Entrepreneur Briefs COBE Students on Startup Payoffs and Perils
A greenhorn entrepreneur can be successful, but growing a startup business in a global economy takes more than a green touch.
Davis Smith, self-described serial e-commerce entrepreneur, shared experiences and insights on Tuesday from his brief but successful career with RU College of Business and Economics (COBE) students in Professor George Santopietro's Econ 495-Foundations of a Market Economy class.
"Entrepreneurship is a noble path and an incredibly satisfying way to make the world better," said Smith, chief executive of baby.com.br., a Brazilian e-commerce site that grew from six employees to more than 200 in its first year.
"We sell to moms," Smith said. "We were able to build a brand in Brazil that moms know and trust."
While his latest venture has taken off, Smith reflected on his first entrepreneurial effort—a rose delivery service to Salt Lake City offices. "It was a great experiment, and we learned a lot about the business model and ourselves, especially that we were not good delivery guys."
For the 20–person class, Smith reviewed some of the efforts that went into his ventures, including a made-to-order pool table business that he and his cousin started on the heels of their ill-fated flower delivery service. That venture, PoolTables.com, was sold after six years during which it became one of America's largest retailers of pool tables. The sale enabled them to return to graduate school and immerse themselves in the study of entrepreneurship and the research that led to baby.com.br. With a business plan that won the prestigious Harvard University business plan contest in 2010, they were able to raise $23 million and launch baby.com.br., based in Sao Paulo, in 2011.
"We learned we were entrepreneurs with a passion for it and, like typical entrepreneurs, we never want to hear about pool tables again," he said.
Describing trips to China to follow up with manufacturers on design flaws to lively meetings with Wall Street venture capitalists, Smith gave a taste of life as an entrepreneur. He recounted the research into the Brazilian market that emboldened them to strike out into the international market.
Smith said their analysis of the Internet's maturity in Brazil convinced them, and their subsequent investors, that consumer use of the Web for e-commerce was on the verge of taking off for business-to-consumer purposes. The opportunity became more attractive, he said, when he experienced Brazil's "absolute passion" for all things baby. More than 3 million babies are born every year in Brazil, making it one of the world's fast-growing markets, according to World Bank data.
The systematic process of idea generation that led to baby.com.br. was another topic on which Smith spoke with the aspiring entrepreneurs. "You need to train your brains to think of opportunities in terms of providing solutions to problems where you can do something better, cheaper, faster or easier," he said.
Smith recounted the story of the investor in baby.com.br who was adamant that the start-up connect with Angelica Huck, a popular Brazilian entertainer and media personality. Huck's endorsement of the website doubled the conversion-to-sales rate of the site, he said.
"We listened to people who are smarter and more experienced," he said. "In this case, they were thinking well beyond us."
Smith described his thinking as a first-time entrepreneur inspired by a desire for the level of affluence his employers had ("Why can't I have the lifestyle he has—the nice car, the house, the leisure time?") He contrasted that mindset with his current role as a CEO where he "shares and sells a vision of what you are going to accomplish with employees and investors."