Whatever Can Go Wrong, Will. Start Up Anyway
Justin Hartenstein, founder and CEO of AAC Enterprises, faced shocking adversity early in his entrepreneurial life. AAC Enterprises, which develops and sells custom lighting for use in automobiles, was launched in Hartenstein's parent's garage and then nurtured in his fraternity house at the University of New Orleans. In 2005, Hurricane Katrina struck and forced Hartenstein to relocate to Atlanta. And when he finally got back on his feet and back to Louisiana, an employee swiped all of his company's proprietary designs and personal information while he and wife Tiffanie were away on their honeymoon.
But despite these challenges, the automotive L.E.D. light maker, with its brand Oracle Lighting, garnered a revenue just shy of $4 million in 2012 and a three-year growth rate of 260 percent.
His Metairie, Louisiana-based AAC Enterprises is one of the companies vying for a spot on the 2013 Inc. 5000. As applications arrive, we thought it would be worthwhile to shine a spotlight on some of these fast-growing private companies. (For more information and to apply, go here). AAC has appeared on the list every year since 2010, ranking at No. 1423 in 2012.
Hartenstein was always fascinated by electronics, and as he grew up this interest gave way to a love of cars. He began crafting products he would want for his own vehicle, and became especially enamored with automotive lighting. He launched a small online car parts store right out of high school, running the business mostly through Ebay. The company, he says, was bootstrap financed, because potential investors thought a business selling only car lights was a crazy idea.
"I told people we design lights that go on cars, and they’d say, 'who buys that? Who is your market?'" he says. He tried to explain that he had a niche market made up of mostly automotive enthusiasts--anyone who modifies their vehicle for car shows, racing, competition, or just for fun. "We found huge value in just specializing in one thing," Hartenstein says, but investors weren't convinced.
Hartenstein's original product was a fiber optic lighting kit, which he used to build the setup for his own car with his own money. A buyer approached him, and he turned around and built two more with that money. He sold them, and made four with the money from that. AAC slowly grew, operating from the basement of his college frat house in early years. "UPS was stopping by daily," says Hartenstein. "As business grew, we were shipping 30 packages a day from the fraternity house."
Eventually, AAC became too large to manage alongside a full-time college education. Just as Hartenstein was debating whether to leave school and pursue his business operation full-time, Hurricane Katrina struck New Orleans.
"It was a blessing in disguise," he says. "I had to take time to figure out what I wanted to do." After a brief stay in Atlanta, he decided to come back to New Orleans. Early on, completely naïve with regard to crafting the necessary legal documents to protect his designs, an employee who had been working with Hartenstein from the beginning copied all his hard drives and stole all of the company’s information, while he was away on his honeymoon.
His ex-employee used that information to start his own nearly identical business. "He’s literally down the street from us," Hartenstein says.
"That hurt us in many ways, but it also gave me some inspiration," he adds. "When I felt like I had put in enough time that day, I would keep going, make one last sales call, wondering if [my competitor] was still working."
He also pulled the company back a bit, allowing AAC’s growth to slow to a volume that was more manageable, while focusing his energy on the company's strengths. "It’s so hard as an entrepreneur to pull back when all you want to do is make that business go to the next step," he says. "But I realized what I was doing to myself as far as putting myself in situations that were unmanageable, going after some accounts that were maybe a little too big. We realized there's never an end of that.”
JULIE STRICKLAND | Staff Writer
Julie Strickland covers start-ups, small businesses, and entrepreneurial endeavors of all kinds for Inc. Her work has been published in Brooklyn Based and City Limits in New York, the Free Times in Columbia, SC, Real Travel Magazine in London, and Daegu Pockets in South Korea. She lives in New York City.