So this year we decided to go straight to the hot industries and write about the smartest entrepreneurs, executives and engineers in their respective fields.
When childhood friends Vinit Bharara and Marc Lore launched Diapers.com in 2005, conventional wisdom said you couldn't make money selling bulk commodities online. Bharara and Lore weren't buying it. Their business plan envisioned diapers as a "loss leader and relationship builder." Low-priced diapers would get busy moms in the door. Diapers.com would win those moms over via free, fast shipping and high-touch customer service. Moms would return to buy not just diapers but also pricier gear like strollers and toys.
Bharara and Lore called their new company Quidsi, Latin for "What if?" They built an elegant, intuitive storefront that now stocks more than 23,000 baby items. Behind it, they set up a sophisticated logistics and fulfillment enterprise. They designed software that determines which of 23 different-sized boxes should be used to ship an order at the lowest possible price. Lore created an algorithm to determine precise inventory amounts and when to reorder. And Quidsi uses a range of national and local shippers to keep costs down and make sure orders arrive on time.
Given that Amazon was already winning the price and delivery game, this wasn't obviously a winning strategy. But the moms came, and as moms do, they told their friends: No more late night diaper runs or standing in line at Costco to buy formula. Last year, Diapers.com posted $300 million in revenue. That included sales from Soap.com, a dedicated site for household essentials, which launched in July 2010 and offered moms another 25,000 items to buy. Soap.com shares a checkout cart with Diapers.com and offers the same value proposition: low prices, great service, fast delivery.
Clearly the Quidsi guys were onto something, so it came as little surprise when Amazon scooped up the company last November (final price: $545 million). But the giant Seattle e-tailer didn't just get Quidsi's loyal customer base or logistics operation; it acquired the genius duo of Bharara and Lore, who continue to run Quidsi from its headquarters in New Jersey. Last July the Quidsi team launched pet supply site Wag.com. Bet on Quidsi's founders to overturn the hapless legacy of Pets.com. Says Jordan Rohan, an Internet analyst at boutique investment bank Stifel Nicolaus: "Marc and Vinit ventured boldly into Amazon's province, the land of low margins and free shipping, and they emerged victorious."
Executive chairman, LinkedIn
He may never be portrayed in a Hollywood blockbuster, but there's no doubt that Reid Hoffman is one of the stars of the social network phenomenon. In 2002, around the time that a certain young prodigy was matriculating at Harvard, Hoffman was already building LinkedIn, today the world's largest professional network with 100 million members and one million new recruits every week.
LinkedIn launched in May 2003 with Hoffman, now 44, at the helm. He took the site through its early-stage growth, drawing on his previous experience as an executive at PayPal. In 2009, Hoffman passed the reins to current CEO Jeff Weiner, but remained as executive chairman with a 20% stake in the venture. This past May, LinkedIn became the first U.S. social network to go public. Shares were initially priced at $45, shot as high as $122, and today hover around $100. The current price gives LinkedIn a market valuation of nearly $9 billion, and makes Hoffman a billionaire.
The success of LinkedIn, which delivered $243 million in revenue last year from advertising, subscriptions and software licensing, would be enough to establish Hoffman as a founding father of social networking. But he's no one-hit wonder.
Hoffman caught the social bug in 1997, when he co-founded Socialnet.com, an early dating and community site that was sold to Spark Networks in 2001. Earlier stints in product development and user experience at Fujitsu and Apple trained Hoffman for his role as the startup's "product guy" (his words), and he began to understand of the power of connecting people through online networks.
Next came PayPal, where as a founding board member and executive, Hoffman made a then-fortune from the sale of the payments platform to eBay. He also became known as a member of the "PayPal Mafia," so-called because colleagues like co-founder Elon Musk, Square's Keith Rabois and investor Peter Thiel went on to further success in tech. LinkedIn is Hoffman's claim to fame, but he also became one of Silicon Valley's most prolific angel investors and advisors to young entrepreneurs, especially those with a social bent. He placed successful early-stage bets on Digg (content sharing), Flickr (photo sharing) and Facebook, the biggest sharing site of them all.
Today Hoffman serves as a partner at venture capital firm Greylock, which he joined in 2009. He oversees the firm's investments in location sharing site Gowalla and home sharing site Airbnb, among others. He is also notably, an advisor to Groupon, and a director at Zynga, two companies that were built on the back of social networks, and whose upcoming IPOs could upstage LinkedIn's. But given that Hoffman has a stake in both, he's probably not too concerned.
Says Netscape founder and venture capitalist Marc Andreessen: "Reid is one of the top go-to people in the Valley and in the industry for social Internet businesses of all sizes and shapes. He's both a great company builder and a profound thinker -- a very rare combination. He's my first call when I'm confused."
CEO and founder, Square
It only takes one great idea to radically change the way we think. Jack Dorsey, 34, has had two so far. In 2006 Dorsey created the microblogging network Twitter, where he still serves as product chief. His new venture is Square, a mobile payment service that replaces the traditional payment apparatus of credit card reader machines, merchant bank accounts and back-office computers.
To use Square, merchants simply plug a free plastic square-shaped dongle into an iPhone, iPad or Android device, turning it into a mobile credit card reader. The service has been a particular boon for smaller merchants who don't normally take plastic. Even more enticing, the startup doesn't charge flat transaction fees, though it does scrape 2.75% from each transaction.
Dorsey co-founded Square in 2009. Today the company processes $3 million in daily transactions, which implies annual revenues of around $30 million. More than 50,000 small businesses are signing up each month. Square recently nabbed an additional $100 million in venture funding, quadrupling the company's value to $1 billion.
The crucial element in this early success is Dorsey himself, who currently puts in at least eight hours a day running Square, plus another eight-plus hours leading product development at Twitter. "Many people come up with complicated answers to complicated problems," says Square COO Keith Rabois. "Jack is extraordinary in that he's able to reduce a very complicated set of features into a very elegant but simple solution that `just works,' which is orders of magnitude more difficult."
CEO and co-founder, Spotify
For years, Spotify was the hot music service that Americans couldn't get their hands on. Its journey across the pond from Stockholm was fueled by promises, speculation, and drawn-out licensing negotiations with record labels. Now that it's here (Spotify launched in the U.S. in July), the music streaming service founded by Daniel Ek seems poised to transform the way stateside listeners consume music, just as it did in Europe.
"All-you-can-eat" music services have existed in the U.S for some time, but none of them work quite like Spotify, a simple, fast, and legal stand-alone application that lets users listen to and share the service's 13 million-plus tracks for free. Whereas Rhapsody requires upfront monthly paid subscriptions, Spotify uses a freemium model. The free tier is ad-supported and places caps on the number of hours that music can be streamed and the number of times a song can be listened to each month. Premium plans let users go mobile and store songs on their mobile devices. Spotify uses money from ad sales and subscription fees to compensate labels and artists.
Ek also created a snappy user experience that outpaces even iTunes, which offers about a million more songs than Spotify but makes users pay upfront and wait for tracks to download before listening to them in full. Ek put stock in the belief that if you open up the entire music catalog to users for free, they will eventually get sufficiently hooked to pony up those subscription fees. The numbers speak for themselves. To date Spotify reaches 15 million users in Europe, more than 750,000 of whom are paying customers.
President, Microsoft Interactive Entertainment
Historically, video game consoles survive for between five and seven years, with sales petering out when manufacturers announce the next product. Thanks to Don Mattrick, that's not the case for Microsoft's Xbox 360.
Things didn't always look this good for the iconic console. When Mattrick moved from Electronic Arts to Microsoft in 2007, the Xbox business had yet to turn a profit. That same year, hardware defects caused up to 24% of all Xbox 360 consoles to fail, causing a $1.15 billion write-off to extend warranties and reimburse disgruntled owners. Mattrick wrote and executed a three-year plan to turn the business around. "There was just a lot of change, and Don was a real stabilizing force," says Dennis Durkin, COO and CFO for Microsoft's Interactive Entertainment Business.
Without Mattrick there wouldn't be Kinect, the company's motion-sensor controller for the Xbox 360. Mattrick assembled the Kinect team, recruited outside talent like creative director Kudo Tsunoda, and set crucial goals like reducing costs to reach an affordable consumer price point.
Now Kinect is one of Microsoft's most successful hardware devices, both critically and financially. Microsoft has sold more than 10 million units since last November's launch and is largely credited with driving console sales up 29% during the first four months of 2011 compared with the same period last year. Hackers have already programmed numerous Kinect applications, from augmented reality games to motion-capture animation programs; and roboticists are using the Kinect's camera to capture 3-D real-time images.
"A lot of people can see trends, but Don also formed a team that could execute against a vision," says Durkin. "That's where he's really changed the trajectory of our business."
Source CNN Money