Entrepreneurial Startup Stories
Here are some articles and stories which illustrate successful startup strategy and tactics. Please note that absitively posolutely none involve running around with a business plan begging for money.
The Cell Phone Distributor Startup
Here is a fine example of chutzpah (or audacity):
There is one other revenue source for fleet-footed industry insiders: opportunism.
Participants with industry insider knowledge can sometimes create cashflows through quick arbitrage moves in scarce resources. Cell phone distributor Brightstar “made a fortune”, according to its founder, during its startup phase by taking advantage of the disorganization of its much bigger supplier CellStar. CellStar’s Dallas office, which supplied the US market, would occasionally call BrightStar and ask if it had a certain model of cell phone in stock. The Brightstar founder would put the buyer on hold and call up CellStar’s Miami office, which served the South American market, place the order, and then tell the Dallas office he was sending them right over. While this stream cannot be considered a formal component of your revenue model due to the difficulty of forecasting such opportunities, the entrepreneur should attempt to be both agile and alert enough to take advantage of them if and when they do occur (excerpted from The Guerrilla Startups Guide).
The Software Startup
Greg Gianforte, founder of $30-million RightNow Technologies Inc., learned that bootstrapping is not simply about pinching pennies and cutting costs. Smart bootstrapping is about turning your lack of resources into a competitive advantage.
The Facial Clay Mask Startup
What’s the first thought that goes through a prospective customer’s head when you tell him or her that yours is a startup company? The answer is, “So when are they going to go out of business?” Here’s a story on overcoming the liability of newness. Sometimes you just gotta do what you gotta do to get traction.
Back in the late eighties, three young guys obtain the rights to market marine clay from the pristine waters off Canada’s coast. The clay is mined by another company and then sold to our heroes who package and market it as an all-natural facial mask. The operations are very simple:
Step 1: mine the clay at low tide from a barge,
Step 2: haul it back to the city and stuff into cosmetics jars for sale to retailers and spas.
All production work is done in one corner of a small shampoo and conditioner manufacturing company belonging to the father of one of the three partners. Total capital investment for the equipment needed to pour clay into the jars is less than $5000.
About six months after launch, a very large Japanese pharmaceutical company hears about this wondrous all-natural product and inquires about distribution rights for its homeland.
Fine and good, so far. Negotiations commence. Letters, faxes and telephone calls begin to cross back and forth across the Pacific. The Japanese indicate that they expect to place substantial orders for the clay from the outset.
All appears well until the Japanese request that they be able to fly a team into tour the supplier’s “factory” and meet management. They want to assure themselves that the supplier has the capacity and expertise to deliver what it is promising.
The entrepreneurs’ alarm bells go off in unison at this news.
They hold an emergency meeting. Although they know that they possess the management know-how to run their company at much larger production volumes, and that they have rights to an almost inexhaustible supply of clay, they fear that their start-up status will scare off a risk-averse corporate buyer with the resultant loss of a huge contract. Afterall, how many big corporations would take on as a sole supplier a start-up consisting of three young guys with a combined investment of $5000 in their venture?
The answer is not too many.
Suddenly, one partner comes up with a possible solution. “Why don’t we have a big sign made with our company name and hang it over the shampoo company’s sign? Then the visitors will think the entire plant is ours.” The other partners quickly agree as it is the only solution that they can see.
So a bigger sign is made and hung over the smaller one. The shampoo company employees are asked to play along. To make a short story even shorter, the tour goes without any hitches, a contract is signed, and for the next few years clay is sold to the Japanese. After the first order is received from their huge customer, the three partners begin a program of capital investment to expand their production capacity.
The Japanese never discover the truth about their supplier’s initial Lilliputian size.
The point being made here is that the entrepreneurs knew that they could deliver the goods to the customer. However, they were also smart enough to understand that representatives of a large corporation would panic at the thought of relying on a tiny entrepreneurial venture as the supplier of a key product. At worst, the buyers would walk away from the project; at best they could be expected to begin dictating terms to the entrepreneurs.
Our entrepreneurs wanted neither. They knew that they possessed the core skills to do the job properly and merely wanted to do it on their own terms. (excerpted from The Guerrilla Startups Guide).