonder if the former engineers fast-tracked the building of Cuil after Google gobbled up DoubleClick and asked certain employees “Did you sign the non-compete” —“great, you’re fired”. That tends to put a strain on the “Don’t be Evil campaign”.

So what makes cuil so cool?

1. Voracious indexing - over 121 billion pages indexed and Cuil is not stopping until entire web is indexed.

2. Richer Web 2.0 type display results with associated imagery and social features.

3. Cuil presents searchers with content-based results, not just popular ones

4. A nice ajax search box that finishes search terms as you type.

So is the Cuil algorithm superior to Google when it comes to indexing the monsterous web? I may be premature in saying this but…No. I am not formally schooled in search tactics such as relevancy and search architecture but I can determine a good search result when I see one. Let’s take a look between Cuil and Google for the search term “startup addict”
(yes, I’m vain, like the rest of the world).

Google is far more relevant for the term. The startupaddict.com (the social network) is #1 with a popular blog post being number #2. You continue down the page and Google has place carefully weighted results appropriately.

Cuil decided to show “aggregators”, “blog networks” and a “few poachers”. As well as a technorati search, and user-submitted video site. I also noticed bogus imagery associated with some results. It’s nice to have an image with text results, but it should be relevant. It appears cool is going over wrappers of content rather than the actual meat and source of the content.

For the sake of disclosure, I did 5 more searches and felt Google’s algorithm to be superior. All in all, I do like Cuil, although monetizing looks like an issue unless the company goes to a column format of sponsored results.

Cuil received series A funding from Tugboat Ventures and Greylock Partners, and series B funding from Madrone Capital Partners. Monetizing the site may not be the goal at all because Cuil smells like a buy-out rather than a next-generation search engine. Three major VC’s threw hefty money in a market place that is dominated by one major player and billions in the piggybank. Can you say exit strategy….if you can’t Microsoft can.

Tags: SEO, Startups by Startup Addict

If your searching for your next startup idea or attempting to capitalize on trends, Paul Graham from YCombinator came up with a nice top 30 ideas he would be willing to fund.

1. A cure for the disease of which the RIAA is a symptom.
2. Simplified browsing.
3. New news.
4. Outsourced IT.
5. Enterprise software 2.0.
6. More variants of CRM.
7. Something your company needs that doesn’t exist.
8. Dating.
9. Photo/video sharing services.
10. Auctions.
11. Web Office apps.
12. Fix advertising.
13. Online learning.
14. Tools for measurement.
15. Off the shelf security.
16. A form of search that depends on design.
17. New payment methods.
18. The WebOS.
19. Application and/or data hosting.
20. Shopping guides.
21. Finance software for individuals and small businesses.
22. A web-based Excel/database hybrid.
23. More open alternatives to Wikipedia.
24. A buffer against bad customer service.
25. A Craigslist competitor.
26. Better video chat.
27. Hardware/software hybrids.
28. Fixing email overload.
29. Easy site builders for specific markets.
30. Startups for startups.

* Full descriptions are over at Ycombinator.

“Far better it is to dare mighty things, to win glorious triumphs, even though checkered by failure, than to take rank with those poor spirits who neither enjoy much nor suffer much, because they live in the gray twilight that knows not victory nor defeat.” -Theodore Roosevelt

Tags: Startups by Startup Addict

Cutting Business Overhead

Overhead is the 600lb gorilla you have to reduce to a chimpanzee. In order to cut business overhead and run a healthy business you need to know your fixed and variable costs. There are two fundamental steps that can be taken to improve profitability in this category. The first is fixed cost, these are payments you have to make each week and month and have very little control over. However, there may be wiggle room in your fixed costs such as switching Internet providers or outsourcing certain tasks. Most of the fixed costs will be set in stone like a 20-year business lease etc. The bottom line is too lower your overhead by streamlining and reducing your fixed costs. The second step is reducing your variable costs, such as discretionary purchases the business makes. If you are a retail store hard up for cash, do you really need to make a capital investment for a building exterior face-lift or does it make more financial sense to choose advertising and customer reward programs instead. These variable costs will make or break a company and are decisions astute managers and owners are faced with on a daily basis.

Time allocation toward earning money.

There are 8 to 10 hours in a normal business day and if you spend six hours doing administrative work and operations support, where is new business revenue coming from? The best business advice I ever received from a mentor was “lead with your marketing foot”. If you want to improve business profitability, than six hours of your work-day should be allocated to bringing in new and repeat business. If you’re good at admin and operations than hire out marketing and sales. If your forte is marketing and sales than hire out admin and operations. Whatever your flavor make sure you appropriately allocate your time and personnel to where the revenue truly comes from. The rest is just “busy work”. Who cares if your busy….are you making any money?

Kill unprofitable products or services

Businesses of all sizes struggle with divisions, products or services that are not profitable or border-line break even. Usually, these products and services stay in existence because the more lucrative products subsidize the laggard services. Improving business profitability is learning to identify and cut-loose the unprofitable products and services. Then reallocate the resources of the dying product or service into a profitable division. In some cases ending the product or services is inevitable because it is a monetary disaster, never fall victim to your own pride, just end it and move on.

Regardless of your business size, following these three fundamental steps is the yellow brick road to improving business profitability and efficiency. Good Luck and- Dream Big * Be Great.

Tags: Startups by Startup Addict

I have been working on several commercial real estate projects that utilize triple-net leases (NNN). A tip out of the gate is be careful the prospective tenants possess a clear understanding of triple net leases and what is involved.

There is really not a tremendous amount of mystique behind the NNN, other than a symbol for additional expenses paid by the tenant beyond the rental or lease payments. In a triple-net, the lessee will usually pay a monthly rent along with all taxes, insurance, and operational / maintenance expenses that occur from the use of the property. The lessor (investor) is responsible for capital improvements on the building, such as roof replacement or major structural components. Again, be very clear in the terms of the lease agreement who has responsibility for majors building systems like mechanical, HVAC, Electrical, as well as major repairs.

I’m sure all of you real estate entrepreneurs looking to jump into commercial real estate development with triple-net leases are asking about financing at this point. A common method is for the investor to form a LLC to hold the real estate and use a credit tenant lease method for financing. The investor borrows money to finance the property and pledges as security the rents to be received from the tenant.

This is an excellent method for obtaining construction money if you lack assets or collateral to pledge. However, this will require a creditable tenant with an executed long-term lease in place and a bank or conventional financing institution to go along with it. Also see non-recourse debt.

For other resources check out:
Investopedia
CIRE Magazine

Tags: Real Estate Development by Startup Addict

Biodiesel from algae continues to be all the rage. One company I stumbled across has as much potential as Sapphire Energy, Live Fuels and Green Fuel Technologies in my opinion. Solix is a Biofuel company that descended from U.S. Department of Energy’s Aquatic Species Program started in 1978 to explore ways to produce Biodiesel from algae. Solix’s answer of “why algae?” is one of the simplest I have researched.

Algae can be found almost everywhere — oceans, ponds, swimming pools, and common goldfish bowls. And while not truly plants, these single-celled organisms have the same photosynthetic ability to convert sunshine into chemical energy. For some species of algae, this chemical energy is in the form of oils very similar to common vegetable oil. What’s the big deal? These oils can be processed and used to produce Biodiesel.

In the current marketplace, Biodiesel from algae offers tremendous strength over conventional petro-diesel. Petroleum-based diesel fuel is at a competitive disadvantage in the $70 – $100 a barrel range. We’re around $146 as of this posting for a barrel of crude. In December 1996 the spot price for a barrel of crude was $25.390. This is the same year the U.S. Department of Energy closed the Biodiesel from algae program with the final results of the program stating “the high cost of algae production remains an obstacle”.

The other major strength for algae is lowering the United States dependency on petroleum products. Foreign oil dependency needs to be dramatically reduced or eliminated for the United States to continue as a global leader in the world market.Theoretically, algae can yield 1,000 to 20,000 gallons of oil per acre. This could mean 20 million acres of non-agricultural soil could generate enough Biodiesel to replace imported oil.

Tags: Going Green by Startup Addict

For all you entrepreneurs looking to incorporate video in your websites or blogs, a new CDN (content distribution network) known as Magnify might be the answer. Magnify enables the following:

• Enterprise strength video discovery
• Full suite of social media tools
• Automated video relevance
• Advertiser safe curation
• Free upload, hosting, and page layout

The social media features for building a community around your video is a powerful feature for this self-service CDN. In addition, Magnify allows you to monetize your hard work and community of users with integrated advertising. The program is called adshare and Magnify’s website states the following:

With AdShare, you simply put your own ad network tags into the Magnify.net pages, and you’ll get 50% of the ad impressions delivered directly to your ad network. No new accounts to set up, no waiting for a “rev share” check.

Magnify is aimed at web publishers and video bloggers and delivers relevant content to your audience on the cheap. Mashable stated the following:

Magnify is really targeting small- to medium-sized businesses with the new CDN offering, giving a self-service option where brands can push their own content. As this could very well be marketing video material, it offers a central place to upload videos with more control options for advertising and delivery.

Magnify has a solid business model in a high growth video market.

Tags: Startups by Startup Addict

Google Ad Planner service fleshes out the suite of web analytic tools and does so at a great price — free. On June 24, big “G” announced Ad planner as new service aimed at media planners. The service will allow media planners to find target audiences easily based on demographic information, site traffic and other metrics. According to emarketer the ad planning service can be even more granular with filters for age, gender education and household income.

I find it interesting that several months ago I was prompted in my Google account with the following message:

I keep clicking the “remind me later” tab until I can figure out what the data will be used for. Clearly the data is being digested by Google’s new ad planner. As with all of Google’s services the amazing feature rich applications always come with the cost of privacy.

The service has launched free and will continue to build a test audience to further deploy the ad planner. It will likely be a free service for the long haul with subscription fees for more robust features.

It’s interesting to point out that Google is throwing its’ weight directly against long-time analytic competitors like Hitwise, Comscore and Nielsen Online. The Experian purchase of Hitwise for $250 million is looking pretty expensive with Google’s recent ad planner news.

Google continues to trump the advertising market and expanding into analytics is only one of many services the business will release. The current market share says it all:

In conclusion, Ad Planner appears to be an amazing service and should be a boon for the little guy and small businesses. Google proves once again, it will provide the tools neccessary for people to garner information and you certainly can’t be the price - FREE.

“Google’s deep pockets allow the company to create free offerings, such as Ad Planner, as a useful come-on to marketers to gain their ad business,” said David Hallerman, senior analyst at eMarketer. “However, continued uncertainty about which company’s Web measurements are most accurate could get exacerbated—or clarified—by another analytics service.”

If anyone has used Google’s new ad planner service, please leave comments on your findings.

Tags: Advertising by Startup Addict