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busi2800.docxRunning Head: ENTREPRENEUR CASE STUDY 1
ENTREEPRENEUR CASE STUDY 2
ENTREPRENEUR CASE STUDY 3
Entrepreneur Case Study
OMAR ALABDULHAI
CARLETON UNIVERSITY
BUSI2800
07/12/2015
Entrepreneur Case Study
Entrepreneurs design and implement a practical business plan to start and establish a venture (Drucker, 2014). Entrepreneurship can be considered as an art in which a businessperson conceives a new business idea and perceives its probable outcome (Kuratko, 2013). During the process, the entrepreneur seeks for viable opportunities that can be exploited, and then design the business plan based on the available viable opportunities before acquiring the financial, human, logistics and other resources needed; and subsequently implementing the business plan (Minniti, 2013). The entrepreneurial ecosystem is one of the most critical determinants of the probabilities that an infant venture start-up would either succeed or fail (Szirmai, Naudé, & Goedhuys, 2011). A business start-up, which adapts to the entrepreneurial ecosystem, is more likely to succeed as compared to non-conformist and rigid business ventures (Drucker, 2014). For one to qualify as entrepreneur, he or she must fulfill the following conditions:
· Must have started a viable venture
· Must have invested resources into the venture
· Must be presently engaged in operating the income-generating venture
· Must operate a legitimate business
The following entrepreneur case study will focus on Jerome Pinto Sports File, an online entertainment portal that focuses on sports and online betting.
Jerome Pinto SportsFile
Jerome Pinto SportsFile is a private members-only portal, which provides real-time sports updates to its clients thereby providing them with updated information, which they can leverage during bets. The portal can be accessed behind a subscription firewall. The firm also has an online betting portal where clients can place bets on upcoming games. The firm also sources its revenue from integrated and customized banner advertisements.
The firm is a viable and legitimate venture, which has accrued customer revenues. The background information about the firm is provided below along with its history.
Background
Jerome Pinto Sports File was established in June 2013 by Jerome Pinto, a graduate computer programmer, and certified web designer. Initially, Pinto conceived the firm as an online sports news aggregator, which would aggregate sports updates mirrored from sport news agencies. In 2012, he started programming the aggregation engine, which he hoped to build his website. However, the aggregation engine performed poorly during a test run, and its core heuristics was not parsed properly and this created problems with search indexing and data retrieval. It was at this point that Pinto started to study the operations of online betting engines and virtual sports simulators.
After two months of research and intense study of various source codes, which were used in online betting networks, he decided to build an online betting engine, which could be integrated into websites. In late 2012, he had built the engine, and he successfully tested it. It was at this time that he conceived the plan to build an online betting platform using his betting engine. Nonetheless, he decided to do a market survey in order to gauge the feasibility of an online betting business.
It was during this survey that he noted that the market was saturated with online betting businesses, but there was a glaring absence of a firm that provided real-time sports news. At this point, Pinto identified a viable market opportunity that could be exploited. He thereafter decided to assess and analyze the feasibility of operating an online sports platform, which would provide real-time sports update.
After the assessment and analysis, he decided to build a trial website, which would relay real-time sports updates, which were obtained from an array of sources including the official websites of sports teams, individual players, sports news and sports pundits. The need to aggregate sports information obliged him to repurpose the aggregator engine he had earlier built in order to harvest real-time news related to sports that was online and whose copyright notice permitted one to share its sports news. The aggregator performed fairly well when it was integrated into the trial website and it was able to collect an average of 67% of all breaking news stories which contained the tag “breaking news” within their content. Pinto conceded that he was amazed by the market reception of its trial website, with the website registering over 1,200,000 page views in its first two weeks with an average of 5,000 unique visitors viewing the page daily. Apart from amazing him, the scale of market reception also convinced Pinto that creating an online real-time sports news platform would be a viable business idea and this is what he had to say about the business idea:
“The trial website provided insights into the dynamics of the sports world. Here was a website which used both copyrighted and non-copyrighted news as the core of its content, and it registered more than a million page views in a week. If one considers this concerning advertisement monetization, it quite apparent that the page views could be converted into a revenue stream. However, most advertisement firms have very low pay rates for page views, with some paying as low as $1 for every 100,000 page views. That translates to a weekly outcome of only $12. It was at this point that I disregarded advertisement monetization as a revenue and then chose affiliate marketing and subscription as the two most viable options.”
After that, Pinto designed a business plan for the new venture and he chose to name the firm, Jerome Pinto Sports File. Afterwards, he was faced with the challenge of acquiring the financial, human, logistics and other resources needed for successful implementation of the business plan. It was during this time that he started to look for the required capital.
Initial Capitalization
During the interview, Pinto stated that he sourced his start-up capital from the following sources:
1. Personal savings
2. Loan from friends and relatives
3. Proceeds from sale of assets
It is therefore quite evident that the firm was started on a very narrow capital base, and this obliged the Pinto to purchase only standard-quality materials for the start-up. Since, the founder of the firm was an accomplished computer programmer and a certified web designer; he did not need the services of computer and web specialists thereby eliminating labor costs. Nonetheless, he needed to purchase four computers, two heavy duty UPS (Uninterruptible Power Supply), a server and a router. Moreover, he needed to purchase a top-level domain name, anti-DDOS (Distributed Denial-of-Service) services from Cloud Flare and virtual data storage facilities.
During the interview, Pinto conceded that the total sum of initial capital was an approximate of $100, 000 which he described as “more than enough” since he needed to purchase standard-quality assets. The only high-quality virtual asset which he purchased was the top-level domain name, which he bought from a well-known vendor, Go Daddy. Since his firm featured two distinct but interrelated business lines, he purchased a top-level domain name, which would allow him to create up to seven sub domains. Also, the online platform required considerable data capacities, and this obliged him to purchase approximately 75 Terabytes of virtual storage space at a cost of $700 per annum.
Start-up
Acquisition of the necessary assets allowed Pinto to build and design the website, which would operate as the front end of the firm. He also did all the initial back-office duties, including setting up the database. He also applied for the necessary operating licenses as well as sought accreditation from the relevant organization, including those which monitor and regulate the online betting market. He acquired the necessary licenses as well as obtained the appropriate accreditation. All of these happened as he was in the terminal phase of testing the website before he could declare it to be a complete website. After the website was completed, he assigned it the domain name and within a period of a week, all the components for the online portal were in place and the business was launched on June 2013.
Pinto advertised the launch through Google adverts and also using both his personal social media accounts and the social media accounts he had created for the firm. On 3rd June 2013, the online portal was indexed by all the major search engines including Google and Yahoo. That is what he had to say about the indexing:
One week after being launched, the firm had registered more than 200 members with each member paying a subscription fee of $150 and an annual membership fee of $50. No advertisement revenue was obtained during the first week. Therefore, one week into its operation, Jerome Pinto Sports File had registered revenue of $40,000, thus, proving to Pinto that his firm was a viable business.
Milestones
The firm has recorded some major successes and achievements to date, and they are described hereafter. At the end of June 2013, the firm had registered revenue approximating $180,000 with advertisements accounting for only 5% of the total revenue. Nevertheless, Pinto concedes that the firm registered a healthy profit margin during its first month of operation.
At the end of 2013, the firm registered a profit of $400,000 thus, allowing Pinto to expand the operations of the company by hiring workers and creating a support team, which was available 24 hours a day to respond to the queries of the customers. Presently, advertisements account for 27% of the revenue generated by the firm. Late last year, the firm had a workforce of 20 and also registered an annual revenue turnover of $1,300,000.
Nonetheless, the firm has encountered difficulties including poor services from its ISP providers which resulted in service blackouts. Also, in March 2014, the firm faced a sustained DDOS attack from criminal elements who attempted to blackmail the firm. Furthermore, in December, 2014, one of the sub domains (which dealt with advertisements) of the website was hacked by criminals out to perpetrate acts of cyber vandalism.
Objectives
Pinto stated that the objectives of Jerome Pinto SportsFile can be categorized into short-term and long-term objectives.
Short-term Objectives
Jerome Pinto SportsFile plans to achieve the following objectives in the next 12 months:
1. Utilization of a more power online betting engine, which would enable the firm to handle all the needs of its present client base.
2. Build an online betting platform that is compatible with all major Operating Systems used in Mobile phones to expand the market reach of the firm.
3. Launch an affiliate sports news website.
Long-term Objectives
Jerome Pinto SportsFile plans to become the largest online betting platform in the world, whose services can be assessed across all networked devices.
Business Environment
Presently, there are no direct competitors but the firm is vulnerable to market changes and uncertainty in the Forex sector. If the local and regional economies experience a slowdown, the firm would also experience a slowdown because most of its clients would have reduced disposable income, which they could spend.
Advice to Upcoming Startups
Pinto had the following piece of advice for upcoming start-ups in the sports and technology world:
1. Choose the most appropriate market for the products and services offered.
2. Study the market well and understand the dynamics operating in that market.
3. Adhere to all the relevant legislations.
4. Build brand loyalty by offering quality goods and services.
5. Create a practical financial plan, which would guide the expansion of the company
Conclusion
Entrepreneurship is an art of business in which a businessperson conceives a new business idea and perceives its probable outcome. During the process, the entrepreneur seeks for viable opportunities that can be exploited, and then design the business plan based on the available viable opportunities before acquiring the financial, human, logistics and other resources needed; and subsequently implementing the business plan. The success of a start-up would be determined by its understanding of the market forces at play within its particular segment of the market.
References
Drucker, P. (2014). Innovation and entrepreneurship. Routledge.
Kuratko, D. (2013). Entrepreneurship: Theory, process, and practice. Cengage Learning.
Minniti, M. (2013). The Dynamics of Entrepreneurship: Evidence from Global Entrepreneurship
Monitor Data. Oxford University Press.
Szirmai, A., Naudé, W., & Goedhuys, M. (2011). Entrepreneurship, innovation, and economic
development. Oxford University Press.
