Ten ideas for businesses you'll wish you'd thought of first
If Fortune 500 companies followed from start-ups as surely as oak trees follow from acorns, then picking which fledgling businesses were destined for greatness would be easy. And where's the fun in that? But happily for the betting folk among us, the annals of enterprise are full of who'd-a-thunk-it success stories. Conversely, even the most promising start-ups can run aground if their technology obsolesces, a market fails to materialize, or a major customer unexpectedly tanks. In each year from 1995 to 1998, an average of 165,000 companies drew their first breath, according to Dun & Bradstreet. And annually from 1995 to 1997, an average of 75,500 gasped their last.
But healthy doubt notwithstanding, some companies are hard not to get excited about--especially those evincing certain early signs of vigor: An idea that makes other people smite their foreheads and cry, "Why didn't I think of that?" A management team with marquee credentials. A well-placed patent. A well-heeled customer. King-size pillowcases full of cash.
What follow are profiles of 10 companies that, judging from their baby pictures, show real promise. All are less than three years old, and all possess some or most of the portents of success mentioned earlier. (Although a few have Internet elements, we chose to swim against the popular current by avoiding companies that hang their hats exclusively on the Web.) We've also thrown in a few interesting resources for entrepreneurs launching companies today. Use them wisely, and maybe in a couple of years you'll be giving us something new to get excited about.
1. Mind games
COMPANY: Cranium, Seattle
YEAR FOUNDED: 1997
CONCEPT: Make and sell a board game that exercises parts of the brain you never knew existed
PRINCIPALS: Whit Alexander, 37, cofounder; Richard Tait, 35, cofounder
PROJECTIONS: Not disclosed, although Cranium was profitable in 1998
FUNDING: The founders' personal savings
BIRTH LEGEND: Tait, a former Microsoft executive, had spent a weekend in the Hamptons playing board games with his wife and another couple. Having excelled at right-brained Pictionary but tanked at left-brained Scrabble, he began on the plane ride home to mentally concoct a game in which players needed more than one skill to win. Back in Seattle, Tait and fellow Microsoft alum Alexander assembled a virtual team--including a crossword-puzzle builder, a children's art instructor, a mime, a college student, a software editor, and a journalist--who designed the game, collaborating entirely by E-mail.
WHAT'S TO LOVE: Even though Tait and Alexander don't advertise and have kept the industry's buzz machine at a distance, as of May they'd moved approximately 100,000 units of the $34.95 game. Cranium sells well on Amazon.com, but surprisingly, the company has racked up its biggest sales through an unconventional channel: Starbucks stores, where it is the only game sold. Cranium also has distribution deals with Virgin Megastores and Barnes & Noble and--after initially bypassing traditional game retailers--with Learningsmith, Store of Knowledge, and the Game Keeper. "I ignored that what we were selling was a game and figured out where our potential players hung out," says Alexander.
FLIES IN THE OINTMENT: Cranium has yet to become a household name to the game-buying public. "It's a difficult sell," says Pam Canfield, an industry consultant and the owner of That Games Store, in Elmhurst, Ill. Canfield also believes the company is too removed from the industry, as evidenced by its founders' early snubbing of game retailers and nonappearance at the annual Toy Fair.
THE "SWF SEEKS SAME" FACTOR: Classified ads are a great indicator of when something enters the popular consciousness. This notice appeared recently in the personals section of The Stranger, a free alternative weekly in Seattle: "Cranium Anyone? 2 prof. lesbians seek new pals, 26-34, who enjoy pool, movies, gin & tonics, and board games." --Ilan Mochari
2. Petal Pushers
COMPANY: KaBloom Ltd., Boston
YEAR FOUNDED: 1998
CONCEPT: Become the first superstore for flowers
PRINCIPAL: David Hartstein, 43, president and CEO
PROJECTIONS: Revenues of $15 million in 2000
FUNDING: $3 million from Kestrel Venture Partners; Venture Investment Management Co.; and Thomas Stemberg, CEO of Staples (a second round of financing, for $13 million, is under way)
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 HÃ„agen-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
4. A Spot In The Dark
COMPANY: Glow Dog Inc., Concord, Mass.
YEAR FOUNDED: 1997
CONCEPT: Sell light-reflective clothing for pets and the people who walk them
PRINCIPAL: Beth Marcus, 41, CEO, president, and founder
PROJECTIONS: Growing from $85,000 in 1998 to $1.2 million this year. "We anticipate that we're going to grow Glow Dog to $5 million to $10 million and then buy somebody else or be sold," says Marcus, who is also considering going public.
FUNDING: $80,000 of founder's capital and $800,000 from outside investors (another $2-million round of financing is planned for this year)
BIRTH LEGEND: Marcus and her cockapoo, Luke, were out for a constitutional one evening when a car almost struck them. "My neighbor came driving around the corner, and we had to leap into the bushes to get out of the way," Marcus recalls. "I wasn't wearing particularly dark clothing, and Luke has a light coat, but this guy didn't see us at all." At the time Marcus was a consultant to start-up Reflective Technologies Inc., a maker of a glow-in-the-dark fabric called IllumiNite. Reflective was targeting nocturnal joggers, a strictly two-legged market. Quadrupeds, Marcus thought, represented a whole other opportunity.
WHAT'S TO LOVE: With its message that healthy pets have shiny coats, Glow Dog is poised auspiciously at the intersection of two trends. Pets today "are frequently considered companions and members of the family," says Bill Schoolman, executive vice-president of the American Pet Products Manufacturers Association. As a result, the $25-billion market for pet supplies and services is growing 4% a year, and the safety-products niche is expanding. Meanwhile, safety products for nocturnal athletes are more popular than ever: worldwide sales of reflective clothing are expected to grow to $7.5 billion in the next few years.
And retailers seem to be lapping up Glow Dog's products. The company has 100 wholesale customers, most notably Petsmart Direct, a $160-million catalog subsidiary of Petsmart, the largest pet superstore in the country. "We don't need another toy or treat on our pages," says Tony Leonardi, president of Petsmart Direct. "We look for something that gives us a competitive edge, and we got that edge with some of the products we saw from Beth." Early sales of items such as dog collars and rain slickers have been unusually strong.
Glow Dog is sniffing around foreign markets as well. "There's an explosion of pet ownership in developing countries," Schoolman says. "Latin America and Asia have limited pet-product manufacturing infrastructures, so they look overseas. U.S. pet products have top-of-the-line status." Indeed, Marcus already has orders from Europe, Japan, and Australia.
Finally, there's the pedigree of the founder herself. "Beth's the kind of person I like to invest in," says Don Spero, an angel investor based in Bethesda, Md. "She gets a dollar's worth out of 30¢. She's creative, aggressive, and an awfully quick study, and she's jumped into this market up to her eyeballs."
FLIES IN THE OINTMENT: Glow Dog has a leg up on competitors, thanks to its exclusive rights to IllumiNite within the pet-supply category. But that can't stop imitators from poaching with products devised from cheaply made reflective fabric. "These guys watch each other," says Leonardi. "They'll see inventory of Beth's products in Petsmart and mimic the success."
THE "IF IT'S GOOD ENOUGH FOR BILL GATES" FACTOR: Marcus isn't likely to roll over and play dead at the first crisis; she's been down the chaotic company-building road before. The Rolex on her wrist is inscribed with the date April 12, 1996--the day she sold her first business, joystick designer Exos Inc. The reported price tag: more than $5 million. The buyer: Microsoft. --Mike Hofman
5. Circular logic
COMPANY: The Net's Best, Irvine, Calif.
YEAR FOUNDED: 1998
CONCEPT: Create a Sunday-newspaper insert for Web sites wishing to advertise economically off-line
PRINCIPALS: Bill Weimer, 36, president; Lisa Espinoza Weimer, 31, vice-president of operations; Shannon Reagan, 28, director of operations
PROJECTIONS: Sales of $5 million this year; profitability in the fourth quarter
FUNDING: $1 million plus from Stone Investments
BIRTH LEGEND: Bill Weimer, a former vice-president of sales and affiliate relations at Fox Sports, had gone to a party at the home of his college chum Keith Clougherty. Clougherty, chairman of the board for Web-based digital-consumer-electronics vendor Roxy.com, described to Weimer his difficulty in getting the company's name out there. On-line advertising wasn't enough. Newspaper, radio, and TV ads were too expensive. What Clougherty wanted was a way to advertise in traditional media without breaking the bank. Three months later Weimer completed his business plan for an eight-page circular that would reach 1.5 million wired households by focusing on major cities and suburbs that are bristling with Internet connections.
WHAT'S TO LOVE: For all the hoopla about Internet advertising, portals and banner ads don't make a sound if there's no one on-line to hear them. The Net's Best not only drives customers to specific sites but entices them to log on in the first place. That's the beauty of aggregation: if one advertiser's special offer doesn't compel someone to sit down at the computer, offers from three or four sites might.
The Net's Best should also appeal to media buyers, many of whom remain unconverted when it comes to on-line advertising. "Internet companies are continuing to move more advertising money off-line," says Weimer. "Our initial focus groups showed us that Internet users visited the URLs they saw in print or traditional media much more than ones they saw in banner ads."
Finally, the Net's Best exemplifies the cost efficiency of target marketing. Since the Net's Best knows exactly where its audience lives, it doesn't waste money spreading its net too wide and can pass the savings on to advertisers. (As of April the company had signed 14 advertisers for each issue, and Weimer expects that number to rise to 24 by the fourth quarter.) And the targeting continues. "We have another product in development targeted just to college newspapers," says Weimer.
FLIES IN THE OINTMENT: The Net's Best's model wouldn't be hard to replicate, especially for print-insert giants like Valassis and News America. Hoping to fend off imitators, Weimer is exploring exclusivity arrangements with such newspapers as the Los Angeles Times, the Chicago Tribune, and the Boston Globe. And some experts think the idea just plain won't work.
THE "YOU MAY ALREADY BE A WINNER!" FACTOR: The Net's Best's ability to propel readers on-line is heightened by its advertisers' effective use of special offers and sweepstakes. Last winter Roxy.com lured 40,000 visitors to its site with a contest--advertised only in the Net's Best--for a JBL Home Theater System. --I. M.
6. Reads Like Teen Spirit
COMPANY: SchoolSports Communications Network LLC, Boston
YEAR FOUNDED: 1997
CONCEPT: Build an advertising-supported media company with print and Web products devoted to local coverage of high school sports
PRINCIPALS: Jon Segal, 30, publisher and founder; Grant Son, 36, president and chief operating officer; Eli Segal, 56, chairman
PROJECTIONS: Revenues of $500,000 in 1999 and $2 million in 2000
FUNDING: $850,000 in private equity. The principals hope to raise at least $2 million this year
BIRTH LEGEND: "In large cities, pro and college teams push high school sports off the news pages," says Jon Segal. But New Haven, Conn., where Segal covered sports for the local newspaper in 1996, had no major-league professional sports teams, so Segal wrote about high school athletics instead. Readers loved it, and Segal figured high-school-sports fans in other markets would too. He launched SchoolSports in Boston a year later and is now also publishing editions in Philadelphia and Washington, D.C.
WHAT'S TO LOVE: Eli Segal swings a mighty Rolodex. An old friend of Bill Clinton's, he was chief of staff for the 1992 Democratic presidential campaign and head of the Welfare-to-Work and AmeriCorps programs. His high-level contacts at large international companies have helped SchoolSports sign such weighty advertisers as Sprint and United Parcel Service. "Eli is likely to have a point of entry with just about everybody," says Harvard Business School professor Rosabeth Moss Kanter, an advisory-board member and investor.
The appeal of SchoolSports is not merely whom its chairman knows but also the people its content reaches. "Advertisers are foaming at the mouth to get an audience they can establish lifetime buying habits with," says Patrick Keane, an analyst at Jupiter Communications, in New York City. President Grant Son adds that unlike other media outlets targeting adolescents--such as Seventeen and Teen People-- SchoolSports reaches both genders. And the cost is low: an advertisement placed in all three cities' print editions, reaching 130,000 readers, is $5,200. (Students pick up the 60-page magazines free at their schools.) Ads on the company's Web site run $45 per thousand page views.
Plus, the timing seems right. Participation in high school sports is up, and alternative sports like lacrosse, water polo, and rugby are gaining in popularity. Yet among the growing ranks of high school athletes, only a few will ever meet a reporter from a local paper. "What we provide that's different from Dawson's Creek is a personal connection," says the younger Segal. "You can see your name in SchoolSports."
FLIES IN THE OINTMENT: The company is pairing its print product with an ambitious Web strategy--it plans on-line coverage of 50 cities in two years. But unlike the magazine, Schoolsports.com can work only if readers seek it out. To make sure they do, the company needs a level of on-line sophistication that's expensive--$800,000 so far--to create and maintain. "They'll need a pretty deep infrastructure to do this," says Keane.
THE "RICH MAN, POOR MAN" FACTOR: While Eli Segal orbits a stratosphere of corporate and political titans, Jon Segal and Son operate from $8-per-square-foot digs above a Midas shop. Jon Segal chose the office for its proximity to Boston University, which is juicy with free labor in the form of college interns. --M. H.
7. Changing oil on troubled waters
COMPANY: Naut-a-Care Marine Services Inc., Newport Beach, Calif.
YEAR FOUNDED: 1998
CONCEPT: Build a franchise of custom-designed boats that provide watercraft such services as oil changing, steam cleaning of marine bilges, and maintenance of closed-loop systems
PRINCIPALS: Don M. Drysdale, 52, CEO; Dan West, 40, chief operating officer; and Harry West, 78, chief financial officer
PROJECTIONS: Revenues of $281,000 in 1999, possibly hitting $1 million next year
FUNDING: $6,000 each from the three founders for the franchise's launch; plus about $100,000 from their collective savings for R&D for the company's special boats
BIRTH LEGEND: It was July 4, 1994, and franchise lawyer Drysdale was on his yacht, preparing for guests who were coming to watch the fireworks. Suddenly, the word full lit up on the loo.
"Ladies were coming!" Drysdale recalls with horror. Following another skipper's suggestion, Drysdale radioed a small business that specialized in pumping out marine-toilet holding tanks. The experience got him thinking about other work that needed to be done on the boat; asking around led him to Aqualube Inc., a local business that the two Wests ran out of a boat they'd outfitted to drain system fluids without mess or environmental damage. Impressed, Drysdale persuaded them to franchise their concept. (Drafting the business agreement and dealing with a traveling and often-unreachable fourth partner delayed the launch until 1998.)
WHAT'S TO LOVE: The market Naut-a-Care seeks to navigate is stable and underserved, according to Caroline Ajootian, director of consumer affairs for the Boat Owners Association of the United States. There are about 17 million registered inboard boats in this country, and most of their owners hate wasting precious sailing hours on such un-fun activities as oil changes. Naut-a-Care customers don't even have to pull into a dock: the company's ocean-going monohull crafts are equipped with two 90-horsepower outboard engines, portable holding tanks, vacuums, and other mounted tools and can pull alongside other vessels to perform their services.
"Boats require more maintenance than automobiles do, but there's nothing like a Jiffy-Lube that can be found in harbors across the country," Ajootian says. "Marine dealers provide most of the service, and their industry has been mom-and-pop for years. They get really busy, and that leaves owners pretty annoyed." Those moms and pops are potential customers, points out Harry West, since they can outsource the service component of their business to the local Naut-a-Care franchise.
In addition, "the marine industry requires a considerable amount of overhead for the equipment and seasonal labor," she says. "Franchising might take away a lot of difficulties for the entrepreneur." One start-up expense Drysdale's scheme eliminates is land. "A really good marine business has always had to be by the water, where real estate is expensive," Ajootian says. "Since this business is on a boat, an entrepreneur could easily rent space at a marina or contract for dock space."
To date, Naut-a-Care has signed up three franchisees covering 12 California harbors. Plans call for the company to enter Florida and other U.S. markets this fall, then sell two $500,000 master licenses for international markets in 2000.
FLIES IN THE OINTMENT: Naut-a-Care expects to do a large part of its business overseas, which will make it difficult to ensure that franchisees are happy and adhering to their contracts. Drysdale is addressing the problem by selling international master licenses that will involve providing foreign franchises with company-trained local management. Also, one thing that Michael Seid, a franchise consultant based in West Hartford, Conn., isn't crazy about is Naut-a-Care's decision to charge licensees a flat monthly fee of $500 instead of a percentage of income. "I'm not a fan of flat fees in domestic operations," Seid says. "I think it's better to deal with the accounting issues than to walk away from them. The purpose of a franchise is for both sides to make money and for both sides to think that the deal is fair."
THE "HORATIO HORNBLOWER" FACTOR: It takes an old salt to know an old salt, and all three principals served in the U.S. Navy. Those credentials "make it very easy for us to talk to customers," says the elder West. "They give us a lot of respect." --M. H.
8. A Winning Exit Strategy
COMPANY: X-It Products LLC, San Francisco
YEAR FOUNDED: 1997
CONCEPT: Make and sell home-safety products--an escape ladder that folds up to the size of a two-liter soda bottle and a fire extinguisher as light as a can of hair spray--that are easy to use and store
PRINCIPALS: Andrew Ive, 31, cofounder and CEO; Aldo DiBelardino, 30, cofounder and chief technology officer; Kevin Dodge, 29, chief financial officer
PROJECTIONS: Growing from just over $1 million in sales in 1998 to about $3 million this year
FUNDING: A little more than $500,000 from 10 investors
BIRTH LEGEND: As a Harvard Business School student, Ive hated it when the fire alarms in his dorm were set off accidentally. He figured an escape ladder would restore his peace of mind, but the two he bought turned out to be difficult to unfold and seemingly too flimsy to support his 215 pounds. Certain that he could do better, Ive enlisted DiBelardino, who was in his product-development course, and they built a ladder as a class project. The aluminum-runged result of their labors, which supports twice as much weight as steel-runged competitors, hit Super Kmart less than six months later.
WHAT'S TO LOVE: There's something appealing about a bunch of Harvard Business School graduates (Dodge went there too) starting a company that makes products a child could understand and use. The compactness of the X-It ladder allows the stores that carry it to maximize their shelf space. It's also a product that, by most accounts, is so well designed that it fills a unique niche. "The market's very fragmented, and with most ladders out there you'd be better off just buying a rope," says Paul Enright, president of Jomy Safety Products, in Boulder, Colo., a maker of fire escapes and collapsible ladders.
Another true believer is Bill Brouse, who helped get X-It products into retail stores through his independent sales network. In addition to being in Super Kmart, the ladder is sold through such powerhouses as the Home Depot and Amway. As for the fire extinguisher, called Flame Stop, it was in BJ's Wholesale Club and Sam's Club just four weeks after the company's launch.
FLIES IN THE OINTMENT: The links in X-It's supply chain aren't quite as dependable as the rungs of its ladders. X-It outsources manufacturing to a company in China; the cost savings allow it to price its products competitively. But "it's a weakness when you don't control the crucial parts of your value chain," Ive concedes. And as the products' popularity grows, so will the opportunities for supply-chain snafus, says Patricia Negron, vice-president of equity research at Adams, Harkness & Hill, in Boston.
THE "CAN LIVE WITHOUT 'EM" FACTOR: "I think about venture capital constantly," says CFO Dodge. "There could be real benefits, but our business grows slowly, and it isn't sexy. But we may not need venture money at the end of the day. We already have real customers who buy a real product." --I. M.
9. Upsetting the stats quo
COMPANY: Trakus Inc., Somerville, Mass.
YEAR FOUNDED: 1997
CONCEPT: Make devices that, when embedded in athletes' helmets, transmit data providing a wealth of new statistics about the game
PRINCIPAL: Eric Spitz, 29, founder and CEO
PROJECTIONS: Growing from no revenues at the present to $10 million in revenues in 2000
FUNDING: $4 million, raised in two rounds of financing from angels and from Venture Investment Management Co. LLC
BIRTH LEGEND: In 1997, Spitz, fresh out of MIT's Sloan School of Management, joined with two engineering grads to build a system that would track the movements of supermarket customers. By outfitting carts with transmitters, the trio hoped to show supermarket managers where shoppers spent the most time. They raised $50,000, rented an office--and six weeks later decided that their product would be too expensive for the low-margin grocery business. "We had one of those come-to-Jesus weekends and locked ourselves in the office to decide what to do with the 95% of the money we had left," Spitz says. "We came up with the sports idea." Regrouping, they talked to some potential customers, including Fox Sports, Nike, and the University of Nebraska football team. Although none signed up on the spot, the response was enthusiastic enough to propel Spitz and two new engineers (the other original cofounders had left) back to the drawing board. The result of their labors was the Electronic Local Area Positioning System (ELAPS), which collects performance data in real time during a game.
WHAT'S TO LOVE: Professional athletics are rapidly adopting a digital gloss, and Trakus is square in the center of that trend. Transmitters in an athlete's helmet broadcast radio signals to antennae surrounding the playing field; the raw data are then crunched by Trakus's computers to yield statistics or digital images. For the first time, coaches and broadcasters will be able to collect precise information on an athlete's speed, acceleration, and impact with other players or objects, and create digital replays of key moments.
Trakus is poised to sell to a diverse group of deep-pocketed customers, says Forrester Research senior analyst Mark Hardie. Aside from its broadcasting applications, the technology could be adapted for Internet use--for the digital re-creation of games on sports Web sites, for example. While Trakus faces competition from other sports-oriented high-tech companies, such as SporTVision, it has a shot at establishing its statistics as the industry standard. To lock in that advantage, the company has filed for two patents on its technology. "It's like Omega's sports timing," Hardie says. "At one point they had to persuade everyone to use them. Now everyone does."
Trakus could even adapt or license its technology for other uses, such as tracking packages in warehouses. And Spitz says he hasn't completely given up on the supermarket idea.
FLIES IN THE OINTMENT: ELAPS is still in the late stages of development. As of April, the company had proved its system could successfully track one player at a time; this summer it will take on an entire team. The whole shebang will be up and running by the start of hockey season, Spitz says. Still, potential purchasers are reluctant to sign on until ELAPS is fully baked. "If they don't see something, it's hard for them to believe it's going to happen," says Spitz.
THE "RATIO OF NECK SIZE TO ENDORSEMENT FEES" FACTOR: Sports fans are notoriously hungry for stats, and Trakus can create a whole range of new ones. Within a year or so, Spitz envisions, football commentators will be tossing around numbers like the hit gauge (force of a tackle) and stamina index (a player's change in speed over time). --E. B.
10. A cure for cabin fever
COMPANY: Knight-McDowell Labs, Carmel, Calif.
YEAR FOUNDED: 1997
CONCEPT: Produce and market a tablet that provides instant protection for anyone venturing into such germ-infested environments as schools, hospitals, and airplane cabins
PRINCIPALS: Rider McDowell, 38, CEO; Victoria Knight-McDowell, 40, president
PROJECTIONS: Growing from revenues of $600,000 in 1998 to $2 million to $2.5 million by 2000
FUNDING: $300,000 in personal savings, including Rider McDowell's paycheck for penning the 1996 made-for-TV movie The Angel of Pennsylvania Avenue, a depression-era Christmas tale about a man in jail, his three children, and Herbert Hoover
BIRTH LEGEND: Tired of sniffling their way through life, the McDowells began experimenting with different combinations of vitamins and Chinese herbs bought at Bay Area natural-foods stores. They finally came up with Airborne, an effervescent tablet that dissolves in water to create a drink with the aesthetic and gustatory appeal of lemon-lime Gatorade.
WHAT'S TO LOVE: The U.S. dietary-supplement market grew to $14 billion last year. And Airborne specifically plays on fears that what air travelers breathe bears little resemblance to what Heidi was inhaling up on those Alps. Since Airborne reportedly works instantly, like a surgical mask strapped across the face, it's a tempting point-of-purchase item in airport gift shops. (The product is being sold in 40 stores in five airports so far.)
Retailers like natural-foods supermarket Trader Joe's are also welcoming Airborne. "When I do products, I'm not iffy about them," says Lori T. Latta, a senior buyer at Trader Joe's. "In our nutritionist's opinion, this has merit." Direct sales are also brisk: Knight-McDowell Labs has moved 50,000 packages of Airborne, priced at $5 to $8, through its Web site and an 800 number.
FLIES IN THE OINTMENT: "More and more big players and house brands are taking up shelf space, and that leaves less space for newcomers," says Lynette Thwaites, managing editor of Nutrition Business Journal. Lack of familiarity is also a prob- lem: plop-plop-fizz-fizz notwithstanding, most American consumers don't use many effer- vescents.
THE "DANCES WITH WOLVES" FACTOR: The McDowells have stirred up significant buzz by extracting endorsements from their celebrity contacts. Rider McDowell says that Kevin Costner liked Airborne so much that he asked Warner Brothers to stock it on its corporate jets. The San Francisco 49ers' training staff swears by the vitamin-laden brew. Just how glam an item is Airborne becoming? Consider this: the first ad for the product outside the airline trades and the Internet appeared in The Hollywood Reporter. --M. H.
Best of breeders
Some people think business incubators exist only to nurture high-tech companies. Others see them as mere sources of cheap office space.
Wrong on both counts, says Dinah Adkins, executive director of the National Business Incubation Association (NBIA), in Athens, Ohio. Adkins points out that today there are more than 600 business incubators in North America, up from just 12 in 1980. Services vary widely, but a good incubator should provide business assistance (such as counseling and training), mentoring services, shared equipment, and computer access, as well as the synergies and support of other start-ups.
Nor do all hatcheries specialize in high-tech eggs. The Denver Enterprise Center's Kitchen Center, for example, is home to 26 organizations that use the $1.4-million culinary facility to develop salsas, gourmet teas, and other comestibles. The Entergy Arts Business Center, in New Orleans, meanwhile, provides practical business assistance to nonprofit arts groups, as well as to performance and visual artists. Despite resistance from many who cling to the image of the "starving artist," the entrepreneurial model has proved successful, says director Mary Kahn. "It points people in the right direction and forces them to get a handle on these issues," she says.
To obtain a list of incubators near you, visit the NBIA's Web site, or send a self- addressed, stamped envelope to NBIA, 20 East Circle Dr., Suite 190, Athens, OH 45701. The organization can also send you a list of guidelines for choosing the right incubator. --Anne Marie Borrego
Funding for the rest of us
Not every start-up is meant to go down the initial-public-offering or venture-capital road, but there are plenty of alternatives if you know where to look. For starters, try these articles from recent issues of Inc. To view an article on-line, go to www.inc.com/incmagazine/, select "browse by issue," and type in the appropriate month and year.
- General financing tips: " Twenty Tips for Finding Money Now," March 1999.
- Community banks: " Community Banks Reborn," March 1999.
- Help with bad credit: " How Do I Find Cash When My Credit Is Bad?" March 1999.
- Banking strategies: " What's Good About Bankers," May 1997.
The plug-and-play office
Linda Kellogg is the start-up's starter-upper. While head of human resources at fast-growing Venture Law Group, based in Menlo Park, Calif., she organized so many office moves and openings that she figured others could benefit from her expertise. So in 1996 she launched San Jose-based Start-up Resources, which helps companies get their offices up and running quickly.
Start-up Resources manages everything from finding and furnishing office space to setting up benefits and payroll systems. Kellogg and her three employees have so far handled start-up operations for 30 companies. Most have paid--at least in part--in almighty equity.
Kellogg's services are in demand because even the sharpest entrepreneurs "don't know how to go about actually starting a business," she says. And what are their most common mistakes? For one thing, they spend too much time checking out used-furniture prices and not enough on recruiting and product development. Or they might hire two or three employees before even thinking about setting up a workers' compensation system, something that Kellogg says can be done in an hour. -- Karen Dillon