Nokia Launches ‘Context-Aware’ Internet Tablet

By Richard Martin

Seeking to maintain its leadership in an increasingly competitive smartphone market, Nokia on Wednesday announced the N810 Internet tablet, the latest addition to its high-end N-series of smartphones.

The new tablet operates over Wi-Fi networks, and via a Bluetooth wireless connection to a cellular device that it uses as a wireless modem. Last week, Nokia said it would include the Devicescape Connect application, which allows users to connect automatically to Wi-Fi networks in range, as a default option on its N-series and E-series devices.

The pricey N95 device was released in September of 2006 and was brought to the U.S. six months later. On Monday, Nokia said it would begin shipping an 8-Gbyte version of the N95, calling it “the memory-packed big brother” to the original phone. The new N95 can store up to 20 hours of video or up to 6,000 songs, according to Nokia.

The N810 — which will offer support for Nokia’s new “Ovi” Web services platform — the third milestone in a five-phase journey toward a fully connected, mobile Web 2.0 computer. The first step in this scheme was the N770 Internet tablet and the second was the release of the N800, one year ago. The N810 is the first of these devices targeted at a ‘normal’ consumer group, beyond the geeks “It’s a fairly small entity of technology leaders, but it’s a very important step No. 3 for us.

This is an important product in defining what the context-sensitive Web can actually be.

Based on the open-source Linux operating system, the new device offers a Mozilla-based Web browser with the Adobe Flash 9 plug-in, a 4.13-inch screen, support for IM, mobile e-mail, and voice-over-IP. It also has an integrated GPS receiver with a built-in maps application.

The new Net tablet, however, also will remind some observers of the ill-fated Foleo from Palm, a wireless Internet tablet designed to connect to mobile devices and provide a richer and fuller browsing experience. Palm announced recently it will not release the Foleo, announced with some fanfare earlier this year. The next milestone for Nokia will be incorporating full-connectivity options in an N810-like device, but when that might happen is unclear.

While Nokia still dominating the overall mobile phone market, the company faces increasing challenges in the market for more advanced devices such as smartphones and handheld multimedia computers. Besides Apple’s wildly popular iPhone, now expected to sell as many as 10 million units in its first year of shipping, Nokia’s other rival vendors, including Samsung and Taiwanese handset-maker HTC, are bringing more and more innovative devices to market (Sprint Nextel said Wednesday it will sell HTC’s Touch, a touch-screen smartphone previously released overseas, in the U.S. beginning in November).

Also on Wednesday, Boingo Wireless said that its Wi-Fi connectivity program is now available on select Nokia devices, including the N810. Boingo Mobile automatically connects to the company’s worldwide network of Wi-Fi hotspots.

Source: Information Week

What is Kopelman sick of seeing from startups

by Kerry Miller

If you’re an Internet entrepreneur in search of seed funding, Josh Kopelman should be high on the list of people you want to run into at a cocktail party. Kopelman is himself a successful entrepreneur three times over—most notably as the founder of Half.com, which was acquired by eBay in 2000 for around $350 million. Now, with his three-year-old early-stage venture fund, First Round Capital, Kopelman is putting his expertise to work backing Web software startups such as StumbleUpon—which was also acquired by eBay in May, for $75 million—VideoEgg, and Satisfaction.

Three recurring themes that Kopelman says he’s sick of seeing from startups—plus one thing he’d like to see more of.

1. Business plans that depend on getting acquired by Google.

There are more people that win $5 million in the New York lottery than get acquired by Google. I do not think companies should be built solely to be acquired by three or five companies in a quick period of time. I don’t think you should be building “hamburger companies” that are built to flip.

That said, it’s always validating when someone comes to you and expresses interest in acquiring your company early. You’ve got to give kudos to Facebook for turning down probably an awful lot of acquisition offers on the way up, recognizing that they’d create more value if they stayed independent. As a VC, I often now see young people who are in the mercenary mode vs. people who really are passionate about what they believe. The most successful entrepreneurs I’ve seen are really excited by what they’re doing—they’re not passionate about creating an exit.

2. Revenue models that revolve around advertising from Google AdSense.

Often the companies we see tend to say, “We think there are three or four different ways we can make money. We might not know which ones will work or which ones will scale.” We’re comfortable signing on to that kind of risk. But if a company comes to us and says, sort of, “The way we’ll generate revenue is by putting Google AdSense on our pages,” and really hasn’t thought through anything beyond that—those are the companies we tend to really pause at. We’re not looking for someone who can predict the future, but we do like people who are thoughtful and deliberate about how they’re going to build a business that solves an urgent and pervasive customer need, and also how they could maybe generate revenue from that.

3. Businesses that piggyback on Facebook instead of picking up where Google left off.

I think I’ve seen my fair share of white-label social networks, and I’ve seen my share of cute Facebook apps. We haven’t funded any Facebook apps since they launched. I think a Facebook application is now a necessary component (BusinessWeek, 8/22/07) in an online marketing and customer acquisition strategy—I just don’t know if you’re going to find venture-backable companies there. We like to see companies that offer the consumer real value. One could argue that amusement is real value, and I agree, but I’m not sure if today’s app du jour is going to be what does it.

Matching Interest to Offer

Amusement apps tend to be very faddish, and I also think those are the hardest to monetize because the use of those apps doesn’t derive from intent like a search query does. So, just because I super-poked you or bit you and turned you into a zombie doesn’t really give me anything as an advertiser to figure out your intent or something to target against.

What Google did a very good job with was to recognize that when someone is searching for something, they’re indicating interest. And if you can match interest with an offer, those ads are going to be far more successful than those that don’t. The advertising business is still an incredibly wasteful business. I don’t think the game’s over in that space. By looking at Google, you can see how someone who can create efficiency out of what was inefficient can create value. There’s real money to be made there.

Source: Business Week Online

MySpace to Open Up, Too

by Aaron Ricadela

Following Facebook’s lead, News Corp. will make it easier for outside programmers to jazz up its social network—and, it hopes, generate big sales.

Murdoch and MySpace co-founder and CEO Chris DeWolfe have a plan to change the News Corp.’s online fortunes: They’ll make it easier for outside software developers to build MySpace tools and then let them share in resulting ad sales. MySpace is following in the footsteps of Facebook, Apple, and other tech trailblazers in harnessing the legions of programmers, many of them independent or affiliated with smaller companies, jonesing to craft the next big consumer application, be it related to games, photos, music, or other interests. Within the next two weeks, MySpace intends to publish a catalog of third-party programs that users can easily find and add to their pages. By December, MySpace plans to test with 2 million members a special portion of the site for installing applications that developers create using tools supplied by MySpace. Most of that software will eventually end up on the broader site, DeWolfe said.

Perhaps most important, MySpace will give outside developers a special page on which they can sell ads. That’s big news for developers, whose businesses rest on the booming market for add-on “widget” software for Facebook, MySpace, and other social networks. Facebook’s growth has boomed since May, when it opened up. Max Levchin, founder and CEO of widget software maker Slide, calls the ability to sell ads “the single most exciting opportunity for widget makers on MySpace,” in an interview before News Corp.’s announcement. “Facebook’s innovation was that you don’t need a relationship with them to share revenue with them,” he says. “They didn’t invent the concept of widgets. But they got millions of people to stick around, and they actually made real money. Developers have a financial incentive to play.”

Best of Both Worlds

Now they will on MySpace, too. But what took so long? MySpace gave many widget makers their start, but it has been so focused on adding users that courting developers wasn’t a priority, Levchin says. “During an era of super-torrential growth, there wasn’t enough time to build a platform,” he says. “They were making sure things didn’t fall apart.” Pressure to match Facebook is also a factor, he adds. “There’s no doubt that MySpace feels pressure to play in the same game.”

The Widget Card Bringing developers into the MySpace revenue stream could help the site expand. Once users have tired of online reenactments of their offline relationships—be it through finding friends, sending messages, flirting—they need more things to stay engaged with a social network. That’s where widgets come in. And as they add more features, tools, and games, sites also create more space for selling ads, increasing traffic, and rewarding developers with a slice of the ad sales generated by widgets.

Facebook has played that card to a T. Its membership has surged, recently reaching 47 million, since it began allowing outside software developers to add programs. And Zuckerberg indicated he may move further onto MySpace’s turf, adding features that make it easier for bands and other groups to promote themselves on Facebook.

Facebook’s incursions aren’t lost on MySpace. “It’s pretty cool,” Murdoch said of Facebook. But “it’s more like a utility, whereas we’re a more interconnected media. It’s not just looking up friends.” Murdoch will need to continue making more out of MySpace to ensure News Corp. parlays the social network’s considerable breadth into market value.

Source: Business Week Online

eBay To Sellers: We Want You Back

by Catherine Holahan

Many of the folks who list items for sale on eBay have never been happy about rising fees imposed by the e-commerce giant. Nor have they hesitated to make those feelings known—in blogs, chat sites, and elsewhere across the Web. Finally, executives at eBay have heeded those complaints.

Faced with increasing competition for sellers and the buyers who bid for goods online, eBay said on Oct. 17 that it’s going to start slashing fees for listing items. In what eBay considers a test of major changes to its pricing model, it will reduce fees at least 33% through the beginning of November and make other price tweaks in hopes of spurring sellers to put more items on eBay’s site at desired prices, leading to large sales growth and higher overall profits. If successful, the fee changes could become permanent.

Google and Amazon Competition

The announcement, made during a call to announce third-quarter results, represents a major shift for eBay. Traditionally, eBay has increased profits by raising fees for sellers. It could do this despite the complaints of sellers because for a long time, small-business owners really didn’t have anywhere else to go. To get noticed by shoppers, sellers had to get their items in front of eBay’s massive, global audience.

Not anymore. Sites such as Amazon.com and Google offer sellers alternative ways to get noticed by the masses. Sellers can either list items on Amazon or drive traffic to their Web sites by buying ads that show up alongside search results when would-be buyers hunt for a particular product on Google. Partially as a result, eBay has seen declining sales growth in its U.S. marketplace over the years. “Having unlimited pricing power over your sellers—those days are over,” says Tim Boyd, an analyst for American Technology Research. “eBay pushed its seller base a little too far and pushed it into the arms of the competition a little bit and now it has to bring them back.”

Investors Still Wary

eBay has been working to reinvigorate shopping growth in its core U.S. and German online auction and shopping sites for some time. This year, it largely focused efforts on getting more buyers to spend time and money on the site, launching new tools and site features aimed at making it easier for buyers to find items they want and, in some cases, buy those items immediately for a set price rather than try to bid on them in an auction. The company has also made it easier for buyers to ensure they get the items they want with tools that help purchasers bid on identical items until they win an auction. Some of eBay’s efforts are beginning to pay off. In the third quarter, eBay posted 14% growth in the total price of goods sold on its site and had better-than-anticipated revenue growth of 26%.

But eBay has a long way toward assuring investors that their core shopping business can stand up to the competition and keep growing. The total number of goods listed on the site decreased 5% in the third quarter, compared with last year, indicating that sellers are placing some of their merchandise elsewhere.

Skype Effect

The fee decreases acknowledge that some of that work has to involve getting sellers to keep more of the merchandise on the site at a price that buyers want. The mix of items on eBay’s site will likely include more fixed-price items. Analysts have argued for some time that online shoppers want the convenience of simply clicking and buying what they want, even if it means they don’t get the thrill of winning an auction or pay slightly more.

The danger for eBay is that decreasing prices could be too little, too late to encourage more shopping. Another risk: eBay’s margins may come under pressure. That fear was fueled by Swan, who said during the conference call that eBay planned to invest in areas of its business such as the Skype calling service and concentrate less on making a profit from them in the short run. “We believe we may have monetized Skype a little too early and a little too much, so we will like reinvest some of those profits,” Swan said.

Source: BusinessWeek Online

Skype Goes Mobile

by Bruce Meyerson

Bit by bit, big names in the computing world, from Apple (game-changing iPhone) to Google (software platform for a new breed of cell phones) are barging into the cell-phone business. Now Skype is set to launch a customized cell phone developed jointly with 3 Mobile, a wireless carrier in Europe, Asia, and Australia.

Code-named the “white phone,” the Skype handset will be introduced by late October in Britain, Italy, Hong Kong, and Australia, and will reach 3’s other five markets later. There are no immediate plans to bring the device to North America, though the companies may try to license it to other carriers or sell versions straight to consumers for them to use on other networks.

Connecting with Skype Buddies

What may be most striking about the device is that it’s being pushed by a mobile carrier at a time when most of the wireless industry is anxiously fighting to preserve its business model against a siege of new technologies and players.

The Skype cell phone, developed with a software outfit named iSkoot, is equipped with multimedia capabilities and high-speed data for mobile Web browsing. But its most prominent feature is a big button right above the regular keypad to activate Skype’s popular service for long-distance and international calls. A press on that button triggers an iSkoot-developed application that brings up a list of a user’s Skype “buddies” and regular phone contacts. A click on any entry in that list dials the call.

Skype’s Challenge: Turning Appeal into Profits

Skype is betting that easy mobile access to its service could spur more overseas call traffic, a revenue-producing business where growth has slumped sharply. Though Skype boasts 246 million accounts, only about one-quarter to one-third of those customers are thought to be regular users, and the vast majority of their calls are free. Skype has struggled to turn its popularity into profits.

Calls on the Skype cell phone will cost the same as on a computer or Skype cordless phone: free when speaking to other Skype users, pennies per minute when users dial regular phone numbers in most countries. 3 Mobile, owned by Hong Kong’s Hutchison Whampoa, won’t charge extra to use the Skype feature. But customers will need to spend a certain amount per month for other services, such as regular mobile calls, ringtones, or text messaging.

A cheap international connection could prove to be a potent draw for wireless users. Currently, few mobile phone subscribers are willing to pay the quarters and dollars per minute charged by cellular companies for international calls. That means 3 Mobile is putting little international revenue at risk by moving to the Skype model. Another intriguing twist: Since eBay owns the online payment service PayPal, success with the Skype phone could provide a springboard for using a cell phone or other handheld device to pay for items, as if it’s a charge or debit card. That’s been an elusive goal for the wireless industry except in a handful of countries such as Japan and Korea.

A Tough Sell with Carriers

But even if it widens the path being carved by Apple and Google, the Skype phone is really more of a back-to-basics concept. The iPhone adds sleek Web browsing and the simplicity of an iPod music player to a phone. The gPhone seeks to bring Google’s expertise, finding information and showing related ads, to a mobile handset. By contrast, the Skype phone is first and foremost about plain old phone calls.

Whatever the nature of these new services and phones, Apple, Skype, and even handset makers like Nokia have found that it’s difficult to get them into consumers’ hands without the aid of mobile carriers—and their cooperation is rare. In the case of Internet calling, the industry’s uneasiness has been especially palpable.

The arrival of the Skype phone is but the latest sign of evolution in wireless, and counter measures by the cellular carriers a ready reminder that there won’t be a revolution any time soon.

Source: Business Week Online

Why Web 2.0 is critical for your business (vendor white paper)

By Socialtext

Overview

‘Enterprise 2.0’ represents the migration of the Web from isolated silos of content to an integrated framework in which the Web becomes a computing platform that is able to provide greater value than traditional tools, like simple email messages and static web pages, have been able to offer. Enterprise 2.0 represents the collision of Web 2.0 business-to-consumer and consumer-to-consumer applications (e.g., blogs, wikis, mashups, RSS and social networking) with corporate users looking to achieve business-to-business benefits. While Enterprise 2.0 offers important benefits for the way that organizations share information and collaborate, the newer workforce raised on consumer-oriented Web 2.0 applications have also become accustomed to these tools and increasingly expect to be able to use these tools in the workplace.

For businesses, Enterprise 2.0 should figure prominently in their communication and collaboration planning, since it allows easier collaboration and greater efficiency of communication than is possible with highly structured, inflexible legacy communication and productivity tools. Enterprise 2.0, for example, has a significant impact on email and more traditional groupware tools, and is becoming increasingly valuable in re-shaping how users manage the growing glut of information. Enterprise 2.0 holds the promise of allowing organizations to make decisions more quickly, to share information more easily and to improve business profitability.

The ascendancy of Web 2.0/Enterprise 2.0 should not in any way be regarded as representative of the demise of traditional applications used in business environments. In fact, Enterprise 2.0 will in many ways make traditional applications more capable and more useful. For example, content in a wiki can replace a large number of individual emails and email threads, thereby reducing email traffic and content, making email more useful than it is today. Furthermore, most advanced wikis allow content to be published easily to the wiki using email, which supports users’ current workflow where email plays a central role.

Published on: August 2007
Type of content: VENDOR WHITE PAPER
Format: Adobe Acrobat (.pdf) (371 kb)
Length: 8 pages
Price: FREE

Download here

Startups Get The Spotlight At Web 2.0 Summit

By Antone Gonsalves
InformationWeek

Startups are behind many of the innovative services offered in the emerging Web 2.0. While many Internet companies evaporated during the dot-com crash in 2000, new ones have been born in the next-generation Internet, taking advantage of the growing use of broadband and better technology for building browser-based applications. During the Web 2.0 Summit in San Francisco Wednesday, many startups were mentioned as favorites of panelists at the conference’s workshops. Here’s a sampling of the sites that got the nod from their peers:

37Signals

37Signals targets individuals and small businesseswith Web-based software with the least number of features necessary. “Our products do less than the competition ” intentionally,” the company says on its Website.

Products include Basecamp, a project management and collaboration app for sharing schedules, files, messages, tasks and more with team members or clients. Other services include Highrise for tracking leads, clients, and vendors; Backpack for calendaring and organizing ideas, to-dos, notes, photos and files; and Campfire for group chat.

EchoSign

EchoSign is a signature service that claims to be used by more than 125,000 businesses and individuals. The service enables users to sign documents over the Web, or through fax. The service also can store and manage signed agreements. Among the company’s partners is Salesforce.com.

ThinkFree

ThinkFree, which is in beta, bills itself as a “free online alternative to Microsoft Office.” The site offers 1Gbyte of free storage, document collaboration and a document viewer that enables users to edit Microsoft Office documents, spreadsheets and presentations online. The company, which targets small businesses, also offers offline software that’s being optimized for Intel-based mobile Internet devices, which are essentially handheld computers.

Workspace

Workspace has launched its “sandbox release,” which is the testing version of the site’s online development environment. Features includes a syntax highlighting editor for editing text, PHP, JavaScript, HTML, Java, Perl, SQL, and other types of files directly on a remote server. The online utility also provides tools for finding and managing files on a number of FTP sites simultaneously. Each user also gets some storage on Workspace servers.

Virgin Charter

Virgin Charter plans to make generally available in February 2008 an online marketplace for booking travel on private planes. The site offers tools for small aviation companies and potential customers to negotiate deals for private jet travel. People or businesses looking for a private jet initiate the process by posting trip itineraries to solicit bids. The site plans to offer ratings on buyers and sellers to help both sides in the negotiation process.

Zoho

Zoho offers online productivity applications that include a word processor, spreadsheet, presentation tool and organizer. The company’s services, however, go beyond what most people would associate with Microsoft Office. Other Web tools include conferencing software, an organizer, a project management application, a full-feature Wiki, collaboration groupware, and chat. In general, Zoho is a lot about Web-based collaboration and communication.

The event, which runs through October 19, is expected to be chocked full of discussion and debate about the most important issues and strategies driving the Internet economy and what we might expect in the coming year.

Headlining the bill will be Rupert Murdoch, chairman and CEO of News Corp., as well as Microsoft chief executive Steve Ballmer, eBay chief executive Meg Whitman, Randall Stephenson, CEO of AT&T, and Philippe Dauman, CEO of Viacom.

Source: Information Week

Building a Web Presence on the Cheap

By Jeffrey Gangemi

Startup businesses are caught in the ultimate catch-22: By definition, they’re strapped for cash, but in order to grow, they need to market their product or service. Entrepreneurs savvy enough to figure out how to market both cheaply and effectively have the best chance of surviving—and thriving—past the startup phase.

Kim T. Gordon is president of the National Marketing Federation, a coaching business that advises small-business owners on growth and marketing issues. Her book Maximum Marketing, Minimum Dollars offers suggestions on how to grow a small business with the aid of effective marketing. Gordon puts special emphasis on the Internet, showing exactly how it offers some of the cheapest and most effective marketing tactics out there.

She chatted recently with BusinessWeek.com writer Jeffrey Gangemi about how to use the Internet for both marketing a business and closing the all-important sale.

Do all small businesses need a Web site?
Essentially, everyone needs a Web presence. Most businesses should have a Web site, since it is becoming the best source of information about any given company. If you’re marketing nationally it’s essential because it creates a level playing field for your company.

If you’re a small-business owner, the Internet is a huge money saver for you. E-mail marketing has one of the best returns on investment (ROI) of any kind of marketing. You can’t engage in e-mail marketing unless you have a great site, because people need a place to go and click through in order to complete their mission of making a purchase.

But if you’re a local dry cleaner, then you might not need a Web site. Instead, a good listing on Yahoo! Local might be better, so that when people search online for a local dry cleaner, they get a map of where your business is and the phone number.

If you decide you need a Web site, what is the most important message it should convey?
Your first, most important step in growing a business is to understand the difference between what you’re selling and what your customers are buying. You may think you’re selling tax-preparation services, but in the end your customers want to buy peace of mind and the ability to save money on their taxes. Define your message such that it differentiates your company or what you’re selling. You have to try to look into the mind of your best, most ideal customer and answer their most pressing question, which is always: “What’s in it for me?”

When creating your site, you should be very careful about copy. You can have a bare-bones design as long as it’s clear and workable and readable and navigable. But if your copy is bad, you’ve lost it. So you may want to bring in a copywriter, someone who can convey your message through the language on your site.

Should you always outsource the creation of your Web site?
There are a few good programs that you can use yourself, like Microsoft FrontPage . It only costs a couple hundred dollars, and if you apply yourself, you can do it yourself. It is challenging, but you don’t have to know HTML.

If you’re not planning a huge site, you can also go with the major Web providers or Web hosts like Yahoo!, Earthlink, or Web.com. They all have their own proprietary software that allows you to follow their wizards and create your own site. Before you sign up with a company, do your homework. If you decide to switch providers, the software stays with them—and so does your site.

In terms of other ways to optimize a business’ Web presence, what search-engine placement and advertising do you recommend?
The major search engines—Google and Yahoo—have very effective local search capabilities. I would go with the big ones, because you want to go where your customers are, and if the vast majority are doing their searches on Google, Yahoo, and AOL, then that’s where you have to be.

[Again,] you don’t want to be on 30 search engines; you want to be on a couple, where your customers are going. You might be in the online yellow pages, Google, maybe a little Yahoo!.… A small business can’t act like a big business. You should think big and plan big and never limit your ideas, but on the other hand, if you have $5,000 to spend instead of $5 million, you have to be circumspect.

Can you offer a few tips on making e-commerce as effective as possible?
You want to remove as many barriers to sales as you can. To make it as easy as possible you might consider adding online search capabilities. The biggest complaint people have is that they can’t find what they’re looking for. Also, sites that display products in logical groupings often do better on sales.

Do people come to a site looking for one thing in particular? In other words, once you close a sale, how many other similar products should you offer before checkout?
It depends on how well it’s done. Amazon.com, is one of the best online sellers. For just about every product, you’ll notice that they’ll present other items that were purchased by the same customers, but they won’t interrupt the original sale. Instead, once you make a purchase, Amazon will send you additional e-mails with offers of similar products that you might like. If you can invest in similar technology, it’s very smart, particularly if you’re an online-only seller.

Customers are very receptive when you come back to them with additional offers [for items that are] similar to things…they’ve [already] purchased. A returning customer is the most important visitor you’ll have on your site. They’re more likely to make additional purchases than any other visitor, so you want to make sure to streamline the purchase process for them. Returning customers should never have to fill in any forms.

What kinds of businesses get the most out of an e-newsletter and other electronic communications? How often is too often to send mass e-mails?
Customer loyalty programs are very popular. Studies show that people, particularly working mothers, appreciate them. If you’re sending out solicitations, make sure you make the benefit or promotion obvious. It should have to do with price or saving money, or an advantage to being in your loyalty program. If it’s not obvious, they’ll quickly tune out.

If you’ve ever bought anything online from Target, you can expect to get an e-mail from them no less than every week. I’m not suggesting that people do that; that’s bothersome. Studies show that every other week is probably your maximum frequency.

How do you deliver the best customer service on the Web, and if your business is great (or not so great) at it, how do you advertise that?
If you’re an online retailer, it might make sense to have live online customer service, where you answer questions in real time. That way, there’s a better chance of closing the sale. Consumers expect the Web to be more instantaneous than any other kind of shopping. A customer might be happy to wait in your store as you help another customer, but on the Web, if the transaction doesn’t happen within seconds, they’re gone.

Source: www.businessweek.com

How SEO Upped the Revenues

By Karen E. Klein

After five years of hard work, Megan Duckett’s Southern California-based theatrical-sewing business had gone from a kitchen-table operation to a well-known local supplier. But two years ago, the Australian-born entrepreneur felt her company, Sew What?, had hit a wall. Its highly specialized local market was nearly tapped out, and Duckett didn’t know how to reach additional customers.

She spoke recently to Smart Answers columnist Karen E. Klein about the technology investment she made, including Web site redesign and search engine optimization (SEO) strategies. Such initiatives have increased her revenues by 45% and earned her the 2006 Dell/National Federation of Independent Business “Small Business Excellence” award. Edited excerpts of their conversation follow.

How did you start your company?
I moved to Los Angeles in 1991 when I was 19, hoping to start a career working behind the scenes in the entertainment industry. I toured with a band called King Crimson and started sewing on my kitchen table as a sideline. An opportunity landed in my lap to upholster some coffins for Knott’s Berry Farm at Halloween time, so I rented a sewing machine from a local vacuum-cleaner store and taught myself how to do it.

From there, the business took off. I got orders from entertainers, Las Vegas casinos, and party planners for table linens and custom slipcovers. By 1997, I discovered I was generating greater income doing sewing jobs on weekends and at night than I was in my day job working for a company that built stages for rock ‘n’ roll tours. My husband and I decided to give the business a go, so we took $1,000 in savings to rent an 800-square-foot space in Torrance, buy a sewing machine, and put used carpeting on the floors.

I started contacting previous clients and cold-calling new ones. In March, 1998, we incorporated and I hired my first employee. I think we did about $55,000 in sales that year, and most of it was eaten up paying rent. Thankfully, that employee—who’s still with me—brought her own sewing machine with her!

You’re now located in a 15,000-square-foot facility in Rancho Dominguez with 33 employees and plans for further expansion. How has the technology revamp that you initiated in 2003 helped?
The biggest challenge for us has always been reaching new customers. Two years ago, we felt like we’d hit a plateau: 80% of our customers were in California, 20% were in other U.S. states, and we’d sold to only two overseas clients. I knew there was a bigger world out there, but I didn’t know how to make them aware of our company.

That’s when I decided to pay for a professional redesign of our Web site, which I had created myself, and have it optimized so it would show up prominently in online search results at places like Google.

What’s been the result?
Over the last 18 months, our customer demographics have completely changed and our revenues are up 45%. Our customer makeup is now 33% from California, 66% from other U.S. states, and we’ve done 55 international transactions. We’ve made sales in every state except Vermont, and all these new clients are finding us through the Web site, which we now have in English and Spanish.

Keep in mind that I’m not doing any substantial advertising—online or off. It’s all been the search engine optimization and some low-budget, pay-per-click ads I’ve placed on certain industry terms at Google.

Other than making the commitment to funding a technology upgrade, what else has contributed to your success?
I had to pick the right search engine optimization specialist and be willing to learn what she would do and how I could help. If I had just hired somebody to optimize my site and then wiped my hands of it, I’m not sure how great the results would’ve been. She had to learn everything about my industry in order to do her job right, and I had to stay involved with the process minute by minute.

It’s been a lot of work, but when people in my industry search on “pipe and drape” at Google, there are more than 100,000 natural results that pop up and we’re in second place. I’m pretty thrilled with that.

How did the award from Dell and the NFIB come about, and how will it affect the future of Sew What?
I was surfing online for some new computers and I noticed a little blurb at the Dell Web site about the competition involving small businesses embracing technology. I thought they were talking about us! I wrote out my story and submitted my application, and I almost fell off my chair when they contacted me and told me I was a finalist.

The award comes with $30,000 in Dell technology and services, which I plan to use to continue being a customer-centric business. I’m hoping that the new technology will help us streamline our in-house operations, so we can remain a very productive firm as we grow. I’m also hopeful that our growth and profitability will allow us to continue to offer health benefits, paid vacations, and retirement plans to our employees.

It’s unusual for a family-owned business of our size to do that, especially in California where our worker’s-comp rates are very high, but we’re proud to be able to do it.

Source: www.businessweek.com

Building Good Web Buzz

By Burt Helm

Serial entrepreneur Munjal Shah had an ingenious idea. He came up with a way to help computer users sort through the sometimes countless images stored on their hard drives. So in 2004 he started building a Web site, Riya, that uses sophisticated facial recognition technology to scan a photo library, sorting and labeling prints by who is pictured.

Mastering the technology and launching the business was one thing. Then came an even harder part: getting users to show up. That can be especially daunting with online photo-sharing, where snazzy startups tussle with such established brands as Hewlett-Packard’s Snapfish and Kodak’s EasyShare Gallery.

THE OLD WAY. But it’s a challenge faced by just about every Web startup. With new companies emerging constantly, building an online presence is fraught with confusion. How do you create awareness on a shoestring budget? Do you take out ads on other Web sites? Buy “keywords” from Yahoo or Google? Hire a PR agency?

All can be effective, but they come at a cost. Take keywords, where the advertiser pays on a per-click basis for placement alongside a Web search triggered by certain words or phrases. Depending on the search term used, a company can end up paying dearly when its site is clicked on, even if the visitor doesn’t stick around, much less register or make a purchase.

Hiring a PR consultant can set a company back anywhere from $60 to $350 an hour. But that doesn’t mean a business is up a creek if it doesn’t have the funding for a big-budget marketing campaign. Web experts point out some clever ways to generate traffic without having to spend too much money.

PRIME THE PUMP. An important early step: Give users a reason to hang around. Make at least some of your tools and features free, says Lynn Stott, director of TechSoup, a Web site that offers tech tips and advice for nonprofit groups. “Too often, small businesses really wanted to keep everything close to the chest, and charge for everything — but you’ve got to prime the pump a little bit,” says Stott.

Give potential customers time to play around on the site, whether with snazzy tools or articles with related news or advice, and it will help them build trust in your little startup and warm them to the idea of doing business there.

Pete Flint, chief executive of real estate search engine Trulia, tries to make his site fun even for people who aren’t looking seriously for homes. For one, he pairs a variety of price-range and size filters with Google Maps, helping Trulia build users who feel tied to the brand ahead of time. Real estate brokers who “had helped us build and design the service then e-mailed their agents and said: ‘Check it out,’ and their agents in turn mentioned it to the buyers.” Flint says.

PARTY PARTNER. At Riya, which was launched publicly on Mar. 26, Shah’s team created a feature that lets users import a party invitation from a site like Evite. When users upload photos from a particular event, the tool automatically tags them so that they show up alongside everyone else’s party photos. Shah’s hoping people will keep coming back as new photos are added.

For companies that opt for online advertising, experts recommend proceeding judiciously. It may seem tempting to buy space associated with searches based on general words, such as “travel,” “photos,” or “real estate.” But such broad terms can be extremely expensive and competitive.

Instead, buy cheaper, less common terms, says Brad Fallon, a marketing consultant. “You have to choose your battles,” he says. “Instead of ‘New York Hotels,’ buy ads for the phrase ‘Discount Hotels New York City.’” It may generate fewer clicks but will yield a higher return, he says. Travel site Kayak.com eschews “cheap travel,” which costs about $1.25 per click, instead buying phrases of specific routes like “New York to Chicago.” That one costs a little under 50 cents on the Yahoo search engine.

BLOG IT. Another tip for Web startups: Find partnerships that bring built-in bases of traffic. Flint says one of Trulia’s first steps was giving a heads-up to real-estate and tech blogs, to get enthusiasts interested. Kayak.com, begun in January, 2004, by veterans of Orbitz, Expedia, and Travelocity, sought arrangements whereby it would provide travel-search services for bigger Web sites, such as USA Today, About.com, and AOL.

Founders Steve Hafner and Paul English met with AOL when their idea for the company was just three weeks old. “At that point, AOL said, ‘We agree with the vision, we’re not so sure you can execute it — you don’t even have business cards,’” Hafner says, laughing.

Kayak eventually won business from AOL, which directs users to Kayak’s site. “[AOL] was the first big punch,” English says. In addition to aiding them acquire traffic, it helped distinguish them from other travel sites.

Determined to spend next to nothing on marketing, Shah hatched his own plan for Riya. In late August, 2005, he started keeping a regular blog about launching his startup.

LOYAL FOLLOWING. “The idea was to have frank conversation with potential users,” getting them involved with the process from the beginning, Shah says. “I just started telling the story of the company with me as the protagonist, with regular entries with mock-ups of what I was trying to build, or just posts where I’d say: ‘God, this was frustrating today.’”

A few established bloggers, including BusinessWeek’s own Rob Hof pointed to his blog, and Shah started generating readership. Blogging is a tack adopted by other startups, including plumpstocking.com, an online stocking stuffer store. Founder Kathleen Vignos regularly weighs in on the challenges and milestones of starting a business.

Does it work? Blogging and other methods helped Riya establish a loyal following before the site went live. In the first 24 hours, nearly 1 million photos were uploaded, he says. “All in all, I think we spent $2,000 on marketing and promotion, including the pizza and T-shirts at the launch party,” Shah says. In less than a month, the company is halfway toward its traffic goal for the whole year, giving hope to other new businesses eager to build a Web presence without going broke.

Source: www.businessweek.com