entrepreneurship at the intersection of sports media and the social graph

I was born in 1972 to a poverty-level family in suburban Chicago. During the first few years of my life, I shared a

600 sq ft, 1 bedroom cottage with my parents, older sister and dog. As a kid, I grew up helping my dad kill roaches and trap rats in his one-man pest control business.

Inspired by my architect grandfather who dabbled in the stock market, I started playing the market when I was 15 years old. In 1994 at age 21, I graduated Magna Cum Laude & Dean's List from Babson College, an undergraduate business college outside of Boston. Shortly thereafter, I moved to San Francisco to find the stark reality of an uninterested job market. After a period of trivial and unsuccessful undertakings, I took to the streets out of desperation to "make something happen." My thought at the time was: "if my resume falls on the floor, nobody will bother to pick it up".

It was September 1995. I had been in San Francisco just over a year and had nothing to show for it. I remember walking around the streets of San Francisco and seeing two individuals who made a profound impression on me. One was a panhandler who simply sat on a corner and directly asked for money. The other was a man standing on a milk crate wearing a sandwich board that said "Repent! The end of the world is coming." I was in a state of mind where I was open to anything. The things that struck me were that the first man had gotten to a point where his ego had been worn away and he was willing to simply and directly ask for what he wanted without beating around the bush. The second man believed so strongly in his convictions that he was willing to physically wear his message and present it to the world. By the end of the week, I had created a sandwich board expelling the virtues of my skills. One morning, I put on my best thrift store suit and boarded the 5am bus to the financial district with my sandwich board under my arm. I stood outside the Bank of America world headquarters, put the two-sided sign over my head and began passing out resumes. I was there for 12 hours. I passed out resumes as people rolled into work, when they went out for lunch and as they left for home. This was one of the most humbling moments of my life. I stood out, exposed, bluntly asking for help and displaying my convictions. The response was amazing and really helped renew my faith in people. In the back of my head, I think I was expecting people to throw tomatoes at me (which my friend in New York said would have happened on Wall Street). Instead, many people took my resume and talked to me. A news crew even came.

In the end, this seemingly crazy idea lead to me getting a job as an associate equity analyst covering high-tech companies in downtown San Francisco. In my job, I was able to use my stock experience and education, but it did not take long to realize that I did not like analyzing companies. What I really wanted was to be involved with starting one.

In October of 1996 at age 24, I left my job in order to write a business plan for an idea I had relating to the relatively new phenomenon known as the commercial Internet. The idea revolved around creating a platform for pooling individual investor dollars to provide angel funding for fledgling companies and create a secondary trading market for these shares.

Open publication -

Unfortunately, after a few months I ran out of money and needed to look for a steady job again. I found a job opening for an entry-level, market research analyst at a small Internet company in San Francisco. Over a two-week period, I left messages on every single voice mailbox I could get at that company. I was never able to get a human on the phone or get a call back. One day, I randomly entered an extension off the main number and heard the message "Mark Goldstein's pager number is....". I knew from the website that Mark was the CEO of the company. What had started two weeks prior as a timid, pump myself up "you can do this" pep talk turned into a "somebody is going to talk to me, damn it!" When I got that pager number I called it immediately. Soon after I got a call asking "who is this?" I explained that I wanted the job his website had listed, but had not received a call back. He said that the reason nobody was there is that a few weeks earlier he had sold the company and its technology. He said he was downtown at a conference and to meet him at lunchtime. I ran over and he preceded to tell me that he was a serial entrepreneur that would be starting another business at some point soon and to stay in touch...He emphasized that he was impressed that I was sitting across from him given the situation.

Time passed and Mark had yet to start his new company, and I was flat broke. I went to him yet again and asked for help. He simply picked up the phone and called a Venture Capitalist friend of his. The next day I was at breakfast with a VC. Two days later I was working at Netscape Communications (one of the companies responsible for the commercial Internet taking off) doing business analysis and portal deal modeling.

It was there that I honed my skills relating to understanding business models and became an expert in the Internet itself. I also proved my worth to the Netscape executives and built a reputation for myself there.

(Netscape CEO Jim Barksdale, Steve Schimmel, VC John Doerr, 1999)

In 1999, America Online purchased Netscape and many executives left the company. One in particular was the Vice President of Business Development. He had decided to go to a very small company that was looking for venture funding so it could afford to try and build a company out of some very good technology it had developed. The company had been incorporated by two Computer Science Ph.D. candidates at Stanford University a few months prior. It only had the two founders and a few engineers working there. The Netscape VP joined the start-up in March of 1999 as employee 12 and hired me to help him build the business. In May of 1999, I joined the founding business team as lucky number 13. That company got its first and only round of Venture Capital, $25 million, a month or two later. The company was a Search Engine company that had only a few hundred thousand searches performed on it per day by at most a million users per month, mostly academics. The company had no revenue at the time. That company, now widely recognized as Google is the world leader in search technology, bringing in billions of dollars in revenue per quarter by aiding many millions of users all over the world find information on a daily basis.

During my career there, I negotiated our first $100k and $1million deals; was on the design team for the original ad program; ran a cross-functional external technology evaluation team; negotiated 3rd party technology licenses; was an all around go-to guy to just about every department that needed business help...and I founded and ran the Google Wine Club :-)

(Steve Schimmel, Google Co-founder Sergey Brin, 2000)

I could not have imagined a better job for myself. I was not constrained by any specific job description and was free to to add value wherever it was needed. I truly got to be a Business Development Renaissance man.

(Steve Schimmel, Vice President Al Gore, 2001)

When Google went public in 2004, it was one of the most successful IPOs in history. For me, that was a defining moment. I felt that I had made my impact, left my personal mark and accomplished everything I had set out to do there. I left shortly after IPO to pursue other interests.

My confidence and follow-through, along with the chances awarded me by individuals who saw something in me and believed enough to give me a "shot", took me from poor kid to successful businessman "retired" by 32 years old. At no point did I ever compromise my integrity. I do things that I can be proud of. My colleagues and I lived by the motto of "don't be evil". It’s not a gimmick. It’s a philosophy of doing what's right and letting the money follow.

Having reached a level of financial success that awards me the freedom and flexibility that it has, I am now looking to share some of my knowledge and experience to benefit the next wave of those who aspire to do as I did.

...and that is my story.

Steve

Google Inc., which helped popularize the idea of automated ad sales on the Web, has been quietly turning to an old-fashioned tool—phone calls—to compete in the hot market for local business advertising.

The Internet-search giant this year has hired several hundred sales representatives to call U.S. businesses such as spas, restaurants and hotels to promote new advertising initiatives, people familiar with the matter said. The effort includes an office in Tempe, Ariz., with around 100 sales representatives, one of these people said.

Since 20% of searches done on Google are for local information, "a strong Web presence can help neighborhood businesses answer those searches and bring in more customers," said Marissa Mayer, Google's vice president of geographic and local services, in a prepared statement. Google's new local ad offerings "are simple and they work, so we've been investing in marketing and sales to support them."

One person who has experienced the results is Debbie Codino, a manager at Bob Brown Tire Center Inc. in Portland, Ore. She said she hangs up daily on callers who say they can help boost the small tire shop's presence on the Web to attract new customers. But when she received a call from a Google salesman last month, she stayed on the line.

Ms. Codino quickly agreed to pay $25 a month to highlight her store and show a 10%-off coupon when people use terms like "Portland tires" in a search on Google. "I was surprised," she said. "This time it was really Google calling so I was motivated to listen."

Google, of Mountain View, Calif., is better known for search algorithms and the engineers who refine them to get better results. The company's $24 billion in revenue last year came almost entirely from AdWords, a self-service system developed 10 years ago to let anyone buy text ads that show up next to search results. More than one million small businesses, from makers of boots to distributors of special shampoo or contact lenses, advertise through Google on AdWords to drive online sales or get people to download catalogs, among other things, according to some analysts.

But AdWords never fully took off with local businesses, in part because it includes features viewed as too complex or time-consuming for average business owners to use, according to former Google employees. For example, AdWords uses an auction-like system to determine prices for ads. By contrast, Google introduced ad offerings this year for local businesses that cost a fixed amount per month, the kind pitched to Ms. Codino.

So far, only a fraction of local businesses advertise online. BIA/Kelsey, a local-media advisory firm, estimates that local businesses will spend about $20 billion online this year, a figure that could reach more than $35 billion by 2014.

Google signaled a strong interest in the market with an unsuccessful attempt to buy Groupon Inc., a fast-growing company that offers users daily deals on a variety of goods and services. People familiar with the matter have pegged Google's offer at $6 billion; both companies have declined comment. Had that deal been reached, Google would have picked up a sales force of more than 1,500 people who call local businesses to get them to offer discounts to Groupon customers.

Companies such as Groupon and Yelp Inc.—a business-reviews website that has hundreds of sales reps—have attracted big Web companies such as Google and social networking site Facebook Inc. to the growing online local ad market. Google tried to buy Yelp last year, people familiar with the matter have said.

The direct-sales approach on local business "constitutes a cultural change of sorts" for Google, said Greg Sterling, an analyst at Sterling Market Intelligence, but a necessary one. Paying sales people generates lower profit margins than a system like AdWords, "but what Google has come to see is that without a sales force or at least human involvement in the process, they're not going to acquire these small businesses as customers," he said.

Direct sales isn't a new approach for Google in handling large advertisers. Though many of Google's 23,000 employees have technical jobs, the company says it also has several thousand salespeople who work with Fortune 500 companies, small and medium-sized businesses and ad agencies on text and graphical ad campaigns, among other things.

To reach local businesses, Google has already built relationships through Web pages it developed last year for them on its search engine. Known as "Place pages," they list basic information, such as the location on a map and a summary of customer reviews.

Google's new sales reps are primarily selling two ad offerings called "tags" and "boost" to the four million businesses that have contacted Google electronically to verify the accuracy of their Place page. The ads show up on Google search results and in Google Maps that display local businesses.

When Facebook earlier this year began its own effort to establish relationships with local businesses, known as Facebook Places, its Chief Executive Mark Zuckerberg said the social network would compete with Google's offerings but added that the local market is huge. A Google executive said he welcomed Facebook's moves.

Links to Place pages on Google's search engine recently became more prominent on the results page for searches covering everything from Italian restaurants to spas. That has put Google into conflict with some business-review sites that generate revenue from local businesses, such as Citysearch.com, which claim Google is crimping their sites' growth by directing more Web searchers to its Place pages. Google executives say the changes are meant to improve users' experience and they believe the changes have generally helped direct more users to non-Google sites that specialize in local-business information.

Mr. Sterling said he expects Google to offer more opportunities for local businesses to reach consumers, perhaps through Groupon-type daily deals. In addition, Google Chief Executive Eric Schmidt said recently that Google's Android software for mobile devices could help people use those devices to pay for goods at a local store, rivaling credit cards.

"Google has always had large sales forces and, quite frankly, the advertiser opportunity has always been bigger than the number of people we were able to hire," said David Scacco, who joined Google as the first advertising sales executive in 2000. But he said Google co-founder Larry Page stressed from the beginning the "need to build automation," or allowing advertisers to buy ads through a self-serve system rather than just hiring scores of salespeople to reach the advertisers.

Mr. Scacco, who is now chief revenue officer at MyLikes, a social-media ad company, said Mr. Page would tell Google's ad team: "If you only throw people at the problem, you won't innovate."

Write to Amir Efrati at amir.efrati@wsj.com

Local has been a category that has long attracted a lot of attention from internet startups. Not surprising given that it is a $130Bn market. Now that Groupon and Living Social (a Lightspeed portfolio company) are growing s0 fast, it is attracting even more attention from startups.

Most of these startups focus on innovating on their product, and aim to have a “sales light” approach.

Usually they start with a self service business model, expecting local businesses to go to the web to sign up for service on their own. They mostly point to Google as the evidence that self service can scale.

I’ve long been skeptical that self service works for selling products to local businesses. From my time at CitySearch in ’96 to today, I haven’t seen this work. In fact, I’d argue that ReachLocal exists as a public company solely because Google can’t get local merchants to self serve. Today, perhaps lost in the holiday shuffle, the WSJ notes that even Google has turned to a call center sales force to reach local merchants.

The Internet-search giant this year has hired several hundred sales representatives to call U.S. businesses such as spas, restaurants and hotels to promote new advertising initiatives, people familiar with the matter said. The effort includes an office in Tempe, Ariz., with around 100 sales representatives, one of these people said.

The other business model that startups attacking local hope to rely on is channel partnerships. Many startups have struck deals with local yellow pages, or newspaper groups, to sell their product too. They have typically been disappointed when sales numbers come in far short of projections. It is hard to get someone elses salesforce to know and care about your product as much as you do, especially when they are used to selling traditional media and not online media.

The winners in this category (Yelp, Groupon, Living Social, Yodle, ReachLocal, CitySearch etc) have all relied on a direct sales force, whether on the phone, or feet on the street, to drive their revenue growth.

If you want to make a business in local online media, you have to control your own destiny and build your own salesforce.