Thursday, November 24, 2005
My quote
If success had an equation, I would be a variable!
Ask an Expert
askanexpert@forbes.net
Sunday, November 13, 2005
Quote of the day.
The pure and simple truth is rarely true and never simple
Saturday, November 05, 2005
Building the next Google
It’s a terrific time to be an entrepreneur. The availability of cheap computer hardware, free software, and high-speed Internet access has created a powerful new base from which to launch new businesses and expand or transform existing ones. The Googles and Microsofts of tomorrow are being built in ways never seen before. Here’s how you can create your own world-changing company.
GETTING GOING
This is the most critical time for any startup. Your main goal is assembling the best team to get your venture off the ground -- that is, generating a product or a prototype that serves as proof that your concept will work. Keep these pointers in mind during the early days.
1 Start Small
Four founders is fine; two is better. With fewer people it’s easier to build consensus and less likely that rival factions will form. Make sure you have technically minded founders (the more engineers, the better). No MBA required, but one founder should be able to moonlight as the company’s top salesperson and communicator. Apple, Google, and Sun Microsystems each started with a close-knit group of founders who shared a common vision but brought different skill sets. Being small is also more efficient: Paul Scanlan, co-founder of MobiTV, a startup that offers TV services via cell phone, says having fewer people makes it easier to focus on a single problem. That helped MobiTV land a contract from networking giant Siemens despite having just six people on staff.
2 Look for Angels
It’s cheap enough these days to start a company without enduring the hassle of raising formal venture capital. If you don’t have friends or family to put the arm on, and your credit cards are maxed out, consider an angel investor -- typically a fat cat who’ll write a big check in exchange for an equity stake in a promising early-stage startup. Ross Mayfield got $600,000 from angel investors who read about his idea for a social networking service, Socialtext, on his blog. You can find angel investors through organizations like the Angel Capital Association (www.angelcapitalassociation.org).
3 Embrace Open-Source
The scores of free software programs available will help you keep infrastructure costs down. While Linux is the best-known open-source project, others, including the Apache Web server program and MySQL database software, are also widely used. Mayfield leveraged these free programs and spent just $5,000 to get Socialtext up and running. Make sure you know the origins of any open-source software you choose, though, since some programs are subject to intellectual property restrictions or open-source licenses that place limits on their use for commercial purposes.
4 Use Off-the-Shelf Equipment
Commoditization has driven hardware costs through the floor. Standardizing around gear from Dell or Hewlett-Packard can save you thousands of dollars in hardware costs and potentially more down the road in productivity, since you’ll be able to get replacement parts quickly and easily if anything breaks down. Neville Street, chief executive of Mobile 365, a startup with $75 million in annual revenues that manages messaging services for wireless carriers, keeps hardware costs down by ensuring that his entire workforce uses inexpensive Dell PCs.
5 Launch Early, Launch Often
Expose your product to a community of users as soon as possible. Google has done this brilliantly with Gmail and Google Maps, letting the audience pound on the product and make suggestions about what’s working and what’s not. Be careful, though: If users are clamoring for specific features, you should either incorporate them immediately or give a clear explanation of why not. Firefox and Flickr were two of the most popular technologies of the past year, and their developers went to great lengths to incorporate suggestions from their audiences into the services. Imeem, a Palo Alto-based startup, tapped 10,000 testers to hone its social networking software, releasing product updates weekly.
FINANCING THE BUSINESS
It’s not raining venture capital the way it was during the dotcom days. You’ll need a strong vision, a working prototype, and a ton of users to be taken seriously now on Sand Hill Road or any other place where the big venture capitalists congregate. “The idea of funding concepts is out the window,” says Ken Gullicksen, a general partner at Morgenthaler Ventures. Here’s how to be a rainmaker in today’s climate.
1 Bootstrap as Long as You Can …
Developing your product as fully as possible allows you to get the greatest valuation for your company. So don’t race to the money trough: “A $1 million investment typically goes to a team that’s still in the early stages,” Gullicksen says. “At $10 million, the team has probably lived longer on sweat and has a more developed product.” In other words, there’s a lot more to sell.
2 … But Know When to Tap the Venture Community
“When thousands of users spontaneously tell their friends about your product,” says David Cowan, a general partner at Bessemer Venture Partners, “that’s when you should start thinking about looking for money.” Why is that a key milestone? It means the product is working; now you want to have the resources to do whatever it takes -- from hiring quality-assurance testers to signing partnerships with other companies -- to sustain that growth. For most businesses, that means it’s time to turn to a VC.
3 Don’t Wait Too Long to Ask for More Money
Building a successful business almost always costs more and takes longer than you expect -- so make sure to start raising your next round while you’ve still got plenty of cash in the bank. If an investor knows that your company is desperate for cash, you may end up striking a Faustian bargain and be forced to give up too much equity. Fresh from raising $20 million, Greg Ballard, chief executive of Glu Mobile, based in San Mateo, Calif., decided to accept an offer for another $7.5 million from Time Warner (parent company of Business 2.0), even though Glu didn’t need it immediately. “The valuation was good and so was the investor, so it became a smart strategic decision to take the money,” Ballard says. “It’s always good to have a well-stocked war chest.”
4 Think Beyond the Terms
Not all venture capitalists are created equal. Top-tier firms such as Kleiner Perkins Caufield & Byers and Sequoia Capital can offer connections to CEO talent and customers and can serve as useful strategic guides on your board of directors. Others focus on specific markets or sectors and have a better understanding of how to grow, say, an enterprise software firm or a consumer digital-media play. Make sure you match your business with the right VC.
MANAGING GROWTH
The final stage of a startup’s life is the trickiest. It’s a critical juncture when you’ll need to show steady growth of not only your revenues but also your staff. The types of hires you make and when you make them call for the finesse of an orchestra conductor. These five tips will help ensure that your company doesn’t grow too fast -- or too slowly.
1 Hire Smart
Paul Graham, an entrepreneur who sold his second company, Viaweb, to Yahoo for $50 million, says the first people you hire should be technical folks who can focus intensely on perfecting the product. Expensive marketing campaigns and advertising blitzes are no-nos for startups today; don’t fill out your sales and marketing team until after you’ve built a business that has proven it can generate cash.
2 Sell It Yourself
An old VC adage: Hire slowly and fire quickly. Nowhere does this apply more than to the sales staff. While it’s a critical component of any organization, the sales force is one of the most expensive. Luckily, selling the product happens to be a task that can be handled -- at least at first -- by most members of your team. Mark Leslie, founding CEO of software firm Veritas and a professor at Stanford’s business school, even developed a model, called the Sales Learning Curve, to help companies determine when to start hiring salespeople. Read more about it at www.eldorado.com/pg_newsletter_read-7.html.
3 Spread the Wealth
If your startup hopes to compete for top talent, you’ll need to offer something established companies can’t: the chance to strike it check-out-my-new-Maserati rich. “If you are going to ask someone to take a risk on your startup, you have to give some equity,” says Srivats Sampath, chief executive of Mercora, a popular Internet radio network. Still, make sure stock options vest over a four-year period, lest your top people be more concerned with cashing in than with building a lasting company.
4 Bring In the Big Guns
Once you’ve built a product you can sell, you’ll need the professionals -- experienced players who have done it before for larger companies and come equipped with deep Rolodexes. When it needed to land some big customers earlier this year, Palamida, a San Francisco-based risk-management software startup, hired former Sun Microsystems executive vice president Mark Tolliver as its chief executive. Within months Tolliver had tapped his network of contacts to help the 20-person firm land several new clients, including big-fish customer Cisco Systems.
5 Know When to Step Aside
Leave your ego at the door and don’t overstay your welcome. As has been painfully demonstrated many times, the founders often are not the best people to take the business to the next level. You might be a brilliant technologist but a lousy CEO. When Jim Clark wanted to bring Netscape to the masses, he was smart enough to step aside and let über-CEO Jim Barksdale come aboard. Barksdale helped the company navigate a successful IPO and negotiated a $4.2 billion deal to sell Netscape to AOL in 1998.
GETTING GOING
This is the most critical time for any startup. Your main goal is assembling the best team to get your venture off the ground -- that is, generating a product or a prototype that serves as proof that your concept will work. Keep these pointers in mind during the early days.
1 Start Small
Four founders is fine; two is better. With fewer people it’s easier to build consensus and less likely that rival factions will form. Make sure you have technically minded founders (the more engineers, the better). No MBA required, but one founder should be able to moonlight as the company’s top salesperson and communicator. Apple, Google, and Sun Microsystems each started with a close-knit group of founders who shared a common vision but brought different skill sets. Being small is also more efficient: Paul Scanlan, co-founder of MobiTV, a startup that offers TV services via cell phone, says having fewer people makes it easier to focus on a single problem. That helped MobiTV land a contract from networking giant Siemens despite having just six people on staff.
2 Look for Angels
It’s cheap enough these days to start a company without enduring the hassle of raising formal venture capital. If you don’t have friends or family to put the arm on, and your credit cards are maxed out, consider an angel investor -- typically a fat cat who’ll write a big check in exchange for an equity stake in a promising early-stage startup. Ross Mayfield got $600,000 from angel investors who read about his idea for a social networking service, Socialtext, on his blog. You can find angel investors through organizations like the Angel Capital Association (www.angelcapitalassociation.org).
3 Embrace Open-Source
The scores of free software programs available will help you keep infrastructure costs down. While Linux is the best-known open-source project, others, including the Apache Web server program and MySQL database software, are also widely used. Mayfield leveraged these free programs and spent just $5,000 to get Socialtext up and running. Make sure you know the origins of any open-source software you choose, though, since some programs are subject to intellectual property restrictions or open-source licenses that place limits on their use for commercial purposes.
4 Use Off-the-Shelf Equipment
Commoditization has driven hardware costs through the floor. Standardizing around gear from Dell or Hewlett-Packard can save you thousands of dollars in hardware costs and potentially more down the road in productivity, since you’ll be able to get replacement parts quickly and easily if anything breaks down. Neville Street, chief executive of Mobile 365, a startup with $75 million in annual revenues that manages messaging services for wireless carriers, keeps hardware costs down by ensuring that his entire workforce uses inexpensive Dell PCs.
5 Launch Early, Launch Often
Expose your product to a community of users as soon as possible. Google has done this brilliantly with Gmail and Google Maps, letting the audience pound on the product and make suggestions about what’s working and what’s not. Be careful, though: If users are clamoring for specific features, you should either incorporate them immediately or give a clear explanation of why not. Firefox and Flickr were two of the most popular technologies of the past year, and their developers went to great lengths to incorporate suggestions from their audiences into the services. Imeem, a Palo Alto-based startup, tapped 10,000 testers to hone its social networking software, releasing product updates weekly.
FINANCING THE BUSINESS
It’s not raining venture capital the way it was during the dotcom days. You’ll need a strong vision, a working prototype, and a ton of users to be taken seriously now on Sand Hill Road or any other place where the big venture capitalists congregate. “The idea of funding concepts is out the window,” says Ken Gullicksen, a general partner at Morgenthaler Ventures. Here’s how to be a rainmaker in today’s climate.
1 Bootstrap as Long as You Can …
Developing your product as fully as possible allows you to get the greatest valuation for your company. So don’t race to the money trough: “A $1 million investment typically goes to a team that’s still in the early stages,” Gullicksen says. “At $10 million, the team has probably lived longer on sweat and has a more developed product.” In other words, there’s a lot more to sell.
2 … But Know When to Tap the Venture Community
“When thousands of users spontaneously tell their friends about your product,” says David Cowan, a general partner at Bessemer Venture Partners, “that’s when you should start thinking about looking for money.” Why is that a key milestone? It means the product is working; now you want to have the resources to do whatever it takes -- from hiring quality-assurance testers to signing partnerships with other companies -- to sustain that growth. For most businesses, that means it’s time to turn to a VC.
3 Don’t Wait Too Long to Ask for More Money
Building a successful business almost always costs more and takes longer than you expect -- so make sure to start raising your next round while you’ve still got plenty of cash in the bank. If an investor knows that your company is desperate for cash, you may end up striking a Faustian bargain and be forced to give up too much equity. Fresh from raising $20 million, Greg Ballard, chief executive of Glu Mobile, based in San Mateo, Calif., decided to accept an offer for another $7.5 million from Time Warner (parent company of Business 2.0), even though Glu didn’t need it immediately. “The valuation was good and so was the investor, so it became a smart strategic decision to take the money,” Ballard says. “It’s always good to have a well-stocked war chest.”
4 Think Beyond the Terms
Not all venture capitalists are created equal. Top-tier firms such as Kleiner Perkins Caufield & Byers and Sequoia Capital can offer connections to CEO talent and customers and can serve as useful strategic guides on your board of directors. Others focus on specific markets or sectors and have a better understanding of how to grow, say, an enterprise software firm or a consumer digital-media play. Make sure you match your business with the right VC.
MANAGING GROWTH
The final stage of a startup’s life is the trickiest. It’s a critical juncture when you’ll need to show steady growth of not only your revenues but also your staff. The types of hires you make and when you make them call for the finesse of an orchestra conductor. These five tips will help ensure that your company doesn’t grow too fast -- or too slowly.
1 Hire Smart
Paul Graham, an entrepreneur who sold his second company, Viaweb, to Yahoo for $50 million, says the first people you hire should be technical folks who can focus intensely on perfecting the product. Expensive marketing campaigns and advertising blitzes are no-nos for startups today; don’t fill out your sales and marketing team until after you’ve built a business that has proven it can generate cash.
2 Sell It Yourself
An old VC adage: Hire slowly and fire quickly. Nowhere does this apply more than to the sales staff. While it’s a critical component of any organization, the sales force is one of the most expensive. Luckily, selling the product happens to be a task that can be handled -- at least at first -- by most members of your team. Mark Leslie, founding CEO of software firm Veritas and a professor at Stanford’s business school, even developed a model, called the Sales Learning Curve, to help companies determine when to start hiring salespeople. Read more about it at www.eldorado.com/pg_newsletter_read-7.html.
3 Spread the Wealth
If your startup hopes to compete for top talent, you’ll need to offer something established companies can’t: the chance to strike it check-out-my-new-Maserati rich. “If you are going to ask someone to take a risk on your startup, you have to give some equity,” says Srivats Sampath, chief executive of Mercora, a popular Internet radio network. Still, make sure stock options vest over a four-year period, lest your top people be more concerned with cashing in than with building a lasting company.
4 Bring In the Big Guns
Once you’ve built a product you can sell, you’ll need the professionals -- experienced players who have done it before for larger companies and come equipped with deep Rolodexes. When it needed to land some big customers earlier this year, Palamida, a San Francisco-based risk-management software startup, hired former Sun Microsystems executive vice president Mark Tolliver as its chief executive. Within months Tolliver had tapped his network of contacts to help the 20-person firm land several new clients, including big-fish customer Cisco Systems.
5 Know When to Step Aside
Leave your ego at the door and don’t overstay your welcome. As has been painfully demonstrated many times, the founders often are not the best people to take the business to the next level. You might be a brilliant technologist but a lousy CEO. When Jim Clark wanted to bring Netscape to the masses, he was smart enough to step aside and let über-CEO Jim Barksdale come aboard. Barksdale helped the company navigate a successful IPO and negotiated a $4.2 billion deal to sell Netscape to AOL in 1998.
The $25 Trillion land grab
There has been an impressive amount of construction in the United States over the last three centuries: All told, we’ve built more than 300 billion square feet of homes, offices, factories, and other structures. But according to new studies from the Brookings Institution and Virginia Tech urban planning professor Robert Lang, we’re about to pick up the pace -- it will take just 25 years to erect the next 200 billion square feet, which we’ll need to accommodate 70 million more people and to replace homes and offices erased by everything from disasters like Hurricane Katrina to plain old obsolescence.
If you think the real estate boom of the past decade was bounteous, peek a little further over the horizon: Researchers estimate that the massive buildout will constitute a $25 trillion development market by 2030, more than twice the size of the entire U.S. economy today. According to Lang, the bulk of that money will flow into 10 major metro regions he has christened “megapolitans.” On the following pages, we’ve assembled exclusive growth forecasts for each of these regions and -- based on interviews with dozens of regional planners, developers, and investors -- identified the savviest angles to play in the near and long term.
CASCADIA
Vast quantities of cheap, prime greenfield surrounding Seattle, Portland, and Eugene give the Northwest megapolitan explosive growth potential. By 2030 the three metro regions will be intertwined.
KEY DEMOGRAPHIC SHIFT: The Asian population will more than triple; the number of seniors will double.
NEW GROWTH INDUSTRY: Seattle will become one of three global hubs for bioinformatics startups.
BEST BUSINESSES TO START: Architectural firms catering to green developers.
BEST RESIDENTIAL REAL ESTATE BET: $200,000 homes in small towns 30 minutes outside Portland, beyond the urban-growth boundary.
BEST COMMERCIAL REAL ESTATE BET: Retail or office space around Snoqualmie Ridge, one of three “urban villages” in early development near Seattle.
GOVERNMENT CARROT: Oregon’s new property-rights law, which opens the door to more rural development.
IT’S ALREADY TOO LATE TO …: Speculate on Paul Allen’s Seattle redevelopment project, South Lake Union.
NEW PEOPLE: 2.2M (+38%)
NEW JOBS: 920,000 (+27%)
NEW HOMES: 1.2M units (+41%)
NEW OFFICE SPACE: 2.8M sq. ft. (+124%)
NORCAL
The action is moving east from the Bay Area: The Sacramento metro region will build more housing and office space in the next 25 years than any other Western megapolitan city except Las Vegas.
KEY DEMOGRAPHIC SHIFT: Flight of skilled workers from the Bay Area to the region’s cheaper exurbs.
NEW GROWTH INDUSTRY: NorCal will host a neurotechnology industry that marries pharmaceuticals and computers; artificial intelligence startups will likely flourish.
BEST BUSINESSES TO START: New Central Valley towns have an across-the-board demand for everything from restaurants to hospices and hotels.
BEST RESIDENTIAL REAL ESTATE BET: $340,000 homes in and around Merced, home to the newest University of California campus. Estimated student population in 2030: 25,000.
BEST COMMERCIAL REAL ESTATE BET: Vulture acquisition of property owned by old, declining industrial businesses in the Bay Area, for pennies on the dollar.
GOVERNMENT CARROT: The new stem-cell research center in San Francisco, which will control $3 billion in state funding over 10 years.
IT’S ALREADY TOO LATE TO …: Nab a condo in one of two luxury towers due to break ground soon in Sacramento’s downtown. The waiting list is impossibly long.
NEW PEOPLE: 4.3M (+35%)
NEW JOBS: 2M (+39%)
NEW HOMES: 1.3M units (+29%)
NEW OFFICE SPACE: 4.4M sq. ft. (+121%)
SOUTHLAND
Trade with China through the country’s largest port, Los Angeles, will fuel a boom in logistics, warehousing, and distribution centers for companies like Target. New military and space programs will do for the Southland what the Internet did for NorCal in the 1990s.
KEY DEMOGRAPHIC SHIFT: By 2020, male illegal immigrants from Mexico will likely make up more than 10 percent of the Southland’s workforce; no other megapolitan comes close to having this supply of cheap labor.
NEW GROWTH INDUSTRY: With freight volume projected to triple by 2030, warehouse builders will become the fastest-growing commercial
developers in the region.
BEST BUSINESSES TO START: Upscale restaurants near I-15 in San Bernardino County, to give future suburbanites a taste of something better than fast food.
BEST RESIDENTIAL REAL ESTATE BET: $325,000 still gets you a 2,300-square-foot house in Apple Valley, one of dozens of suburban boomtowns emerging east of Los Angeles.
BEST COMMERCIAL REAL ESTATE BET: Parking lots in downtown Los Angeles for tomorrow’s high-rise redevelopments.
GOVERNMENT CARROT: Billions in local, state, and federal funding that will be used to build 150 miles of truck-only express lanes in Los Angeles, Orange County, and the Inland Empire by 2020.
IT’S ALREADY TOO LATE TO …: Buy raw land around Las Vegas for sprawl development; prices are soaring because it’s hemmed in by federally owned property.
NEW PEOPLE: 8M (+35%)
NEW JOBS: 3.7M (+40%)
NEW HOMES: 2.7M units (+35%)
NEW OFFICE SPACE: 8.3M sq. ft. (+115%)
VALLEY OF THE SUN
This is the smallest megapolitan, but the one with the greatest supply of raw, buildable land at the lowest prices -- one reason it will soon be the fastest-growing metro region in the country. The big draw: a Palm Springs lifestyle for the masses at a substantial discount.
KEY DEMOGRAPHIC SHIFT: Phoenix will remain the top destination city for Americans moving from other states.
NEW GROWTH INDUSTRY: Higher education and biotech research; big-box malls; laser and high-energy weapons engineering.
BEST BUSINESSES TO START: Fast-food, coffee, and retail establishments in Maricopa, another edge city set to boom.
BEST RESIDENTIAL REAL ESTATE BET: A house in a virgin subdivision like Verrado, undervalued because stores and office parks aren’t yet built.
BEST COMMERCIAL REAL ESTATE BET: Acreage bordering luxury-home developments announced by prestigious builders like Phoenix’s DMB.
GOVERNMENT CARROT: Expansion at Arizona State University, which will increase its enrollment by 50 percent to 90,000 students and generate more than 10,000 new jobs by 2020.
IT’S ALREADY TOO LATE TO …: Buy land you think will become a future freeway interchange. Investors have gobbled up acreage along I-10 as far as 65 miles west of Phoenix.
NEW PEOPLE: 3.9M (+82%)
NEW JOBS: 1.3M (+63%)
NEW HOMES: 940,000 units (+54%)
NEW OFFICE SPACE: 2.1M sq. ft. (+156%)
GULF COAST BELT
Hurricane Katrina will for decades exaggerate a divide at the Texas-Louisiana border between the region’s richer western section and the poorer eastern one. Surrounding megapolitans will enjoy spillover growth because of the Gulf Coast Belt’s higher risk premium.
KEY DEMOGRAPHIC SHIFT: By 2015, Houston will have one of the nation’s highest surges in workers under age 25 and retirement-age boomers wanting to downsize.
NEW GROWTH INDUSTRY: Homeland security technologies will emerge around Louisiana’s complex of ports.
BEST BUSINESSES TO START: Law firms, accounting shops, or restaurants in the Texas “borderplex” that cater to U.S. companies with maquiladora factories south of the border.
BEST RESIDENTIAL REAL ESTATE BET: Houses on hills in Baton Rouge. Its population has more than doubled since Katrina. Those who can afford to stay will be buying.
BEST COMMERCIAL REAL ESTATE BET: Discounted industrial property that should bounce back with a rebound in port traffic for oil and other commodities.
GOVERNMENT CARROT: New coastal infrastructure, courtesy of the U.S. Army Corps of Engineers.
IT’S ALREADY TOO LATE TO …: Buy New Orleans warehouse space that escaped damage. FEMA contractors and other infrastructure providers are renting out the properties.
NEW PEOPLE: 3.8M (+31%)
NEW JOBS: 2M (+38%)
NEW HOMES: 1.5M units (+34%)
NEW OFFICE SPACE: 4.8M sq. ft. (+120%)
I-35 CORRIDOR
No region better captures and caters to the Latino population boom. A new generation of Hispanic business owners and industrialists will drive the growth, and the area will become a magnet for foreign firms trying to cash in on the U.S. Latino market.
KEY DEMOGRAPHIC SHIFT: Dallas’s Caucasian population will jump 30 percent over the next two decades as relatively cheap real estate draws more people willing to move from overpriced markets in other states.
NEW GROWTH INDUSTRY: Thanks to deregulation and subsidies, Texas will be the country’s new base for wind power. Auto manufacturers will move operations here to capitalize on cheaper labor.
BEST BUSINESSES TO START: Parts and components subcontractors to major suppliers for Toyota’s new San Antonio plant.
BEST RESIDENTIAL REAL ESTATE BET: Starter homes and townhouses in Latino neighborhoods of Dallas and San Antonio.
BEST COMMERCIAL REAL ESTATE BET: Land along I-35 north of Dallas, where new edge cities are leapfrogging each other.
IT’S ALREADY TOO LATE TO …: Invest in waterfront homes on the many lakes surrounding Austin. The lots are full, and prices have peaked.
NEW PEOPLE: 6.4M (+40%)
NEW JOBS: 3.3M (+45%)
NEW HOMES: 2.8M units (+46%)
NEW OFFICE SPACE: 6.6M sq. ft. (+130%)
GREAT LAKES HORSESHOE
Hit hard by manufacturing’s decline, the constellation of Northern industrial cities is morphing into a service-economy region and will draw a flood of immigrants.
KEY DEMOGRAPHIC SHIFT: With the smallest percentage of baby boomers of all the megapolitans, this region will have one of the most plentiful prime-age workforces for the next two decades.
NEW GROWTH INDUSTRY: Third-party logistics contractors that manage supply chains for companies ranging from carmakers to retailers.
BEST BUSINESSES TO START: Retail stores and restaurants in Latino enclaves like Chicago’s Little Village.
BEST RESIDENTIAL REAL ESTATE BET: Elburn, Ill., a tiny Chicago suburb set to boom after a commuter rail extension is completed by year’s end.
BEST COMMERCIAL REAL ESTATE BET: Joliet, an old steel-mill boomtown on the Des Plaines River and the hub of Will County, is expected to be among Illinois’s fastest-growing towns in the next quarter-century.
IT’S ALREADY TOO LATE TO …: Redevelop a lot within Chicago’s Loop; Trump was one of the last to move in.
NEW PEOPLE: 4M (+10%)
NEW JOBS: 3.2M (+17%)
NEW HOMES: 2.5M units (+16%)
NEW OFFICE SPACE: 14M sq. ft. (+94%)
ATLANTIC SEABOARD
The country’s most heavily populated megapolitan braces for another boom. Where will most of the development go? Up: Urban infill will outstrip suburban growth.
KEY DEMOGRAPHIC SHIFT: Native residents will leave for the Sun Belt, but the loss will be offset by newcomers from abroad.
NEW GROWTH INDUSTRY: New York City and Boston will be hotbeds of quantum computing and encryption.
BEST BUSINESSES TO START: For-profit colleges and professional schools located near major cities.
BEST RESIDENTIAL REAL ESTATE BET: A $325,000 house in Lehigh Valley, Pa., and not just because it has some of the cheapest land in the region. The area is becoming a medical-devices, health-care, and distribution hub.
BEST COMMERCIAL REAL ESTATE BET: Ripping down old big-box malls and converting them into denser developments with offices, shops, and condos.
IT’S ALREADY TOO LATE TO …: Buy and flip monster homes in the exurbs, where prices are stagnating.
NEW PEOPLE: 6.2M (+12%)
NEW JOBS: 5.9M (+24%)
NEW HOMES: 3.4M units (+17%)
NEW OFFICE SPACE: 17.2M sq. ft. (+98%)
I-85 CORRIDOR
The 410-mile stretch from Atlanta to Raleigh is fast becoming a contiguous strip of McMansions and McDonald’s. As textile manufacturing fades, consumer banking in Charlotte, telecom in Atlanta, and high-tech in the Raleigh-Durham Research Triangle drive the growth.
KEY DEMOGRAPHIC SHIFT: Elsewhere, Latino arrivals join already thriving communities. Here they’ll be building neighborhoods from scratch.
NEW GROWTH INDUSTRY: Food and nutrition-product startups emerging from a planned $1 billion biotech research hub outside Charlotte.
BEST BUSINESSES TO START: Distribution firms to handle the inflow of Chinese imports via Savannah and other regional ports; home-health-care centers catering to seniors.
BEST RESIDENTIAL REAL ESTATE BET: A $215,000, two-bedroom home in Fieldstone, an up-and-coming neighborhood in north Durham.
BEST COMMERCIAL REAL ESTATE BET: Parcels along I-85 in rural North Carolina that will become part of a planned tech-research park to support the Research Triangle.
GOVERNMENT CARROT: Long-term tax perks for new industrial tenants like Dell.
IT’S ALREADY TOO LATE TO …: Buy a teardown in Atlanta's Midtown West neighborhood and build a dream home close to downtown. Big developers are already moving in.
NEW PEOPLE: 7M (+35%)
NEW JOBS: 3.4M (+38%)
NEW HOMES: 3.1M units (+40%)
NEW OFFICE SPACE: 7.7M sq. ft. (+120%)
SOUTHERN FLORIDA
The state posted the nation’s highest job growth last year, as baby boomers from the North poured in to take advantage of the job market and climate. Land scarcity will drive urban growth.
KEY DEMOGRAPHIC SHIFT: The 65-and-up population will continue to swell, doubling by 2025.
NEW GROWTH INDUSTRY: Florida will lead the nation in health care for the elderly; Scripps Research Institute will seed a biotech cluster with its new research center based in West Palm Beach.
BEST BUSINESSES TO START: Sports bars or national fast-food franchises near new residential developments outside Bradenton and Sarasota.
BEST RESIDENTIAL REAL ESTATE BET: Preconstruction condo units between Venice and Tampa, where demand is so high that builders hold lotteries.
BEST COMMERCIAL REAL ESTATE BET: Inland lots in Manatee County, where cities will bloom by 2010.
GOVERNMENT CARROT: An oldie but a goodie: no state income tax.
IT’S ALREADY TOO LATE TO…: Make easy money owning a for-profit nursing home. Rising insurance costs are killing margins.
NEW PEOPLE: 7.5M (+52%)
NEW JOBS: 3.4M (+55%)
NEW HOMES: 3.3M units (+57%)
NEW OFFICE SPACE: 6.2M sq. ft. (+136%)
If you think the real estate boom of the past decade was bounteous, peek a little further over the horizon: Researchers estimate that the massive buildout will constitute a $25 trillion development market by 2030, more than twice the size of the entire U.S. economy today. According to Lang, the bulk of that money will flow into 10 major metro regions he has christened “megapolitans.” On the following pages, we’ve assembled exclusive growth forecasts for each of these regions and -- based on interviews with dozens of regional planners, developers, and investors -- identified the savviest angles to play in the near and long term.
CASCADIA
Vast quantities of cheap, prime greenfield surrounding Seattle, Portland, and Eugene give the Northwest megapolitan explosive growth potential. By 2030 the three metro regions will be intertwined.
KEY DEMOGRAPHIC SHIFT: The Asian population will more than triple; the number of seniors will double.
NEW GROWTH INDUSTRY: Seattle will become one of three global hubs for bioinformatics startups.
BEST BUSINESSES TO START: Architectural firms catering to green developers.
BEST RESIDENTIAL REAL ESTATE BET: $200,000 homes in small towns 30 minutes outside Portland, beyond the urban-growth boundary.
BEST COMMERCIAL REAL ESTATE BET: Retail or office space around Snoqualmie Ridge, one of three “urban villages” in early development near Seattle.
GOVERNMENT CARROT: Oregon’s new property-rights law, which opens the door to more rural development.
IT’S ALREADY TOO LATE TO …: Speculate on Paul Allen’s Seattle redevelopment project, South Lake Union.
NEW PEOPLE: 2.2M (+38%)
NEW JOBS: 920,000 (+27%)
NEW HOMES: 1.2M units (+41%)
NEW OFFICE SPACE: 2.8M sq. ft. (+124%)
NORCAL
The action is moving east from the Bay Area: The Sacramento metro region will build more housing and office space in the next 25 years than any other Western megapolitan city except Las Vegas.
KEY DEMOGRAPHIC SHIFT: Flight of skilled workers from the Bay Area to the region’s cheaper exurbs.
NEW GROWTH INDUSTRY: NorCal will host a neurotechnology industry that marries pharmaceuticals and computers; artificial intelligence startups will likely flourish.
BEST BUSINESSES TO START: New Central Valley towns have an across-the-board demand for everything from restaurants to hospices and hotels.
BEST RESIDENTIAL REAL ESTATE BET: $340,000 homes in and around Merced, home to the newest University of California campus. Estimated student population in 2030: 25,000.
BEST COMMERCIAL REAL ESTATE BET: Vulture acquisition of property owned by old, declining industrial businesses in the Bay Area, for pennies on the dollar.
GOVERNMENT CARROT: The new stem-cell research center in San Francisco, which will control $3 billion in state funding over 10 years.
IT’S ALREADY TOO LATE TO …: Nab a condo in one of two luxury towers due to break ground soon in Sacramento’s downtown. The waiting list is impossibly long.
NEW PEOPLE: 4.3M (+35%)
NEW JOBS: 2M (+39%)
NEW HOMES: 1.3M units (+29%)
NEW OFFICE SPACE: 4.4M sq. ft. (+121%)
SOUTHLAND
Trade with China through the country’s largest port, Los Angeles, will fuel a boom in logistics, warehousing, and distribution centers for companies like Target. New military and space programs will do for the Southland what the Internet did for NorCal in the 1990s.
KEY DEMOGRAPHIC SHIFT: By 2020, male illegal immigrants from Mexico will likely make up more than 10 percent of the Southland’s workforce; no other megapolitan comes close to having this supply of cheap labor.
NEW GROWTH INDUSTRY: With freight volume projected to triple by 2030, warehouse builders will become the fastest-growing commercial
developers in the region.
BEST BUSINESSES TO START: Upscale restaurants near I-15 in San Bernardino County, to give future suburbanites a taste of something better than fast food.
BEST RESIDENTIAL REAL ESTATE BET: $325,000 still gets you a 2,300-square-foot house in Apple Valley, one of dozens of suburban boomtowns emerging east of Los Angeles.
BEST COMMERCIAL REAL ESTATE BET: Parking lots in downtown Los Angeles for tomorrow’s high-rise redevelopments.
GOVERNMENT CARROT: Billions in local, state, and federal funding that will be used to build 150 miles of truck-only express lanes in Los Angeles, Orange County, and the Inland Empire by 2020.
IT’S ALREADY TOO LATE TO …: Buy raw land around Las Vegas for sprawl development; prices are soaring because it’s hemmed in by federally owned property.
NEW PEOPLE: 8M (+35%)
NEW JOBS: 3.7M (+40%)
NEW HOMES: 2.7M units (+35%)
NEW OFFICE SPACE: 8.3M sq. ft. (+115%)
VALLEY OF THE SUN
This is the smallest megapolitan, but the one with the greatest supply of raw, buildable land at the lowest prices -- one reason it will soon be the fastest-growing metro region in the country. The big draw: a Palm Springs lifestyle for the masses at a substantial discount.
KEY DEMOGRAPHIC SHIFT: Phoenix will remain the top destination city for Americans moving from other states.
NEW GROWTH INDUSTRY: Higher education and biotech research; big-box malls; laser and high-energy weapons engineering.
BEST BUSINESSES TO START: Fast-food, coffee, and retail establishments in Maricopa, another edge city set to boom.
BEST RESIDENTIAL REAL ESTATE BET: A house in a virgin subdivision like Verrado, undervalued because stores and office parks aren’t yet built.
BEST COMMERCIAL REAL ESTATE BET: Acreage bordering luxury-home developments announced by prestigious builders like Phoenix’s DMB.
GOVERNMENT CARROT: Expansion at Arizona State University, which will increase its enrollment by 50 percent to 90,000 students and generate more than 10,000 new jobs by 2020.
IT’S ALREADY TOO LATE TO …: Buy land you think will become a future freeway interchange. Investors have gobbled up acreage along I-10 as far as 65 miles west of Phoenix.
NEW PEOPLE: 3.9M (+82%)
NEW JOBS: 1.3M (+63%)
NEW HOMES: 940,000 units (+54%)
NEW OFFICE SPACE: 2.1M sq. ft. (+156%)
GULF COAST BELT
Hurricane Katrina will for decades exaggerate a divide at the Texas-Louisiana border between the region’s richer western section and the poorer eastern one. Surrounding megapolitans will enjoy spillover growth because of the Gulf Coast Belt’s higher risk premium.
KEY DEMOGRAPHIC SHIFT: By 2015, Houston will have one of the nation’s highest surges in workers under age 25 and retirement-age boomers wanting to downsize.
NEW GROWTH INDUSTRY: Homeland security technologies will emerge around Louisiana’s complex of ports.
BEST BUSINESSES TO START: Law firms, accounting shops, or restaurants in the Texas “borderplex” that cater to U.S. companies with maquiladora factories south of the border.
BEST RESIDENTIAL REAL ESTATE BET: Houses on hills in Baton Rouge. Its population has more than doubled since Katrina. Those who can afford to stay will be buying.
BEST COMMERCIAL REAL ESTATE BET: Discounted industrial property that should bounce back with a rebound in port traffic for oil and other commodities.
GOVERNMENT CARROT: New coastal infrastructure, courtesy of the U.S. Army Corps of Engineers.
IT’S ALREADY TOO LATE TO …: Buy New Orleans warehouse space that escaped damage. FEMA contractors and other infrastructure providers are renting out the properties.
NEW PEOPLE: 3.8M (+31%)
NEW JOBS: 2M (+38%)
NEW HOMES: 1.5M units (+34%)
NEW OFFICE SPACE: 4.8M sq. ft. (+120%)
I-35 CORRIDOR
No region better captures and caters to the Latino population boom. A new generation of Hispanic business owners and industrialists will drive the growth, and the area will become a magnet for foreign firms trying to cash in on the U.S. Latino market.
KEY DEMOGRAPHIC SHIFT: Dallas’s Caucasian population will jump 30 percent over the next two decades as relatively cheap real estate draws more people willing to move from overpriced markets in other states.
NEW GROWTH INDUSTRY: Thanks to deregulation and subsidies, Texas will be the country’s new base for wind power. Auto manufacturers will move operations here to capitalize on cheaper labor.
BEST BUSINESSES TO START: Parts and components subcontractors to major suppliers for Toyota’s new San Antonio plant.
BEST RESIDENTIAL REAL ESTATE BET: Starter homes and townhouses in Latino neighborhoods of Dallas and San Antonio.
BEST COMMERCIAL REAL ESTATE BET: Land along I-35 north of Dallas, where new edge cities are leapfrogging each other.
IT’S ALREADY TOO LATE TO …: Invest in waterfront homes on the many lakes surrounding Austin. The lots are full, and prices have peaked.
NEW PEOPLE: 6.4M (+40%)
NEW JOBS: 3.3M (+45%)
NEW HOMES: 2.8M units (+46%)
NEW OFFICE SPACE: 6.6M sq. ft. (+130%)
GREAT LAKES HORSESHOE
Hit hard by manufacturing’s decline, the constellation of Northern industrial cities is morphing into a service-economy region and will draw a flood of immigrants.
KEY DEMOGRAPHIC SHIFT: With the smallest percentage of baby boomers of all the megapolitans, this region will have one of the most plentiful prime-age workforces for the next two decades.
NEW GROWTH INDUSTRY: Third-party logistics contractors that manage supply chains for companies ranging from carmakers to retailers.
BEST BUSINESSES TO START: Retail stores and restaurants in Latino enclaves like Chicago’s Little Village.
BEST RESIDENTIAL REAL ESTATE BET: Elburn, Ill., a tiny Chicago suburb set to boom after a commuter rail extension is completed by year’s end.
BEST COMMERCIAL REAL ESTATE BET: Joliet, an old steel-mill boomtown on the Des Plaines River and the hub of Will County, is expected to be among Illinois’s fastest-growing towns in the next quarter-century.
IT’S ALREADY TOO LATE TO …: Redevelop a lot within Chicago’s Loop; Trump was one of the last to move in.
NEW PEOPLE: 4M (+10%)
NEW JOBS: 3.2M (+17%)
NEW HOMES: 2.5M units (+16%)
NEW OFFICE SPACE: 14M sq. ft. (+94%)
ATLANTIC SEABOARD
The country’s most heavily populated megapolitan braces for another boom. Where will most of the development go? Up: Urban infill will outstrip suburban growth.
KEY DEMOGRAPHIC SHIFT: Native residents will leave for the Sun Belt, but the loss will be offset by newcomers from abroad.
NEW GROWTH INDUSTRY: New York City and Boston will be hotbeds of quantum computing and encryption.
BEST BUSINESSES TO START: For-profit colleges and professional schools located near major cities.
BEST RESIDENTIAL REAL ESTATE BET: A $325,000 house in Lehigh Valley, Pa., and not just because it has some of the cheapest land in the region. The area is becoming a medical-devices, health-care, and distribution hub.
BEST COMMERCIAL REAL ESTATE BET: Ripping down old big-box malls and converting them into denser developments with offices, shops, and condos.
IT’S ALREADY TOO LATE TO …: Buy and flip monster homes in the exurbs, where prices are stagnating.
NEW PEOPLE: 6.2M (+12%)
NEW JOBS: 5.9M (+24%)
NEW HOMES: 3.4M units (+17%)
NEW OFFICE SPACE: 17.2M sq. ft. (+98%)
I-85 CORRIDOR
The 410-mile stretch from Atlanta to Raleigh is fast becoming a contiguous strip of McMansions and McDonald’s. As textile manufacturing fades, consumer banking in Charlotte, telecom in Atlanta, and high-tech in the Raleigh-Durham Research Triangle drive the growth.
KEY DEMOGRAPHIC SHIFT: Elsewhere, Latino arrivals join already thriving communities. Here they’ll be building neighborhoods from scratch.
NEW GROWTH INDUSTRY: Food and nutrition-product startups emerging from a planned $1 billion biotech research hub outside Charlotte.
BEST BUSINESSES TO START: Distribution firms to handle the inflow of Chinese imports via Savannah and other regional ports; home-health-care centers catering to seniors.
BEST RESIDENTIAL REAL ESTATE BET: A $215,000, two-bedroom home in Fieldstone, an up-and-coming neighborhood in north Durham.
BEST COMMERCIAL REAL ESTATE BET: Parcels along I-85 in rural North Carolina that will become part of a planned tech-research park to support the Research Triangle.
GOVERNMENT CARROT: Long-term tax perks for new industrial tenants like Dell.
IT’S ALREADY TOO LATE TO …: Buy a teardown in Atlanta's Midtown West neighborhood and build a dream home close to downtown. Big developers are already moving in.
NEW PEOPLE: 7M (+35%)
NEW JOBS: 3.4M (+38%)
NEW HOMES: 3.1M units (+40%)
NEW OFFICE SPACE: 7.7M sq. ft. (+120%)
SOUTHERN FLORIDA
The state posted the nation’s highest job growth last year, as baby boomers from the North poured in to take advantage of the job market and climate. Land scarcity will drive urban growth.
KEY DEMOGRAPHIC SHIFT: The 65-and-up population will continue to swell, doubling by 2025.
NEW GROWTH INDUSTRY: Florida will lead the nation in health care for the elderly; Scripps Research Institute will seed a biotech cluster with its new research center based in West Palm Beach.
BEST BUSINESSES TO START: Sports bars or national fast-food franchises near new residential developments outside Bradenton and Sarasota.
BEST RESIDENTIAL REAL ESTATE BET: Preconstruction condo units between Venice and Tampa, where demand is so high that builders hold lotteries.
BEST COMMERCIAL REAL ESTATE BET: Inland lots in Manatee County, where cities will bloom by 2010.
GOVERNMENT CARROT: An oldie but a goodie: no state income tax.
IT’S ALREADY TOO LATE TO…: Make easy money owning a for-profit nursing home. Rising insurance costs are killing margins.
NEW PEOPLE: 7.5M (+52%)
NEW JOBS: 3.4M (+55%)
NEW HOMES: 3.3M units (+57%)
NEW OFFICE SPACE: 6.2M sq. ft. (+136%)
Hardware
1 Hardware has become insanely cheap. As Kraus recalls, Excite ran on Sun Microsystems (SUNW) servers that cost as much as $60,000 a pop. “Today JotSpot runs on commodity hardware -- Intel (INTC) chips inside boxes with no corporate logo, made by companies no one’s heard of.” And instead of $60,000, those anonymous boxes cost $1,000 each.
2 Infrastructure software is even cheaper. Excite paid a vast amount of money to companies such as Oracle (ORCL) just to license the software needed to build its service. “We must have spent $250,000 before we’d written a line of code,” Kraus says. But now open-source -- Apache, Linux, MySQL, Tomcat, and so on -- has reduced that cost to zero.
3 The labor market has gone global. In the 1990s, only monster companies like IBM (IBM) had tapped into offshoring. Today JotSpot, using Elance and RentACoder, has programmers on the payroll in Germany, India, Romania, and Russia -- at a fraction of what they’d cost in the Valley.
4 Search has rewritten the rules of marketing. Before Google, advertising on the Web was all about big marketers paying big bucks to reach as many eyeballs as possible. “But now,” Kraus says, “pay-per-click advertising, placed in an automated fashion, with no money spent on creative, lets me reach small or medium-size markets incredibly efficiently.”
2 Infrastructure software is even cheaper. Excite paid a vast amount of money to companies such as Oracle (ORCL) just to license the software needed to build its service. “We must have spent $250,000 before we’d written a line of code,” Kraus says. But now open-source -- Apache, Linux, MySQL, Tomcat, and so on -- has reduced that cost to zero.
3 The labor market has gone global. In the 1990s, only monster companies like IBM (IBM) had tapped into offshoring. Today JotSpot, using Elance and RentACoder, has programmers on the payroll in Germany, India, Romania, and Russia -- at a fraction of what they’d cost in the Valley.
4 Search has rewritten the rules of marketing. Before Google, advertising on the Web was all about big marketers paying big bucks to reach as many eyeballs as possible. “But now,” Kraus says, “pay-per-click advertising, placed in an automated fashion, with no money spent on creative, lets me reach small or medium-size markets incredibly efficiently.”
Retooling the entrepreneur
Citing the book Flow: The Psychology of Optimal Experience, by academic Mihaly Csikszentmihalyi, Kraus suggests that people performing at a high level -- in sports, the arts, and other endeavors -- attain Csikszentmihalyi’s “flow state”: Time slows down, concentration comes effortlessly, distraction melts away. “I think the flow state is addictive,” Kraus says. “And the only way I know to get there is through being in a startup.”
1 Hardware has become insanely cheap. As Kraus recalls, Excite ran on Sun Microsystems (SUNW) servers that cost as much as $60,000 a pop. “Today JotSpot runs on commodity hardware -- Intel (INTC) chips inside boxes with no corporate logo, made by companies no one’s heard of.” And instead of $60,000, those anonymous boxes cost $1,000 each.
2 Infrastructure software is even cheaper. Excite paid a vast amount of money to companies such as Oracle (ORCL) just to license the software needed to build its service. “We must have spent $250,000 before we’d written a line of code,” Kraus says. But now open-source -- Apache, Linux, MySQL, Tomcat, and so on -- has reduced that cost to zero.
3 The labor market has gone global. In the 1990s, only monster companies like IBM (IBM) had tapped into offshoring. Today JotSpot, using Elance and RentACoder, has programmers on the payroll in Germany, India, Romania, and Russia -- at a fraction of what they’d cost in the Valley.
4 Search has rewritten the rules of marketing. Before Google, advertising on the Web was all about big marketers paying big bucks to reach as many eyeballs as possible. “But now,” Kraus says, “pay-per-click advertising, placed in an automated fashion, with no money spent on creative, lets me reach small or medium-size markets incredibly efficiently.”
1 Hardware has become insanely cheap. As Kraus recalls, Excite ran on Sun Microsystems (SUNW) servers that cost as much as $60,000 a pop. “Today JotSpot runs on commodity hardware -- Intel (INTC) chips inside boxes with no corporate logo, made by companies no one’s heard of.” And instead of $60,000, those anonymous boxes cost $1,000 each.
2 Infrastructure software is even cheaper. Excite paid a vast amount of money to companies such as Oracle (ORCL) just to license the software needed to build its service. “We must have spent $250,000 before we’d written a line of code,” Kraus says. But now open-source -- Apache, Linux, MySQL, Tomcat, and so on -- has reduced that cost to zero.
3 The labor market has gone global. In the 1990s, only monster companies like IBM (IBM) had tapped into offshoring. Today JotSpot, using Elance and RentACoder, has programmers on the payroll in Germany, India, Romania, and Russia -- at a fraction of what they’d cost in the Valley.
4 Search has rewritten the rules of marketing. Before Google, advertising on the Web was all about big marketers paying big bucks to reach as many eyeballs as possible. “But now,” Kraus says, “pay-per-click advertising, placed in an automated fashion, with no money spent on creative, lets me reach small or medium-size markets incredibly efficiently.”
The Nanotech makeover
To create natural-looking makeup, L’Oréal is borrowing a concept from nature. Next year the Paris-based cosmetics powerhouse will unveil a line of nanotechnology makeup that gets its color not from pigments but from microscopic layers of liquid crystals and minerals. The lipstick, eye shadow, and nail polish appear white in their packages, but when the layers interact with light, the makeup takes on vivid hues. It’s a look cribbed from the animal kingdom: The wings of morpho butterflies turn colors when light bounces off layers of protein-rich cuticle.
Other companies, such as Japan’s Teijin Fibers, have used light-manipulating layering. But L’Oréal, which pours about 3.4 percent of its $17.5 billion in annual sales into research and development, is the first to apply it to cosmetics. The company plans to price its new makeup competitively with standard offerings, though customers will have to depend on labels to see how the colors look on various skin tones. “At the lab stage, it works perfectly, so we are confident,” says L’Oréal research communication director Patricia Pineau. Nanotechnology expert Richard Jones says the layering technology could eventually find its way into other applications, such as large-scale solar power cells. Green eye shadow today, green energy tomorrow.
Other companies, such as Japan’s Teijin Fibers, have used light-manipulating layering. But L’Oréal, which pours about 3.4 percent of its $17.5 billion in annual sales into research and development, is the first to apply it to cosmetics. The company plans to price its new makeup competitively with standard offerings, though customers will have to depend on labels to see how the colors look on various skin tones. “At the lab stage, it works perfectly, so we are confident,” says L’Oréal research communication director Patricia Pineau. Nanotechnology expert Richard Jones says the layering technology could eventually find its way into other applications, such as large-scale solar power cells. Green eye shadow today, green energy tomorrow.
The hiddenT-shirt economy
Who needs internet advertising? Silly T-shirts are turning into a serious online moneymaker. For a handful of websites, in fact, customized apparel is now bringing in far more revenue than ads do.
CollegeHumor.com pioneered the trend in March 2004 when it launched e-commerce site BustedTees.com. (One of its best-sellers shows a man with furry arms and claws, riffing on the Second Amendment’s right to “bear arms.”) Merchandise now accounts for more than 60 percent of the $6 million in annual revenues at parent company Connected Ventures, up from 50 percent in March. The company opened a second online store, Defunker.com, in April.
Meanwhile, other sites are building instant business on the backs of third-party merchants such as CafePress.com and Spreadshirt.com, which create custom T-shirts and other merchandise on the cheap for companies that submit designs. About 1,000 merchants per day have opened shops on CafePress this year, a 40 percent increase over 2004. “It’s one of those great ‘just because you can’ moments in the online world,” says Reinier Evers, founder of Amsterdam-based marketing agency Trendwatching.com. “Not only is it easy, but the risks are nil.” BoingBoing.net opened a new store on Spreadshirt in September, while left-leaning Americablog.com set up a CafePress shop in June. Founder John Aravosis says the store, which sells shirts with slogans like “George Bush is a Category 5 idiot,” now accounts for more than a quarter of Americablog’s revenues, while the controversial apparel also drives traffic back to his site.
Some websites are shunning ads altogether. Red vs. Blue and Homestar Runner, which publish animated shorts, now bring in nearly all their revenues from T-shirts, DVDs, and stickers featuring their stars and catchphrases. Their merchandise might be silly, but these companies are laughing all the way to the bank.
CollegeHumor.com pioneered the trend in March 2004 when it launched e-commerce site BustedTees.com. (One of its best-sellers shows a man with furry arms and claws, riffing on the Second Amendment’s right to “bear arms.”) Merchandise now accounts for more than 60 percent of the $6 million in annual revenues at parent company Connected Ventures, up from 50 percent in March. The company opened a second online store, Defunker.com, in April.
Meanwhile, other sites are building instant business on the backs of third-party merchants such as CafePress.com and Spreadshirt.com, which create custom T-shirts and other merchandise on the cheap for companies that submit designs. About 1,000 merchants per day have opened shops on CafePress this year, a 40 percent increase over 2004. “It’s one of those great ‘just because you can’ moments in the online world,” says Reinier Evers, founder of Amsterdam-based marketing agency Trendwatching.com. “Not only is it easy, but the risks are nil.” BoingBoing.net opened a new store on Spreadshirt in September, while left-leaning Americablog.com set up a CafePress shop in June. Founder John Aravosis says the store, which sells shirts with slogans like “George Bush is a Category 5 idiot,” now accounts for more than a quarter of Americablog’s revenues, while the controversial apparel also drives traffic back to his site.
Some websites are shunning ads altogether. Red vs. Blue and Homestar Runner, which publish animated shorts, now bring in nearly all their revenues from T-shirts, DVDs, and stickers featuring their stars and catchphrases. Their merchandise might be silly, but these companies are laughing all the way to the bank.
Podcasting meets elevator pitch
Getting face time with venture capitalists -- even 60 seconds for an elevator pitch -- can be tough. But with a few blog-savvy, iPod-toting VCs, it’s now easier to bend their ears remotely. Five months ago Fred Wilson, a managing partner at New York’s Union Square Ventures, began using his A VC blog (avc.blogs.com) as a place to hear business plans; entrepreneurs talk up their ideas and submit the pitches as MP3s. Much like podcasts, the MP3s can be downloaded to Wilson’s iPod, so he can listen to them anytime. “This is an ideal way to screen opportunities,” he says. Though anyone can find the pitches with some digging through Wilson’s blog, he says he isn’t concerned: “Is there really anything proprietary in an elevator pitch?” So far he has received 12 pitches via podcast and has scheduled a meeting with a Web-based video-sharing company called Cozmo Media. The best part for Wilson? He can listen to the pitches while riding his bicycle to work.
Other VCs have also started taking audio pitches, including David Hornik, a partner at August Capital in Menlo Park, Calif., who says entrepreneurs are often more comfortable talking about their businesses than writing about them. Rick Segal of Toronto’s J.L. Albright Venture Partners says he’s also received 12 pitches, though unlike Wilson, he doesn’t make them public. “The entrepreneur gets the pitch out quickly, and the VC can focus on listening,” Segal says. And, if you’re lucky, on handing out money.
Other VCs have also started taking audio pitches, including David Hornik, a partner at August Capital in Menlo Park, Calif., who says entrepreneurs are often more comfortable talking about their businesses than writing about them. Rick Segal of Toronto’s J.L. Albright Venture Partners says he’s also received 12 pitches, though unlike Wilson, he doesn’t make them public. “The entrepreneur gets the pitch out quickly, and the VC can focus on listening,” Segal says. And, if you’re lucky, on handing out money.
Wednesday, November 02, 2005
Business Quote
Businesses are like buses. Don't like that one? They'll just keep coming. There's no end to buses or businesses.
In a Ceaser salaad, the anchovy is the first thing to get chopped up. That's what we foreigners are in China: the anchovy.
In a Ceaser salaad, the anchovy is the first thing to get chopped up. That's what we foreigners are in China: the anchovy.
Underwater Lumber Jack
Christopher Godsall is CEO of Triton Logging. http://www.tritonlogging.com
Triton's Sawfish™ Underwater Harvester represents the first true arrival of viable marine technology in underwater forests. Developed and manufactured by Triton, it is the world's only deep-water logging machine, combining proven elements from timber-harvesting and submarine vehicle technology on an innovative platform.
Triton's Sawfish™ Underwater Harvester represents the first true arrival of viable marine technology in underwater forests. Developed and manufactured by Triton, it is the world's only deep-water logging machine, combining proven elements from timber-harvesting and submarine vehicle technology on an innovative platform.
Pizza Boxes
Supply individual pizza shops with pizza boxes, but boxes have advertising campagins on them that you sell to ad companies and sponsors.
The Knot
Wedding media company with a databse of over 6 million brides.
