Opportunities On The Internet

In the 1960s, Sir Arthur C. Clarke predicted that by the year 2000 the planets would be colonized and the world would have a vast electronic “global library” that would be used for business, academia and personal research. As far as I know, we haven’’t populated Mars, but the Internet is fast becoming the high-speed information resource Clarke imagined.Thirty odd years later, Bill Gates topped Clarke by foreseeing, in a memo to his staff, an “Internet Tidal Wave” that would sweep over America and rapidly change every business and every consumer’s perception of how to do business.Clark was prescient. Gates made a good speech. Notwithstanding the media hype and financial hyperinflation of the high tech stock market, the Internet itself is a vast, fast-changing medium creating many big changes.

Big changes create big opportunities. Always have in the history of wealth. Think steam engine. Think railroad. Think internal combustion engine.

And big businesses create all kinds of big opportunities for entrepreneurs. Example: I happen to know three very wealthy fellows who live within a five-mile radius of my home in Florida. All derive their wealth from Coca Cola, but none directly. One was involved somehow in the cleaning of bottles; another’s grandfather did something important with pull tabs; the third had an uncle who had a distribution license in Israel.

The first wave of Internet wealth is pretty much over. (We’’ll talk more about this soon.) But there are more than enough opportunities for you (and me too) to make money and even create a family fortune by focusing on ancillary and support businesses. Or, if we are in the selling business now, by taking advantage of the Internet’s scope..

In this and many future ETR messages, we’ll talk about ways to get rich from the Internet. Let’’s start by making three somewhat evident observations:

* The technology of the Internet allows for cheaper and much faster business transactions.

* The global nature of the Web provides Internet users with access to a huge market.

* The economics of the Internet creates what the experts call an “atomization” of competition: As the Internet develops, business increasingly takes place on an individual basis.

Cheaper Is Better . . . Somewhat and Sometimes

Reducing the cost of doing business is important, but the Internet’’s effect on that is sometimes exaggerated. Certainly, communications is cheaper. It costs less to order a cigarette lighter on the Internet than it does to drive down to the mall and buy one there. But how much less? The cigarette lighter still needs to be produced. It still needs to be advertised. It still needs to be delivered to local storing and shipping facilities and warehoused. And it still needs to be serviced. So how much really has changed?

Likewise, it is certainly cheaper to fulfill a subscription to the Wall Street Journal online than in print. But what percentage of the overall cost of the newspaper does the physical production comprise? Five percent? At best. And once this 5% is accounted for and the market grows accustomed to electronic delivery, how is the fundamental nature of the WSJ going to change?

In the newsletter business, for example, delivering the message via the Internet or on the Web saves money, but not as much as you might expect. Of the $90 a publisher spends on marketing and fulfilling a $100 newsletter, only $6 is in delivery … thus only maybe 5% can be saved.

Bottom line: The economics of the Internet are favorable to businesses for whom the cost of delivery is a significant factor. That would include anyone in the information business. Cheap delivery of data will help, but it will not in itself make you successful. The information business is still about (and will always be about) selling – selling the idea that one type of information is better than another. If you can do that well, you will succeed – and you will be able to enjoy nicer margins. If you can’’t do it well, then your business will fail, regardless of the Internet’’s economics.

Size is a Big Factor – It Gives You a Market You Can’t Get Elsewhere

The World Wide Web gives you a giant market. The whole world really.

This is especially attractive if you are selling the kind of product that people search for. (Example: I have a beach house I rent out. 90% of our bookings come from the Internet. Half of them from overseas. We do no advertising. We have simply listed our property here and there. Sales occur because when tourists decide to vacation in Delray Beach, they get on search engines and look for Bed & Breakfasts. Since January of this year, we booked more than $50,000 that way.)

I am in Rome as I write this. Every store in Rome is selling the same shoes, the same clothes, the same jewelry and handbags that are sold in the United States, in England, in Spain, and so on. Like it or not, modern telecommunications (aided now by the Internet) is fast creating a single world culture. That means if you are lucky enough to sell a product that becomes trendy, you will be able to sell it around the world almost instantly. (Example: Those singing wall-plaque fish that are all over the place in the States? They are here too!)

Of course, many businesses will not be able to take quick and easy advantage of the global market. If you sell fish, for example – the eating kind, not the singing kind – you are best advised to focus on the local market.

The Opportunity Is For Individual Entrepreneurs

That being said, there has never been a better time or an easier way for individuals to start their own businesses and even get rich than there is right now.

Six years ago, only 80,000 Americans were on the Internet. Most of them were college professors. Today, that figure stands at almost 100 times that number (80 million). During the same time period, online retail sales have gone from nothing to $20 billion per year. Industry sources estimate this number will quintuple by 2003. Business-to-business sales are already over $100 million and are projected to hit $1.3 trillion. And that is just in the USA. The rest of the world, though lagging behind us now, is expected to catch up quickly.

Obviously, this spells opportunity. But it’s not just a chance for the Amazon.coms and the Cisco’s and the eBays of the world. It’’s a legitimate chance for home business players.

Case In Point:

Two years ago, TH (a client – I’ll name him if I get his permission) decided he wanted to sell golf equipment on the Internet. He had no retail experience and no real knowledge of the Internet. He had only one resource of any value – a friend who could supply him with very inexpensive clubs.

His story is a funny one – I’’ll tell you later – but in an 18-month period he managed to turn his hobby into a business that was so successful he retired from a six-figure job.

Example two: I just came back from cocktails with a friend of my sister (a direct mail guy living in Rome) who just one year ago started some sort of gay porno website. (I didn’’t ask for details.) He is not happy with the results so far, but he did admit to netting $50,000 in his first year.

There are hundreds of similar stories. And there will be hundreds more in the next few years. Yours can be one of them. I’’ll make it a habit to tell you stories I hear. And maybe you can tell me of any you hear about. Between the two of us, we’’ll come up with something good. Nothing flashy … just something that will allow us to retire comfortably and provide for our children and grandchildren.

[Ed. Note: Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]