If youre going to do business on Internet time, youd better be first with your hot new idea.
Then youd better be prepared to hold your breath until you turn blue waiting for everyone else to find out how brilliant it is. But once that happens, youre golden, and it will be hard for others to knock you off your perch.
That, in a nutshell, is the advice three Wharton MBA grads gave an audience of would-be e-capitalists at the Nov. 30 seminar Entrepreneurial Opportunities in E-Commerce: Wharton Success Stories.
Each of the three Del Ross (WG97), founder, CEO and customer advocate of Nexchange; Farhad Mohit (WG96), founder, president and CEO of BizRate.com; and Rick Thompson (WG96), cofounder and vice president for client services of Flycast Network started with a vision of filling an unmet need on the Internet.
For Ross and Thompson, it was better ways to connect on-line sellers and buyers.
Thompsons company syndicates banner ads to networks of Web sites with the goal of maximizing response. Our response rates are twice the industry average, and our costs are about one-third, so its easy to see why our customer renewal rate is 85 percent, he said.
Ross company lets on-line sellers hawk their wares directly on other Web sites that appeal to their customers. For instance, visitors to a Web site for soccer players could purchase shoes directly from Just for Feet via forms incorporated into the site. He explained, Were dealing more with an impulse-buy market and he noted that impulse buys account for two-thirds of all retail sales.
For Mohit, it was a way to increase buyer confidence in on-line sellers. His firm provides customer ratings of on-line merchants to both sellers and buyers, serving as a trusted infomediary between buyers and sellers, he said.
Mohits experience in getting BizRate off the ground was typical of the group. Land a key large client first to establish credibility, then schlep your concept around the Net and tough it out through several quarters of little or no revenue. Then, once enough clients are on board, watch your traffic and revenues shoot through the roof.
The key questions for would-be e-trepreneurs, he said, are, What is your threshold for pain, and how long are you willing to wait [for the payoff]?
Thompson also said that up-front backing from friends, family and angels private investors willing to risk losing everything on a startup is also important in getting an e-business off the ground. As if to underscore that point, Thompson told the audience that he was going into the angel business himself by using $1 million of the proceeds from the upcoming sale of Flycast to provide seed money to Wharton students starting up e-commerce ventures.
The response to that banner ad was huge.
Originally published on January 20, 2000