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Sunday, January 31, 2010

The foray: Step 1

Thanks to the people in the blogosphere (does anyone use that word anymore?) for the help. I had some pretty interesting tidbits, from some offerings of wisdom to some recommendations.

@kvr said: "Besides if you don't see a way to earn back $25 a month then maybe your in the wrong business." That woke me up. 

An anonymous commenter suggested a site to check out, which I did. It talked about general things to look for in an e-commerce site host.

@Adam McFarland said: "It sounds like you have a good 'in' to get these violins at a good price from a company that not everyone has access to. That's a huge competitive advantage to start with." I hadn't thought of the connection with China as a competitive advantage. I still revert to thinking only about the product and not the business holistically. 

@nethy on Adam's blog suggested Weebly. I checked it out, it actually was pretty neat... drag and drop web designing. For a product with a high price point like violins, may not be the best. But I definitely see a use for it for future endeavors. 

What put me over the top was a post on Neville's Financial blog about how interest rates in a savings account were laughably low. I'm losing money by it sitting in a savings account that pays interest rates below inflation. So now's a good time to invest it! Neville responded to my comment and offered up a post he did about starting his e-commerce site. I actually had read it a long time ago, but I plan to do it again now that I've got $25 sunk into it. :)

So... I just signed up for Shopify. And for good measure I entered their e-commerce contest where the top selling site got $100,000. Just for fun. Thanks all for the encouragement. The first baby step is done. The next one will be to figure out how to make the site look professional. 


Wednesday, January 27, 2010

A foray into e-commerce

My dad, who works a lot with China, one day asked me if I had any interests in selling violins. He had a contact who manufactured violins, and since I'm a violin player myself he figured he'd ask. I was intrigued, since I had just bought a new violin (the first since high school), and someone told me it was actually made in China. Turns out Chinese-made violins have gotten pretty good.

I got a catalog from the manufacturer, and the prices seemed low enough to get a good margin. My parents, who happened to be heading to China for a visit, bought two sample violins and lugged them on the plane back. Over the holidays, I played it and had a violin teacher friend of mine play it too. He confirmed the market price would be something where I could make a nice margin.

But how do I go about selling violins? I had no interest in setting up a retail store. So I figured starting by selling on-line was the way to go. There are lots of questions. Are people willing to buy a violin on-line? Who do I market this to? How do I set up an e-commerce site? I had an idea... why not sell Chinese made violins to Chinese people? Not to propagate stereotypes, but that's quite a large market (I myself belong to the Chinese violin playing demographic). It would be pretty easy to target advertising, and you'd think the trust factor would be there.

I was pretty pumped up about this over the holidays. I even got a fortune that said "An interesting musical opportunity is in your future." (Apparently taking pictures of fortunes with the iPhone doesn't work that well.) Recently, I figured I should take the next step... which I believe is to set up an e-commerce site. I'd ideally love to set up a cheap, if not free, site where people could click on a "buy" button. Then I could at least test the idea to see if any traffic was generated.

But this proved to be a little dauting. I asked Adam McFarland on his blog, and he suggested Shopify. I checked it out, but it was $25 a month. So I did some Google-ing, and found a tutorial on how to set up an ecommerce website with Wordpress in 5 minutes. Then I discovered the difference between Wordpress.org and Wordpress.com. I needed to host my own site in order to set up the e-commerce plug in. After way too many hours of researching hosting sites, I paid $80 or so to set up a bluehost.com site for a year.

It took me about 2-3 hours to set up the Wordpress e-commerce site (had to do a little debugging). I then had trouble customizing the site to look decent. So it was back to the drawing board.

I checked back on Adam's site and @nethy suggested I try Weebly, which allowed you to drag and drop your way to an e-commerce site for free. I tried that out, but I wasn't happy with shopping cart because it dumped me off on Paypal. I figured if someone was going to pay that kind of money for a violin, it'd hafta at least look like the cart was on my site. So back to the drawing board again.

I looked at Godaddy's e-commerce solution... $9 a month. It got bad reviews. 1and1's web hosting was $9.99 setup fee, and required a year subscription. Its reviews said it was hard to use for newbies (that's me!). Yahoo was like $30+ with a percentage of revenue too. I think my next step is going to be Shopify, Adam's original suggestion.

I keep wondering if I'm overcomplicating this process. I'm already out $80 for hosting. I'm to the point where I think I need to just suck it up and try one of these sites, thinking I'll never learn if I don't try. And now I'm wondering if this is even a good idea. Any advice from the experienced crowd out there?


Wednesday, January 20, 2010

Richard Branson: Life at 30,000 feet

Richard Branson is the definition of the serial entrepreneur - but what I love is that while he keeps launching businesses he doesn't just sell them off and move on - he continues to build his portfolio of companies. I also love that he is a dreamed - as evidenced by Virgin Galactic - one of the 1st space tourism companies! Richard Branson's companies employ 55,000 people with revenues of $25 Billion. He has obviously become quite rich but has also given back by providing so many employment opportunities to others (see list below). Enjoy this interview with "Sir Richard."

Richard Branson talks to TED's Chris Anderson about the ups and the downs of his career, from his multibillionaire success to his multiple near-death experiences -- and reveals some of his (very surprising) motivations.

Virgin brands (under various ownership)
(source: wikipedia http://en.wikipedia.org/wiki/Virgin_Group)
AirAsia X — long-haul budget airline operating from Malaysia (20% owned by Virgin Group)
Oüı FM — rock radio station in France and Asia
V Festival — two-day music festival held in two separate locations in the United Kingdom
V Festival (Australia) — an Australian version of the V Festival
Virgin Festival — a North American version of the V Festival
Virgin Active — a health club chain in South Africa, Spain, Portugal, Italy and the UK
Virgin America — a United States budget airline based at San Francisco International Airport
Virgin Atlantic Airways — an international carrier based at Heathrow Airport, London
Virgin Balloon Flights — a hot air balloon operator
Virgin Blue — an Australian-based airline operating in the South Pacific
Blue Holidays — The holiday program of Virgin Blue, now a joint venture between Virgin Blue and Zuji
Pacific Blue — a Virgin Blue subsidiary based in New Zealand
Polynesian Blue — a Virgin Blue subsidiary based in Samoa
V Australia — a planned Virgin Blue international subsidiary set to offer flights between Australia and the USA
Virgin Books — publisher, retailer and distributor of books
Virgin Brides — bridal wear shop in Manchester, UK
Virgin Charter — a private jet online marketplace
Virgin Comics — comic book producer
Virgin Drinks — drink manufacturer
Virgin Cola — carbonated cola soft drink
Virgin Vodka — alcoholic beverage
Virgin Experience Days — corporate and consumer experience events
Virgin Flowers — Internet florist
Virgin Galactic — a venture to market and operate commercial space flights, using spacecraft designed by Scaled Composites
Virgin Games — online games and gambling
Virgin Green Fund (originally known as Virgin Fuels) — venture capital firm for investing in petroleum alternatives
Virgin Health Bank[2] — a business enabling parents—to—be to store their baby's stem cells
Virgin HealthMiles
Virgin Holidays — UK travel agency and tour operator for worldwide destinations served by Virgin Atlantic and its partner companies
Virgin Holidays Cruises — UK cruise holiday agent
Virgin Limited Edition — exclusive hotel operator
Kasbah Tamadot — exclusive Moroccan holiday destination
Lady B — luxurious Catamaran available for Caribbean charters
The Lodge — ski lodge
Natirar — private spa located in Somerset County, New Jersey
Necker Island — exclusive island in British Virgin Islands for private hire
The Roof Gardens and Babylon — 1.5 acres (6,100 m2) open air gardens, venue, nightclub and restaurant in Kensington, London
Ulusaba — exclusive game reserve in South Africa
Virgin Limobike — passenger bike service in London
Virgin Limousines — chauffeured limousine service in San Francisco and Northern California
Virgin Media — provider or home telephone, cable television, broadband and mobile services to the United Kingdom
Virgin Media Television — a British television network, made up of Virgin 1, Trouble, Bravo, Living TV & 50% stake in UKTV
Virgin 1 — a general entertainment channel on Freeview, Virgin Media and Sky Digital
Virgin Mobile — brand used by several companies providing mobile phone service around the world
Virgin Mobile UK — provides mobile phone service in the United Kingdom, now part of Virgin Media
Virgin Mobile Australia — provider of mobile phone service in Australia
Virgin Mobile Canada — provider of mobile phone service in Canada
Virgin Mobile South Africa — provider of mobile phone service in South Africa
Virgin Mobile USA — provider of mobile phone service in the United States
Virgin Mobile France — provider of mobile phone service in France
Virgin Mobile India — provider of mobile phone service in India
Virgin Money — providers of financial services
Virgin Credit Card
Virgin Nigeria — international, regional and domestic Nigerian airline
Virgin Play — a Spanish publisher of video games, once part of the now defunct Virgin Interactive.
Virgin Radio — Virgin branded radio stations around the world.
Virgin Radio Asia — collection of station operating in India and Thailand including Virgin Soft, Hitz, Easy FM and Oui
Virgin 99.9FM - a Canadian radio station, broadcasting a hot adult contemporary format at 99.9 on the FM dial in Toronto, Ontario. The station is owned by Astral Media. Formerly branded as 99.9 Mix FM, it adopted its current brand on 2008-08-25, pursuant to a licence from the Virgin Group.
Virgin Radio (France) — -(Lagardère Active) a rebranding of the "Europe 2" radio station
Virgin Radio Groove — (TIML Golden Square Limited) soul, motown and disco music station broadcast on DAB, internet and Satellite TV
Virgin Radio Italia — (Finelco) An Italian radio station
Virgin Records — record label now owned by EMI
Virgin Spa — shop chain retailing Virgin Cosmetics product
Virgin Trains — a railway operator in the United Kingdom
Virgin Unite — charitable foundation
Virgin Vacations — U.S. travel agency
Virgin Vie At Home — retailer of body care, cosmetics, homeware and jewellery products through the Internet, direct selling and Virgin Vie stores
Virgin Vines — A Californian—based company, created in 2005 and producer of Red and White wines
Virgin Voucher — gift voucher scheme, also functions as a staff reward scheme
Virgin Ware — clothes brand and retailer


Friday, January 15, 2010

Learn small, profit big

I majored in Chemical Engineering. My dad is a well-known hop chemist in the beer industry (yes, he gets free beer). To most people, chemists and chemical engineers are pretty much the same (it's only one word different!). But there's one thing that separates a Chemical Engineer from a chemist... and that's scale-up.

My dad works in a lab, working with beakers and flasks. A chemical engineer works in a pilot plant and in a plant. We take what the chemist learned in the lab and figure out what fundamentally needs to happen (transformations) to make the product we need. We do this on the lab scale, then pilot plant scale, and finally at the plant.

These transformations are the same no matter what scale you're on... for instance, "remove water" is a fundamental transformation. Notice that "drying" is NOT a fundamental transformation... Why? Because removing water is what needs to happen. Drying is only one way to do it. Can you think of other ways to remove water? Freeze drying? Sucking it out? Zapping it with microwaves?

Once we've figured out what the transformations we need are, we try to quantify it and determine what measures are the same on every scale. For our "remove water" example, the quantity may be "remove water until product has 5% water." This is true in the lab, pilot plant, or manufacturing plant the size of the moon.  In the plant, this could be a 10 million watt Yankee direct contact dryer. In the lab, it could be a stack of Bounty towels.

What's the advantage of doing all this work? Why not just run it at the plant? The reason is a run in the lab probably costs $<100. A run in the plant could cost $10K, $20K, maybe even $100K or more. There's a saying: "Make mistakes in the lab, profits in the plant."

Entrepreneurs should take that to heart. Too many "entrepreneurs" make their mistakes in the plant... Think of all the dot bombs who got $50 million in funding and failed. That's why entrepreneurship is so "risky." On the other hand there are people who start small and when they scale up just multiply everything by 2 or 3 or whatever. They don't figure out what the fundamental measures are.

For NOTtheBookStore venture, I'm trying to apply these principles. I could try to get $1 million in funding, spread it to 100 schools, and go straight to the plant. But instead I'm testing it with 2 schools, one that's 6,000 students and one that's 30,000 students. The fundamental measure I'm testing is conversion rate... i.e. how much I make per visitor to my site. I want to see if that's constant with a bigger school. This is very important so I know how much I can spend on advertising. I also learned that the marketing is the most important part right now; Facebook ads by themselves don't cut it. So I'm also testing ROI for various marketing avenues.

If I show that the bigger school has the same or better conversion, and it makes a profit, I know I have a scalable venture and can start expanding. I also know how to expand it and what marketing avenues to use. If it doesn't make a profit, I can find out by blowing only $1000 or so. I'm making my mistakes in the lab, and hopefully someday my profits in the plant.


Sunday, January 10, 2010

Re-entry after the sabbatical

I've now been back to work for 2 months now after my 3 month sabbatical. As you can probably see, one of the things that's happened is I've been able to post less. I still have tons of ideas for blog posts, but making the connection between idea and execution has been a lot harder with 10 hours a day, 5 days a week spoken for.

I enjoy the camaraderie with my co-workers back at work. I also like having all of the resources available to me that a large company has. As I'm working my project, 10-20 other people are working other aspects of it that I don't need to worry about. And the fat paycheck does wonders to replenish the hole in the savings account (before you think I'm really high in this company, I want to tell you that "fat" means fat for a single guy in a city with a very low cost of living).

But the frustration of being in the corporate world still gnaws at me. We still have functional silos that I hate dealing with. The organization chart for the function that represents the consumer and the function that represents production doesn't cross until the general manager (4 levels above me). Which means any decision that requires a trade-off between the functions must be made by someone who thinks about my project for maybe 1 hour a week. Which means we need to have endless meetings and create endless documents and presentations to frame the issue for the general manager, who then makes a call based off a high level view of the project and the company's strategies.

Enough of the complaining. One of the things I'm grappling with is how to find time to work on the outside of work stuff. Another development that has affected my free time is I'm in a relationship that has really progressed in the past few months. (She doesn't quite get the allure of blogging. When I come across people like that, I blog about them. That either causes them to read the blog, or if they don't, I can talk about them without fear of repercussion). The only goal that ranks above being financially independent is being in a great relationship and family. However, she completely buys into the vision of being financially independent, so the prospects are good for finding a win-win at some point! Meanwhile, I'm still working the balance.

Being back at work has given me the challenge of trying to find time for my own projects. The techniques I've learned about have really helped me keep things rolling, but I'd love for things to progress faster. Being on sabbatical had different challenges... it was more getting myself motivated and developing self-discipline.


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