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In short and simple terms, the long tail strategy consists of selling a huge number of items in relatively small quantities. Items can be products or services. Quantities can also refer to prices. 

As an example, Amazon.com and Netflix.com generate most of their revenue by selling a huge variety of products that are in low demand or have low sales volume. Google makes most of its advertising revenue not from large advertisers, but from the hundreds of thousands of small advertisers. 

The challenge of this strategy is to create systems and processes that reduces dramatically the costs of storing products or selling services. (in addition obviously to having a solid distribution model to attract thousands of potential customers). But applying a long tail strategy has immense benefits to your business, not only for generating massive profits, but for protecting your revenue base from lapsing customers.

Here is a simple example: Imagine you have 1 customer generating 10,000$ per month in profit. For circumstances out of your control (economic crisis?), this customer decided to stop doing business with you. Overnight, you are out of business.

 Now consider having 10 customers generating 1,000$ per month in profit for a total of 10,000$. If 1 customer lapses, you are still strong with 9,000$ per month. Even if 5 customers lapse, you are still generating 5,000$ per month.

So assess the risk your business is currently facing and figure out how to protect your business or revenue stream (whether you are a freelancer, a startup or medium sized company, it doesn’t matter). Can you apply the long tail strategy in your business? Do you have the systems in place (whether it is customer support, staffing, account management, distribution model, inventory optimization…) to target the long tail? Can you adjust or even redesign your business model or processes accordingly?

I can’t stress enough the importance of business focus. Lack of focus can literally make or break your business, especially as a young fragile startup, with limited resources.  It is very important to focus on your core strength, on your unique selling proposition, on a specific feature set, on your specific target audience, core product… whatever it is, just focus all your energy on that one thing and become the best at it.

When laying out the business model, and the financial forecast, it is easy to assume that out of all your potential customer base, you will get x% and project some monthly revenue numbers around them. However, when it comes to starting up a business, although focusing on revenue is a great thing, it is still not focused enough.

Consider focusing more by asking: which target audience is it best to focus on? which sector or industry? which product will you sell? Once you identify your target audience, sector and product, my tip is to go even a level deeper: Focus on getting 1 customer first, just 1 customer. Focus all your efforts, resources on getting that first customer. Hustle, follow up and do anything to close that first deal. Then, and only then, move on and focus on getting the 2nd customer, then 5 customers, then 10 and so on…

As a startup founder, It’s so easy to fall in the trap of doing many things at once, seeing all the business opportunities ahead and wanting to grab them all immediately. With patience and laser sharp focus you will be eventually able to get where you want.

But remember, laser focus and hit hard with all your resources.

As a startup founder, I wonder what are the possible exits for my company in the future? It’s a topic I think every founder should really think of. How many other Maktoobs can we really have in the region? It took 10+ years for the exit to happen. And it was a foreign company who acquired an Arabic company. I think it is a bit sad to see that the biggest web acquisition in the region was a foreign acquisition. 

Although it was a really awesome story deal for the Maktoob team, it was great to place Arabia on the world map, It gives hope to young founders, but should the biggest web acquisition in Arabia, sized at around $175M (I do not have the accurate figure) - a relative average deal based on US standards - worry Arab founders? Did the Yahoo-Maktoob deal set a valuation ceiling for future acquisitions? Can local Arabic companies hope to exit their companies for higher valuation deals?

The other questions would be, who are the potential acquirers of web startups? Should founders rely on foreign corporations for their exit strategies? Can startup founders hope for any big exits from within the MENA region?

I wonder…

One thing many people do not lack is having plenty of ‘business’ ideas. Stop random people on the street and ask them, it’s very likely that they have dozens of ideas in mind that they are ready to execute on. It’s also relatively easy to create a ‘business model’ around certain assumptions in an attempt to convince yourself (sometimes unconsciously) that the idea you’re pursuing is actually a viable ‘business’ idea worth dedicating your time and resources on.

The key is to rigorously challenge your assumptions in the first place, and face reality by assessing how much of a problem your idea is really trying to solve. It is very important to separate business ideas, from nice to have features, or even creative cool products. 

What pains are your potential customers currently having? how much are they willing to spend to buy your product or service? what alternatives do they have? what are they currently doing to solve these problems? are you addressing an existing need or are you creating a need? what pocket of money are you interested in (marketing budget, IT budget, R&D budget, training/HR budget)? Can a larger company copy your idea and offer it as a feature (maybe even for free)? 

Many of the products out there are merely nice-to-have ideas, that people don’t really need or maybe willing to spend money on. There are tons of free products on the web, open free platforms to use, what is the real unique element in your model that will attract potential customers and buyers.

So, my advice, before you take the plunge and dedicate all your resources, time and energy on your business idea, ask yourself the above questions, and challenge every assumption that you initially used to project your business model, by doing research, asking lots of people (preferably potential customers), or even testing your idea on a very low budget and scale.

Many entrepreneurs fall in the mistake of believing their own marketing. They get the media to write about their product, they might do TV interviews, they have many followers on Facebook or Twitter to talk about their product. Yet, almost all the time, all the above rarely ever translates into real business (ie money in the bank account). It’s just flash. And the big problem is, the entrepreneur starts believing his own marketing that he seeded in the first place, and gets under the illusion that he has now a successful business. WRONG!
 
I mentioned 2 important words: “Successful Business”. Having a lot of PR and marketing does not constitute success. Having followers on Facebook and Twitter do not constitute success. TV and press interviews does not constitute success. Although it does help a lot in certain cases to have good PR and a solid marketing machine supporting you. Success is having sustainable solid growth in revenue, month over month, or at least a solid continuous growth in user base and probably eye balls that eventually would translate in $$ in the bank account. It’s about money, revenue, profit or cash, whatever you want to call it.

It is very easy to fall in the trap of pandering to bloggers and reporters who are hungry for stories that attract more eye balls, and have to post new material everyday (many times without even fact-checking them such as this story about an android app that allegedly was stealing info). Although it is good to be featured by them, it is not necessarily though a badge of quality or success. While it could make you look ‘cool’ and ‘popular’, keep focused on why you are in the business in the first place, which is to actually build value and make money.

There is a lot of buzz in the media about startups, entrepreneurship and rise of VCs and funds in the MENA region. Many are pushing young people to start a business, to build something, and to take the plunge in the entrepreneurial path.

A lot has been said about the benefits of a successful business, from the financial rewards to the freedom of being your own boss and commanding your own schedule. However, do not be misguided by all this, starting a business is actually very tough, and having a successful business is even tougher.

What they fail to tell you is the percentage of startups that fail, and the sad stories of their failure. Fact is launching a business is very tough. And I am not talking about a side project that is built in parallel to full time job. I am talking about a real business that takes over your entire life and focus, where you are faced with real life challenges of securing enough cash to survive, identify real customers and generate revenue, attract a team and build an attractive value proposition for them to stick with you during the harsh moments of your startup, having the responsibility of making money and build an actual business, not a product, but a business that makes money, a lot money. Because this is what you are after in the end, right?

It is a very tough path, and you need to be ready for some serious emotional challenges, some sleepless nights thinking about all the above challenges. This said, I do not want to discourage you, having a successful business is a very attractive thing, and by all means you should think of doing, especially when young, but keep in mind, it is going to be a very tough ride.

In this blog, I will share my honest thoughts and observations I have about startups in Arabia, entrepreneurship, and common business practices. I will share tips and personal advices about starting business, marketing and business development, dealing with people, and common obstacles along with some recommendations on how to overcome them.

I will also try to shed light on some common PR BS that surrounds entrepreneurship and entrepreneurs (I hate this word), how these 2 words have been stripped with their true values to be replaced by a factor of ‘cool’, allowing anyone with an idea, maybe even a product and some heavy PR buzz around it to call themselves ‘entrepreneurs’.

Along the way, I will describe my journey in building loomni.com and share along my experience hoping that my tips and advices will save you eventually time and money and help you avoid the mistakes am doing.