Do you ever wonder if it is actually possible to build a successful online business in 2 years, find 28 million customers, generate zero revenues, sell it for a billion dollars and become an Internet millionaire almost overnight?
Well that question was recently answered in the now famous and somewhat controversial recent acquisition of Instagram by social media Behemoth Facebook.
So, yes it is possible.
I know what you are thinking. Oh no! not another post analyzing the Instagram acquisition. Well, I have some good news. This post is not about Instagram or apps in general. This is about exploring the incredible opportunities the Internet now offers bootstrapping entrepreneurs to build immense wealth and become Internet millionaires in as little as two years.
Earlier this year I wrote a brief blog post with the prediction that 2012 could yet prove to be the best year to start an online business. I also compared a traditional business to a typical online business model and compared the various pros and cons.
Let me explain this further. In late 2010, I met a business coach for a 1 hour consultation and explained to him how was really interested in building a coffee franchise business. We talked about the logistics of starting such a business, amount of capital I will need and how I planned to make myself stand out from the crowd.
At the end of the conversation, I asked him so how long would it take me to get such a business to serious levels of profitability where I could look to expand to other stores. His answer was quite blunt. A minimum of 5 years! He further added that most small businesses don’t even last to see the fifth anniversary.
Let’s now a take a look at a list of internet related businesses which have been sold for billions of dollars since the dawn of Internet.
Hotmail.com (1998) – $400 Million
Overture (2003) – $1.63 Billion
Youtube (2006) – $1.65 Billion
CNET.com (2008) – $1.8 Billion
Zappos.com (2009) – $1.2 Billion
Instagram (2012) – $1 Billion
Pretty impressive don’t you think?
Ok, let me ask you. What do you think is the secret sauce behind these wildly expansive acquisitions for businesses, who in some cases were not even making a single dime?
Answer. They had a large loyal audience.
Back in 1998, when Internet was still in its infancy. Hotmail was all the craze as it was just about the best free email service available to users with its potential to go viral very quickly as users would encourage friends to sign up using their own accounts.
Microsoft saw the potential of this massively large audience and snapped it up for just over $800 million. Unlike a traditional business, Microsoft wasn’t buying an operation or an email service, it was buying customers. Hotmail to date still has the largest user base even as compared to the Gmail although how many of those users are active is debatable.
5 ways you can be become the next Internet Millionaire in the next five years
1. Create a web app
The best webapps tend to solve the simplest of problems in an elegant way. Let’s look at how:
How hard could it be to share files when the very foundation of Internet is based on sharing content. But, let me tell you it was hard.
Enter Dropbox. A simple, elegant cloud sharing solution that lets you share files with anyone across the world with a dropbox account. With an endless array of features, the use of dropbox doesn’t stop at just file sharing.
Dropbox is now generating well in excess of $100 million every year and has already rejected a $800 million takeover bid from Apple.
So, what is the secret to creating a successful web app? Not rocket science really. Do your research, find a problem that you think can be solved and create an elegant solution. The key here is simplicity in implementation.
Some great examples of web apps that solve everyday problems with elegant uncomplicated solutions:
Freshbooks – Forget sending annoying excel invoices (I love this one)
Evernote – Track your personal ideas, thoughts and inventions
Formstack – Wake up from your webforms nightmare
Lastpass – Hate remembering passwords?
Aviary – Waiting for Photoshop to open?
2. Create an Iphone app
The use of Iphone apps is not limited to solving specific problems. A number of Iphone apps were simply created for entertainment and fun. Phone apps are a lot cheaper to create and implement but given the stiff competition in the app market, it can prove to be a lot harder to get attention.
As you are probably not going to make a lot of money by selling a 99 c app, the key here is to target a usergroup you can use to build a large audience.
We have already seen the example of Instagram. A 100% free app which simply applies filters colour filters to your photos. The key to its success? 28 million active users.
The deceptively and wildly popular Iphone game Angry Birds has also made its developers well in excess of $100 million just through sales.
Building your own app is easier than you think. You can either outsource the entire project to an offshore team through places like Odesk or do it yourself using readymade app or game builders like Appbreeder or Gamesalad.
3. Build an online store
This millionaire maker is probably the closest you can come to a traditional business as in most instances you will buy something at wholesale price, mark it up, sell it and the difference is your profit.
Is it really that simple? Well, yes but simply “selling” stuff will probably not make you a millionaire in a hurry. The true ecommerce leaders have gone far and beyond what most most players on the industry would do.
Zappos.com was acquired by Amazon for $1.2 billion not because they were just another ecommerce store selling “stuff”. Zappos was a company that reinvented customer service through innovations like 365 day returns, free shipping, free returns and creating a company culture based on “wowing” their customers.
Amazon had finally met its match when it came to ecommerce and they had to act quickly to sniff out the competition.
Yes agreed that Tony Hsieh had a pretty good head start after selling his last company for over $400 million during the peak of the Internet bubble in the late 90’s. Think about how Amazon started, from Jeff Bezos garage selling used books.
Interested in selling a product online? It’s easier than you think. Check out these readymade shopping cart solutions to get you up and running in no time.
4. Create a website
Creating a website is the easiest of all the methods I have mentioned above but can it make you a millionaire?
Lets look at some of the answers.
Just like all of the other ways to make you a millionaire, the success of any website will largely depend on traffic or your visitors. Your visitors are your customers and if you can get a lot of customers very quickly, you are well on your way to making millions in no time.
Markus Frind from Plentyoffish.com famously recieved the $900K cheque from Google AdSense for two months worth of income. At the time he was receiving as many as 3.5 million unique visitors a month.
The key to his success wasn’t SEO or paid advertising. He simply offered a free online dating service which was at the time largely dominated by paid services and not surprisingly it went viral almost instantly.
Think outside the box of AdSense or affiliate sites. Is there a service you can offer that will bring hoards of visitors to your site without having to spend a single cent on SEO or advertising?
Here are great examples of websites and blogs that went viral while offering a simple service that was useful to masses of people.
Instapaper (Webpage bookmarking/publishing)
Techmeme (A journal of the hottest tech stories)
Kickstarter (Crowdsourcing for entrepreneurs)
Hipmunk (Sleekest way to book air travel)
Storify (Bookmark and organize your favourite social media news)
5. Create an information product
I know what you are thinking. Information product to make me an Internet millionaire?
You have heard the story of Mike Geary from truthaboutabs.com right? Well, that’s exactly how he went from nothing to earning well over 7 figures through his hot selling eBook on Abs!. Mike’s eBook has now sold well in excess of 1,000,000 copies.
Here is the truth about information products. Your product ought to be solving a seriously compelling problem for someone for it to be a grand success.
Focus on finding that compelling problem first and then create something of huge value. As Mike Geary has proven already, a successful product doesn’t need to be a bible but if you can hit a nerve with a niche audience with a simple eBook, you are well on your way to making millions.
Do you need lots of capital to become an Internet Millionaire?
No you don’t if you are just interested in becoming a millionaire through creating websites or information products but if you truly want to build something special that will have Facebook or Google lining up with the cheque books then you will need to look at some investment funding to help you take your product to the masses and build a large audience quickly.
Why is this important?
Over 70% of Internet startups fail due to lack of capital. Sure, anyone can get an idea. But, seriously how many people can actually implement and take an idea to the finish line. This is where your ability as an entrepreneur to step outside your “idea” comfort zone will be tested.
One of the quickest ways to raise capital is crowdsourcing platforms like Kickstarter. You simply pitch your idea in detail, set a minimum capital requirement and let interested investors, small and big, pitch in with little bit of capital until you hit your target. Once you reach your investment goal, the funds are made available for you to invest in your business.
The key to a successful crowdsourcing campaign is to be very thorough with what your startup is trying to achieve. Create an exceptional elevator pitch to get people interested and then provide a detailed breakdown of the potential of your business and how you plan to achieve it once you receive the funds.
The second method of raising funds is to go through a traditional VC (venture capitalist) style of funding. This method can yield better results if your ideas has already been implemented in some form and already has customers.
Venture Beat is one of the best resources for all thing related to venture capital with great news, examples, case studies and even advice from potential VC’s to help you raise money for your project.
Just in case you are wondering. Why is a blog about building AdSense niche sites talking about building web apps and iphone apps.
Here is the thing. I love being an online entrepreneur and I love sharing ideas (absolutely free of charge) with my readers who think they have what it takes to be successful online.
Let me know what you think by leaving your comments below.