Concept: Beach towels with weights in the corners so they won't flip in the wind
Founder: Joanne Marlowe, 23, founder of a clothing-design company at age 14 and later of Double Sharp, originally a clothing manufacturer
Financing: $750 of her own money
Source of Idea: A gust of wind blew her towel and the sand underneath it all over her freshly oiled body
Critical Hurdle: Maintaining quality control on a product she never handles
Projections: $4.5 million this year; $7 million to $8 million next year
SHARK PRODUCTS
Battle on the Beach
Standing in sharp contrast to Joanne Marlowe and Double Sharp Garments (see previous profile) is Dave Mednick.
Like Marlowe, his inspiration came during a day at the beach. Also like Marlowe, his idea had to do with taming flighty beach towels -- he decided to create a kind of clothespin-on-a-stake gadget to clip towels in place.
But the similarity in company creation ends there. Mednick spent two years and $20,000 developing his idea. He signed on Mike Mayer, a former Parker Brothers sales rep, to carry the project forward. They went to the Wharton Small Business Development Center to write a business plan to entice investors, who plunked $170,000 into the company. Then they contracted with a school for the developmentally disabled to assemble the Sand Sharks, expanded the line with two other products, and moved into a 2,300-square-foot warehouse.
To date, the company has used foreign manufacturers who produce a complete product. "I send them an order, and eight weeks later it shows up on my dock, which is a little bit easier than trying to coordinate five contractors to land on the same point at the same time," Mayer says. "That can lead to five mistakes." Still, Mayer, who runs the operation full-time while Mednick pursues his career as a commercial diver, is convinced that in-house production will make Shark Products Inc. more flexible to do special packaging and labeling. So the company will do manufacturing both in house and out.
One market. Two companies. Two approaches. Choose the smartest.
ADVANCED FORMING TECHNOLOGY
Powdered Metal
The industry that Advanced Forming Technology is trying to forge is so revolutionary it doesn't have a name yet. AFT, in Longmont, Colo., has developed an injection-mold process to turn powdered metal into small, complex, high-precision parts usually made by casting and machining. The payoff? Dramatic reductions in the cost of metal components -- a result likely to affect the manufacture of everything from airplanes to sunglasses.
The company was launched with $4 million from venture capitalists and corporations -- including Xerox Corp.'s venture capital group and Alcan Aluminum Ltd. -- each a potential acquirer. Customers include such blue chippers as ITT, Johnson & Johnson, and Teledyne, and AFT's 1990 sales goal of $6 million is already backlogged. "We're at cash-flow break-even right now," CEO David Bruce says. "Next year we should be profitable."
For the moment the industry is small, although big companies in Japan and West Germany are entering the marketplace. As many as 20 U.S. companies also are struggling to get involved. "We are analogous to the plastics industry 30 years ago," Bruce says.
HOLLYWOOD MAKE A MOVIE
Picture This
Sorry to sound primitive, but some problems are just aggravated by technology. Take, for instance, those boring people who are always showing you snapshots of their adorable, brilliant kids. Now, they've all bought video cameras, so "they can pay $1,000 to tape hours of their family in the act of walking," as John Marco puts it.
Marco, who used to sell and rent movie equipment, has come up with an antidote. His three-year-old company, Hollywood Make A Movie Inc., in Toms River, N.J., sells moviemaking kits -- complete with scripts, sound effects, and props. The kits, ranging from slapstick to horror, retail for $9.95 to $39.95. "They've bought the equipment," says Marco, who is seeking to raise $500,000. "We're just giving them the software to use it."
HOT SERVICE COMPANY:TCOM SYSTEMS
Special Delivery
Two things suggest TCOM Systems Inc. is headed for a prosperous future: (1) it has already attracted $25 million in venture capital, a reasonable sign of serious potential; and (2) it aims to provide a better alternative to the U.S. Postal Service -- the business-strategy equivalent of shooting fish in a barrel.
What Washington, D.C.-based TCOM Systems does is shortcut the Postal Service for corporate clients that send a lot of mail, such as direct-mail ads, pitch letters, bills, and customer-relations messages. At a typical cost of 55¢ per piece, TCOM bypasses 19 of the post office's 23 steps, electronically sending letters to seven sites across the country, laser printing them, sorting them by postal route, and direct depositing them for delivery by local post offices -- the postage is included in the price. Clients such as Dun & Bradstreet, AT&T's American Transtech, and Marriott could save the overhead of doing mailings themselves, president Arpad de Kovacsy says, and get letters into recipients' hands days sooner because of TCOM's 24-hour turnaround and local postings.
"Our main competitors are the in-house mailrooms of major corporations," de Kovacsy says. TCOM studies show that internal mailroom costs are generally more than 55 a letter. Convincing corporations hasn't been easy, though.
"When we started, we had the misimpression that we could get major corporate accounts to switch to us overnight, and that's not the case," de Kovacsy says. "It takes them a while to feel sure that you're here to stay, that you really do provide the quality service they demand, and that you're cost effective. Plus, there's the natural desire to stay with the way you've been doing things."
Still, the opportunities are enormous: 12 billion of the 140 billion pieces of mail sent each year are electronically generated. By TCOM's calculations, that represents a potential $6-billion market. The U.S. Postal Service itself once tested the concept, but rejected it under pressure from the telecommunications industry, which didn't want the competition. TCOM expects to take less than 0.5% of the market next year -- which still adds up to 56 million messages for $33 million in revenues.
