|
 |
|
RELATED:
[ Hi-Tech Entrepreneur Networks | Editorial: Logging onto E-Commerce ] Hopping onto the Bandwidth Bandwagon Three years ago, when Amar Goel was studying to get his bachelor’s degree in economics and a master’s degree in computer science at Harvard University, he pondered the idea of starting his own business. Back in 1995, as the concept of e-commerce -- the notion of selling products over the Internet -- was being bantered about in technology circles, Goel, who also played on the varsity golf team, came up with a business model that stemmed from his two passions -- golf and technology. With a laptop computer in his dorm room and a few hundred dollars, Goel started Chipshot Golf, a Web site that sells golf equipment over the Internet (www.chipshot.com). He’s not alone, as companies are hawking wares from books to bridal sets on the Net. In the past three years alone, Goel’s company has captured the attention of investors like Sequoia Capital, a venture capital firm, which just last year provided the company with $3 million. The company also struck partnerships with America Online, CompuServe and PointCast. What started as a one-man business run out of dorm rooms and personal residences has now blossomed into a 30-man operation headquartered at its manufacturing facility in Sunnyvale, Calif. On the manufacturing end, an aspect of business that was once handled by another company, Chipshot Golf has gone from making five to six clubs a day to making 400 to 500 clubs a day. In addition to selling golf clubs, the site also sells accessories such as shoes, balls, bags and gloves. At the heart of his idea for the company, said Goel, who is of Asian Indian descent, was making the rather costly sport accessible to everyone. “Golf clubs are overpriced and a lot of people don’t have access to them,” said Goel, who began playing golf when he was in the seventh grade. Though the company initially began selling brand-name golf clubs, which can cost thousands of dollars, Goel added custom-made clubs as well as “knock-off” or “look-alike” clubs that are substantially cheaper than those made by popular brand names like Taylor Made, Ping or Callaway. The idea seemed to take off, and by 1996, knock-offs made up the bulk of Goel’s business. “A lot of people seemed to just grab on to that value proposition,” said Goel, explaining that the company can offer its equipment at lower prices because it builds clubs on site, and sells them directly to the customer. “We do the manufacturing, we buy the components from various suppliers, then we custom assemble the golf clubs here for people,” said Goel, who explained that his business model is patterned after Dell Computer, which builds computers and sells them directly to customers. “Because there is no middle man in between, the customer gets 60 to 70 percent off the brand-name cost,” Goel said. Although there are numerous sites selling golf equipment over the Internet, Goel said Chipshot Golf’s ability to create custom-fit golf clubs is what sets it apart from some 200,000 other individual club builders across the country. A customer who is interested in purchasing Chipshot Golf’s custom-built clubs online will be asked a series of questions regarding his or her golf game, such as the person’s height, handicap or whether he or she prefers to play with a club made for maximum distance possible when hitting the ball. Once those questions are answered, the company will then recommend and build a custom-fit set of golf clubs, and ship the final product out to the customer within two days. Goel and his 20-something-year-old business partners, most of whom have played the sport competitively and have backgrounds in computer science, include his younger brother Rajeev, who is currently attending Johns Hopkins University; and Alex Gonzalez and Nick Mehta, whom Goel met at Harvard. The foursome is hoping that the growing popularity in golf, spawned in part by young professional golfers like Tiger Woods, will continue to boost its business. According to the National Golf Foundation, there were some 26.5 million golfers in the United States in 1997, while total golf industry revenues approached $17 billion for the same year. “The majority of golfers out there are from their 20s to 50s,” said Mehta, vice president of marketing. “A lot of them are middle- to upper-income people who play golf a lot, but who may not be able to afford the expensive brand-name clubs or who are sometimes looking for good values. “The big thing is we’re trying to target the average golfer, rather than the high-end country club golfer,” continued Mehta, adding that more than 80 percent of all golfers have incomes of $75,000 or less. Along with that, Goel and Mehta are hoping the buzz around buying online, which International Data Corporation estimates will grow from $2.6 billion in 1996 to more than $400 billion in 2002, will continue. So far, business for the privately held company has been good. “The business has been growing unbelievably from January to August [1998]. It grew 45 percent month over month,” said Goel, explaining that all sales the company did until 1997 were based on the initial $350 used to start the company. “All of 1998 we saw a huge growth period.” Goel himself is a little surprised with how far the company has gone, considering how little capital was invested in marketing for the first three years. “The business was started on $350, and there was no more money that went into that company until July of [1998],” he said. “It really was sort of a boot strap company, since people before were starting companies with a million or $2 million from day one.” Equally surprising, Goel said, is how e-commerce has taken off. “I can’t say that back in 1995 I knew there was going to be an Amazon.com out there with its $20-billion cap, but I definitely saw [e-commerce] as something that was going to change the way that we do business,” Goel said. “E-commerce is still pretty small right now, compared to all commerce off-line ... but it’s growing so quickly.” Mehta was considering a career in investment banking before Goel convinced him to join the company. “[Goel] and I were partners on tons of computer assignments ... We spent a lot of late nights writing code and we were always talking about business ideas,” Mehta recalled. “Amar had already started this company and he asked me if I was interested in getting involved to help build the marketing, so I did.” So far, Mehta has no regrets about his decision. “I love it. I wouldn’t want to be doing anything else,” Mehta said. Although both Goel and Mehta decided against potentially lucrative careers in investment banking, they both credit their success in part to the support they received from their families. “My parents were very supportive,” said Goel, who was also considering a career in the computer industry. “And they definitely had ideas about my career, but they didn’t dictate it. “My parents had some concerns, because this is definitely riskier. But just looking at the opportunity, it seemed like it would be a bad move to pass up.” What hasn’t proved to be a hurdle for Goel and company is age. “I think that there is some [skepticism],” said Goel. “We probably get a little more skepticism than if we were 40 or something, but people are almost becoming a little bit primed to it. “This is such a new space and a new medium where the rules haven’t been written and where technology is changing all the time. This isn’t [a business] driven by lots of experience. It’s driven by creativity and people who are thinking about it.” At some point, the company would like to expand its product line to include sporting equipment in general, but for now, the priority remains making the business profitable. “We are in an aggressive growth mode right now, so we’re spending aggressively to grow the business internally, in terms of marketing dollars,” said Goel. “We are really scaling our business ... so in a sense we are losing money.” But the way to reverse that trend, added Mehta, is to get word out about the business. “We’re trying to build awareness and brand-name recognition on the Web,” Mehta said. “We’re trying to get as many people to know about Chipshot as possible, to go to the Web site as much as possible ... and hopefully they’ll tell their friends about it, and come back and get more stuff.”
When she isn’t putting in 15 hour days at the two-year old start-up, CityAuction, you can find her either surfing in Baja, mountain biking in Marin, snowboarding in Tahoe, or practicing her punches at Fairtex Muay Thai kickboxing. Monica Lee needs little sleep, and that’s an advantage in her 24/7 work/play life. Lee heads up business development at CityAuction, an Internet auction site based in San Francisco (www.cityauction.com). CityAuction provides person-to-person auctions for NBC’s Snap!, AOL’s Spinner.com, First Auction, Ticketmaster Online-CitySearch properties, and others. Unlike eBay or other auction sites, CityAuction specializes in local auctions along with its national and global auctions. Local auctions are more suitable for hard to ship or large ticket items such as cars, boats or antiques. The five-employee firm, which started a little over two years ago, was acquired by Ticketmaster Online-CitySearch in January for $54 million. When Lee joined CityAuction a year and a half ago, the fledgling company had just moved out of the founder’s bedroom and into a windowless, one-room office near San Francisco’s Union Square. Nonetheless, CityAuction’s strong business model and the opportunity to get in at ground zero appealed to Lee, who has a bachelor’s degree from Harvard and an MBA from MIT. “I was strongly influenced by my dad, who ran his own grocery and restaurant businesses ... and whose mantra to me was always, ‘start your own business ... or buy one ... it’s far more rewarding to run your own than to work for others.’” Today, CityAuction, with over 100,000 registered users, is growing by 20 to 30 percent per month. Lee, who grew up in Jacksonville, Fla., is no stranger to start-ups. Lee’s past careers include being an analyst at Chemical Bank and marketing manager at Match.com, an online matchmaking start-up. In the late ’80s, when Lee was in New York, she spent her free time with A. Magazine founder Jeff Yang, helping to get that magazine off the ground. After two and a half years at Charter Ventures making venture capital investment decisions for Internet and software companies, such as Match.com, Lee became impatient, and wanted to start her own business. “My interest in start-ups was fueled by witnessing the challenge and the fun entrepreneurs had as I sat on the other side of the table as a venture capitalist.” Lee went to business school with the goal to develop a start-up after graduation. “The goal in business school was to find some talented engineers and start a company right away or find a start-up to join after graduating.” The job opening at CityAuction came about like many of these start-up opportunities -- through networking her connections. The CEO of CityAuction, Andrew Rebele, was another MIT alumni. One of the reasons why Lee chose MIT’s Sloan School of Business was because of the school’s focus on business and technology. “The Internet presents a whole new playing field of opportunities and a chance to rewrite the rules of how business can be done,” she said. “Overall, it doesn’t feel any different to be an Asian woman in venture capital or in the Internet arena ... I’m just enjoying being part of an industry full of forward-thinking, brilliant minds. However, it is great to see that there are so many entrepreneurial-minded Asian Americans -- men and women -- out there influencing how the Internet becomes a part of our lives.” As the internet matures, Lee feels that sites will need to distinguish themselves from their competitors by truly executing well on the community aspect -- both virtually and via real, physical events and opportunities to interact. Sites that provide localized content and community will succeed at this and, Lee predicts, “will become more and more a major part of our lives.” Even as she continues developing CityAuction’s strategies, Lee is passionate about helping other entrepreneurs get started. As an organizer for a Bay Area high-tech social network, Lee looks ahead to “helping other entrepreneurs in succeeding, starting ventures of my own.” But ultimately, her plans include “making sure I minimize my parents’ worries as they adjust to being retired.”
For most people, getting married is a milestone in life. For David Liu, it was also a career benchmark. Then 30 years old, Liu found himself responsible for planning his wedding to a non-Asian bride. “I was planning my wedding and it became pretty clear that there were not that many resources for men, or [resources] that dealt with interracial couples ... how to pay for a wedding yourself, inter-racial weddings and how to plan it if it’s the guy doing it,” he said. “I thought, here’s an opportunity to be useful to consumers.” After the wedding and the honeymoon, Liu and his wife, Carley Roney, started TheKnot (www.theknot.com), now the No.1 online wedding resource and gift registry with funding from AOL. TheKnot offers advice as well as services to take customers through the entire wedding planning process, from engagement to honeymoon. With everything from the 2000 BMW Z3s to blenders and mountain bikes, there’s something for every couple in the 10,000-item gift registry. The free services allow couples to search through more than 11,000 bride and bridesmaid dress images, locate a photographer in their area, budget for the big day on worksheets, chat with wedding professionals and read about the latest in wedding trends. With more than 1,000 new visitors a day, the TheKnot is the most popular wedding site on the Web. Accolades include being one of UPSIDE magazine’s Hot 100 Private Companies for 1999 and a four-star rating from Yahoo! Internet Life Magazine. But the viability of a specialized e-commerce site was not so apparent when Liu hit upon the idea. In 1995, consumers had barely begun to use the Internet for e-mail, let alone make credit card purchases. But Liu, who was formerly founder of RunTim Inc., a CD-Rom development company, saw an opportunity to create a vertical niche. “The opportunity was to pick a niche category where we could dominate,” Liu said. In July of 1997, TheKnot formed a partnership with AOL and launched the site with $1.8 million in seed capital. Within months, the site received more than 4 million monthly page views, raking in more than $1 million in advertising. In 1998, page views climbed to more than 6 million and the company launched its online gift registry with a $3 million infusion from venture capital firm Hummer Winblad Venture Partners. Liu is not exclusively wedded to the Internet however. And shortly before Christmas, Liu launched The Knot Complete Guide to Weddings in the Real World, the first of a three-book series, now in its second printing. With the book in bookstore fronts, TheKnot.com’s traffic more than doubled in January. More cross-media content and promotion is in the works; TheKnot will produce a 13-part television series on wedding planning for public television. Also in development is The Knot Magazine. This year, revenues are expected to be within the $2- to $3-million-target mark, Liu said, with half of that coming from advertising and half from merchandise sales. Audience numbers have increased by leaps and bounds as TheKnot is drawing over 900 unique visitors a month, 300 registered users per month and scoring 17 million page views per month. While other retailers such as the new upstart Della & James have partnered with traditional mortar-and-brick stores like Nieman Marcus and Williams Sonoma, TheKnot has no immediate plans to share the margin with these other retailers. “It is not immediately on our radar,” Liu said. “Our primary goal is to be provide value to customers.” In addition to being able to offer customers lower prices, Liu said, operating without partnerships with retail stores also makes TheKnot a more profitable business model, with its site pocketing the entire mark-up. “We go directly to the manufacturers to get the full margin,” Liu said. Things could have been different for the charismatic CEO if he had followed his family’s advice. “I was supposed to be a doctor, but I didn’t take a math class all through college and tried to buck the stereotypes,” said Liu, a film and television major at New York University, where he began making art history CD-ROMs. “My parents don’t really understand what I do -- it’s not like being a doctor or a lawyer,” he said. “What I do leaves more to the imagination, I guess.” With the tremendous amount of press TheKnot has received, though, Liu’s parents are coming around. “My wife was on TV with Barbara Walters,” Liu said. “When you are on TV with Barbara Walters, you’re a success.”
|
|
|||||||||
|
|