|Arnold Kling Essays | Short Book Reviews | Favorite Links | Under the Radar | Home|
In spite of all the attention lavished on the Internet by the media, the truth is that they wound up missing the real story. What went unreported is the fact that there are many entrepreneurs who have used the Internet to start successful businesses without venture capital. No, they are not being featured in magazine cover stories, but they have built profitable companies. They have not been involved in high-flying IPOs, but many of them have netted millions of dollars from the sale of their companies to larger firms.
I think that what makes my story inspiring is how ignorant and unprepared I was for becoming an entrepreneur. The point is that you do not have to get every single decision right or anticipate every contingency. Now that I have had the experience, I would say that starting your first business is like going through adolescence: nobody is completely prepared for it, but somehow you make it through.
Observe the differences between the two points of view. One side--the entrepreneur--might be content with a target valuation of $5 to $10 million. The other side--the venture capitalist--is not even willing to consider a business with a target valuation of less than $1 billion. Do you notice a gap here? That gap is the region that I refer to as Under the Radar. There is a lot of room Under the Radar.
In the textbook model for starting a business, the first step is to write down a business plan. However, the textbook process is inappropriate for Netstrapping. In reality, if you were following a sound, systematic approach to starting an enterprise, the business plan would not be the first step, or even the second or third step.
For an Under the Radar business, selling does not just feed your mouths. It feeds your minds. Of all the ways that you can gather information to improve your offering and strengthen your business, the selling process can be the most powerful. From this perspective, selling is a form of trial-and-error learning.
Almost all consumers who arrive at your web site do so by choice, with a particular purpose or expectation in mind. The typical consumer arrives with two questions paramount:
1. Can I find what I am looking for here?
2. Can I trust what I find here?
To get the partners you need, become the ideal partner.
This is yet another instance of doing the role reversal. If you can view the relationship from the perspective of the potential partner, you increase your chances of obtaining the partnership.
A clean getaway is more than just an exit strategy. An exit strategy refers to a goal of either selling a business or taking it public. By a clean getaway I mean that at any time after founding a company, it can undergo a restructuring or change of personnel of any kind without triggering an expensive legal case.
All start-ups face difficult choices. Most of the dilemmas that you face will be issues that cannot be anticipated ahead of time. That is what makes entrepreneurship interesting and challenging. However, the dilemmas described in this chapter are ones that you ought to think about ahead of time. Nearly every Netstrapper faces the issues of when to jump in full time, whether to pay suppliers in equity or cash, deciding whether short-term profitability should be sacrificed for long-term value, which functions to outsource, and when to seek funding.
What I can offer is the impressions and opinions that I have gained from my own experience, from reading books like The Origin and Evolution of New Businesses, and from interviews with over two dozen Netstrappers. Based on these impressions, perhaps you can compare yourself to successful Under the Radar entrepreneurs, and identify areas for development.
I believe that most Netstrappers would rather build a solid enterprise than try to make a fortune by fooling stock market investors. Certainly, the focus of this book is on creating a real business. If you identify a genuine market need and create a company that meets that need, then I believe that you will achieve the success that you deserve, regardless of how the stock market behaves.