Hot Start-Ups

BIRTH LEGEND: On several trips overseas, Stemberg observed that Europeans purchased fresh flowers as often as they bought fresh bread. Despite their affluence, Americans ranked only 13th among the world's blossom buyers. The difference, Stemberg speculated, might be in the marketing: European flower markets were generally larger and more inviting than their U.S. counterparts, and their prices were 35% lower. Would it be possible, he asked Hartstein, a former Staples executive and Israeli diplomat, to reinvent the U.S. floral industry along the European model?

WHAT'S TO LOVE: KaBloom applies a biggish-box strategy to a brand-new category. Outlets stock more than 200 varieties of fresh-cut posies, compared with an average of 40 at the largest supermarkets and 20 at most florists, says Hartstein. KaBloom keeps its prices low--about half the industry norm--by buying directly from growers and distributors, as opposed to wholesalers. On-line, the company charges less than half as much as 1-800-Flowers. KaBlooms are also twice as large as and better lit than many mom-and-pop shops. "A walk in our store is like a walk in a garden," says Hartstein.

FLIES IN THE OINTMENT: Each KaBloom store costs about $250,000 to open, five times as much as a traditional florist.

THE "JERRY LEWIS" FACTOR: The makers of Coca-Cola say that European and American tastes aren't all that different. Don't believe 'em. --Marc Ballon

3. The Young and The Caloric

COMPANY: Jeremy's MicroBatch Ice Creams, Philadelphia
YEAR FOUNDED: 1997
CONCEPT: Apply the beer industry's microbrew strategy to ice cream, making the product in small quantities and selling it in limited editions
PRINCIPAL: Jeremy Kraus, 23, president and founder
PROJECTIONS: Growing from revenues of $1 million in 1998 to $5 million to $10 million this year
FUNDING: $70,000 that Kraus raised from selling personal stock; more than $1 million in venture capital from Bluestem Capital Partners

BIRTH LEGEND: Kraus wasn't old enough to drink when the microbrewery wave transformed the beer industry, in the 1980s. But a decade later, as an undergraduate at the Wharton School of the University of Pennsylvania, he wondered if the same model--high-quality ingredients, unusual flavors, and loads of cachet--would work with ice cream. He did a feasibility analysis and a business plan as part of his class assignments, then launched the company in his junior year.

WHAT'S TO LOVE: Youth can be a handicap--but not in the ice-cream business. By plastering his own collegiate-looking mug on the product's packaging and appearing in person at ice-cream samplings, Kraus broadcasts the message that there really is a Jeremy behind Jeremy's MicroBatch. And Kraus's strategy of becoming ice-cream supplier to Generations X and Y, a market that rivals the baby boomers in size, could give the company real staying power, says Dairy Foods chief editor Dave Fusaro. With that in mind, Jeremy's uses college students to taste-test new products and put coupons for free pints on the windshields of cars that have gotten parking tickets.

Jeremy's also stands to benefit from recent changes in the relationship between Ben & Jerry's and its longtime distributor Dreyer's. The start-up quickly cut a deal to let Dreyer's handle its products in the New York area, and Kraus hopes to work with Dreyer's in other territories as well. That should help Jeremy's reach its goal of being sold in 5,000 convenience stores and supermarkets from Maine to Arizona by the end of this year.

FLIES IN THE OINTMENT: Competition for space in the nation's dairy freezers is fierce, and HÄagen-Dazs and Ben & Jerry's have both begun releasing their own limited-edition flavors.

THE "127 MILLION VIEWERS" FACTOR: In January, Jeremy's won a 30-second ad during the Super Bowl in a contest sponsored by Mail Boxes Etc. The exposure has helped the company with its pitches to distributors, and after the Broncos won, Kraus says, "we got into basically all the Denver grocery stores and convenience stores overnight." --Emily Barker

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