Sometimes finding the right business venture is like panning for gold. Luckily, Brian Ree, Co-Founder of GoldenMine.com shares with us how he found his gold, and used it to start a successful company.
(article continues below)
Tell me about your current business. What are you doing exactly?
As a large jewelry e-tailer, we offer a wide selection of gold and wedding jewelry to customers at competitive prices and exceptional value. We strive to follow 3 golden values - quality, service, and trust – in order to provide the best customer service.
Sounds like a tough thing to start. What were you doing before this, and is this your first business?
My close friend, David Lee, and I, Brian Ree, started GoldenMine. Lee grew up in the jewelry industry – both of his parents started Lee's Gold Imports, Inc in 1979, which became a big U.S. gold jewelry wholesaler. To help manage Lee's Gold's steady growth, Lee joined the family business while attending the University of California, Riverside and later came up with the idea to sell jewelry online as internet ventures popped up. While Lee had the jewelry business expertise, I stepped in to bring jewelry from the traditional brick-and-mortar establishments to a new channel, the internet. Even though we were in the middle of the dot-com bust era when planning GoldenMine, I still saw the potential of what the web could bring while attending the Haas School of Business at the University of California, Berkeley. The university, like most other universities, had a very fast internet connection as most homes used dial-up at that time. I saw students, as well as my own personal experiences, download large amounts of data in minutes and believed that this technology would soon expand into people's homes. Consequently, Dave and I believed we can still create value over the internet, so we proceeded with our plans despite other internet businesses shutting down. I also successfully started another venture, Exceed Tutorial Services, prior to GoldenMine in 1996 and used that experience to start this jewelry e-commerce company.
Wow, sounds like you'd have some good advice to give to somebody else who wanted to start a similar business.
Ecommerce for goods is maturing. For those thinking of starting an ecommerce company that sells tangible products, it's best if you have access to a competitive supply of products. Otherwise you may not be strong enough to compete with others in the industry.
Did you operate your business from your home? What were the challenges and benefits to this strategy?
In the beginning, we used David's father's office at Lee's Gold headquarters, so it wasn't necessarily at a home but at a familial place. We started off with little capital, around $20,000, so we definitely had to look for ways to bootstrap. I remember setting up operations in a 5'x5' space with only an L-shape desk, two computers, and a phone. That was all we really needed at that time.
Challenges – We had no significant challenges…One of the drawbacks was that we had to work according to Lee's Gold's business hours, so if we needed to work longer hours, we had to wait until the next day. When starting the business, we really wanted to get things going and do as much as we can to grow quickly but could only do so during restricted times.
Benefits – We had free rent, which saved us a lot of money. Later on, as the business grew, we were able to move to another office of our own. Furthermore, we worked right next to our main supplier. If we had any questions, issues, and orders to give, we could address them right away. Being in the same office also allowed us to develop a positive business relationship with Lee's Gold outside of our personal relationship that we already had beforehand (David the son of the owners of Lee's Gold and I as a long-time family friend). Also, because we are an internet company, we could still operate in a small, shared space without our customers knowing or even caring as long as we exceeded their expectations.
Do you own a business with family members? What do you think are the benefits and challenges to running a family owned business?
Technically, we don't own a business with family members. However, David and I are good friends since elementary school, almost like brothers, and his dad is a supplier and silent partner. He actually stays silent and feels comfortable giving us no opinions on how to run GoldenMine.
Benefits – We have an established level of trust and loyalty. When running a high-value goods company, especially in the jewelry industry, those qualities need to exist, which is why most jewelry companies are family-run. These companies need a high level of trust and loyalty in which they generally get from close family members.
Challenges – The main challenge is that we see each other outside of work. If we have any conflicts, we want to make sure that they don't spill into our personal lives, so we need to address conflicts in a business-like manner and keep them from being personal. It also makes it harder to let go of any relatives and friends that we hired.
With the current economy in rough shape, what penny pinching tips would you have for a new entrepreneur?
Start small to prove your business model and see if it works if possible. For example, get at least one conversion, one customer without spending lots of money.
See what others in your industry are doing, especially notice what they are doing well. Focus on a few of them that you can succeed in realistically without spending money. Try to outsmart your competition in these areas. For instance, our competitors conducted search engine optimization (SEO) activities and placed banner ads to market themselves. We chose to focus on SEO and not on banner ads because of our limited budget.
Try to be as hands on as much as possible, especially in the beginning, and understand all aspects. Even if you have others working on different activities, you should have an overall understanding of them, so you know how to grow your business and address any problems that may occur.
Have you outsourced any portion of your business? How does that work for your business?
Yes, we outsource the portion of the business that is unrelated to our core business values. We first started out by outsourcing a majority of our business in the beginning, then became in-house, and now are a mixture of outsourcing and in-house.
The main thing we outsource is our technology. One of the drawbacks of outsourcing is finding a reliable and cost-effective partner. It took us seven to eight years to find our current web hosting partner, which we found out through a trusted referral.
Temporary labor can be a great asset to an entrepreneur. Have you ever hired temps or contractors? Would you suggest this as a strategy for new business owners?
Yes, I hired many different types of part-time contractors – remote, in-house, interns (students for credit and stipend), domestic, and oversees. They helped to get a lot of work done.
Because of their help, I do recommend hiring contractors, especially for time-intensive but less complicated work. However, you have to be realistic about what you want to get in low-cost labor. For free, low-cost positions, realize what can kind of quality you will get. Expectations should definitely be lower than expert-level quality. If you are looking for higher quality contract work that is time intensive with low experience, hire students from good universities and offer payment. Contractors can also be good for project-based work. You can look for them for free in forums related to your industry. For example, if you're looking for someone to conduct SEO projects, look in DigitalPoint or Elance, which have a good history of providing quality work. However, they can be a hit or miss.
Thank you very much for your time today Brian, hope all goes well with the online retailing!