DRESS FOR SUCCESS

Raymond turns T-shirts into treasure with $2,000

RAYMOND LEI MIGHT not be a millionaire just yet. Like many people, he prefers not to discuss such details of his personal finances.

But he’s been successful enough as a small business owner to have “unenrolled” from the University of California at Berkeley during his second year to focus on his innovative T-shirt business, ooShirts.com.

What’s innovative about a T-shirt company? Well, Raymond doesn’t actually design the shirts, nor does he print them himself. Raymond, who started the business while in his junior year of high school, uses a network of screen-printing shops to make the shirts. Customers design them on his website using software developed by a programmer from India that Raymond hired with his $2,200 start-up investment.

Raymond, who was still just twenty-one when I interviewed him, is the California-born child of two computer engineers. His mother works at Broadcom Corp. and his father works at a small Web company.

He came up with the idea for ooShirts.com while ordering T-shirts for his high school’s tennis club.

“I searched endlessly for a company to order from but was never able to find one that had both solid quality and reasonable prices,” he said. “It was very frustrating to be unable to find good prices on such a commonly bought item, so I decided to do some research on my own.”

Raymond’s digging confirmed what he suspected: The T-shirts themselves weren’t that expensive to print; it was the inefficient practices of printing companies that drove their prices up.

So just months later, he decided to start his own company.

His goal was modest—to sell affordable printed T-shirts to other student clubs at his school.

He did that and more. The company has grown to include six employees and now has annual revenue of more than $3 million.

One of Raymond’s biggest challenges early on was getting the word out to potential customers, a challenge that faces many new companies.

“Part of the way I managed to make our prices low was by making our margins lower,” he said. “Though this meant lower prices for customers, it also meant I had less money to spend on advertising.”

However, over a couple of years, the company’s website became more and more accessible to customers through search engines, he said, and it started getting a lot of repeat and word-of-mouth customers.

Raymond used his computer savvy to improve his rankings on search engines when people entered search terms such as “custom T-shirts.”

He doesn’t claim to fully understand the complexities of search algorithms. He said search engines basically rank a site by seeing how many other sites link to it.

“In the very beginning, we had very few customers and very little potential to attract links, so we were ranked poorly. Many new websites face this problem. But over time, as people started using our service and being very happy with it, we started seeing more and more links build up.”

Raymond doesn’t profess to have a magic formula for building high rankings.

“I think that if you focus on building a great website and on satisfying your existing customers, then, over time, you’ll see search engines pick up on these natural signals and reflect it in their rankings.”

Raymond loves everything about owning a business. He loves that he’s built something from nothing and loves the creativity he can express, the control he has over where the company goes, and the excitement that comes with growth.

“The company’s success, in the end, is measured by how much value it provides to others,” he told me.

Raymond has no interest in going to work for an employer. Whether tomorrow or ten years from now, he expects to spend his energies building a company, whether it’s ooShirts or something new.

“This applies until I’m sixty, give or take twenty years.”

Despite Raymond’s success, he lives modestly. He has a studio apartment in Berkeley that includes a sofa from Costco, a desk from IKEA, a mattress from a discount store, and a computer he built himself. He says his total expenses are roughly $2,000 a month.

His parents have supported and encouraged him along the way. “Despite being academically focused when I was younger, my parents were actually the ones that gave me the idea to drop out of school,” he said.

I asked Raymond if he has any entrepreneurial role models. He named Amazon’s Jeff Bezos, Zappos’s CEO Tony Hsieh, Elon Musk of the Silicon Valley–style space transport company SpaceX, the fictional billionaire Tony Stark (aka Iron Man), and “whoever is in charge of Costco.” (Costco co-founder James Sinegal retired at the end of 2011 and was succeeded by Craig Jelinek.)

One of the big lessons to take away from Raymond’s success is that you don’t need a lot of capital to start a business. ooShirts.com is what’s known as an “ultra-light start-up,” the kind of company that lets entrepreneurs use the power of the Internet to get started on the cheap. Ultra-light start-ups leverage every creative technique and the use of the Internet to do everything for free or for very low cost.

Everything Raymond is doing is based on holding down the use of capital and at the same time generating revenue. It’s not the easiest thing to do, but it is possible.

“Having so few resources at the very start forced me to value efficiency more than entrepreneurs with more funding,” Raymond said. “I think that frugality has stuck with the company. It’s this constant drive to produce more for less that’s causing the company to grow today.”

Here are some tips to keep in mind if you would like to launch an ultra-light start-up:

Get a business plan in place.

• If you need help writing a business plan, the Service Corps of Retired Executives (SCORE) is a group of volunteers who provide free advice and counseling to people who want to start a business, grow an existing business, or are in trouble with a business they already have.
• Depending on the chapter near you, a SCORE mentor will either meet with you or you can attend a class on how to write a business plan. Visit SCORE.org to get started.

Find the talent you need to realize your idea

• When Raymond launched ooShirts.com, he didn’t design the website himself—he hired somebody else to do it. Thanks to technology, you too can hire the best tech, design, marketing, accounting, and back office freelance contractors to help you realize your business idea.
• Sites like crowdSPRING.com, Elance.com, Guru.com, and oDesk.com let you post a job and field bids from qualified vendors around the world. These sites are in a category called “virtual hiring halls” because they’re a modern adaptation of the union hall idea where workers would go to await job orders.

Get a free website for your small business.

• If you don’t have a website these days, it’s like you don’t exist to your potential customers. Thankfully, it’s easier than you might have heard to establish a Web presence if you don’t want to hire someone like I suggested above. Google has teamed up with Intuit for a joint venture called “Get Your Business Online.” Simply log on to gybo.com. You’ll get free twelve-month access to an easy-to-build Intuit website, a customized domain name, a year’s worth of free Web hosting, and more.
• After the first year, you’ll have to pay $2 per month for your domain name and $5 per month for hosting. Additional e-mail support is available for $8 a month after the first thirty days.

Get financing from someone who knows your business.

• If you’re an ultra-light start-up visionary, the last place you probably want to get capital is at a big bank. You need somebody who thinks and works like you do. That’s where a site like Kabbage.com—an online lender exclusively dedicated to online businesses—comes in.
• The Kabbage application process is streamlined and simple. Among other factors, they’ll look at your transaction history as an Amazon or eBay merchant, user feedback ratings, and even your social media participation to make a decision on your loan application.
• Upon approval, the money is issued through PayPal in just minutes. One caveat, though: The interest rate is only marginally good, sitting at somewhere between 10 and 18 percent.

Go mobile for your credit card payments.

• Let’s say you’re a vendor at an arts and crafts fair, or you have a hot dog pushcart in a busy downtown area, or you’re some other kind of merchant who doesn’t do business at a fixed location. You can accept credit card payments from customers using a little mobile credit card processor that plugs into a smartphone. Below are some no-contract services where the plug-in device itself that you use to run the card is completely free; you just pay per transaction with no contract.
• SquareUp.com for Apple and Android phones charges a simple flat merchant fee of 2.75 percent on every swiped transaction. PayPal Here (PayPal.com/Here) for Apple and Android phones charges 2.7 percent, though if you do more debit card transactions than credit card transactions, you can lower your transaction cost to about 1.7 percent. And Intuit’s GoPayment.com for Android, iPhone, and BlackBerry charges 2.7 percent per swipe.