5 Key Lessons for Succeeding in an Online Business
To the tens of thousands of potential entrepreneurs interested in starting an online business, there are lessons aplenty to be learned from Paperlesspost.com.
The roughly one-year-old New York-based company allows consumers to send elegantly designed virtual invitations and greeting cards through email and keep track of responses. In itself, that doesn't sound so gee-whiz. And it's not. The barriers to entry in this market are almost non-existent and the competition is considerable.
Aside from Evite, the granddaddy of online invitations (and acting its age), there are online companies like Smilebox.com, MyPunchBowl.com and Socializr.com that are in the online invitations business, not counting the greeting card companies that have online tools for virtual card-sending.
Paperlesspost.com, whose customers sent about 1 million email cards in the company's first year from November 2008 to November 2009, sent another million in the single month after that, according to James Hirschfeld, 23, who co-founded the company with his sister, Alexa, 25. That's a hockey stick growth chart to be reckoned with. The company gives consumers 25 free "stamps" when they open an account, then charges them from $5 for 40 stamps to $25 for 500 stamps. The company is private and doesn't reveal its revenues, but if it mailed 1 million e-cards in a month, it could have seen revenue for the month of $50,000+.
So what are some of the tips you should pay attention to about this blossoming company?
1. Style Counts
James is the co-founder chiefly responsible for design and look-and-feel of the company's invitations, cards and user interface. It is difficult to find anything to complain about as you look through its beautifully presented gallery of card offerings. You can tell they have done their homework on user experience. Everything is really, really easy to use. It's laid out invitingly, like a well-decorated, spotlessly clean room. Its color scheme is simple: basic shades of grey except for its burgundy stamp logo and the color Flash renderings of its card options.
If you are on the receiving end of one of its cards, which may well be how most people come to learn of the company, the experience will make you want to send cards to your own friends or business contacts. The use of technology to simulate the receipt of an actual card is pristine and elegant. There's nothing cheesy about it, as there is with so many other similar services.
Not surprisingly, James's and Alexa's entrepreneurial hero is Steve Jobs. If Apple was in the online invite business, it would be Paperlesspost.
2. Get Buzzed
Paperlesspost has gotten great media exposure. Not a ton of it, but just in the right places. The New York Times has written about them twice in less than six months (a PR miracle). They've also been featured on Fox News and trendy sites like Vogue.com, W, Lucky and Tatler, among others. It also helps that other early adopters have included Condoleeza Rice and designer Zac Posen. And Ivanka Trump said this on Twitter: "what's the fab site u used for your Holiday card? spent 6 hrs looking for it."
3. Think Brand Position
You may make the greatest cheese slicer ever known to man, but you need to think beyond your product of the moment. James doesn't describe his company as being in the online invitations and greeting card business. "Email is two dimensional, totally flat," James notes. "We had the opportunity to create a platform for meaningful, formal, textured communication on the Internet." That brand platform could migrate into many different expressions that go far beyond greeting cards and invitations sent by email. While James would not discuss future plans, one can contemplate things like email stationery/letterheads that help companies and individuals brand themselves in email far better than they can today.
4. Help from the Angels
Paperlesspost scored $880,000 in angel investor financing a year ago when the company had "$4,000 in the bank," James says. The investment enabled the company to hire a team of developers, a chief financial officer, and a branding expert. It now has a staff of 15. The company had a rudimentary prototype to show investors, so it appears it the investors were buying a vision and management team more than a ready-to-go product.
5. Gen Y Characteristics
Like many other Gen Y entrepreneurs, James says he and Alexa "know the limitations of our own expertise." James's work experience after graduating Harvard (as his sister did slightly ahead of him) included stints at the Getty Museum in Los Angeles, New Line Cinema and working summers for a hedge fund. Alexa's first job was working for Katie Couric at CBS News. Certainly both had some prestige employers but both are new entrepreneurs. They act as co-CEOs but give a lot of lattitude to the people who do development, finance and marketing/branding.