I went to a presentation at the Engineering School featuring “serial entrepreneur” Scot Wingo, currently the CEO of ChannelAdvisor. He talked mostly about his background and the about the software businesses he has grown and sold in the past. I really enjoyed the presentation because Scot started out as an engineer doesn’t have sort of the “typical” business background.
One of the most interesting things Scot talked about was the emergence of major internet channels that control the way consumers find retail sites and make purchases online. Scot claims that roughly 80% of consumers come through one of three channels:
1. Search engines. This one is probably the biggest (I’m guessing) and probably includes both natural and paid search. It would be interesting to see how important natural search is compared to paid search for specific retailers and specific search engines (Yahoo! probably refers more paid leads than natural search leads, for example).
2. Shopping engines. These are sites like Shopping.com, BizRate, Yahoo! Shopping, Froogle, and others. I actually did some strategic analysis and research on shopping engines during my (unpaid) internship at ChannelAdvisor and I came to the conclusion that these guys have a pretty shaky business model at best (guess Scot didn’t get to read my report!). I came across a report about Google temporarily blocking one of the shopping engine sites (I think Shopping.com?) from the search engine due to a dispute of some sort. This is tough because shopping engines get most of their traffic from search engines but they’re also competing with the search engines’ own shopping services (Froogle anyone?). The other thing to note is that shopping engines are essentially performing paid search arbitrage. They buy clicks on search engines and then resell those clicks to retailers on their own site. It’s only a matter of time before retailers cut out the middle man and advertise directly and exclusively on search engines. Paid search just needs to become a bit easier to manage before this happens.
3. Marketplaces. eBay, Amazon, Overstock, et al are the big marketplaces online today and they are becoming more and more important in driving sales to online retailers. This is the area where ChannelAdvisor really shines today, and in fact this is where things all got started.
Scot also talked about some of the guerilla marketing his companies have done and the stories he had were pretty entertaining. Most of the things were pretty simple but they were things that I personally would have thought twice about doing since some of the campaigns were mildly destructive and/or illegal. I would love to slap singletracks.com bumper stickers on mountain bike trail signs but that seems a bit tacky and/or destructive. This, however, would be something Scot and his team would have NO PROBLEM doing.
Another interesting comment Scot made was regarding his choice of staring a business in the Research Triangle (Raleigh / Durham / Chapel Hill) instead of Silicon Valley with all the other tech companies. Scot said he felt like the Triangle keeps his company more grounded and insulates them from chasing the e-commerce “flavor of the week” that many valley companies tend to follow (example he gave included tagging and social networking).
Finally, the biggest thing I got from Scot’s talk was that starting a business is all about just doing something. Alot of the things I’m learning at Fuqua focus on the analysis portion of making decisions but Scot warned against analysis paralysis when starting a business. His experience has been that it’s best to just get started and make mistakes so you can learn by doing rather than spending alot of time and money just figuring out the best way to do something (which may end up being wrong anyway). I also appreciated his ability to do things without really worrying about the outcome, (like his guerilla marketing tactics) a lesson that many entrepreneurs can use.
