Starting a business never has been simple, but many young entrepreneurs are finding that their ability to reach customers and raise money over the Internet has lowered the barrier to launching a company.
Working out of an apartment in Pacific Beach since the spring of 2014, Brandon Leibel and two other co-founders have built Sand Cloud Towels to the point where they are planning to lease commercial space. They started with no costs for office or store space. They also use low-cost methods to market their product.
“We started out selling towels on the beach for cash,” Leibel, 25, said. “Now we sell directly to consumers through our e-commerce site: sandcloudtowels.com. You don’t need that much money. You can use social media. You have to work at it 24/7, but it definitely is possible.”
Sand Cloud Towels’ core product is a beach towel with a built-in pillow. One of the early strategies Leibel and partners Steven Ford, 25, and Bruno
Aschidamini, 30, used was giving away sunglasses to people who agreed to follow their product online. This created a buzz and built name familiarity.
“We would tell them to take out their phones and go onto Instagram and follow our account,” Leibel said. “We did that all day throughout the summer. Then we had them repost pictures of our towels on their social media.”
The advertising was almost free, he recalled. “We got the sunglasses in China for 50 cents apiece.”
They have used other visually based social media such as Snapchat and Pinterest to sell their towels all over the world.
Understanding Your Customers
He said the trio figured out early that they needed to aim their marketing at young women.
“Ninety percent of our customers are women,” Leibel said.
That’s because men tend to buy things out of necessity, while women are more likely to shop on impulse, he explained.
“We are reaching them,’’ Leibel said. “Maybe they are telling their brothers and boyfriends about it. At the end of the day, they are the ones who are fueling our growth.”
The three entrepreneurs were working at the same insurance office in San Diego when they started their enterprise. All were eager to start a company of their own. Leibel said having your own company is a form of freedom, even if you have to work long hours.
“Not everyone is cut out to be an entrepreneur,” he said. “There is a lot of risk in it.”
He says business has grown steadily. The company sold 10,000 towels last year and expects to hit the 30,000 mark this year.
Peter Martini, 36, president of iboss Cybersecurity in San Diego, credits online marketing and sales with helping his company become successful. It began in a garage in 2003. Martini founded the business with his twin brother Paul, now CEO, when they were 23.
It’s no longer rare for very young people to start a business, he said. It doesn’t mean everyone will succeed, but the barrier to entry is low.
Martini noted that Internet marketers such as Google now help new companies get their online ads in front of the right people.
“You can market your product more easily,” he said. “You also can target your customers more granularly. Before, you had to do mass marketing. You were advertising to 100,000, hoping that one or two or five were potential clients.”
It helps if you have a product that people want or need. He said that iboss provides Web security in the cloud to any device at any location.
“What makes us different is our ability to secure a device without having to deploy loads of hardware.”
The iboss business is located near Genesse Avenue and Interstate 5. Martini said he and his brother Paul worked as contractors before striking out on their own.
“We were working in technology in R&D, doing a lot of engineering services for companies like Hewlett Packard, the U.S. Navy, (and) special projects to solve complicated problems,” he said. Despite their humble beginnings, the brothers now have 105 employees and expect to grow to 160 by mid-2016.
Finding Your Market
Based in the Clairemont area, ROBO 3D also has found success; in its case, the low barrier to entry was initial fundraising. As a student at San Diego State University, CEO Braydon Moreno, 29, co-founded the company with fellow student Coby Kabili. His 3-D printer business began in 2012 on a dining room table, progressing first to a one-car garage, then to a two-car garage. Today, the business occupies 6,000 square feet of leased space.
In 3-D printing, layers of material are formed to create an object of almost any shape. In May 2015, ROBO 3D initiated an international rollout by signing distribution agreements in Canada, Latin America and Europe. ROBO 3D products now are being sold in all key international markets. Units have been shipped to more than 2,400 cities worldwide.
What got the company moving was a visit to Kickstarter, an Internet-based crowdfunding platform. Although Moreno had a funding target of $49,000, the company raised nearly $650,000.
“That gave us confidence that the business was there for the taking,” he said.
One of the ways the company raised money in the beginning was by offering “preorders” of its unfinished products.
“Your goal is to see if people are going to buy your product,” he said. “You say, ‘If you put in $500, once we finish our product we will send you a machine.’ They are putting money into a cool new product that they expect to get down the road. This is the way of the future. Any other way will require you to raise considerable amounts of money or give away half of your company” in return for financing, often for the initial inventory of parts and equipment.
Moreno and Kabili have hired contract workers from around the globe at reasonable rates to help them build graphics and conduct public relations.
“I don’t think there has ever been a better time than now to start a business,” Moreno said. “The lean startup methodology is so easy right now…You don’t have to carry inventory. You don’t have to have employees. You can outsource everything.”
At Productive Computing Inc. in San Marcos, Chief Financial Officer Keith Larochelle has noticed how easily new businesses are being created. It was harder when he started his company in 1996, before the Internet began to have a major impact.
“It was relationships,” he said. “You had to network. Now it doesn’t matter how big your bank account is. It’s how much you learn, know, and leverage the technology. Absolutely, the barrier has been lowered.”