START: The adventure of new ventures
My New York Times blog column on independently-owned start-up companies appears in full here: http://boss.blogs.nytimes.com/category/start/
A Start-Up Incubator That Floats
courtesy Blueseed
DECEMBER 14, 2011
Technology gurus have long lamented how hard it is for foreign talent to secure American visas and create start-ups here. As Congress spins its wheels with endless debate over immigration, an ambitious venture based in Sunnyvale, Calif., is trying to chart a more productive course aboard a 600-foot boat, or possibly a barge.
That’s the idea behind Blueseed, which aims to create a visa-free, floating incubator for international entrepreneurs off the California coast near Silicon Valley.
Blueseed’s co-founders, Max Marty, 27, and Dario Mutabdzija, 31, envision a seaworthy, 1,000-passenger hothouse for entrepreneurs from around the world, moored 12 nautical miles offshore — just outside California’s territorial waters — with enough appealing amenities to make it a “Googleplex of the Sea.” Passengers could take a day trip by ferry to the mainland on temporary tourist or business visas, returning to sleep in cabins that would rent for $1,200 to $3,000 a month.
“Blueseed is a way to connect Silicon Valley with the amazing founders and entrepreneurs out around the world,” Mr. Marty said. “Existing visa policies were designed for a different era. The nature of business has changed, and what’s lacking now is an avenue for people to be able to come in and create great companies.”
Peter Thiel, a co-founder of PayPal and prominent venture capitalist, signed on recently as an investor in Blueseed. The company is currently seeking additional investors to raise a total of $500,000 in seed capital.
“Tech innovation drives economic growth, and we need more of both,” Mr. Thiel elaborated in a written statement for this blog. “Many innovative people have a really hard time getting visas, and Blueseed will help bring more innovation to California with a solution that is itself as innovative as it is clever.”
Mr. Thiel, a staunch libertarian, made a splash in August by contributing $1.25 million to the Seasteading Institute, a Sunnyvale nonprofit founded by Patri Friedman (grandson of Milton Friedman, the economist) that explores the creation of autonomous ocean colonies. He declined through a spokesman to say how much he had invested in Blueseed.
Mr. Marty and Mr. Mutabdzija first met as directors of business and legal strategy at the Seasteading Institute. They estimate that their current project could end up costing $15 million, if they charter a vessel, to $40 million, if they buy one. They hope — perhaps optimistically — to have it afloat in 2013.
Past efforts to ease immigration restrictions for entrepreneurs have seemed less the stuff of science fiction. In February 2010, Senators John Kerry and Richard Lugar introduced the first version of the Start-Up Visa Act, which would create a path to citizenship for immigrant entrepreneurs who meet benchmarks for raising capital and creating jobs. Though the bill has since been reintroduced, it hasn’t made any progress.
Champions of both Blueseed and the Start-Up Visa Act are quick to point out that immigrants were founders of more than half of Silicon Valley’s start-ups between 1995 and 2005, according to Duke University research. They add that, without strivers from abroad like Sergey Brin and Vinod Khosla, companies like Google and Sun Microsystems would not be part of America’s tech ecosystem. (Mr. Marty’s parents are both Cuban immigrants and entrepreneurs; Mr. Mutabdzija was born in Sarajevo.)
For Blueseed’s founders, the first hurdle will be convincing potential investors that their vision is not as far-fetched as it might seem. They believe it is a matter of cobbling together best practices from well-explored, less exotic territory — maritime engineering, international law — to create great work-live-play spaces for tech dreamers. Foreign entrepreneurs, they say, are hoping for the chance to marinate in Silicon Valley, and more than 60 of them have expressed interest in the project through an online survey.
“I and many others are suffering over the situation that we cannot go to America to be around these people,” said Nico Schweinzer, a serial entrepreneur reached by Skype in Graz, Austria, where he created JobGuru, an employment site, and is building Oracly, a service that lets shoppers scan product bar codes with smartphones to receive short reviews. “For me, it’s not so much about the investors, but more about being where you can exchange ideas and get skilled people for your projects.
“Blueseed is a fantastic idea,” he added. “You could go there and be very close to the mecca of the tech scene.”
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NOVEMBER 17, 2011
Bringing the Tasting Room to the Living Room
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Using a technology that sounds more NASA than Napa, TastingRoom.com “reformats” wines from their original retail packaging into 50- and 100-milliliter, single-serving bottles. Technicians re-pour some 1,000 varieties of wine inside an oxygen- and particle-free Plexiglas clean room, which is 40 feet long and protected from contamination by a pair of airlocks, similar to the entry and exit vestibules on a spacecraft. Tiny bottles mean consumers can sample high-quality individual wines without committing to buy a traditional 750-milliliter bottle of each one.
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Employees: About 40.
Founder: Tim Bucher, 47, is a serial entrepreneur who founded two technology companies, Mirra and Zing, that were acquired by Seagate and Dell, respectively. Over the last decade, he’s held top posts at Dell, Microsoft and Apple, and he’s developed his own winery and olive orchard. Mr. Bucher grew up on a dairy farm in Healdsburg, Calif. and made his first wine at age 17. (“Of course, I didn’t drink it, right?” he said.) He began research and development for TastingRoom.com two and a half years ago.
Location: Based in Los Altos, Calif., with an operations center in Santa Rosa.
Pitch: “Think about it: Do you just buy a car without test-driving it?” Mr. Bucher asked. “We bring tasting rooms from wine countries all over the world to your living room.”
Traction: Wine is a very fragile liquid. Mr. Bucher spent more than $3 million developing the proprietary system he calls T.A.S.T.E. – for Total Anaerobic Sample Transfer Environment – to rebottle wine without oxygenating or otherwise altering it.
His company courts two kinds of clients: consumers, who can purchase mini-bottle samplers at TastingRoom.com’s online store, and wineries, which commission the mini-bottles for promotional purposes, including distribution to sommeliers and other potential buyers. TastingRoom.com currently works with about 300 wineries from 20 countries, including some major players: Constellation Brands, Treasury Wine Estates, Kendall Jackson and Diageo Chateau & Estate Wines.
Thursday, TastingRoom.com plans to introduce a partnership with Cost Plus World Market, which has committed to selling three new samplers – a line called Luxury Wines by the Glass – at more than 200 retail outlets nationwide.
Revenue: TastingRoom.com claims more than $1 million a month in revenue and expects to be profitable by the end of next year.
Financing: The company has raised a total of $10 million in venture capital and angel investments. Among its backers are James Meyer, president of SiriusXM; Mark Jackson, president of EchoStar; and Steve Luczo, chief executive of Seagate; along with the Seraph Group Venture Fund in Atlanta, Ga. and CampVentures in Los Altos, Calif.
Marketing: TastingRoom.com hopes to win attention with samplers selected by famous wine lovers. So far, they’ve included chefs such as Mario Batali and Michael Chiarello, along with Gary Vaynerchuk, the online wine guru, whose picks were branded “Wine for Dudes.” The company has run promotions with Gilt City, Groupon and wine associations such as Napa Valley Vintners. And to encourage repeat purchases, TastingRoom.com packages its samplers with offers for discounts on full-sized bottles, emulating the refund of a “tasting fee” you’d get when making a purchase after trying samples at a winery.
Competition: Not a lot. Domaine Habrard, a vintner in the Northern Côtes du Rhône region of France, sells samples of its wine in 60-milliliter vials. Crushpad, a San Francisco microvintner that lets consumers make custom wines, started a rebottling service called Brixr last year selling packs of 50-milliliter samples but quickly discontinued it.
Challenge: “I want to scale this thing intergalactically,” Mr. Bucher said. So what is keeping him from expanding TastingRoom.com at the speed of light? “We have a very, very high bar on our quality control side,” he said. “Every single 750-milliliter bottle that we open, we actually take a sample of that and put it into our internal laboratory, which measures every single molecule in that liquid to make sure that the taste has no cork taint. We will never sacrifice the quality level, because we’re dealing with these amazing brands and we have to be perfect.”
On top of that, “we’d need more capital in front of that big wave of scale.” Until recently, that’s seemed daunting given the struggles of Wine.com, which famously burned through more than $200 million before a lender foreclosed on it in 2001, making large venture firms wary of sinking capital into Internet wine endeavors. (It’s worth noting that, under new management, the now 13-year-old Wine.com turned its first profit this year. And Lot18, an Internet wine retailer specializing in flash sales, announced Nov. 4 that it had closed a $30 million round of financing, indicating that the online curse may be weakening.)
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NOVEMBER 1, 2011
A Start-Up Tries to Eliminate ‘Food Deserts’
courtesy Patrick Robinson — West Seattle Herald
Last year, M.B.A. students at the Bainbridge Graduate Institute in Seattle began hunting for a business-based solution to the problem of “food deserts” — low-income neighborhoods lacking access to healthful, affordable food. (More than 23 million Americans live in such places, according to the Department of Agriculture, which maps them here.)
The result? Stockbox Grocers, a start-up that converts reclaimed shipping containers into miniature grocery stores and operates them out of parking lots in under-served communities. Its slogan: “Good food, where you live.”
Founders: Former classmates Carrie Ferrence, 33, and Jacqueline Gjurgevich, 32, registered Stockbox as a limited liability corporation in July, a month after completing their graduate studies. Now they’re both working full-time, handling everything from securing permits to cultivating community relationships and selling veggies.
Employees: None.
Location: Seattle.
Pitch: Stockbox intends to promote access to fresh food — and turn a profit — by blending the dependability of brick-and-mortar shops with the low overhead of pop-up retailers and food trucks. “We take away the high set-up cost,” Ms. Ferrence said. “We take away the high ongoing operating cost, and we focus on the inventory that moves most efficiently. Most families, most communities, buy the same five to 20 items, week in and week out, so they only need to go to a huge grocery store once or twice a month to get the remaining items.”
For that reason, Stockbox focuses on perishables like juice, milk, dairy, meat, produce and other staples. Not only does this limited range of heavy-turnover items help a whole market fit in a shipping container, Ms. Ferrence believes it can boost profitability, too. “Huge grocery stores are fairly inefficient,” she said. “They depend on 15 percent of their inventory to carry the profitability of the rest of their store.”
Traction: Stockbox took second place at the University of Washington Business Plan Competition in May and also won the contest’s “best service/retail” category, earning a total of $12,500 in prize money. On Sept. 12, the company opened a temporary prototype selling more than 300 types of items in the Westhaven Apartments parking lot in Delridge, a Seattle neighborhood where grocery options are limited.
“No one’s really put a grocery store in a parking lot before,” Ms. Ferrence said. “We wanted to be able to bring it to life, show people what it would really look like.” The last day of the eight-week pilot is scheduled to be Nov. 7. Stockbox plans to open its first permanent store this spring in one of two Seattle neighborhoods, Delridge or Skyway. Plans are to open two to four stores next year.
Meanwhile, Ms. Ferrence and Ms. Gjurgevich have received calls from entrepreneurs in more than half a dozen cities — including Detroit, New Orleans, San Francisco, and Washington — most of them looking to franchise the idea. Stockbox plans to open at least its first 10 to 20 stores itself but is considering franchising after that. “People are thirsty for this,” Ms. Ferrence said. “It’s been great to see that people look at the idea, they see the business, and they see a way for it to work where they live as well.”
Revenue: The company does not release revenue figures. The Delridge prototype began collecting modest revenue in September and gets between 20 and 25 customers in an average half-day, Ms. Ferrence said. Projections are for the permanent stores to take in $600,000 a year in revenue with a profit margin, eventually, of between 5 percent and 8 percent.
Financing: Stockbox’s $12,500 business plan competition winnings became seed money. A Kickstarter drive that closed Sept. 15 garnered $20,129 from 195 contributors. Eighty percent – or about $20,000 — of the company’s costs for refrigeration and initial marketing efforts were covered by Healthy Foods Here, a local initiative funded in part by the Department of Health and Human Services.
To get their first permanent store off the ground this spring, the co-founders plan to rely on a mix of grants and bank loans. They said they also hope to open a couple more stores in 2012, for which they’ll seek angel investments. “Our models do have us being financially sustainable, but we’re not a tech start-up, we’re not going to have huge returns,” Ms. Ferrence said. “We’re looking for investors who want to support something that is giving back to the community, so they don’t need to have the 10-times return.”
Marketing: The partners have been relying primarily on a grassroots, do-it-yourself effort to get the word out. They’ve been attending community group meetings to forge relationships, posting fliers, getting supporters to put up yard signs and distributing coupons.
Competition: Most food deserts aren’t completely barren. Residents are accustomed to shopping at convenience stores, which may carry some staples but prioritize alcohol, cigarettes, lotto tickets, soda and junk food over components for healthful meals. “It doesn’t feel good to take your kids into those stores, but those are the established places to shop in the community,” Ms. Ferrence said. “Similar to any retailer, we’re competing against what people have been using for many years.”
Stockbox will also compete with big grocery stores, but those are typically a couple of miles away and inconvenient to reach by public transportation.
Challenge: Getting consumers to change their habits. At the prototype, Ms. Ferrence said, “we would see people standing 20 feet away in the parking lot, just staring at the store. We had to invite them in. They just had no concept of what was going to be inside.” To win repeat customers, she added, Stockbox will have to break down the idea that a “real” grocery store needs to be 30,000 square feet and carry 50 types of toothpaste.
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OCTOBER 12, 2011
Starting a Teach for America for Entrepreneurs
courtesy Venture for America
Each spring, well-heeled recruiters from financial and consulting firms lay siege to college campuses. They wine and dine the best and brightest students, siphoning future leaders off the top of the talent pool.
How can start-up founders compete?
A serial entrepreneur, Andrew Yang, thinks he has the answer. Venture for America, a nonprofit he founded this summer, recruits college seniors to spend two years after graduation at start-ups in struggling cities. For the inaugural class of 2012, he expects to place about 50 fellows at renewable energy, biotech and Internet ventures in Detroit, New Orleans and Providence, R.I.
“People think college seniors are deciding what they want to do based on native desire or affinity, but that’s not the case at all. Organizations spend millions of dollars to recruit them,” said Mr. Yang, a start-up veteran and most recently the president of a test-prep company, Manhattan GMAT, which Kaplan Inc. acquired at the end of 2009. “If we want to see our young people do things to help get the country back on its feet, we have to make it as easy to go work at start-ups in these cities as it is to work at investment and consulting firms.”
Venture for America is inspired by Teach for America, the staggeringly popular initiative that places top college grads in low-income schools. Nearly 48,000 applicants, including 12 percent of Ivy League seniors, vied for that program’s 5,200 slots this year, according to its administrators. “They have become one of the most singularly successful talent recruiting organizations in the world,” Mr. Yang said admiringly.
So far, Venture for America has attracted strong partners. Brown University is providing classroom, dormitory and dining hall space in June for the fellows’ five-week introductory boot camp. “Philanthropic, entrepreneurial types,” Mr. Yang said, have committed a combined $500,000 in funding, half of which has materialized. (IAC, which hosted the program’s kickoff this summer, donated $25,000.) The organization’s roster of board members includes Doug Ulman, chief executive of the Livestrong Foundation; Tom Ryan, chief executive of Threadless; Murray Low, director of Columbia Business School’s entrepreneurship center; David Tisch, managing director of TechStars in New York City; and Andrew Weissman, a partner at Union Square Ventures.
College seniors are responding, too. Venture for America has received more than 700 applications since it began accepting them in August. This month, the organization has embarked on a whistle-stop recruitment tour, with information sessions at Princeton, Harvard, Duke, Dartmouth, Stanford and other schools.
Salaries will range from $32,000 to $38,000 plus health insurance, provided by the start-ups that employ fellows. And if a fledgling company tanks in the middle of a fellow’s two-year commitment, that fellow will be placed elsewhere, an effort to mitigate the risk of failure inherent to start-ups. Companies that have committed to hire fellows so far include Drop the Chalk, an education company based in New Orleans; Federated Sample, an online sampling start-up, also in New Orleans; and NuLabel Technologies, an adhesive and printer technology start-up in Providence. At the end of each two-year program, the top-performing fellow will win $100,000 in seed money.
Venture for America’s ultimate goal is ambitious: creating 100,000 jobs by 2025.
“We believe that job generation is a social good,” said Mr. Yang, who sees the program’s creating jobs in two ways. “First, we’re going to supply promising companies with the talent that it takes for them to succeed and get to the next level.” Second? “We’re going to socialize and train a generation of our top college graduates to themselves become business builders and job creators. That’s how we think you get to the 100,000 jobs.”
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OCTOBER 4, 2011
High School Entrepreneurs Promise to Save Millions for Schools
photo: Ann Johansson for The New York Times
Founded in January, TruantToday is a messaging service that alerts parents instantly via text and e-mail message when students cut class. The goal? Reducing truancy and restoring state and federal financing to school districts, which can lose as much as $50 each day that a student is missing.
Employees: Three full-time employees and hiring two more: a sales representative and a designer.
Location: Westlake Village, Calif.
Founders: Zak Kukoff, 16, and Jonathan Yan, 18, classmates, started TruantToday after Mr. Kukoff skipped a 7 a.m. honors geometry class at Westlake High School. Administrators took two days to call his parents and notify them of his absence.
“An actual person from the school called and said, ‘Your son was absent two days ago and, you know, get on that,’” said Mr. Kukoff, the company’s chief executive. By then, of course, it was far too late to get him back into class. On top of that, the school was expending limited staff resources to make calls that he felt could easily be automated.
“Being the entrepreneurial sort that I am,” he said, “I immediately thought there was a huge opportunity to make a much more efficient — and much more cost effective — system for the school.”
For the record, Mr. Kukoff adds that he was not actually playing hooky. “I wasn’t skipping to go to the mall,” he said. “I was helping the student government set up for a dance.”
Pitch: “Right now, schools are losing millions of dollars per year because students don’t come to the classroom,” Mr. Kukoff said, adding that public schools in San Diego County alone lost at least $102 million in financing during the 2009-10 term because of absences. “Because we send messages out instantly, and because they go out to parents in a medium they’re already interacting in, parents can then work with the school to bring the student back to the classroom in many cases that same day, which not only saves schools millions of dollars but improves grades, lowers dropout rates and actually lowers crime rates as well.”
Traction: So far, TruantToday has signed up three paying customers in the Conejo Valley region of Southern California: Mr. Kukoff’s own Westlake High School, along with Thousand Oaks High School and Newbury Park High School. The company is running free trials at 10 more schools in Chicago, Los Angeles and New York. It is also in talks with district-level education officials in Sacramento and Seattle, Mr. Kukoff said.
Revenue: None yet. TruantToday charges on a sliding scale — from $10 to $1 per student, annually — with lower rates going to clients with the most students. Mr. Kukoff said the company is on track to start collecting revenue this year but declined to make projections.
Financing: The company is currently nearing completion of a $500,000 round of angel investment, with investors including Dave McClure of 500 Startups.
Marketing: TruantToday has been building buzz with a few early, high-profile coups. Last week, it won $15,000 in funding and took second place in the Innovation Challenge at NBC’s Education Nation Summit meeting. In June, it was voted the most promising of five start-ups selected to participate in CGI America, a Clinton Global Initiative event dedicated to creating jobs and improving economic growth in the United States. In August, the company completed a 13-week program in Boulder, Colo., with TechStars, a start-up accelerator that provides participants with seed financing and mentoring.
Mr. Kukoff said he was pitching TruantToday to media outlets that cater to educators and developing strategies that would give districts incentives to promote the service. He also blogs for The Huffington Post.
Competition: TruantToday’s primary competitor is SchoolMessenger, a service of Reliance Communications, which was founded in 1999 and is based in Santa Cruz, Calif. SchoolMessenger offers a notification system that disseminates information about emergencies, attendance and schoolwide events using voice mail, text messages, e-mail and social media. Earlier this year, New York’s mayor, Michael R. Bloomberg, teamed up with SchoolMessenger as part of WakeUp! NYC, an initiative that sent chronically absent students recorded wake-up calls from Magic Johnson and other celebrities.
Other rivals include Edulink Systems, based in Orange, Calif., and ParentLink, a service of Parlant Technology, which has its headquarters in Provo, Utah.
Mr. Kukoff believes his system is more user-friendly than most other software now available to educators. He also said that TruantToday’s system lets educators address individual absences more rapidly than his competitors’ broad-based messaging services. “We’re pitching a very specific return on investment for schools,” he said. He added that his service was the only one that allows two-way text messaging, which lets parents reply to the schools with their phones rather than connecting to the Internet.
Challenge: Getting the word out and hiring the right team members. “We’re looking for people who are not only going into business just to make profit, but to have a social impact as well,” Mr. Kukoff said. “It’s important to us to have a company that’s founded on an ethos of helping people.”
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SEPTEMBER 22, 2011
Starting the 'Netflix' of Flowers
photo: Courtesy H. Bloom
Last year, two software geeks who’d never been anywhere near the flower business — in fact, one of them is, quite literally, allergic to it — started H.Bloom, an online, subscription-based floral delivery service that operates in New York, Chicago and Washington.
Employees: 38 full time.
Location: New York.
Founders: Bryan Burkhart, 36, and Sonu Panda, 35, met in 1997 at the University of Pennsylvania and spent the next decade in the software industry. In 2009, they decided to cast off software in favor of … flowers?
What sounds like a romantic venture was actually a shrewd calculation. Neither of the guys had a green thumb (Mr. Panda is allergic to pollen), but both could spot a disruptive opportunity. They were surprised to learn how much of the $35 billion floral industry still relied on the old, brick-and-mortar economy, untouched by technology. Though companies like 1-800-Flowers.com and FTD had brought much of the floral gift-delivery marketto the Web, a huge part of the industry — self-bought flowers for home and office display — still belongs mostly to bodegas, boutiques and high-end supermarkets.
Pitch: This is a subscription service. “We’re the Netflix of flowers,” said Mr. Burkhart, the company’s chief executive (he said this before Netflix’s recent struggles). “We enable customers to sign up for luxurious flowers with convenient delivery at really affordable prices.”
A basic subscription costs $29 per bouquet, including weekly, every two weeks or monthly delivery. Clients can suspend service when they’re out of town.
Running an exclusively online shop helps H.Bloom keep overhead low, Mr. Burkhart said. And in an industry where spoilage is a huge problem, the subscription model offers a distinct advantage, letting him know in advance how much inventory he should buy. Unlike traditional brick-and-mortar florists, which lose 30 to 50 percent of their products to spoilage, he said, H.Bloom has a spoilage rate of 2 percent.
Mr. Burkhart said he believed he could pass the savings along to customers and still profit: “We’re closing a quality-to-price gap.”
Traction: H. Bloom boasts 200 corporate customers and 600 consumer subscribers. The company entered its third market, Chicago, this month.
Revenue: The company started selling flowers in New York in April 2010 and brought in $342,000 in revenue for that year. Mr. Burkhart projects that sales for 2011 will top $2 million.
Financing: The company has raised $8 million across three rounds of financing. Earlier this month, H.Bloom announced the latest: a $4.7 million venture capital round led by Battery Ventures. Also participating were Brian Lee, the founder of LegalZoom and ShoeDazzle, and Anton Levy, a General Atlantic partner and Gilt Groupe board member.
Marketing: The company targets two separate audiences: companies and consumers. For its corporate line, H.Bloom hires full-time salespeople with quotas in each local market. They pound the pavement visiting businesses that include restaurants, hotels and property management offices. On the consumer side, H. Bloom relied until recently on word of mouth but just hired a head of marketing and is preparing to introduce an opening salvo of direct-mail and online advertising.
Competition: Most existing online floral subscription services – including “bouquet of the month”-style offers from companies such as Teleflora and FTD and 1-800-Flowers – target gift-givers and are packaged and priced accordingly.
H.Bloom targets a different demographic, however, and it’s one left mostly untapped by Internet-based services. Eighty-four percent of H.Bloom’s subscribers receive flowers at least every other week, suggesting their subscriptions are not one-time gifts: they’re bought by the end users.
H.Bloom’s primary competitors for making nongift flower sales are all the places people buy themselves flowers already, a fragmented market including those bodegas, boutiques and high-end grocery stores. “I think we fit really nicely in between,” Mr. Burkhart said, “because we provide the luxury arrangements and convenience of delivery that a high-end boutique would offer but, because of the subscription model and being able to buy directly from the farms, we’re able to offer prices much more closely resembling a grocery store.”
Rapid growth would also help him deliver the kind of bargain that will ward off would-be competitors. “Getting to a certain volume allows price breaks that you just can’t get as a sole proprietorship,” he said.
Challenge: Staffing the planned expansion. H.Bloom wants to grow like a weed, entering 25 cities in the next five years, then tackling both smaller American markets and international markets. To that end, the company has established what it calls the SEED program to find and foster new leadership. (SEED stands for Startup Education and Entrepreneurial Development.) The first graduate was just dispatched to Chicago after completing a six-month training program in New York, where he learned skills such as how to read a profit-and-loss statement, how to hire and how to handle customer service.
“If we can do this well, first, it will allow us to succeed as a business and expand across the country, but also I think it will train a whole host of future entrepreneurs,” Mr. Burkhart said. Eventually, he said, he hopes that he will end up investing in some of their start-ups.
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AUGUST 23, 2011
Can ATDynamics Get Trucking Fleets to Go Green?
photo: Courtesy ATDynamics
Since 2008, ATDynamics has been selling the TrailerTail, an aerodynamic device that retails for $2,000 and mounts on the back of a semi-trailer to reduce drag and boost fuel efficiency.
Employees: 30 full time.
Location: South San Francisco, Calif.
Founder: Andrew Smith, 35, started ATDynamics in 2006 as an M.B.A. student at the Tuck School of Business at Dartmouth, where he met his first employee, the engineer Jeffrey Grossmann. That year, his company also took the grand prize at Rice University’s Business Plan Competition, bringing in more than $135,000 in winnings.
Pitch: “The least aerodynamic shape – and therefore the least fuel-efficient shape – to pull down the highway at 60 miles per hour is a big rectangular box, yet there are two million of these big boxes being pulled around on U.S. highways on a daily basis,” said Mr. Smith. “Our company is fixing that error. We’re basically changing the shape of the trucking industry and putting aerodynamic tails on the back of long-haul trailers.” TrailerTails, he said, can boost fuel efficiency by more than 6 percent and pay for themselves within six to 18 months, depending on mileage.
His goal is ambitious: getting TrailerTails on two million trailers, which he asserts would save $20 billion worth of diesel fuel in a decade.
Traction: Last year, after testing the technology, Mesilla Valley Transportation of Las Cruces, N.M., purchased 3,500 TrailerTails. “They were the first to make the jump,” Mr. Smith said. Earlier this year, three of the largest trucking companies in the country – Swift Transportation Corporation, Werner Enterprises and Schneider National – ordered tails to try out on their trailers as part of formal demonstration programs.
ATDynamics is also participating in the Energy Department’s “super truck” program, collaborating with Indiana-based Navistar and other companies as part of a $115 million, federally financed initiative to cut tractor-trailer fuel use in half.
Revenue: ATDynamics does not disclose its revenue but has sold nearly 5,000 TrailerTails so far and became profitable last year, according to Mr. Smith. He projects that the company is on track to sell between 20,000 and 25,000 of them next year, more than quadrupling its revenue.
Financing: So far, the company has raised about $3 million with three rounds of angel investment, Mr. Smith said. Two primary angel groups — the GOOSE Society of Texas and Angeli Parvi — were joined by individual investors.
Marketing: Mr. Smith relies primarily on the fact that his product doubles as a mobile billboard, emblazoned with the words “TrailerTail” and “ATDynamics.” “Because it sticks four feet off the back of the trailer,” he said, “we have to invest very little in marketing.”
Competition: The Environmental Protection Agency’s SmartWay Technology Program publishes a long list of approved drag-reducing accessories for tractor-trailers, some of which can be used in tandem with each other. These include the SmartTail, an inflatable rear-mount device from Aerodynamic Trailer Systems, a company in Bedford Heights, Ohio, which brought the product to market in 2010 and claims it reduces fuel consumption by 4.45 percent. SmartTruck, a company in Greeneville, S.C., sells plastic pieces truckers can install in several configurations beneath and to the rear of their trailers for fuel efficiency gains the company claims can top 11.5 percent. When the company’s latest model, the UT-6 UnderTray System, was released last year, initial customers included Con-way Truckload, Frito-Lay and PepsiCo.
Challenge: Truckers wanna keep on truckin’. In other words, it’s hard to shift the status quo in an established industry dominated by big corporations. In the words of Mr. Smith, “The rate of adoption in the trucking industry is slow because people have a lot of fixed assets.”
Another challenge is split ownership of trucking components. “There are some trucking fleets that don’t own the trucks as well as the trailers,” he said. “If you own a bunch of trailers and you hire people with trucks to pull them, you don’t get the savings.”
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JULY 12, 2011
Has Perky Jerky Lost Its Perk?
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Long before Lady Gaga donned her famous meat dress, Brian Levin was wearing a 30-pound beef tunic.
Yes, you read that right: “caffeinated meat snack.” |
Perky Jerky’s beef and turkey varieties are steeped in guarana, a Brazilian berry that’s packed with caffeine. The original Web site set up by the company — Performance Enhancing Meat Snacks — claimed that “Each 2 oz. pack of Perky Jerky contains roughly 150 mg. of caffeine, or slightly less than the caffeine amount in 2 Red Bulls.”
But Mr. Levin learned something that Lady Gaga apparently has not: Attention isn’t always such a good thing. In March of last year, the United States Department of Agriculture’s Food Safety and Inspection Service sent him a cease-and-desist letter two weeks after the snack was mentioned in a Wall Street Journal article about guarana. The gist of that buzz-killing message was this: Guarana is authorized as a food additive only when used in small quantities as a flavor enhancer, rather than in the larger quantities required to produce a caffeinated boost. (continues...)
JULY 12, 2011
A Safer Way to Start a Business
Most new entrepreneurs don’t have much spare time. But beginning next fall, those with a couple of hours to kill can immerse themselves in Startup Fever, a board game that challenges players to start and build rival companies.
Forget “life imitates art.” This is “play imitates work.” And for the game’s designer — Louis Perrochon, 43, a software engineering executive in Mountain View, Calif. – it involved trying something he’d witnessed many times but never done himself: starting a small business. (continues)
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JULY 8, 2011
Introducing Start: In the Trenches With Young Businesses
By Jessica Bruder
One summer Saturday afternoon, I was kneeling on a barren patch of dirt in Brooklyn, digging flat-bottomed trenches with a trowel. It was 2008. My sister was trying to open a bar, and I was helping her prepare to lay bricks in what would be the backyard.
A few weeks earlier, the lot had been a graveyard of broken bicycles, hip-deep in rusty spokes, fenders and other detritus from a shop that had occupied the space for many years. Friends had helped my sister haul the junk away and level the lumpy ground; the project took on the quality of a barn raising. It was hot. We were grimy. “Sweat equity” wasn’t just a figure of speech. And I remember thinking that, although her enthusiasm might kill us, at least we’d all get a drink at the end. (continues)
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