Lessons Learned From An E-Commerce Adventure

It is better to have tried and failed than never to have tried at all; and even more important to learn from your mistakes.

That is what I keep telling myself after having invested the time and cash equivalent to a Harvard MBA in an e-commerce start-up that has stalled and is winding down. Not a happy prospect in light of all the media pre-occupation with e-commerce success stories and the young millionaires watching their IPOs rocket into cyberspace. But the headlines ignore the more frequent stories of new e-commerce businesses that do not hit the stock market jackpot. Many of them either settle into a low-key niche or exhaust their resources and fold.

This is the story of an Internet venture that did not make the headlines, but offers some useful insights for entrepreneurs evaluating their own initiatives. The lessons learned are applicable to your own new venture or to an investment in someone else’s.

In mid-1998 we launched a new company called nxtNet (www.nxtnet.com) with the slogan … “taking you to the next level on the Internet”.

My partner and I both had prior successful entrepreneurial experience in computer products and wanted to start a new venture together. We decided to develop a business that would catch the next wave of e-commerce services for mid-sized companies seeking to do business on the Internet. After long discussions, searches for a unique service offering, and many draft business plans, we developed a market strategy and then chose Intershop Communications as our software development platform. This product had the advantages of being suitable for single or multiple online storefronts, and offered a flexible, economic and comprehensive solution. We committed to the product, staffing, facilities and equipment to start training and development immediately. The two of us provided the time and cash required to get started.

By October 1998, we had an initial product with application as an online storefront for an associated computer business. At the same time, we realized that the application had wide appeal to other computer dealers and could be sold as a multi-user database service and e-commerce resource. We had developed a consolidated catalogue of 85,000 computer products from multiple distributor product databases that allowed rapid search and comparison for product information, pricing, and current sources. Users could access the catalogue from the Internet and find a product by manufacturer, category, and part number, key word or price range and immediately see the alternate sources and prices with links to more technical information, preferred dealer pricing and actual stock levels. Additional features allowed the catalogue to be customized so that any computer reseller could present the database as his own online storefront. This option offered all the search and product information features to his customers, but showed only retail pricing and enabled the online ordering process.

The product offering quickly received positive feedback and strong indications of support from all the participants – resellers, distributors, and manufacturers. It was a comprehensive, powerful, and effective tool for buying and selling at all levels within the Canadian computer distribution channel. Resellers recognized the value in an online resource to save time and effort. Distributors and manufacturers saw the opportunity to promote their products, and major publishers in the industry wanted to offer complementary online services to their subscribers and advertisers. How could we fail with all this enthusiasm and support?

While the potential for success clearly existed, everybody had the same questions and reservations – “Who is there now?” “How many are using it?” and “I don’t want to pay until it’s bigger”.

Reasonable objections we thought, so we added features and content for free. We promoted the product with free trials and low cost subscriptions for reseller access. Then we coaxed, persuaded, sold hard, and made deals. The “contra” became the standard for obtaining press coverage, free ads, mailing lists and promotion in exchange for free participation and future consideration. Activity on the Web site and catalogue grew to 3000 visitors per month with over 800 subscribers and the distributor list increased from three to twelve.

But revenue remained near zero as most reseller subscribers declined to pay for the service. Reasons were “it should be free – let the advertisers pay”, “I don’t use it enough”, “there are lower cost options”, or “we built our own solution”. The audience did not grow fast enough even after we offered it for free, to satisfy the advertisers and content providers. Without persistent and conspicuous sales and marketing efforts, all the participants quickly lost interest. Meanwhile the costs of database maintenance, ongoing development, site hosting, Internet access, sales, marketing, and administration were increasing.

Clearly the old entrepreneurial model of controlling costs and growing revenue was not going to apply. We had to realign our profile to show how zero revenue and high initial costs could still lead to significant investment returns like other well-known Internet ventures. So from early 1999 we started an aggressive search for financing, estimating our requirements at $500,000 to $1,500,000 over the next two years before achieving positive cash flow. More business plans, spreadsheets, and glossy presentations to demonstrate future valuations up to $20 million, even $40 million.

We knocked on many doors, from banks to government agencies, from angel investors to venture capital, from stock promoters to business consultants, and again received lots of encouragement, but no financing. So the founding partners were faced with a continuing cash drain, no relief in sight, and the limits of their own resources rapidly approaching. It was time to put the project on hold. Strategic partners or investors might still be developed to proceed with the project, but the ongoing expenditures were stopped in late 1999.

So what are the lessons learned? We already knew that nothing ventured, nothing gained. We now also knew that big successes in the new economy require big investments. Entrepreneurs may start small, but large investments will be required from new sources to achieve significant success. And no one will put significant money into a venture unless it is the only remaining requirement.

The concept, product, development, marketing and staffing all have to be in place before an investor will provide the final ingredient – his cash. Exceptions are likely only where the management team has already succeeded in the same arena, or the investor himself can deliver the missing elements, such as customers or management skills. No investor is going to take the chance that the entrepreneur with a good concept or product will also be able to deliver the required management and marketing skills to succeed, after he has the cash.

Next time we will know better. And there are side benefits from this expensive learning experience. I can now admit that with the knowledge gained through our association with Intershop Communications, I was confident enough to make an investment in their stock on the German Neue Markt at 65 Euros last year. It went over 400 Euros last month and is still rising with their rapid growth and the prospect of a NASDAQ listing this year. Almost enough to recover my investment in nxtNet.

So the most important lesson is that education in the new economy is essential, and not free, but it can lead to success outside the original plan. Learn, be aware, and be aggressively opportunistic.

Pros and Cons of Watching Television

Many of us love watching TV especially during our free time and if we do not have anything to do. We like watching TV while eating our favorite snacks or hanging around in a friend's place. Either way we are entertained when we watch TV. There are many different programs we can watch on TV depending on our mood and our personality. Some love watching comedy and talk shows while others particularly kids and those who are young at heart love watching cartoons on Cartoon Network or Disney channel.

But then, watching TV has its advantages and disadvantages. Experts say that too much watching of TV especially among children is not good for the health and the mind. TV can be entertaining and informative yet at times it can be damaging and harmful.

Below are the Pros and Cons of watching TV.

Pros:

1.) Entertainment and Laughter
We are entertained by shows we love to watch. We laugh at things we find funny and comical in the TV program we are watching. We also love to dance or sing along with celebrities we see on TV and some of us even copy their dance moves and singing styles.

2.) Information and How-To
We learn a lot of information about places and people that we usually do not learn on magazines, books, and newspapers. There are travel shows that show us beautiful places in the world and inform us the culture of different countries which can be a great help especially if we are planning to travel. We also easily learn how to cook new recipes by watching cooking shows and we can learn doing some other stuff through programs that show step-by-step procedures of performing a particular work, exercise or other interesting stuff.

3.) Improve Memory and Easy Learning
We usually take note of the time schedule for our favorite programs especially if it is only shown once or twice a week. We tend to store and recall the things that recently happened in our favorite show before the next episode will be shown on TV. This will help enhance our memory which we can apply on our daily life. For children, it is easier to learn math, science, alphabet and other subject matters if someone can show them how to do it like counting, identifying objects and a lot more. Educational TV shows are available for children to watch and learn.

4.) Bonding With Family and Friends
Watching TV is a great way to bond with family and friends especially on weekends. You can laugh and discuss things that you see on TV. That can be really fun.

5.) Awareness and Alertness
Weather reports and current news on different parts of the worlds can make you aware of what is happening outside your country. You can also be alert when there is an incoming typhoon in your area and that can help you get prepared.

Cons:
1.) Decline in creativity and imagination.
TV shows including commercials have a tendency to share their creative works on us and apart their ideas and opinions on us which is not favorable and can lead to a decline in our creativity and imagination since we can not think on our own since creative things are readily available And shared to us.

2.) Health problems
We usually eat junk foods or any of our favorite snacks while watching TV. This is not good for our health because we tend to eat a lot while we are sitting down facing the television. This can lead to obesity since we do not move a lot when we watch TV. This can also lead to other serious ailments caused by eating a lot and moving less.

3.) Makes people lazy
Most of us get hooked when watching programs of our favorite TV channel. We sometimes even forget to do our work or other important things because we got engaged in the show we are watching. Some people forget to do their household chores because they would rather watch TV than work.

4.) Some shows do not teach good values.
There are TV programs that do not teach good values ​​particularly to children. Instead of teaching them good deeds they even imitate, re-enact or spoof important things happening around us which is not good for children to watch.

To sum up, in watching TV you should choose and monitor the TV programs that you and your children should watch. Choose programs that can help you learn and grow as a person. You should also limit the time your children spend in watching TV. The maximum number of hours small kids should watch TV is 3 hours while for teenagers you should make sure they watch good shows only when they are done with homework and projects.

Setting Up a Studio for You

With the new Nikon D7100 digital camera, you would expect to be able to turn your hand to almost anything. This versatile and flexible camera is designed to excel in all areas of photography. So, once it is out of the box, many new owners will be rushing to take portraits and still-life images in studio conditions. Obviously, if you can, you should always try to shoot in natural light – particularly if you are shooting portraits. If that is not feasible, the pop up flash can usually provide the necessary fill-in, or you could use you flash gun, carefully placed and fired remotely. In most circumstances these tools will help you to get a decent result. But a time will come when you decide you need more control and at that point you will want a studio set up.

If you are setting up your studio at home, the ideal scenario is to have a room specifically put aside for your photography. It should have plenty of space, a high ceiling and be at least 5 meters long. Paint the walls a color that does not reflect too much – black is ideal, but if you have to share the room, then gray would be OK. Cover the windows with blackout material to ensure that the light can not get in and also cover the doors to prevent further contamination. Ideally you only want to have the light that is under your control to be effecting your images. You will also need a good supply of electrical sockets.

Having closed out all external light sources, you can decide what lighting you want to have in your studio. Lighting falls into two categories – continuous or strobe. Continuous also has two options, either tungsten or fluorescent. Tungsten is very popular for portraititure because it gives good skin tones. It is naturally a ‘warm’ light, both in light and temperature (this can be a problem, if you make your subject sit under them for a long time). You would also want to use tungstens if you were shooting video.

Fluorescent lights have a more sterile white light with a blueish hue. They are often used for stock shots ad still-live photography, because it is felt that the colors are more accurate. Of course, it is up to the photographer to choose which he prefers. White balance, in the D7100′s settings will be able to rectify most light settings, but, as you are in charge of your lighting, it would be better to set the lights so that the subject appears as you want to see it. Relying on in-camera correctives is just another think to try to remember and sooner or later you will be cursing your memory and catching up in Photoshop.

The one great advantage of continuous lighting is that you can actually see how the subject will appear in the picture in real-time. This means that you get the lighting right and can then confidently address other variables like content and composition. With the strobe, you are sometimes not sure if the flash fired or not. In many ways continuous lighting is a lot easier, and I would recommend that you start with this. However, when you need to photograph something or someone and give the impression of movement, or freeze them in action, you will have to use strobe lighting.

Although strokes are more difficult to set up, they give the photographer bit more flexibility. The power of the flash can be increased or reduced to suit the photographer’s needs. This means that the photographer can design his lighting around his shutter speed requirement. Obviously, if the subject is moving and you do not want blur, you will need a fairly fast shutter speed. Once mastered, strobe lights are a great way to get the images you want. However, because they operate on a burst, they sometimes take a while to recharge.

If you start off with a couple of lights, the easiest way to set them up is with the soft box at the front and the spot at the back. The soft box emits a softer more even light that is easier to meter against. The soft box should be 6 feet away from the subject, near the camera. The other light should be at least 3 feet away from the back drop so that it gives an even background. I would advise getting some barn doors for the back light, so that the light does not spread where it is not wanted. Always set your trigger up to the front light and ensure that both lights fire at the same time. Most lighting systems have slaves built into them these days.

I usually begin a shoot on a standard 1/125 at f8 with an ISO set at 200. This gives me enough flexibility to change things around gradually if I need to. Most studio lenses operate comfortably at f8 and the shutter speed will catch most fluid movement. If you find the lighting a bit flat, move the soft box out wide to get some more definition and shadow, but always be aware that more shadow can be very unflattering, particularly if the subject has an angular face or large nose. I always start by getting the standard shots done – the full length, half-length and then move in tighter for head and shoulders or portrait. By the time you want to try something more interesting your model will have relaxed and you will have become more confident in the equipment and you abilities.

Porter’s Five Forces Model And Internet Competition

According to Porter’s Five Forces Model, in my opinion, competition has increased overall as a result of the internet and e-Commerce. The internet and IT has made it possible to both focus on the top and bottom lines and market share is expanded and costs are cut. Many products and services exist just online, major companies have gone online to successfully augment the brick and mortar corporations, and the playing field is all the way to edges of cyberspace, wherever that is. We will further evaluate this stepping through all five forces.

Buyer power is higher when buyers have more choices. Businesses are forced to add value to their products and services to get loyalty. Many loyalty programs include excellent services that customers demand on-line. Customers want to solve their problems and many times they are more successful on-line than on-phone. Also, we see internet savvy businesses springing up offering more valuable goods and services at lower costs. Now with the advent of eBay, many people are assuming roles as drop shippers. Individuals can have a thriving business selling goods of larger companies without having to carry inventory.

Supplier power is higher when buyers have fewer choices from whom to buy. As mentioned earlier, drop shipping has increased the amount of suppliers available. All an individual has to do is form and agreement to sell products for the company. The company takes care of all the logistics. The same is true of associates programs that Amazon.com and Google.com offer. Associates allow a webmaster to earn money by recommending products from others. This increases supplier offerings.

Threat of substitute products or services is high when there are many product alternatives. This is different than having many suppliers. Examples of alternatives are exchanging brand names, substituting credit card capabilities, and looking at better values from cheaper sources. The internet allows this with the “global economy”. I can substitute my product by purchasing from companies overseas where labor, services and products are cheaper, but of comparable quality.

Threat of new entrants is high when it is easy for new competition to enter the market. Well, what have we been talking about? Now, small operations can open shop with less than $10.00 per month and make a lot of money. As inventive as people are, there are always opportunities to do improve a product or service or just create and sell something new. Recently, many new entrants have made even more money authoring Ebooks that tell others how to do what they did. Rivalry among competitors is high when competition is more intense within industries.

On-line book stores and catalog companies are an excellent example. Amazon.com and Barnesandnoble.com are very competitive. However, there are many also smaller niche affiliate bookstores that when combined take a great deal of market share. They offer even more competition. However, both major bookstores have used IT to create value for their customers. These values include associates programs, ease of payment and shipping and many, many others.

The internet offers avenues of competition to existing companies and opportunities for start ups. Now businesses can enter the market on-line with few barriers to entry. Porter’s Five Forces Model can help demonstrate the attractiveness of starting your on-line business. A business person should use the model to identify competition, make a plan, and implement the process.