Internet Entrepreneurs Blog

Man, that PayPal is some powerful stuff! I’ve been on PayPal for almost five years now (actually 4 years, 8 months, and 14 days according to my member information box) and only recently have I realized how strong PayPal really is.

Most of are probably familiar with PayPal’s eBay integration (they are, after all, owned by the same corporation) but the tools go WAY beyond simple auction payment. One of the first things many webmasters might find useful is the FREE PayPal shopping cart you can use for your website. PayPal has made great strides to allow customization of shopping cart pages and there is actually a good bit of flexibility in setting shipping charges (like flat amount, free shipping for orders over $X, etc.). Buyers don’t even need a PayPal account to buy through your cart, they can simply use a credit card just as they would on any other e-commerce site. Best of all, you only pay processing fees when purchases are completed as opposed to services like Authorize.net that charge multiple minimum monthly fees.

Another awesome feature that some might not be aware of is Instant Payment Notification (IPN). IPN is a great way to sell online subscriptions (we use this on singletracks) because it automatically notifies your website when a successful payment has been made. Integrating IPN is a bit tricky but there is great support online and PayPal offers great tools for testing your IPN system before you go live. If you offer instant access to online content via PayPal you may want to disable e-check payments since these take a couple days to clear which can be confusing to some users.

My latest PayPal discovery (and I’m actually pretty behind on this) is the ability to purchase and print USPS postage online. We’ve been using Edicia’s Dazzle program for Unity3 and it is a huge time and money saver but it’s kinda hard to get over the $15 a month fee we pay to use the service. With PayPal you can print shipping labels through the site without any special software and no subscription fee! Delivery confirmation is included and you can even purchase insurance through the site. Best of all, it automatically records and notifies your buyers (assuming they paid through PayPal) and even disguises the actual shipping cost on the label. My one complaint is that the label printout takes up an entire sheet of 8.5″x11″ paper while the actual postage label is only half a sheet (labels are expensive). Apparently people have found ingenious ways to save labels like feeding half sheets of paper into the printer so there are ways to conserve labels if you try.

PayPal is also a legit bank and I haven’t used their ATM/Debit Card or banking services but it seems like a good idea if you use your account alot. If you’re looking for a good way to start selling online, consider using PayPal for your shopping cart and payment gateway. How can you argue with free?

You have no doubt been waiting with bated breath for the conclusion to my e-commerce article to find out which solution I chose for my first real e-commerce project. In the end Volusion seemed to meet most of our needs for a reasonable price. But despite having the opportunity to try the software free of charge for 2 weeks, there were still surprises and disappointments along the way. Nothing is perfect, right?

First off, the ability to customize Volusion stores is much more limited than I had hoped it would be. Much of the shopping cart, product pages, and category pages are locked up in ASP files that can’t be touched and in many ways you’re just able to frame the Volusion layout with your own template. Great for people without the time or skills to edit HTML, frustrating for those who do. Support for CSS is spotty at best, though with better penetration it could be used to really allow full customization. To make most of the design changes you need to edit/replace the stock background, button, and layout images, a time consuming and frustrating process.

I initially signed up for the cheapest plan Volusion offers thinking it would be more than enough to get started (100 products, 1Gb of data per month, 50 Mb storage) but quickly found that Volusion’s definition of a product is different than most. After adding just 25 items (t-shirts, four sizes of each SKU) I had hit the 100 product limit. It turns out “product” means SKU/option combination when using option-level inventory control, forcing us to upgrade to a pricier plan just to get our initial inventory loaded (less than 60 SKUs). Frustrating, and seemingly a little deceptive.

Technical support has been good with prompt and courteous responses to most of my inquiries. In one case I was told something was not possible just as I figured out how to do it on my own. No worries though, this is what happens when you’re a technical genius like I am

The Volusion servers seem to be a bit slow at times and the file caching they use is pretty aggressive (good for bandwidth I guess, not so good for making quick changes).

Although my comments may seem overwhelmingly negative, I’m really quite happy with the choice thus far. The payment integration was simple and the backend admin area is powerful (especially compared to my osCommerce foray). The SEO tools seem solid, though our site isn’t listed in the search engines yet so it’s tough to tell. The data system seems to be very flexible and exporting info to Froogle and Endicia (for shipping) has been a snap. I’ve even been able to build custom ASP pages with database hooks (though not officially supported) that work like a charm. The support forums are great and other Volusion store owners are more than willing to offer advice and support.
Volusion really seems to be the best hosted e-commerce solution around, despite the limited customization options currently available. I’m looking forward to more e-commerce solutions that take things to the next level of customization and powerful back end support (keep an eye on these guys).

I’ve come to realize a major shortcoming of Google AdWords (and similar search marketing options) is the inability to advertise innovative products and services. What do I mean?

Well suppose you just invented a electric widget. No one knows about the electric widget yet or the benefits of owning such a device and so they certainly aren’t searching for “electric widgets” on google or anywhere else. You could try to buy search terms related to your competition and build ads saying something like “Still using a manual widget, try the electric version!”

But what about if there isn’t even another thing like the widget out there? You could try to buy keywords that your target market are searching for (suppose many people in the market for electric widgets also enjoy playing soccer). But if you buy “soccer” as your keyword your ad will quickly disappear due to its irrelevance to searchers’ intended information.

Let me make this more concrete. I’m working with a partner on launching a site called Unity3 that sells “inspired fashion” clothing (basically, clothes for Christian teens and twenty-somethings). There is some search traffic for “Christian clothes” and the like but for most Christian teens there is very little awareness of the Christian clothing category at all. Our hope is that the market will continue to get larger (due in part to our marketing) but this isn’t possible through advertising on obvious terms.

One of our strategies has been to advertise alongside other keywords these kids ARE searching for like Christian music (bands like Switchfoot, Anberlin, etc.) The search traffic here is HUGE compared to the Christian clothing traffic and the demographic is right. However, since our ads aren’t as tightly targeted as, say, a CD retailer, our ads are quickly deactivated for search.

What does this mean? It means online retailers in newly or unestablished markets can’t rely on search marketing alone - mainly because no one knows what to search for yet! New markets require old school marketing - print, television, etc. - which can be expensive. So while first mover advantage is key, it is also costly.

I’ve been building hot websites for the last 10 years but this summer I needed to build my first real e-commerce site for unity3. I found researching the choices for e-commerce to be a bit overwhelming and difficult to sort out marketing from objective opinions. It seemed as if every e-commerce comparison site I found was an affiliate marketing scheme or a review by a magazine writer who had no intention (or understanding) of actually building an online store. Here is the perspective of an experienced web designer (read: not interested in your WYSIWIG interface) on the top choices available today. This list is not all inclusive as there are many providers that I did not even consider for various reasons.

One of the most obvious choices for e-commerce is Yahoo! Stores as they seem to power many of the small businesses online. Their prices appear to be reasonable but wait: what’s this about taking a percentage of my online sales?!? Yep, Yahoo! will take a cut for every sale you make, even if you’re paying for their most expensive plan. Awesome, huh? It gets even better: when your customers checkout, the web address they’ll see will start store.yahoo.com. That’s confusing, since the customer thought they started their shopping experience on your website. I would imagine shopping cart abandonment rates are fairly high for most Yahoo! merchants for this very reason. Yahoo! also uses a proprietary markup language for customizing their storefronts so if you already know HTML or ASP you can pretty much throw alot of that out the window. These first two issues were pretty much show stoppers for me (not to mention that I already host one of my sites with their standard web hosting and I’m sorely unimpressed), so I moved on.

Next, for some strange reason, I looked at Pro Stores, an eBay company. Their product seems solid and easy to use but in the end, it seemed a little too easy to use. I talked to a sales person and didn’t get a warm fuzzy with regards to customization (a big deal for our site) and they too charge a percentage of sales in addition to their monthly fees. I know that in the meat world many shopping center leases have similar revenue sharing provisions but it still doesn’t sit well with me. Why should my e-commerce host share in my success?

Moving on: Monster Commerce, owned by Network Solutions. Now I’m not a big Network Solutions guy since they are absolutely the most expensive registrars around but the Monster Commerce model intrigued me. No pesky revenue sharing and really only 1 plan offered at $99 a month. While a hundred bucks a month seemed a little steep starting out I knew I would quickly be paying twice that amount with Yahoo or ProStores so I looked more closely. MonsterCommerce claims a high level of customization though looking through their client list showed me dozens of sites with predictable and similar designs. But perhaps the most troubling thing with MonsterCommerce is the add-on fees you’ll encounter with their service. Want to export your financial or inventory data to Quickbooks? Just pay a one-time fee of $299 and you’re set! How about just exporting your product data to Froogle or an excel spreadsheet? For only $30 a month additional you can do that too! WTF? That is my data, I should be able to access it whenever and however I want! Next…

Next I peeped on Volusion. Volusion had some good reviews and was even a finalist for a “Codie” in 2006 (whatever that is). They offered all the marketing features like coupons and gift certificates across all their plans and even free Quickbooks exporting! Plus, with no revenue sharing and plans starting at $57 a month things looked good. But wait; I only get 50Mb for my webspace and 1Gb of transfer a month? Yup, that’s how they make their money. At least these are things I can (somewhat) control with crafty web design and efficient coding. The client gallery showed some impressive designs (though I later learned that some of the designs had been accomplished using the $10K licensed version of the shopping cart software).

The other solution I considered was osCommerce. While all the solutions above are what is known as “hosted solutions,” osCommerce software can be installed on your own webserver and can be completely customized in terms of design and functionality. Best of all, it’s free! Even though I’m a super bad-ass PHP/MySQL programmer I was still concerned about my ability to build a stable and secure shopping cart on the osCommerce base. There is a huge support community though and there are hundreds of modules to handle everything from shipping to inventory to marketing.

So which solution did I end up picking? You’ll have to wait for the rest of the story I’m afraid (if you haven’t already figured it out.) Let me know about other solutions you considered that I may have missed.

In a previous post I talked about the importance of understanding your business competition but not being scared off by it. Now I want to talk about how this understanding can help shape your strategy for entry and set you on the path to success.

Getting back to our experience in starting singletracks, we first set out to be a mountain biking “portal” offering everything from bicycle auctions to forums to classified ads, e-cards, gear review, and trail information. We even incorporated a good bit of this technology into the site using free, off the shelf perl scripts. But after a year or so certain parts of the site weren’t generating traffic or content, namely those features that required scale (like auctions and forums). We rethought our reasons for building a mountain biking website and realized our main passion was sharing trail information with others.

With a new focus in mind, we stripped all the distracting features and concentrated on making trails easier to find, rate, and manage. Our competition (MTBR specifically) wanted to be all things to all mountain bikers and we saw an opportunity to offer a more useful alternative trail information resource. We added features like training logs tied to trails, trail wishlists, favorite trails, GPS trail data, trail filters, photos, and tons of other features that other mountain biking sites simply didn’t have the time or resources to address (especially since they were also managing hundreds of non-trail related features).

Our focus seems to have served us well as we’re still around after 8 years online. Our content continues to grow and improve and we’ve finally found our niche among mountain bike riders who are searching for quality information on new and exciting trails around the world. They say imitation is the sincerest form of flattery and in the time we have spent focusing on building new trail features, we have seen competitors follow our lead in adding features to their own websites (like Trails.com, among others). But once you choose your direction of differentiation, competitors will always be playing catch-up since you will be in the lead.

It’s as if Overture can read my mind! Just as I try to login to reduce my Overture budget due to a lack of positive results, the system is unvailable. Actually I would estimate I see this message about 20% of the time I try to log in and it’s a bit disconcerting.

The other stupid thing is that there is no message on the home page warning you that the system is unavailable - you are only told this once you have successfully logged in. It’s as if they are hiding the fact they are unreliable from potential advertisers who may not yet have an account. Plus it is a little scary since it appears you are logged in with no way to “log out” of your account - you’re only presented with an image telling you in 6 different languages that they are unavailable. I have been trying for the last hour with the same result. WTF? Maybe I should just ratchet my budget down to zero and throw EVERYTHING to Google?

As I wrote in the post about internet business ideas, it is important to do a quick scan of competitors before getting too excited about your brilliant business idea. However, even if you do find someone doing EXACTLY what you planned to do, it isn’t quite time to throw in the towel.

In early 1998 Leah and I were mountain biking at the Stevens Creek mountain bike trail in Modoc, SC when we came up with the basic framework for singletracks. Leah had her own mountain biking homepage at the time called Mudhunny that listed directions and descriptions of trails we had both ridden but was limited to just those trails we had experienced. Our brainstorming led us to believe there should be a website that offered mountain bike classified ads, product reviews, trail information, forums, etc. for a national audience. Thus, singletracks was born.

Since neither of us had heard of sites like MTBR.com or Dirtworld.com we assumed that nothing like this existed at that time (it did). Had we known this, as would-be entrepreneurs we probably would have passed on the idea since it was already being done well. Our naivete allowed us to get a product built and deployed. By the time we had a product, we were committed to the idea and the threat of competition really didn’t phase us. Almost eight years later and singletracks is still around (and poised to pass Dirtworld in terms of the number of trail listings).

Once we recognized that the competition existed, it was time to differentiate ourselves. Stay tuned to hear the rest of the story…

Funny thing about Internet business ideas: no one is ever the first to come up with a new idea for a website. In fact, this is generally true for most ideas and this concept has been reinforced in writing by successful entrepreneurs like Guy Kawasaki. But what does this mean?

First off, it means that if you have a great idea for a business, it is generally not to your advantage to keep it a secret while you write your business plan. You probably don’t have anything that (many) other people haven’t thought of before and even if it is a great idea, most people are not in a position to take advantage of your idea. In fact, by sharing your idea with others you’ll get useful feedback and may even find potential partners while you build your network of business contacts. I’ve listened to dozens of business ideas while at Duke and I can honestly say none of the ideas I’ve heard have been completely “new.” Most business ideas are at most a new twist on an old idea or an extension of an existing concept into a new area. These are the best types of ideas in my opinion anyway since they involve an established and proven market.

But what about ideas for Internet websites? Since I’m generally known among my network of contacts as the Internet guy, I get alot of people approaching me with ideas for websites. How about a website that allows you to report speeding ticket locations/speedtraps? (speedtraps.org, speedtrap.com, and now my own entry, TripleBlaze Speeding) What about an online DVD trading service? (Peerflix or DVD Exchange) These are just two of the ideas I’ve heard from friends who simply weren’t aware of what already existed online, even though a simple google search quickly revealed these sites. But isn’t there still an opportunity since no one knows about these sites? Yes and no.

The real opportunity lies not in building a better website but in creating a more effective marketing program for your site. It’s what the dot-coms in the late 1990s understood about Super Bowl marketing and blowing tons of cash. But arguably sites like Yahoo!, Amazon, and eBay could not have risen above the clutter without the HUGE marketing investments that were made in the early days of their categories. Today the same lesson holds; if you want to have a successful website operating in a particular category you need to figure out FIRST how to market the idea, (with a good emphasis on offline as well as online marketing) then how to actually execute the website. These days building the website is actually the easiest part with customizable open source software and user-friendly web design packages.

So, before you get excited about that great new concept for a website you just came up with, take a quick look around the search engines. If your idea already exists (or even if your idea actually turns out to be original) the next most important step is to figure out how you will market your idea. Who are the customers, where can you find them (at the DMV, buying DVDs at Best Buy, etc.), and how expensive will it be to reach these consumers? If you can answer these questions then you probably have a great idea you should pursue. If not, you can at least understand why no one has heard of Speedtraps.org or Peerflix (yet).

Yesterday I attended the first annual Duke MBA Marketing Conference at the Fuqua School of Business and I was pleasantly surprised at the quality of the event. All the sessions were entirely relevant to what I’m working on now with Messenger, TripleBlaze, and Safarium. Here are my notes (I planned on typing them up anyway, why not post them on the blog as well?).

Lenovo
- Using blogs to gauge brand impressions on certain brand attributes (positive/negative/neutral)
- Media spend is divided among these steps to loyalty:

• Ad awareness
• Consideration
• Preference
• Lead generation
• Conversion
• Loyalty

- Leveraging partnerships with global brands; partnership with Google helps Lenovo to be seen as innovative, cool, etc.
- Go after your fan base and they can talk for your brand (influencers)
— Bloggers are influencers

Ford Fusion
Mockumentary on Hurra Torpedo
Lots of interesting web and TV advertising.

Long Term Brand Equity
- Price elasticity on sales is approximately 15X advertising elasticity
— This means discounts have a much larger effect on sales than ads
- Advertising is a form of promotion
- Brand managers are increasingly short term focused at the expense of the brand
— Data is increasingly thinly sliced (up-to-the-minute sales numbers, etc.) leading to a short term focus
- People have become more price sensitive over time (decades)
- Average long term effects offset short term effects by about 40%
- Advertising and discounting have largest effect on long term (baseline) sales
- Price premium: distribution and product have greatest role
- Wide availability helps price premium: form of advertising, signals value
— “With such wide distribution, it must be good”
- Discounting can be good for new products to induce trial

ING Direct
- Memory = saliency (relevance) X frequency
- ING has no physical locations (beyond cafes)
- Bringing groups together makes online biz more personal
— Free outdoor film screenings
— Free commute, events, etc. [reinforces “save your money” message]
— Show up to a movie, it’s paid for by ING! People tell friends, surprise
- Credit card companies push credit irresponsibly, ING promotes savings
- Good service is good for repeat business but is not usually enough for exponential word of mouth growth
- Don’t advertise the surprise

Tremor (P&G subsidiary)
- Focus on “connector” consumers rather than innovators
— Connectors have social networks 5 to 6 X larger than normal folks
— Connectors actively seek new news, love to talk, highly influential
— Inqusitiveness, connectedness, persuasiveness
— Prime prosepect is female HS sophomore or junior
— Trend spreaders, not trend setters
— Motivated by sharing
— Typical teen has 25 people on his/her buddy list; connector has 150!
- Slightly less than 1% of connectors can affect change on national scale

• There is a message the consumer wants to HEAR
• There is a message the consumer wants to SHARE
• These two messages are ALWAYS different

- Advocacy plus amplification
- Buzz (viral) marketing - not the same as word of mouth (WOM) advocacy (amplification without advocacy; ex: subsurviant chicken)
- Connector brand enthusiasts are best salespeople
- Advocacy does not occur online but in 1 to 1 conversations; exceptions: consumer electronics, travel
- Connectors are 70% female
- Marketers must remember they are not the average consumer
- Dawn connector marketing: making chores around the house easier by having kids help
— Make it easy for the consumer to talk about the brand
- Identify who your target customer listens to
- Create a database of your enthusiasts
- What is uniquely talkable about your brand?
- What is the consumer insight that is driving your brand?
- What triggers are you providing to allow talk about your brand to occur naturally?
- Product design can lead to talkable moments: iPod “wheel”
- Qualitative feedback yields insight
- WOM window is 1-2 weeks before launch then periodically

I attended a talk at Fuqua yesterday by a serial entrepreneur named Jeff Johnston that was pretty interesting. I usually take handwritten notes at these events and eventually type them up and I think I’ll continue to post my notes to the blog for others to read. Anyway, here are the interesting things I took away from Jeff’s talk:

- Illiquidity is a huge issue for entrepreneurs. An entrepreneur may own stakes in 5 companies making him/her rich on paper but this doesn’t do anything for one’s own cash flow. Having an exit strategy in mind when starting a business is the best way to make sure you will have cash at some point in the future.

- Jeff helped found a market research company in his early days and said he found that to be extremely helpful in identifying market opportunities for new businesses. I imagine what happens is you are doing research for a particular company and hear feedback that is unrelated to the research at hand but that yields market insight into a new area of focus. Jeff didn’t give specific examples of ideas he got from market research but the concept makes sense.

- Jeff said his MBA was a key to his success. I’ve spoken with a number of entrepreneurs over the years and they often tell me an MBA isn’t necessary to succeed (maybe they’re jealous of or intimidated by the MBAs?). In fact, when I met with Steve Bigari and told him I was interested in entrepreneurship and was planning on getting my MBA, he looked incredulously at me and asked “why?”. Of course every entrepreneur thinks the path he/she took to success is the best one but it was comforting at least to hear an MBA said that he got value from his education.

Another great presentation at Fuqua, it’s awesome to be able to get so many perspectives from successful entrepreneurs like Jeff while in business school.