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.”
Many discussion groups on the net have rules against advertising, and Geiser has been careful not to infringe on them. However, he tacks an innocent “signature” on the end of all of his email responses that reads: “Performance General Corporation, Developers of ‘Strokz’ Digital Swim Stroke Analysis Watch.” If he used the signature in a generic newsgroup for, say, small businesses, it would probably be ignored. But it’s a tantalizing lure for swimmers, and they’re biting. In fact, several responses have come from seasoned businesspeople with an interest in swimming. After many follow-up phone conversations, three of them offered seed capital as soon as Geiser is ready to take on investors.
Lesson #3: When posting messages to newsgroups and mailing lists, don’t blatantly promote yourself. Respond only when you have something meaningful to say, then find a subtle way to solicit interest in your business.
Leveraging the Net to Save Money
Aside from discussion groups, Geiser rarely revisits most Web sites. One exception is Electronic Data Systems’s Shadow Patent Office http://www.spo.eds.com , a searchable database of U.S. patents. Before paying engineers to develop his watch, Geiser made sure others hadn’t already secured rights to crucial technology. He used a $70 service from the Shadow Patent Office — which offers both free and fee-based full-text searches — to secure the peace of mind he needed before proceeding. It’s not a foolproof way to protect yourself. But it’s a great way to front-end your research before paying $500 to $1,000 for a professional patent attorney to do a definitive search. Through his Web meanderings Geiser even found a patent attorney in Australia — a triathlete — whom he’ll likely engage to do his international searches. Maybe he was lucky. Or maybe this is how the Web works.
Lesson #4: Don’t expect Web-based information sources to substitute for the services of professionals. But in a startup’s early stages, certain resources can expedite the hunt for critical information.
Going Online for Offline Work
For all the information he’s harvested from the net, Geiser is realistic about what he expects to accomplish. For example, he’s using conventional, offline channels to contact manufacturers. However, he first plumbs the Web for everything he can find about their businesses. He’s pulled up data about their distributors and competitors, and financial statements from the SEC’s EDGAR database http://www.sec.gov/edgarhp.htm . To understand the economics of watchmaking, he’s tracked down contacts at about 40 Asian manufacturers through one of several business directories, such as Asia Business Yellow Pages http://www.tradeasia.com/abyp . By faxing them, he’s determined the range of unit and tooling costs in the industry. That’s given him a basis for negotiating with target manufacturers later on.
Lesson #5: Lacking the credibility of an established organization, startups should use the Web to learn more about critical partners before approaching them. “You get only one chance once you contact them,” says Geiser. “The Web has helped me avoid looking like another wild-eyed inventor.”
The internet has opened up a world of contacts to Geiser. But had he not applied some real-world wisdom, they could easily have posed more trouble than opportunity. In his many conversations with manufacturers, investors, and technicians, Geiser always declines to give details related to his pending patents or other intellectual property. “I have no problem describing my product on the Net,” he says. After all, you have to reveal enough to get relevant feedback. “But when people ask how it works, that’s where I draw the line.”
Lesson #6: When describing your unprotected (read: unpatented) invention or idea, use generic terms, speak in generalities, or make comparisons with things already on the market. Above all, use common sense. “This is not rocket science,” Geiser says, “just good detective work.”