Startups Take the Plunge

Business is all about money and ideas. anything that gets in the way of marrying the two -- such as a middleman -- makes business slow and inefficient. That's why the Internet is drubbing the old economy: it's hyper-efficient -- fast, open, direct. And it's cutting the middleman out of business. That makes the Net a really good place for entrepreneurs.

If you're launching a company, you don't need to hire a focus group to try out a product concept -- you can test it with an online newsgroup. You don't need to hire a lawyer to do a patent search or incorporate your company -- you can do both on the Web. A well-designed presence on the Internet can bolster a startup's market image, helping it to appear much larger than it really is. "A professional Web site is the great equalizer," says Tim Bajarin, president of San Jose's Creative Strategies Consulting, which studies how small companies use new technology. "It gives a company a much more substantial market presence than it could ever achieve through traditional advertising or distribution channels."

"The Net," adds Miles Spencer, chief visionary officer of Money Hunter Properties LLC, which helps growing companies raise capital "is slitting the throat of an investment banking industry that preys on the inefficient transfer of information between entrepreneurs and the investment community."

Bill Geiser's experience is a telling study of how startups can harness online resources to cut costs, speed development, and prepare for competition. A year and a half ago his company, Performance General, was just an idea. Now he's negotiating with several brand-name manufacturers for a license to his first product, called Strokz, a wristwatch-style digital "pedometer" for swimmers. Strokz counts efficiency measures such as distance per stroke, calories burned, and total distance. "This has been the most productive year of my life," he says. "I wouldn't be able to make that claim if I hadn't used the Internet."

Here is Bill Geiser's story -- plus advice on how other entrepreneurs can benefit from his electronic trailblazing.

Finding Customers: Put Serendipity to Work

In his off-hours, usually late at night, Geiser wanders the Web, sometimes aimlessly but always open-minded about what he might turn up. Often he starts with a favorite "jump site" -- such as the Harvard Men's Swimming and Diving Page. Then he follows interesting links. He's found, among other gems, a worldwide listing of swim camps that he plans to tap for prospective customers. Sites specific to swimming are far more productive than the dozens of generic small-business sites. "But no single site has the franchise on all the information I need," says Geiser. "I simply follow a never-ending thread that weaves from site to site."

Lesson #1: Allocate time outside of normal work hours to cruise sites related to your business, with no specific target in mind. Often the best results come from serendipitous encounters.

To Research Your Market, Get Talking

Geiser, who co-captained Indiana State University's 1974-75 swim team, frequents a number of Net-based electronic bulletin boards, or "newsgroups," where people chat about swimming and other individual sports. In one sports group conversation, a cyclist was looking for a "superwatch" -- a metronome-like counter that he could attach to his bicycle. That led Geiser to other conversations and helpful newsgroups.

Geiser avoids open-ended queries such as, "Here's my product idea; what do you think?" The danger, he warns, is that you could be bombarded by replies from salespeople peddling their own services, or from would-be competitors trying to skew your thinking. Instead, he sticks to specific questions about his concept. In a discussion group with sports scientists, for example, Geiser asked simply, "How many calories do swimmers burn?" The query led to a number of conversations yielding technical data useful both for marketing and for calculating the algorithms for the watch's software.

Geiser's two favorite newsgroups are rec.sport.swimming and rec.sport.triathlon. By joining in on the conversations at both newsgroups, he's gathered a rich list of eager beta-testers for Strokz, including world-class swimmers and high-profile coaches. "I've found that people are eager to tell you everything about themselves -- what products they like or don't like, what's great and what sucks," he says. "It's unbelievable market research." No doubt the same research would cost a small fortune in professionally run focus groups.

Lesson #2: In discussion groups, avoid the temptation to focus the conversation on your product or company. Sit back and absorb the banter. "You can learn a lot," says Geiser, "by watching."