START: The adventure of new ventures
My New York Times blog column on indie start-up companies appears in full here: http://nyti.ms/NYTStart
MARCH 29, 2012
Trying to Inject Entrepreneurship Into the Greek Economy
courtesy coLab
It’s not easy being Greek. That’s doubly so if you’re an entrepreneur.
As Greece’s economy staggers under government debt and austerity measures, longtime independent businesses are going dark while hopeful newcomers struggle through red tape. (Last week, The Times’s Suzanne Daley reported on an olive oil start-up whose founder had to run a 10-month regulatory gantlet that included submitting board members’ lung X-rays and stool samples, just to get his company off the ground.)
But some entrepreneurs are pushing back against the bleak Greek narrative. Over the last year and a half, ambitious founders have taken advantage of depressed real estate prices to establish co-working spaces to serve their fellow start-up enthusiasts, places with names like coLab, Loft2Work, 123P and ThermiLink.
These hothouses, they hope, will offer a bright spot in the dark economy, helping entrepreneurs, particularly techies, to find fellowship, mentors, and maybe even access to capital as they build their companies.
“Despite all the doom and gloom, we’re trying to get some good things going,” said Stavros Messinis, 39, a co-founder of coLab, which opened 18 months ago in Athens. “Entrepreneurship is the way out of this. There is no other way. Greece has been an insular economy for too long, where people have either worked for the state or worked in retail serving the primary Greek market. There are very few Greek companies that are exporting anything. Right now we’re consuming, but an economy needs to produce if it’s going to grow.”
Getting coLab running took fewer than four weeks, Mr. Messinis said. Now the 4,300-square-foot space is home to 16 start-ups, including the Openfund, a seed-finance firm for innovative ventures; Bugsense, a service that collects crash reports from mobile applications, and iMellon, a developer whose main product, an Android app called Historious, steeps smartphone-wielding tourists in Athenian history. (It’s worth noting that some of these companies are working from Greece but formally incorporated in other countries, in an effort to avoid some of the Hellenic headaches surrounding business creation and raising capital.)
CoLab began turning a modest profit four months ago, said Mr. Messinis, who plans to open two more locations soon. Last month, the space joined with Entrepreneur Week, an international event series that brought business experts to Athens from 10 countries and attracted about 600 participants, according to Gary Whitehill, the series’ founder.
“Greece really doesn’t have another option except to start harnessing entrepreneurship,” Mr. Whitehill said. “‘Laborious process’ is an understatement in terms of what it takes to become an entrepreneur in that country. But it’s going to break. Greece doesn’t have a choice but to break.”
In the meantime, Mr. Whitehill is planning further collaborations with coLab, including events where start-up founders can pitch their companies via Skype and get critiqued by American investors. (The organization’s next New York event begins on April 16.)
“When you have people that are that passionate, all they need are the right resources,” he added. Mr. Whitehill has his eye on a few ventures in particular: Virtual Trip Group, an accelerator and seed fund with a focus on e-learning for entrepreneurs, Made in Greece, a business-to-business portal for connecting potential exporters and suppliers with the outside world, and Babelverse, a real-time, on-demand audio translation service.
“For some of these guys, it really comes down to patriotism,” he said. “The people who really care about Greece see their work as having a double bottom line: they’re making a short-term sacrifice for the long-term gain of their country.
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MARCH 14, 2011
For ‘B Corps,’ a New Corporate Structure and a Triple Bottom Line
photo courtesy Olivia Rogers
A native of Australia, Prue Barrett, 36, started Agrodolce for Fast Foodies, her first company, six months ago in Brooklyn. Her goal? Package and sell slow-cooked provisions – stocks for meat and fish, chutneys, caramelized onions – that can be mixed with fresh ingredients to build fast but wholesome meals.
“I want to bring the slow food movement to busy people,” Ms. Barrett explained.
As if running a new venture isn’t challenging enough, Ms. Barrett also decided to do it in a new way. Last month, she filed paperwork with state officials to transform Agrodolce into a “benefit corporation.” Informally known as a B Corp, this corporate structure obligates businesses to pursue a triple bottom line, which means they are accountable not only for generating profits but also for creating positive social and environmental impacts.
The B Corp structure exists “to suit the needs of entrepreneurs and investors who want to make a better world through business,” said Jay Coen Gilbert, co-founder of B Labs, a non-profit based in Berwyn, Pa. that promotes legislation allowing companies to formally incorporate as benefit corporations.
New York recently became the seventh state to adopt the new corporate structure, joining California, Hawaii, Maryland, New Jersey, Vermont and Virginia. B Corp legislation is also pending in Michigan, North Carolina, Pennsylvania, and Washington, D.C.
(The name “B Corps” is cropping up elsewhere, too. Additionally – and somewhat confusingly – B Labs acts as an independent certification agency for what it calls “Certified B Corps.” Any business can voluntarily pursue such certification, whether or not it has formally incorporated as a benefit corporation. Candidates for Certified B Corp status must fill out an “impact assessment” questionnaire, open themselves to the possibility of an on-site audit, and pay an annual fee to B Labs.)
So far, the cavalcade of state-recognized B Corps range from start-ups like Agrodolce to Patagonia, the outdoor clothing company. Patagonia changed its status on Jan. 3, when B Corp applications were first available in California. Legislators there have also adopted a second structure for socially conscious firms called FlexC, or “flexible purpose company,” while a handful of other states have introduced a different designation, LC3, or “low-profit limited-liability company.” (An excellent slideshow called “Profit and Purpose,” by Kyle Westaway, an attorney and Harvard adjunct professor, reviews the differences among all of these structures.)
According to Ms. Barrett, making Agrodolce a benefit corporation was something of a no-brainer: the standards aligned with how she had planned to run her business anyway, with an emphasis on fair wages, sustainable practices and locally farmed ingredients. She also wanted to signal her customers that Agrodolce isn’t all talk, that it is part of a system where adherence to such practices would be regulated. “I definitely want to make money, but I want everyone else to be all right in the process as well,” she explained. “People are looking to restructure business and the economy of our society in a more equitable way.”
Ms. Barrett also wants to see her company grow. So far, Agrodolce products are available online and in nine brick-and-mortar stores in Brooklyn and Manhattan; her projected revenues for this year are $400,000. To meet her long-term goals – a broader line of products with national reach – she will need funding. Will her B Corp status make that part harder?
“My initial reaction,” she said, “was, Oh, wow, maybe that’s going to turn potential investors off, that it is a different model, that it isn’t just returns for the shareholder first. But I’m speaking to investors now and it hasn’t been an issue.”
She paused. “To be honest with you,” she added, “it’s so new. I don’t think people really genuinely know how it’s going to play out just yet.”
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FEBRUARY 21, 2012
A Customer Loyalty Program (From Some of the Folks Who Brought You Groupon)
Ever want to toss five dozen eggs at your favorite food truck? Hear the owner of a bagel shop croon a song he wrote just for you? Or punch a beloved comics store proprietor in the gut?
These are some of the quirkier “rewards” devised by Belly, a start-up that creates customer-loyalty programs to encourage repeat patronage at small and medium-size businesses. (You would have to make 50 purchases at AlleyCat Comics in Chicago before taking out your aggression there. And no one has hit either that benchmark or owner Nicholas Idell, just yet.)
Belly’s customer loyalty plans are intended to match the culture of individual businesses, creating experiences to build a relationship between merchant and consumer. What works at a comics store, for example, would not necessarily work at a spa. Tamer incentives include a variety of coupons and discounts, along with “cut the line” privileges at coffee shops and grocers.
When customers sign up with Belly, they gain access to all the loyalty plans on the company’s digital network, cutting down on the need to carry wallet-clogging buy-10-get-one-free punch cards. Participating stores are equipped with iPads that patrons use to sign in and tally points. Belly also offers low-tech options for the analog set: wallet cards or key-chain fobs that can be handed to merchants.
Employees: 40 full-time.
Location: Based in Chicago, with satellite offices in Austin, Tex., and Madison, Wis.
Co-Founders: Logan LaHive, Belly’s 29-year-old chief executive, cut his teeth working for start-ups like Pay By Touch, the biometrics payment company that raised hundreds of millions of dollars before going down in flames, and Redbox, which rents DVDs through in-store kiosks and is now owned by Coinstar. Belly’s co-founders, Brad Keywell and Eric Lefkofsky, both 42, were on Groupon’s three-man founding team and now serve as Belly board members.
Pitch: “We’re a digital loyalty program. We help replace the traditional buy-10-get-one-free cards with unique customer rewards programs that reflect the culture of small companies,” Mr. LaHive said. “It’s completely free. You get rewards and experiences at places you already know and love.”
Traction: Belly has teamed up with more than 515 businesses in Chicago since going live at its first store, the aforementioned comics shop, in August. Some 63,500 customers have accounts; so far, they have checked in at participating businesses more than 195,000 times. Last month, Belly expanded its offerings to Austin, where it now serves 55 businesses. This month, it expanded to 10 locations in Madison. Belly has also shipped kits to stand-alone businesses and chains in about 15 cities the company has not yet selected as core markets.
Revenue: After a 30-day free trial, Belly charges business owners monthly subscription fees of $50 to $100 a month. Mr. LaHive said Belly was generating revenue but would not release figures. “We’re really focusing exclusively on product and expansion,” he said.
Financing: Belly announced in December that it had received more than $1 million in seed capital from Lightbank, the Chicago early-stage investment firm created and managed by Mr. Keywell and Mr. Lefkofsky.
Marketing: “We rely on the most traditional form of advertising there is: a one-to-one interaction between a customer and a cashier,” Mr. LaHive said. Belly furnishes its partners with iPads, along with informational displays and other in-store marketing materials, while building awareness about promotions through e-mail and social media campaigns. Mr. LaHive also hopes Belly’s unusual rewards will create a built-in marketing edge by starting conversations.
Competition: “Loyalty programs, in general, are not a revolutionary concept,” Mr. LaHive acknowledged. When it comes to digitizing the experience, Mr. LaHive said, “There are 10 to 15 start-ups competing for this space. What it comes down to is who creates the model with the least amount of friction, the most engagement in terms of users.”
Apart from old-school punch cards, Belly’s competition includes digital upstarts that rely on mobile phones, like CardBank, CardStar and Perka, along with tech behemoths like Foursquare and Yelp that are also muscling into the customer loyalty arena.
Challenge: Staying ahead of competitors. “Loyalty to a small biz isn’t about coupons and discounts,” Mr. LaHive said. “How can we create a more engaging experience? What creates a more personal connection? I think the main thing that really separates us is the customization and uniqueness, the creativity of the different rewards. We’re creating a platform where each store can run their loyalty program as they choose, based on the personality and culture of the store.”
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FEBRUARY 7, 2012
After a Year, Startup America Has a Start
Scott Case, hands raised, and Steve Case celebrate Startup America.
(Courtesy Startup America)
It’s been a year since business leaders gathered at the White House to kick off the Startup America Partnership, a national nonprofit initiative intended to spur the growth of new companies, with the end goal of creating jobs.
What has happened in 12 months? Did Startup America become a well-meaning but soft entrepreneurial pep rally, as skeptics feared? Or are entrepreneurs getting a measurable, tangible boost from its efforts?
The answer, so far, is a bit of both. Startup America is still in start-up mode. The organization’s board met for the first time in December. Unsurprisingly, it has yet to hatch the next Facebook or put a discernible dent in unemployment. Whether it will have a quantifiable effect in nurturing start-ups and creating jobs is unlikely to be evident for some time.
But its chairman, Steve Case, a co-founder of AOL, and its chief executive, Scott Case, a co-founder of Priceline who is not related to Steve Case, have been promoting the importance of entrepreneurs while building their program’s infrastructure. Here is what they have done so far:
• Startup America has joined with big companies like Dell, Facebook, Ernst & Young, Google and Microsoft. The behemoths pledged $1.2 billion worth of consulting, software and other donated services for start-ups. For example: Intuit offers Startup America members six free months of its online payroll system. Google AdWords gives an additional $1,000 worth of ads to members who spend $1,000. Dell offers discounts on laptop purchases.
• Startup America has also begun recruiting members. Young companies register free and receive access to those offers, along with the chance to network with other members and be promoted on Startup America’s Web site. They also get free use of a .co Web address for a year. To qualify for membership, companies must fall into one of two categories: founded since 2006 and employing at least two people, or founded since 2001 and employing at least six people.
So far, 3,800 start-ups have signed on. The goal is to get 100,000 start-ups by March 31. That will not be easy, so Startup America has “gameified” the process, creating a competition in which venture capitalists and other start-up stalwarts vie with one another to recruit the most. (Brad Feld of the Foundry Group is leading the pack with 119 start-ups, despite one rival’s vow to “crush him like a bug.”)
• Startup America has joined with business leaders in 17 states to create local “Startup Regions,” a loose network of community-driven efforts to promote start-ups through networking and mentoring. A flurry of kickoff celebrations happened on Jan. 31 when nine new Startup Regions — including Hawaii, Kansas, Michigan and Missouri — were started.
I spoke recently with Scott Case about the past year, what Startup America’s offerings mean for new companies, and what comes next.
Q. You joined the Startup America partnership in March. How do you think it’s going?
A. We focused on three things pretty early on that have developed over time. The first was bringing in partners from the corporate sector that had specific things they could offer to help start-ups to grow their businesses, all with the idea that we could get them access to some unbelievable tools.
The second thing we realized is that the network of support for start-ups is vastly different across the country. In places like Silicon Valley or Boston or New York, there is a very robust network for start-up culture. But there are clearly beachheads in lots of other places around the country where there were amazing start-ups. And that inspired Startup Illinois, quickly followed by Startup Tennessee, then Startup Connecticut. Before we knew it we had eight states with serial entrepreneurs who saw what Startup America was doing and said, “We want our state to be a great place to start and grow a company. What can we do as a community in each of these places?
The third major track was accelerating the visibility of America’s start-ups in all industries, not just high-tech. How do we raise the visibility for start-ups, which often get lumped into being small businesses until they become big businesses? They need to be engaged and treated and elevated, because they really are the heroes of our economy in many ways. All the net new jobs created in the last 30 years were created by companies less than five years old.
Q. How will you know if you’ve succeeded?
A. We’re collecting a set of data from every Startup America firm. We ask what their revenue run rate is, what their most recent month was, how many full-time and part-time employees.
So the impact of the work will come out as we track these companies over long periods of time. Do they grow faster than the typical organizations? We’re looking out at the next two years and saying, “O.K., how did these start-ups grow? What tools and resources were they able to take the most advantage of?” And then, “How did the rest of the ecosystem respond to engaging with those start-ups?”
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JANUARY 24, 2012
Coding Start-Ups Compete for Booming Market
Would YOU learn to code from this man? The ambassador talks shop in a Treehouse tutorial. (Courtesy Treehouse)
If you build it, they will code.
That’s the attitude behind a groundswell of learn-to-program start-ups, all competing to put aspiring coders through their paces online. With target audiences ranging from neophytes living under rocks – “What’s a browser?” – to tech-savvy kids, entrepreneurs and mid-level developers, these young Web companies use game mechanics and narrative techniques to hold users’ attention and are part of the ongoing boom in online education.
Here’s a look at three coding start-ups that are leading the way:
Video tutorials welcome students to Treehouse Island, where they arrive in a zeppelin, meet a mysterious, eye-patch-wearing ambassador (see photo above) – think Mister Rodgers transposed to “Lost” — and unravel mysteries while learning to code in HTML, Ruby, Python, PHP and JavaScript. The service went live in November and offers three beginner-oriented learning tracks: Web design, Web development, and iPhone/iPad application creation.
Founder: Ryan Carson, 34.
Location: Orlando, Fla.
Employees: 23.
Financing: $600,000 angel round closed in October.
Revenue: Monthly sales hit $175,000 in December.
Users: 6,500 paying subscribers. Corporate clients include Disney and Estée Lauder.
Business model: Users choose between two tiers of access and pay $25 or $49 monthly, with a $9 student plan coming in February.
Special sauce: “We’ve done partnerships with Facebook, WordPress and LivingSocial,” Mr. Carson said. “They’re going to start recruiting people who’ve unlocked our badges for internships and jobs.”
Codecademy
Working inside the start-up incubator Y Combinator, a pair of former Columbia students noticed a lack of user-friendly online tools for beginning programmers. Codecademy began offering JavaScript training in August, quickly attracted major investments from Union Square Ventures, SV Angel and other heavy-hitters, and plans to roll out more programming languages soon. The company’s new initiatives — Code Year, a yearlong tutorial that started this month and attracted more than 350,000 users, and Code Summer+, a youth partnership with the White House announced last week — have won big attention.
Co-founders: Zach Sims, 21, and Ryan Bubinski, 22.
Location: New York City.
Employees: six.
Financing: $2.5 million venture round closed in October.
Revenue: None.
Users: more than 850,000.
Business model: “There is no revenue model at the moment,” Mr. Sims said. “Our first thing is the product.”
Special sauce: Broad appeal. “We got an e-mail from an 85-year-old stroke victim using it,” said Mr. Sims said. “We’ve seen people in almost every country in the world sign up.”
Code School by Envy Labs
In 2010, Web applications consultancy Envy Labs unveiled Rails for Zombies, an interactive Ruby on Rails teaching suite. Some 60,000 coders let the game eat their brains. Hoping to build on that success, the young company introduced Code School in March, targeting users who already know some programming but want to keep current with Ruby, HTML5, CSS3, CoffeeScript and jQuery. It plans to expand to an audience of new and younger users.
Founder: Gregg Pollack, 34
Location: Orlando, Fla.
Employees: Of Envy Labs’ 23 employees, a rotating cast of about five work full-time on Code School at any one time.
Financing: No outside money. Bootstrapped with $280,000 so far.
Revenue: $250,000 since debut.
Users: 90,000 registered for content, including free offerings like Rails for Zombies; 2,000 paying subscribers monthly.
Business model: $25 monthly subscription fee.
Special sauce: “We’re a different kind of start-up. We’ve used our consulting work to fund the development of projects like this,” Mr. Pollack said. “And the content isn’t introductory. Most of our customers are existing developers.”
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JANUARY 17, 2012
What Start-Ups Can Learn From a Crime Boss
Donald DeSantis (Courtesy Kyle Kesterson)
What lurks in the hearts of mild-mannered software developers? Donald DeSantis’s answer may surprise you. The 29-year-old Seattle techie recently penned a tale of unlikely inspiration called “Everything I need to know about start-ups, I learned from a crime boss.”
The short manifesto, published at GigaOm, probed the underbelly of leadership and set readers aflame, provoking thousands of Twitter comments and direct responses. Some comments were positive and others told Mr. DeSantis he should be ashamed for loosening “the moral fiber of young entrepreneurs.”
The piece begins: “The door opened and into the room walked the most dangerous person I’ve ever met. He reached toward his belt and slowly pulled out his .45 caliber handgun, raised it and paused to evaluate my expression. ‘No disrespect, but it’s been pressing into my hip all day.’”
Introducing the organized crime figure and mentor he identifies only as “Kobayashi” — “I’m a Usual Suspects fan,” he explains — Mr. DeSantis goes on to attribute to his teacher such lessons as “Don’t Sell Rocks when You Can Sell Mountains.” Kobayashi, according to Mr. DeSantis, also stressed the importance of networking and acting decisively: ” ‘Closed mouths don’t get fed,’ he would say. ‘If you want something, you have to either ask for it or walk up and take it.’ We can’t expect good fortune to fall into our lap. It’s our responsibility to create the circumstances for it and then capture that good fortune. The meek may inherit the earth, but they’ll be getting it from Kobayashi.”
Mr. DeSantis works at a four-person social-video start-up, Giant Thinkwell, which closed a $600,000 round of seed funding in April. He’s also an organizer and speaker for Startup Weekend events around the globe.
“I don’t think that he’s read it,” Mr. DeSantis said of Kobayashi during a phone interview. “I haven’t spoken to him in years, but obviously the impression he made is lasting. I’d hope he would feel somewhat flattered.”
Mr. DeSantis declined to disclose details of Kobayashi’s, err, revenue streams. If there’s a theme to Kobayashi’s teachings, Mr. DeSantis said, it’s to be a charismatic and self-disciplined leader. “It’s not like ‘Be a bad person,’” he said. “I’ve had an opportunity to work for some really amazing people, where the world just gets out of their way and reorganizes itself behind them.”
Whether we’re seeking wisdom from Kobayashi or Mother Teresa or the Shackleton Expedition, business-oriented humans seem to react strongly to lessons from unconventional characters and incongruous contexts.
Have you learned from people and experiences outside your professional sphere? If so, what are your most unexpected sources of influence?
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JANUARY 10, 2012
A Brooklyn Tea Company Backed by a Socialist President
Tyler Gage, left, and Dan MacCombie at a trade show (Courtesy Runa)
Forget its mild-mannered reputation: tea is not for the faint of heart. Last year, the United States tea industry brought in $6.5 billion thanks to a roster of heavy hitting, fiercely competitive brands, ranging from Honest Tea to Tazo and old-time stalwarts like Lipton.
So what are the chances that Runa – a start-up company peddling an obscure Amazonian leaf called guayusa – can elbow its way into this already crowded scene? Combine seemingly long odds with Runa’s unlikely provenance: In 2008, a pair of Brown University undergrads, one doing linguistic research in the Amazon, the other studying marine biology, rerouted their career paths to become entrepreneurs after encountering the caffeinated guayusa leaf, which steeps into a potent brew, and realizing it hadn’t yet been commercialized.
Founders: Former classmates Tyler Gage and Dan MacCombie, both 26, founded Runa and are the company’s president and executive vice president, respectively.
Employees: Runa has 5 full-time employees in Brooklyn, 30 in Ecuador.
Location: Headquartered in Brooklyn, N.Y., with Ecuadorian offices in Quito and Archidona.
Pitch: “We’re a beverage company that creates livelihoods for indigenous farmers in the Amazon,” Mr. Gage said, “and we produce beverages made from guayusa tea, which has more caffeine than any tea and double the antioxidants of green tea. It’s an energy offering in the tea space.”
On top of providing income to some 1,000 farmers, Mr. Gage said Runa puts money into a “social premium fund” the workers can tap collectively to finance local development projects. “Runa” means “fully living human being” in Kichwa, an indigenous language spoken in Ecuador and Colombia.
Traction: Runa’s first big boost came in 2009, when the company won two contests in quick succession: a business plan competition at Brown University’s Entrepreneurship Program, and the Rhode Island Business Plan Competition, bringing in more than $70,000 in cash and services.
Runa’s tea bags and loose tea went on the market less than a year ago and are now available at some 1,200 stores nationwide, including Whole Foods, Kings, the Vitamin Shoppe and Wegmans. Runa also sells loose tea to larger companies — Stash and Oregon Chai, to name a couple — that use the leaves in their own blends. In March, Runa plans to introduce a line of bottled beverages, focusing at first on the New York and Boston markets.
Revenue: Runa’s revenue for last year was $277,000, according to Mr. Gage. He expects Runa to surpass $1 million in sales for 2012.
Financing: Runa has received grants totaling $500,000 from the United States Agency for International Development and Corporación Andina de Fomento, a Latin American development bank. In November, the company closed a $1.6 million round of angel investments. Now, Mr. Gage is seeking $2 million in a Series A equity round, which he hopes to close by the end of the fiscal year’s second quarter.
Runa’s most unusual backers so far? The government of Ecuador, led by socialist president Rafael Correa. In October, the country’s Ministry of Production put $500,000 into the company through a national investment program.
“The social aspect of the company’s business model — the high wages to farmers, the social benefit fund, and support for sustainable farming — are the real reason Ecuador is wise to play venture capitalist to a Brooklyn business,” wrote Alex Goldmark, a GOOD magazine contributing editor, in a recent post about the unusual investment.
But the government’s direct influence, Mr. Gage said, is limited. “They’re very much in the backseat,” he said. “They have one of six board seats.”
Marketing: “We sponsor a lot of events, everything from design challenges to fundraisers, anywhere we can donate tea,” Mr. Gage said. The company targets young professionals with “office drops” of product samples and holds frequent tastings in grocery stores, along with guerilla offerings at concerts, in parks and on the street.
Competition: Though Runa claims to be the lone exporter of guayusa, the company faces stiff competition from purveyors of other kinds of tea, along with energy drink manufacturers and companies selling yerba mate, another South American tea-like caffeinated beverage.
Challenge: “The biggest challenge right now is marketing,” Mr. Gage said. “We’ve actually done more than we expected in terms of getting the product on the shelf. It all comes down to getting people to try it.”
With so many teas and energy drinks already on the market, do you think Runa can build – and keep – a niche of its own?
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DECEMBER 14, 2011
A Start-Up Incubator That Floats
courtesy Blueseed
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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