We have mentionned LaFraise on this blog before. Patrice, the founder, has just reached the 100KE of revenues / month. Congrats! And including himself, there are only 3 people in his little company. It gave me the urge to modelize his business real quick
in the attached Excel file. (not yet: I'll publish it after you get a chance to play with this model)
These are very very rough numbers just to see the dynamics of his business. Try to figure out how I did it, or where I’m totally wrong in this. I did a 5 year very simple plan. T-shirts are sold through a web site. The store is only for visiting the goods (like the recent Wired store in NYC)
Cost of good sold: (all excluding tax)
General & Administration:
It took me about 40 min to compute the whole thing. So my question to you all is what is the required capital this business owner would need to bootstrap his business ? (in other words, the minimum point of sum of free cash flow) ?
I simplified the model: no sales season, no season variation (Patrice confirms this), no discount on volume for some people, not taking into account the price he pays for designers submitting visuals, etc.
I know this post might sound weird to you, but I gave a 1h30 lecture the other day on the HEC Campus to PhD graduates studying entrepreneurship. And this is exactly the case I used on the white board to illustrate the rule #1 for entrepreneurs: CASH IS KING. Then comes market demand (or market PAIN).
Let me know whether this exercise is useful to you.
Our new DELL Computers arrived yesterday at the office. Brand new desktops with enough memory and large flast screens. We placed the order last Tuesday, and they arrived only 6 days later, built to order, about 8 days early of the previsionnal date on the order form.
Isn't it great :) ? the only thing I had to do offline was to negotiate a special price with my account manager at DELL, that I've known for some time now. It always helps to create good relationships with your suppliers, as they can sometimes pull out special deals for you :)
Next step, install the stuff (we have just joined a special program at Microsoft, so we are also BUYING our software), and get back to normal work, with better working conditions !
Catherine is the founder & CEO of cashstore.fr, a French cash-back service relying on over 122 partner merchant sites.
How does it work ? You register (free) on the site, click on any of the partner sites, and proceed as usual on your e-commerce purchase using your cashtore email address. She tracks you with the email, and the merchant site tracks the originating click.
Her business model is simple: she negotiates reductions with each partner site and shares the savings with the buyer, keeping approximately 50% of it. On average you can expect to get an additional 5% off any public price + any discount you might get elsewhere for the site. Cashstore will pay you by check whenever you reach 30 euros of cashback.
I recently used her service for buying my new Mac, and I encourage you to make it your first destination whenever shopping online. The company is self-funded, and I hear it will start looking for funds soon. Good stuff.
Interesting approach to an e-commerce mall. Lecentredumonde.com (the center of the world …) has added a 3D interface (actually a series of 3D pictures) to an online shopping gallery. It’s rather simple, and navigation not intuitive at first. Then when you click on a store, you go off to the store’s web page. The concept actually needs to be extended and have a presence for instance in real virtual life, like in Second Life.
In terms of business model, I guess they are trying to live off an affiliation model with bounties. But their interface is not compelling enough to go a 2nd time, nor does it incentivize me with promotions that I couldn’t get elsewhere.
So, unless they make this thing into a real online 3D mall, I’m not going back
About a month ago, a number of popular bloggers respected a no GYM (Google Yahoo! Microsoft) moratorium for about 2 weeks. I guess we should give it some additional consideration for 2006, because writing all the time about a new feature here and there is kinda silly. In the meantime, since I’ve still got a few days to go until 2006, here’s an interesting piece of news found on ZDnet, via digg.
“ The video upload program terms and conditions had a major upgrade this morning, and with it comes some insight into new features that Google may be preparing to launch for Google Video — including rentals.
The other night, French bloggers united for... and used the offices of vodeo.tv for the event. I've mentionned them a couple of times: they're a specialist video on demand service focusing on documentaries, old television footage and indies. They have raised so far 2.5m euros so far from business angels.
The founder, Frédéric Pie is a funny man. We had lunch together several months ago at Marc Veyrat in Annecy, for several hours, and I can tell you he has a lively spirit.
I caught him on camera here, where he describes his TV tastes ;). Disclaimer: his birthday was the night before, and I guess he enjoyed it very very much :D
The shops here in Paris seem to be over-crowded and the shopping streets are full. And somehow, business life seems to be slowing down. I don’t know why or how, since I hardly leave my desk, even on weekends
So here are some quick thoughts:
Typepad was down on Friday for about the whole day. I got pinged about 10 times in the morning (chat, email) by contacts who said my blog was now blocking comments, had gone back in time, was down… Yep I saw it AFTER being pinged, and checked as usual: http://status.sixapart.com where indeed the service had gone full red. Bad but hey, I’ve been in the Internet business for 10 years now: I was sure network engineers and sysadmins at SixApart and partners were already deep in the computer room trying to solve the situation. So no need to scream, yell, get angry. The tech people would get the service back online as fast as they could, and indeed now on Sunday evening, the service is back and no content was lost in the process. And maybe if SixApart could have communicated a bit more, my guess is that they didn’t know better and that they were putting all efforts in restoring the service. Only the big guys have the ressources to employ a full-time PR team ;(
I wrote a while ago about the difficulty of getting a service online, and managing growth. I’ve lived through it, and I can indeed tell you that you get a lot of white hair, because complexity of a system grows with the number of users: fault-tolerant systems, dual/triple backups, dual electrical/telecoms/heat systems, etc. + monitoring tools, around-the-clock engineers, 24/7 call center, etc. Startups all have to learn how to deal with this, and there’s no glory in having a robust system until it breaks. Since the purpose for it is not to break, you never know whether you are OVER or UNDER investing in this space, which falls in the EXPENSES and CAPEX categories of your P&L. Bloggers tend to forget that for a service to exist, and to grow (and not break), a lot of investment has to be made. Which means revenues, which means a P&L, which means trade-offs.
There’s no free lunch, and I was shocked by some of the comments on the blogosphere when Typepad went down. Yes, nothing is fault-proof. But I wouldn’t bet my business on a service that I pay 15 euros/ month for. At that price it can’t be the miracle solution you are looking for.
Remember: 99,9% uptime means a downtime of 0,1% per year. Which means 24 hours * 365 days * 0,1% = 8.76 hours. That’s more than what you get with telcos for a decent price, so add everything else that can go wrong above the telco layer: machines, services, humans, etc. In the 99% area of service level agreement, that’s a 87,6 hours downtime per year, ie. almost 4 days.
If you want a solid blogging platform, get yourself a server (500$) + a blogging sofware (ranges from free to paying: remember someone has to pay the developers) + a hosting rack + bandwidth + 2–3 full time employees to monitor the server round the clock. Not exactly 15$/month.
Remember, there’s no free lunch.
And also: backup often and test often that you can restore.