Thursday, November 27, 2008

Annual family squabbles over the turkey bone sparked this entrepreneur's profitable big idea.

Link of the day - The Paradox of Choice: Why More Is Less

Each Thanksgiving, my household brims with abundance and gratitude. But after dinner my family always squabbles over who gets to break the wishbone. One year I had an idea that would solve the problem for my family and, I was sure, many others on Turkey Day.

I was familiar with plastic manufacturing because I ran a consulting firm that helped Christmas-light makers meet quality standards. So I called eight plastic companies and requested samples of breakable plastic. They wondered why I wanted them, but I didn't tell. After a year of testing we launched our product in 2004: a plastic wishbone with the feel and satisfying snap of a real turkey bone.

Given my background with seasonal products, I was confident enough of this one to wind down my consulting business and focus on bringing the wishbones to market. We began in a few Seattle-area novelty and grocery stores. By 2006 we had hit almost $1 million in sales, and our four-packs were selling in nearly 1,000 outlets, such as the Party Store chain, in 40 states.

The previous year we had gotten a call requesting a product sample from Sears Roebuck's ad agency, Young & Rubicam. Next Y&R asked for a quote on millions of wishbones custom-packaged for Sears. We were thrilled, and created a design for it. But then Y&R abruptly went silent. We assumed the deal had fallen through.

Days before Thanksgiving 2005, I spotted a Sears ad insert in our local paper. On its top left corner was a photo of our product! I drove right to Sears and saw that it was using our wishbone and packaging as a marketing tool: Customers got a free wishbone redeemable for $10 off a $100 purchase. My blood boiled as I stood with the product in my hand.

We promptly sued Y&R and Sears for copyright infringement. The case went to trial 2Ѕ years later. Thanks to our patented design and our packaging's copyright warning statement, we were awarded $1.7 million in damages. (Sears spokesperson Kim Freely notes, "We're disappointed by the verdict.")

We lost 50% of our business in 2007 because of the time and money we spent in court. But we are moving on with new wishbone design ideas, such as colorful and custom-printed lines. The wishbones are a hit with vegetarians and even internationally - turkey is also a Christmas staple for many families.

At the end of the day, breaking a wishbone is a lot like blowing out birthday candles. There's a renewed sense of hope and optimism when it snaps.

Pee Farming

Leo Nordine - The King Of Foreclosures

Dumping Startbucks Can Be A Good Thing For Your Business

The junk boom: Profiting from foreclosures

Monday, November 24, 2008

Link of the day - How Changed The Domain Game For Good

A little over five years ago, Michael Ball looked at his then-girlfriend's expensive jeans and decided he could design a much better pair himself. Not long after, Ball, who had no fashion design experience, did just that, creating an ultra-slim fitting line that caught on with the celebrity set in Los Angeles. Having stirred interest, he got financial backing, suppliers, and manufacturers together and began selling his high-end jeans for $300 from specialty stores within the city. A cult following soon developed.

Since then, Ball has turned his idea into Culver City (Calif.)-based Rock & Republic, a $300 million brand of men's and women's jeans that now includes cosmetics, accessories, shoes, and other clothing lines that are sold in 86 countries. His long-term goal is to create a far-reaching lifestyle brand that includes boutique hotels and restaurants and a domestic airline. Ball says he is far from done.

From the start, Ball, 43, a former television commercial actor and professional long-distance cyclist, concluded he had to do more than just design cool jeans to be successful in the cutthroat denim market. He had to create a new version of cool. Although he began by planning to construct a high-quality product as a foundation, Ball says: "I was clear about who we were as a brand and who we were going after. The market was clean, edgy, rock-and-roll. I was very confident, take-no-prisoners."
A Life-Changing Purchase

According to market researcher NPD Group, denim is an $11 billion industry in the U.S. and has been growing at around a 5% to 7% clip in recent years. Premium labels such as Rock & Republic now account for a 7% chunk of the total market. "Consumers will pay $300 for the right pair of jeans," says Marshal Cohen, NPD's chief industry analyst. "They see it as an investment."

Moreover, Cohen says, "certain denim brands have made it their focus to be a game-changer. They make you feel really great and you will pay twice as much for those. What [Ball] is able to do is get the consumer of many different age segments and deliver on the implied promise that these jeans will make your life better, you will feel better."

Even in an economic downturn, Cohen calls denim "recession-resistant." "People are going to make significant changes," he says. "They don't have a lot of money in their pockets. They may not buy three pairs, but they will buy one pair and it has to be about who has the right message."
Timing is Everything

At the time of Rock & Republic's debut in 2002, premium jeans (those with price tags that start at $75) were on the rise. Brands like True Religion (TRLG), Citizens for Humanity, Diesel, and 7 for All Mankind had recently hit the market and were catching on. Ball acknowledges that his timing was spot on. "7 was exploding and buyers were looking for the next big thing," he says.

The rest of his success came down to branding and marketing. Following a strategy to create a niche label within a tight space of niche labels, Ball and his partner, Andrea Bernholtz, unveiled the line at fashion shows primed to grab attention. They had models careen down the runway drinking beer, flipping the bird at photographers, and lifting their skirts. "We did things that no one did," Ball recalls.

At the same time, Rock & Republic worked to heighten interest among consumers and retailers by creating scarcity. According to Ball, when Barneys came to him and said it wanted an exclusive deal to sell his line, he turned the luxury department store down. In the beginning he says he also turned away Bloomingdale's. "My ability to say no made our brand," he says. "I had a twofold strategy about where I placed the brand and leverag[ed] its exclusivity."
Hit With Lawsuits

As he built his brand, Ball earned a reputation for brash arrogance, taking digs at his competitors and blithely forecasting triple-digit growth. Last year, he told the Los Angeles Times that his company would reach $400 million in sales, eclipsing the combined total of revenue of his two closest competitors. (Annual sales are over $300 million, he now says).

Last year, Ball was served with a handful of civil suits, alleging defamation, extortion, assault, and sexual harassment. However, at least two of the suits alleging extortion and harassment were dismissed and the defamation suit was voluntarily withdrawn. (Currently, the extortion suit is being appealed.)

Ball, who holds the view that all publicity is good publicity, cites Sir Richard Branson, and his Virgin Group empire as a business role model. "He was able to market and brand himself and his various products very well," Ball says. "I learned [from watching him] that those businesses that he is completely attuned to became extremely successful and those that were kind of a throwaway, kind of failed." Ball learned the latter lesson the hard way over the past year when he says he neglected his new handbag and footwear categories and their sales slipped.
Moving Away from Top Tier

Ball says that sales during the first half of 2008 were up 14% but have fallen flat in the second half. With consumer spending slowing to a trickle, Ball says he's had to put some of his grand plans on hold, recalibrate, and retrench, including repricing his luxury jeans which had catalyzed the denim market. Going forward he says, "we are not developing jeans above $280. The top-tier has fallen off—there is no point in sitting there."

If any luxury brand has a shot at staying aloft during this downturn it very well might just be Rock & Republic. "We know very well from our data that strong brands hold up better than weak ones," says Nigel Hollis, chief global analyst at Millward Brown, a branding firm. "And by strong I mean those that have a distinctive position and a real perceived differentiation in the market. Rock & Republic seems to fit that bill even in a fairly competitive market."

Moreover, Hollis says one should not underestimate the cachet that Rock & Republic jeans continues to confer on its wearers. "Yacht manufacturers are suffering," he says. "But let's face it, someone that is willing to shell out $200 to $300 on jeans is not going to run out to the Gap (GPS) for their next pair. There is tremendous badge value in this sort of luxury and if Rock & Republic has it, that is what people will buy."
Retail Plans Moving Ahead

For now, the Ball's boutique airline is on hold. The hotels and restaurants, however, are moving forward, he explains, because he is using "other people's money" to finance them. Plans to open the first Rock & Republic branded supper club in Los Angeles is on tap for third quarter of next year, and a hotel in Las Vegas is planned by 2011.

The one area that is moving ahead more or less as planned is the expansion of his Rock & Republic retail stores. "Freestanding stores means control of our own destiny," says Ball. He has, however, reconsidered locations. "Rodeo Drive [in Beverly Hills] or Fifth Avenue [in New York City] are not as important anymore."

When asked about his future plans for his brand given the state of the economy, Ball says, without irony, "global dominance."

A well-heeled business

Sneaker Art As A Business

Buying and selling usused brands

Saturday, November 22, 2008

Seed Capital

Link of the day - Who Is Shawn Casey? Is He For Real?

They look like pumpkins in the field, and the end product is marketed as "pumpkin seeds," but technically they are squash and squash seeds.

Despite the elastic terminology, Autumn Seed Inc. has firmed up its grasp on the market in the past 60 years. Howard Ropp's father started the business back in 1943, producing 100,000 pounds of seeds. Now Howard and his son Greg oversee a company putting out 2.5 million pounds in a good year.

"We're the only ones in the U.S. doing this," Greg Ropp said. "Our only competitor is China. And they can't match us for quality."

The Ropps contract with farmers in Oregon's Willamette Valley to grow Golden Delicious, a variety of squash with high seed yield. They credit the valley's hot summers and cool autumns for the sweetness of the seeds.

"Normally we have about 30 different guys growing about 2,000 acres for us," Greg Ropp said. "This year a lot of them went to wheat, so there are fewer acres growing. We'll turn out about 1.6 million pounds this year."

He said he settles contracts on a handshake. The farmer agrees to plant and tend the crop; Autumn Seed harvests the seeds, cleans and dries them, ships them to processors, and cuts a check for the farmer based on dry weight.

"We keep each grower's batch separate, and we send the check by Dec. 20. A farmer can make about $1,200 per acre, which is about 1,000 pounds. Yields usually range from 900 to 1,300 pounds per acre."

Autumn Seed's machinery and techniques are proprietary, to the point of fabricating its own equipment.

"We build our own harvesters, which handle up to 60,000 pounds a day," Howard Ropp said. "We've got nine of them, and run six at a time, but we don't sell them."

"The Chinese would love to have these machines," Greg Ropp added.

"Our harvest runs from September through about the second week of November," he said. "We've got about 15 full-time workers right now, and four full-time year-round - two full-time fabricators and two in the warehouse. A lot of retired guys come work for us during harvest, driving and whatnot."

The dried squash seeds are shipped to several roasters, "David and Sons being one you'd recognize," Greg Ropp said. Once the seeds are roasted and ready for market, then they can be called pumpkin seeds, he said.

In the field

The harvesters extract the seeds from the squash, with the flesh either dumped out the back as fertilizer for the next crop or used as cattle feed.

"You never follow squash with squash," Greg Ropp said. "It's a three- or four-year rotation. Most growers follow squash with wheat, then with grass or corn."

Autumn Seed also has about 25 acres in organic hull-less seeds. "This one is actually a pumpkin," he said.

After harvest is over and the last batch of seeds is out the door, Howard Ropp heads for warmer climes.

"We've got a ranch down in West Texas, raising alfalfa and a few cows," he said.

Greg Ropp and his wife and three kids stay in the Willamette Valley, raising sweet corn and grass seed.

He has also coached the basketball team at Santiam Christian School - "this will be my 18th year."

Greg Ropp said he is concerned about how the economy will affect his niche market. "When times are tight, people don't buy pumpkin seeds. They're a snack food, so at the convenience store, you may not want to spend a dollar on a bag of seeds.

"We'll be fine for next year. The year after that, I don't know. My dad and I look three or four years down the road to see what we'll need to replace in tractors and forklifts and other equipment. Any new investments depend on tax incentives.

"Our business has been doing wonderful until the high prices of fertilizer and fuel hit. People look for easier-to-grow crops, with lower risk.

"As for that $1.20 per pound, we've never had to drop our prices to our growers, and we sure don't want to."


Dumping Startbucks Can Be A Good Thing For Your Business

Magic As Business

The junk boom: Profiting from foreclosures

Tuesday, November 18, 2008

World’s Smallest Postal Service

Link of the day - Blind Spots: Why Smart People Do Dumb Things

Lea Redmond runs the World’s Smallest Postal Service, a teeny tiny letter transcription service.

She sets up shop in cafes and stores, and is now available online. Here’s how it works: You write a letter (up to 12 whole sentences!) and Lea transcribes it onto tiny stationary (1 x 1.5 inches) with a magical transcription device. It then goes into a tiny envelope which gets addressed, stamped, and sealed with a miniscule wax seal with your initial on it.

The letter then goes into a see-through folded coin case and is packaged up with a magnifying glass in a larger glassine envelope, finished off with a large “World’s Smallest Letter” wax seal. Lea can send your letter directly to a recipient of your choice, or to you if you would like to distribute it yourself.

Lea also offers some new products, World’s Smallest Birthday Cards, Winter Holiday Cards, Valentines, and cards from the Tooth Fairy! Or write a letter from one of Santa’s elves! Or to welcome a new baby into the world.

The King Of Foreclosures

The Business Of Deer Pee

Voicemail Blasts from Your Computer

Monday, November 17, 2008

Voicemail Blasts from Your Computer

Link of the day - I will pay you $25, if you come up with a cool domain name for me.

Just after his daughter, Nova, was born in June, Dinesh Singh couldn't wait to tell upwards of 40 friends. But e-mail felt too impersonal, texting too clunky, and making that many calls personally too time-consuming. So Singh used Phonevite to record a message about his new daughter and send it to phone numbers he had entered on Phonevite's Web site.

John Nahm, 34, the company's co-founder, points out that the service isn't limited to birth announcements—it works just as well for last-minute barbecue rain cancellations or practice reminders from Little League coaches. Nahm and Kalvin Kim, 35, both technology startup veterans, launched their San Jose business in mid-2007 with $15,000 of the pair's savings. Although revenue is just $4,000 a month, they secured $600,000 in seed funding last January.

In July the company premiered Phonevite To Go, which enables users to input everything over a phone. Nahm's driving mission? "To make this service dumb simple, for the average Joe."

The Kid-Friendly Tongue Depressor

Barter Exchanges Catch On as Credit Tightens

Lending, With a Twist

Saturday, November 15, 2008

A New Sport and a Startup

Link of the day - I will pay you $25, if you come up with a cool domain name for me.

What do you get if you cross a skateboard with Rollerblades? If you're Ryan Farrelly, it's a new sport and a startup that could pull in $5.5 million in revenue this year. Farrelly, 29, invented Freeline Skates in 2002 while bumming around from one odd job to the next, surfing in the morning and skating at night. The skates are like a polished metal skateboard that has been cut in two, with the wheels mounted sideways. Riders balance one foot on each half.

He then spent three years living on friends' couches as he and surfing buddy Jason Galoob tinkered with the design and raised money for a first batch of 500 skates. Based in Carlsbad, Calif., Freeline Sports sold 5,000 pairs in 2006, and 20,000 in 2007, thanks largely to buyers in South Korea and Japan. He predicts sales of 40,000 this year, at $134 a set, through or 40 sports shops mostly in California. Farrelly says he has turned down Wal-Mart Stores as a retail outlet. Why? Bad for Freeline's street cred.


Dumping Startbucks Can Be A Good Thing For Your Business

Don't Touch My Beer!

Easing Death's Sting While Turning A Profit

Tuesday, November 11, 2008

An entrepreneur lures aspiring miners to an old gold-rush town.

Link of the day - Talent Is Overrated: What Really Separates World-Class Performers from Everybody Else

The northern California town of Happy Camp (pop. 1,000) was founded in 1850 when an estimated 15,000 people converged here, pitching tents and building rickety lean-tos. They came to work on a nearby stretch of the Klamath River dubbed the Million Dollar Mile because, legend has it, that was the value of the gold extracted on an average day.

While not every prospector struck it rich, Happy Camp earned its name from the variety of diversions available to both failed and successful miners: gambling, hookers, whiskey, and opium. What happened in Happy Camp stayed in Happy Camp.

Today the town features zero stoplights, only a few businesses (Bigfoot 24-Hour Towing is one), and a handful of houses, mostly hidden among the pines. I'm here to attend a beginner's prospecting weekend, led by an enterprising former Navy SEAL named Dave McCracken.

I check into the Forest Lodge Motel on Friday evening. Early the next morning I present myself at the Lions Hall, the only room in town large enough for McCracken's opening seminar on prospecting techniques. The roughly 100 attendees hail from as far away as Hawaii and Virginia. Among them are entrepreneurs, a railroad engineer, a computer programmer, several retirees, and a contingent of career gold diggers, mostly locals, some of whom work for one or more of McCracken's prospecting enterprises.

The day after Christmas 1979, following a four-year tour of duty, McCracken succumbed to the gold bug. Along with two partners, he headed for the Klamath River in Northern California. The partners lasted just two months. McCracken stayed on, living in a tent for the next three years. On his best days he recovered a few pennyweights of gold (worth roughly $100 back then). For a while he subsisted on an annual income of less than $3,000 - and lots of beans. Over time he won the trust of some old-timers who still worked the region. They taught him their tricks.

Now 54, McCracken has built a Happy Camp mini-empire. He owns the town's prospecting store, where shoppers can purchase anything from a tiny gold-display vial (50 cents) to a big, unwieldy piece of prospecting equipment called a dredge ($4,550).

He is the author of five books on prospecting and has produced three DVDs. He has also staked mineral claims along 70 miles of the Klamath. McCracken pays annual fees of about $50,000 to the U.S. Forest Service to maintain those rights. His stakes enable his biggest moneymaker, a prospecting club called the New 49'ers. For a one-time, $3,500 fee, members can prospect on McCracken's claims, keeping any gold they find. He launched the New 49'ers in 1985 with 500 members and says he now has more than 2,000.

McCracken explains what we can expect during our prospecting initiation. After panning to find promising locations for gold, we'll return to work them hard. The weekend will culminate in a split of the gold among all 100 participants. He stresses that although everyone will find some gold, it's unlikely that anyone will find much. Still, McCracken has a tough time containing himself.

"Hardly anything compares to finding your first gold," he says. "Even if it's just a tiny fleck - it's pure euphoria."

Sifting sediment

At noon on Saturday our group heads over to Savage Rapids, on the Klamath River. The plan is to work a gravel bar in the flat plain between the water and the woods. It's considered an ideal panning location because the river often deposits gold here when it overflows its banks.

Gold panning involves two steps, one land-based and the other water-based. McCracken demonstrates the technique, which hasn't changed since 1849: Using a spade, he flicks away the top layer of gravel, then digs into the rich, wet silt underneath, filling his pan. He walks to the river's edge and dips his pan in the water. Moving it around, he separates out liquid and lighter bits of sediment. After about five minutes he holds out his pan for us to inspect. There's some water, a lot of iron-laden black sand, and a few tiny flecks of gold.

Panning proves a lot harder than McCracken makes it look. Squatting in the chilly Klamath, the pan heavy with dirt and water, I struggle to keep my balance. After 20 minutes of sloshing, I reach the bottom of the pan. To my amazement, I see two minute, glittering specks.

Saturday night we return to the Lions Hall for a potluck dinner of beef stew, corn bread, and potato salad. Country music twangs over the speakers. As the evening draws on, both visitors and locals relax. One after another, the seasoned prospectors reach into their dungaree pockets and show their treasures, special nuggets that they carry in grubby envelopes and little glassine bags. Each lump tells a story. Some are prized for their unusual shape, others for weight and purity.

On Sunday morning I return to the Klamath, where McCracken and his crew are setting up four gas-powered machines, known as high-bankers, in the most promising spots from the day before. These robotic gold pans process dirt much faster than humans can. Drawing river water through a long hose, the high-banker sorts and agitates, spitting out the lighter sediments. At the base of the machine, the heavy stuff (gold, black sand, bits of lead) comes to rest in a removable tray. This weighty yield is then run through a mechanism that separates gold from other heavy material.

Nuggets and flakes

My job is to dig with a shovel and fill buckets with dirt. Other prospectors haul the buckets and dump the contents into the high-bankers to be filtered. We work in the grueling heat from 10 A.M. to noon, when McCracken announces we have processed enough soil. With much ceremony he withdraws the trays from the high-bankers. I can see numerous metallic glints, many of them golden. The next step is to run this yield through another machine that washes away the dross and leaves the gold.

Back at the Lions Hall, the entire day's take is spread out on a single piece of letter-sized paper. McCracken passes a magnet over the sheet. It attracts iron-rich black sand, leaving behind the nonmagnetic gold.

He then pours the precious metal onto a scale. The room falls silent in anticipation. McCracken fiddles with the slider weights and then announces, "We got an ounce and a half of gold - not bad for two days' work." Our haul includes 13 small nuggets among the flakes and flecks. We draw numbered poker chips from a can. The first 13 people will get a nugget. I draw No. 86.

As I line up to claim my small share of gold dust, I run into fellow prospector Linda Wilkinson. Along with her husband, Wilkinson owns Jump Organics, a soap manufacturer in Albany, Ore. She examines her little vial, agitating some $13.50 in glittering flakes. "I won't be retiring on this, but I had a blast," she says, grinning.

Lending, With a Twist

Should you listen to Seth Godin?

The Business Of Hats

Sunday, November 09, 2008

Lending, With a Twist

As the credit crisis deepens and Wall Street roils, it's getting tougher for small companies to land bank loans. For On Deck Capital Inc., that situation spells opportunity.

The New York-based start-up lends money to small businesses that can't get funding from major banks. On Deck has distributed more than $10 million in loans since launching in May and says the total amount of loans is growing about 35% each month.

To be sure, lots of alternative lenders have popped up lately, with a host of approaches to serve small businesses. But a couple of critical factors set On Deck apart from the crowd.

For one thing, unlike many of the start-up lenders, it has big-name backers. On Deck got funding from several high-profile venture firms -- including RRE Ventures and Khosla Ventures -- and has since partnered with a big hedge fund and a number of community banks.

What's more, the company has an offbeat system of evaluating borrowers. Instead of looking at a snapshot of performance, such as an applicant's tax returns, On Deck uses software to examine a company's daily business activity. The software figures out, among other things, how many customers the business has, how many complaints it gets and how its sales surge and sag. The idea is to gauge cash flow and see if the company is stable enough to pay back a loan.

On Deck's methods of collecting payments are just as unusual. Instead of sending out monthly notices, the company electronically debits small amounts every day from borrowers -- usually about $100 -- to pay back the loan over a year.
A Solid Start

Some prominent small-business advocates like On Deck's approach -- albeit with some reservations. Marilyn Landis, chairwoman of the National Small Business Association, notes that On Deck doesn't provide the personal "feet on the street" relationships banks once had with small businesses, "but at least it's a start" toward helping small companies get funding.

Some traditional lenders echo those sentiments. Bob Seiwert, a senior vice president with the American Bankers Association, says On Deck's system provides an "interesting niche product for undercapitalized, cash-starved businesses," but it doesn't provide a personal connection with a banker.

What's more, he says, "for a business that needs a permanent increase in working capital, this probably isn't the best option. If you have a short-term blip due to seasonality and can't get a bank loan, this might work."

On Deck's backers argue that the company's technology helps it get a better handle on the state of a business -- and, potentially, approve more loans. Usually, banks look at "three years of personal tax returns or a credit score," says Josh Kopelman, managing partner of First Round Capital, which has invested in both rounds of On Deck's venture funding. "But those are moment-in-time snapshots. On Deck built an algorithm that looks at the true health of a business."

That ability made On Deck an intriguing investment, Mr. Kopelman says, "especially with credit tightening and everyone talking about how to assess true risk."

Along with RRE, Khosla and First Round, Contour Venture Partners and Village Ventures have poured more than $12 million in equity financing into the company to get it up and running. Community banks are also signing on, according to James Robinson, general partner of RRE, and in June On Deck added $100 million from Silar Advisors, a New York-based hedge fund and asset manager. The money will be made available to On Deck as needed to make loans.

"The market for small business and small financial companies to move upstream into the traditional bank lending space has grown," says Robert Leeds, founder and chief executive of Silar. "That's opened up huge opportunities for specialized small businesses and specialized finance businesses, and we're really excited about that."

The recent Wall Street crisis only helps On Deck by showing the dangers to investors of previous modes of loan underwriting, says On Deck founder and Chief Executive Mitch Jacobs. "The current turmoil raises the awareness of the problem and the need for our solution," Mr. Jacobs says. He adds that the liquidity crisis hasn't affected the $100 million from Silar Advisors.

On Deck's business model faces a couple of big questions. One is defaults. So, far On Deck has seen "very few," says Mr. Jacobs. But it's still early, and he expects higher default rates from businesses with high cash-flow volatility. "Small businesses are volatile -- they are subject to shifts in the economy, and there is significant potential for losses," Mr. Jacobs says. "For a certain subset of our portfolio, losses could be as high as 10% if not potentially more."

Another question for On Deck: How tough will its competition get? A host of alternative lending options have gained traction in the wake of the credit crisis, including Web sites where private individuals bid on loan requests from borrowers and services that provide small, very short-term loans at high interest rates.

Mr. Jacobs expects the field to get a lot more crowded. Small businesses that can't receive a traditional loan make up "a $160 billion financing hole in the U.S. economy focused on trying to fuel the American dream," he says. "We have to anticipate that a lot of other parties are going to enter the market."
A Stitch in Time

For now, On Deck is betting there are a lot of entrepreneurs who will seek out its services as credit gets tighter. For one indication of how tough the lending picture has gotten, consider a recent survey by the National Small Business Association. The group found that 55% of small businesses reported difficulty securing credit in the previous six months.

Along with showing a healthy cash flow, potential On Deck borrowers must meet some other criteria. They must hold a separate business bank account, they must have been open for business for more than a year, and they must process at least $3,000 in credit-card transactions per month.

On Deck approves about 70% of eligible applicants, says Mr. Jacobs, and provides funding within two days of receiving an application. Interest rates range from 18% to 36% -- higher than traditional loans but significantly less than those at other alternative lending sources, which can run as high as 200%.

For some small-business owners, being judged on actual day-to-day performance and not tax returns is a relief. So is the daily micropayment system, which allows them to avoid large monthly bills that can sneak up and become crushing if one cycle is missed.

"We know exactly what is coming every day, and the exact amount that is going out," says Nancy Ebker, president of New York clothing company Montagerie LLC, who approached On Deck for financing in May.

Ms. Ebker's company had struggled through a difficult first year, and a potentially make-or-break season loomed. She and her partner had to find financing to tide them over until clients made their fall purchases. Knitters had to be paid up front to create sample outfits to show to customers. Skeins of yarn had to be purchased. "Big banks were telling us, 'We don't do that start-up thing,' " Ms. Ebker says. "All the credit was freezing up. What were we going to do?"

Ms. Ebker called On Deck, and was relieved to hear that the lender was interested in seeing Montagerie's growth trends -- which were positive, she says. "Banks don't want to hear any of that, of course," Ms. Ebker says. "They just want to see where you are at a given moment, not where you might be going."

Ms. Ebker got the money she needed to keep her business moving. Now she's looking ahead to a "totally booked" season for Montagerie and expects the company to be profitable this year, with about $500,000 in revenue.

Should you listen to Seth Godin?

Pee Farming


Don't Touch My Beer!

Easing Death's Sting While Turning A Profit

Thursday, November 06, 2008

How Two Tech Guys Created A Viral Food Sensation

Link of the day - Talent Is Overrated: What Really Separates World-Class Performers from Everybody Else

Bacon Salt was the invention of Dave Lefkow and Justin Esch, two former employees of Seattle startup Jobster. The idea for Bacon Salt came over dinner one night. This is how they tell it:

“While on a business trip together, we had the chance to sit down for dinner and eventually, the conversation turned to our mutual love of bacon. It was then that Justin told Dave and another coworker named Kara about his idea for Bacon Salt. Kara, who is a vegetarian, loved the idea. Dave, a card-carrying carnivore and Midwesterner, loved it even more. Even the waiter at the fancy restaurant loved it.”

Working in a startup gave them a strong understanding of what was required to get a business off the ground, but venture capital for untried food products isn’t as easy to find as funding for a Facebook application.

Lefkow and Esch needed some seed capital to get the idea rolling, so they turned to the most unlikely source: Amercia’s Funniest Home Video Show. A video of Lefkow’s daughter took home $5,000 in prize money, and this kick started the company.

Along with a traditional website and blog, Bacon Salt was promoted strongly across social networks. Along with Lefkow’s YouTube account, Bacon Salt created groups on Facebook and MySpace. Thrown into the mix was a Twitter account and even a Zazzle store.

The aim was to build viral brand awareness while keeping costs low. None of the accounts I visited had huge numbers, but from what I’m told, they were enough to plant a viral seed.

Word of Bacon Salt grew, and within 3 months of launching the product Bacon Salt was popping up in the strangest of places. WWE magazine ran a story on Bacon Salt, along with some mens magazines, PC Gamer and even The New Yorker.

Initially Bacon Salt didn’t have any distribution deals, offering their wares by online order only, but this soon changed as the press continued to build. What started as a viral internet campaign turned into positive mainstream media coverage, and consumer demand for Bacon Salt in their local supermarkets.

Badconomy - Economics Of The Bad Times

As America Crumles, It’s Pay Day For Pawnshops

The Day The Credit Died. How Americans Will Have To Live Without Visas And MasterCards

Monday, November 03, 2008

The Craziest Taxi In The World

The Ultimate Taxi was born on Halloween night, 1983, Jon’s vision started modestly with a few flashlights, some dry ice, a Star Trek light on the dash, a good sound system, and some strategically-placed tin foil.

The rest is history. Today Jon Barnes from The Ultimate Taxi bills his cab as the only music studio, nightclub, planetarium, toy store, and Internet taxi on the planet!

It's a rock & roll concert, roller coaster ride, magic show, movie ride, laser light show, and photo shoot.

From the front seat of his 1978 Checker Cab, Barnes orchestrates a sophisticated in-taxi light show, complete with 9 lasers, 14 miniature stage lights, a revolving disco ball, and a $2,000 haze machine.

The ride also includes toys, rainbow glasses, and a photo page on his world-famous web site

Famous celebrities like Ringo Starr, George Lucas, Jimmy Buffet, Clint Eastwood, Bob Dole, Michael Eisner, Michael Douglas, and Kevin Costner are among the many notables who have enjoyed this magical, mystery tour.

In this interview you are going to learn and travel along with Jon as he describes his journey from novice taxi driver in Aspen, providing an entertaining ride, to purveyor of an other worldly, high-tech experience of a lifetime.

You’ll hear how Jon successfully leverages free media attention and his cutting-edge technology to brand an unforgettable experience in the mind of his customers.

You’ll also learn how this not so ordinary taxi diver markets his business using these universal business building lessons…..These are lessons that anyone can use for their own business. For instance how to…

• Develop relationships to build repeat business – Jon made friends with other cabbies, the dispatcher, and cops by helping them meet their needs; he treated customers like friends, giving free rides, leaving the meter off, and knowing where they lived, and where they wanted to go.

• Focus on the unique – instead of just a ride, Jon sells fun and entertainment, always trying to boost his smileage (smiles per gallon). His guarantee: either you have fun or there’s no charge.

• Leverage your core business into multiple revenue streams – the Ultimate Taxi is central to the Trunk Boutique memorabilia, the web site, and media fees.

• And much, much more!

[Via - Mike Senoff]

Dig finds camp of 'real Crusoe'

Weird Businesses - Pee Farming

Dumping Starbucks For Profit

Sheriff: Family cremated mom on BBQ, kept benefits

Saturday, November 01, 2008

Small Is Beautiful. And Profitable, Too.

Link of the day - Talent Is Overrated: What Really Separates World-Class Performers from Everybody Else

Name: Contract Interiors
Industry: Office furniture
Employees: 18
2007 revenues $15 million

Deni Tato serves a market that spends less when the economy languishes. But Tato isn't sweating the current slowdown. Ever since she chopped an arm off Contract Interiors, her Cincinnati-based business, the CEO runs a leaner, more profitable operation.

When Tato, 52, started her business back in 1986, she envisioned a vertically integrated firm that would handle sales, installation, delivery, and service. After she bought a large distributor in 1992, Contract Interiors moved into a 55,000-square-foot warehouse filled with thousands of chairs and desks.

But when the office furniture market dipped in 2000, her high overhead kept her from being as profitable as she should have been. In 2001, Tato forged partnerships with two local installation companies, which bought her warehouse and trucks and also absorbed many of her former employees. She then turned a critical eye on her streamlined staff.

Contract Interiors is now firmly focused on its core competency - sales and marketing. While her staff has shrunk from 50 in 2000 to about 18 today, revenues have held steady at more than $15 million a year.

RapidPSD Review

Magic As Business

The Business Of Homebiz Scams