Getting back to the proposition that started this thread, I think that one of the big things that the internet economy has done is set up an economy of possibilities. If a small company can identify a niche and develop a sufficient customer base, they can make good money. Really the biggest issue that such a company would have is getting noticed by their target customer.
An example that I would give is a company that I use, J Martinez, a local coffee importer. They specialize in providing estate coffees, i.e. if I buy a pound of Blue Mountain or Kona, it comes from a specific estate from Jamaica or Hawaii respectively and is 100% from that estate. So they market to coffee connoisseurs who are picky about their coffee. They started as a walk in shop, but quickly moved into the mail order/internet business. I generally put an order in and it arrives the next day since they are intown. They also sell to restaurants and high end markets.
Once again, to hop on my pet soap box, discoverability is the issue. I suspect that most of J Martinez's business is either word of mouth or restaurants. They have a website, but I'm not sure how one would phrase a google search to find them, other than by name. Hum, Estate coffee roasters Atlanta will pull them up. The internet does mean that you have more competition, but it also means you have more potential customers. Everyone doesn't have to be a multi-billion dollar business to be successful.
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