A Solution to a Start-Up’s Biggest Dilemma

Start-up resource: StartupLotto.com

Anyone who has started a business that requires establishing a user base before securing clients knows that it’s a double-edge sword. How do you gain one without the other?

 

A new company based in Copenhagen, Denmark, might have a solution to the dilemma that many entrepreneurs face.

 

As a way to help cash-strapped start-ups find an initial user base, StartupLotto.com offers a lottery of sorts to its subscribers. Here’s how it works: StartupLotto.com subscribers are presented with a new business, and if it interests them, they sign up. Once they sign up, they’re automatically entered into a lottery, where one person will receive 1 percent equity in the start-up.

 

From the entrepreneur’s standpoint, the process is simple: Provide one lucky Startuplotto.com subscriber with 1 percent equity in your business to potentially gain thousands of new users.

 

As a nonprofit, Startuplotto.com collects no other fees from participating start-ups or users. And all transactions are securely handled by an outside company, PricewaterhouseCoopers.

 

Founder Thomas Bro tells us more:

 

What is Startuplotto.com all about, and what are you offering to entrepreneurs?
It’s a new way for start-ups with limited cash to market their service to a large group of global subscribers, by giving away a small percentage of the stock in their new company.

 

What kind of companies is your service open to?
Primarily, global Internet start-ups with a B2C business model—but given that we work with start-ups, there is no rulebook. We’ll be happy to look at any and every kind of start-up, as long as they are global and have some kind of “freemium” model that our subscribers can try out and sign up for.

 

I know you’re still in Beta, but how many subscribers do you hope to deliver to entrepreneurs upon launch?
That’s a hard one. I was hoping for around 100,000, but I can see that it looks like it might start with around 10,000 sign ups. I think that we need to showcase some winnings before it will skyrocket. I have a start-up coming out of stealth within the next couple of months, and I’m willing to add it to the lottery for whatever amount of subscribers there is at that point.

 

You mention 1 percent equity. Is that the most someone would have to give away, or does that change for each situation?
We’re going to start with 1 percent and then we’ll see how it goes. Depending on the reaction, we may add more in the future.

 

Are there any extra fees for companies to participate?
No extra fees—we are not in this to make money.

 

How do you ensure that the winning user gets their equity?
PricewaterhouseCoopers will be in charge of both lottery drawing and stock share payouts.

 

How does a company (or user) go about signing up?
It’s easy. They can simply go to Startuplotto.com/entrepreneurs to sign up.

 

To learn more, visit StartupLotto.com.

Protecting Your Fantasy Assets

Start-up: LeagueSafe

 

Founded: 2008

 

Location: Plymouth

 

Key players: Paul Charchian, Tom Doering, and Christian Peterson

 

Funding: Self-funded

 

Web site: leaguesafe.com

If you're a fantasy sports fan in Minnesota, you’ve probably heard of Fanball.com. And there’s a good chance you’ve heard Paul Charchian. That’s because, in addition to being the founder of Fanball.com, he’s also a well-known sports radio host on 1130 KFAN.

In 2005, Charchian successfully sold Fanball.com and started working on his latest venture, LeagueSafe. He saw an opportunity to help fantasy sports players manage the money that exchanges hands before and after each season.

 

The solution was to create a service that allowed fantasy league commissioners to securely collect, protect, and disperse the entry fees and winnings to each player—at no cost to the team. Charchian and his partners have been running for the past two years as a local proof-of-concept, and are now ready to take it nationwide.

 

Charchian explains more about LeagueSafe and offers great advice for entrepreneurs:

Explain how LeagueSafe works.
Most fantasy leagues have an entry fee. The fees ensure that everyone has some skin in the game, and that everyone continues trying to win throughout the season. (If you’re wondering, fantasy sports aren’t considered gambling. But that’s a story for another day.)

 

LeagueSafe is not a bank or financial institution; it’s an information technology company that allows fantasy players to deposit funds into a third-party bank account, where it is stored securely until the end of the fantasy season when it is ready to be distributed.

 

Players deposit fantasy league fees at the beginning of the season. It locks down the funds throughout the season, and league winners are eligible to withdraw funds at the end of the season. 100 percent of the entry fees go back to the winners. This product augments the services provided by online fantasy league administration sites such as ESPN, Yahoo, and CBS Sports.

 

What opportunity did you see in the fantasy market?
The fantasy sports marketplace has matured significantly since I started Fanball. At the dawn of the Internet age, there were dozens of areas of dire need for fantasy players. That’s not the case any longer. Big portals have sophisticated applications that meet the needs of most fantasy leagues, and increasingly, these products are free.

 

As I looked at the industry in 2007 to 2008, the only area of fantasy play that hadn’t seen an online solution was entry fee management. A value proposition began to crystalize.

 

Without LeagueSafe, league commissioners (who manage the league) are still dealing with checks, cash, IOUs, and promises of payment, just as they were 20 years ago. LeagueSafe simplifies all of those issues by allowing online payment processing with the ease of buying a book on Amazon. Plus, winners can finally rest assured that they’ll get paid. Traditionally, most commissioners co-mingle league funds into their household bank account.

 

With your service being free to users, how do you generate revenue?
When I was developing LeagueSafe’s business model, interest rates were at 4 percent to 5 percent, and a free model was easy to cash flow. Since then, interest rates have nose-dived. It challenged our management to find alternative revenue streams while retaining the ability for site visitors to use LeagueSafe without fees.

 

Using LeagueSafe default options, the service continues to be free to the end user. We’ve added optional functionality that generates revenue for us. One example is a nominal late payment fee, which allows deadbeats to make payments after the normal deposit deadline. Another example is our express payout option, which allows for funds to reach winners in two to four business days.

 

You’ve successfully positioned yourself as an authority in fantasy football. How has that impacted your business success?
My career has been significantly aided by two areas outside of my day job. First, as the host of KFAN’s Fantasy Football Weekly radio show, I’ve gotten to interact with thousands of listeners since it started in 1995. It’s helped me keep me on top of the evolution of fantasy sports.

 

Also, I’m the president of the Fantasy Sports Trade Association, an industry group composed of 110 member companies in the fantasy sports space, from ESPN down to start-ups.

 

What are the keys to successfully raising money?
LeagueSafe’s value proposition is straightforward, and its revenue streams aren’t complex. Calling your product “understandable” almost sounds patronizing; but in reality, investors like knowing that they fully understand any company they’re involved with.

 

Also, people can easily appreciate the size of the fantasy sports marketplace because they know dozens of people who are playing. It certainly helps to raise money from someone who already knows, first hand, that there is a sizable market already in place.

 

As someone with so much start-up success, do you have any words of wisdom?
I’ve taken plenty of jumps over the years, so I have plenty of blunders to draw upon. Allow me to offer two (highly compressed) areas of advice:

 

First, ask yourself if your idea is a solution looking for a problem. If you’re not ready to solve an existing problem, it’s probably going to be tough to materialize a market out of thin air. Here’s an example: In 2000, I built a fantasy football auction game called Bid2Play for Fanball. It merged eBay-like bidding with fantasy football. It was a great game. But back then, fantasy players weren’t auctioning (they are now), so the game felt foreign, and it never gained critical mass. Bid2Play was a solution without a problem.

 

Second, as you start building your great idea into a viable product, be ready to adapt. A lot. Often, the pride of authorship results in an unwillingness to iterate ideas. Any start-up needs tenacity. But not when it comes to reshaping and rebuilding your idea. Your friends, family, users, and customers want to help. Let them. And listen to them. Be willing to throw out all of your preconceptions.

 

Learn more about LeagueSafe at leaguesafe.com.

Deals in the Hood

Start-up: Hoodbid

 

Founded: Currently in beta; anticipated launch, June 2011

 

Location: Lakeville

 

Key players: Colin Lee, founder; Chris John, chief financial officer

 

Funding: Self-funded, working on seed round

 

Web site: Hoodbid.com

At this point, most people are familiar with the money-saving daily e-mails you get from companies like Living Social and Groupon. In the very near future, you're going to have several more options, as it seems everyone is trying to ride the Groupon wave. (For example, this blog recently profiled local company Locate My Deal.)

 

The companies that will survive are the ones that take the secret formula (group buying) and apply it to situations that make the most sense for consumers. In the dog-eat-dog world of daily deals, relevant offers will be the name of the game.

 

Hoodbid.com, a relatively new player, thinks it has come up with a winning formula. It uses a combination of relevancy and hyper-local targeting to create a unique offering.

 

Founder Colin Lee is in the process of beta testing his plan to help neighborhoods save money on frequently used services, such as garbage. Lee plans to use the buying power of an entire neighborhood to negotiate better deals with service vendors.

 

Here, he talks more about his new venture.

 

Deal-seeking is at an all-time high, but your approach is different. What can you tell me about Hoodbid.com?
Everyone seems to be copying Groupon’s business model letter-for-letter. It’s a successful model, but it doesn’t work well for many services. We organized ourselves around recurring expenses we heard homeowners complaining about rather than coupons for skydiving. I’m not knocking skydiving or massages, but Groupon’s model has mostly targeted random, discretionary spending. If subscribers see too many uninteresting deals, they may unsubscribe.

 

By bringing deals to a neighborhood, you’re relying on a very concentrated critical mass. Aside from going door-to-door, how do you plan to attract people within a small area?
Targeted, direct marketing. After proving enough interest in a neighborhood, we’re looking mostly at saturation mail, social networking, and word-of-mouth.

 

With your service being free, how do you plan to monetize?
We plan to sell advertising, plus charge a minimal site fee for vendors—enough to cover costs.

 

What do you see as your biggest challenge moving forward?
Our greatest challenge will be capital. Our business model has upfront costs to organize a neighborhood. If we don’t raise funds, we run the risk of our reputation outgrowing our reach. We use viral word-of-mouth through social networking to grow organically, but we may disappoint if our work queue moves slower than our buzz.

 

Once you’re out of beta, how do you plan to spread the word?
We have customers lined up already. We are already feeling demand crunch.

 

Do you have any words of wisdom for other early-stage entrepreneurs?
Yes. Don’t stake your company’s future on any one deal. We put a lot of hope into our YCombinator application until we found out how slim the odds were when one founder couldn’t leave town. If you believe in your abilities, you have to be willing to try everything and fail often until you succeed. Apply for everything, but assume you don’t know everything.

 

To learn more, visit Hoodbid.com.

Minnesota Cup: What You Need to Know

Start-up resource: 2011 Minnesota Cup

 

Web site: minnesotacup.org

 

Since 2005, the Minnesota Cup has become the preeminent competition for Minnesota entrepreneurs with breakthrough businesses and ideas. Now in its seventh year, the prize money is the highest it’s ever been and they’re expecting over 1,000 hungry entrepreneurs vying for top prize.

 

This year’s competition has officially opened. Minnesota entrepreneurs have between now and 11:59 p.m. on May 20 to register and complete their entries. Semi-finalists within each category will be chosen on June 10. In late August, six winners will be chosen from the finalists. Those six will compete for the grand prize at the closing ceremony on September 8.

 

Past participants have gone on to raise capital, secure partnerships, and even acquisition. The experience allows entrepreneurs the opportunity to network, identify new resources, and further their businesses through thoughtful exploration.

 

Minnesota Cup Program Director Matt Hilker shared some key information about this year’s event.

 

For those who don’t know about the competition, please explain.
The Minnesota Cup is an annual competition that seeks to support and develop entrepreneurs, inventors, or anyone with a potentially breakthrough business idea. The 2011 competition will award over $150,000 in cash, professional services from our partners, and many other valuable prizes to the best ideas in each of six divisions: clean tech and renewable energy, biosciences, high tech, social entrepreneur (application deadline is April 15), student, and a general division. Ideas can be submitted between March 28 and May 20.

 

Who is the competition open to? Can you enter with just an idea?
The Minnesota Cup is open to anyone from Minnesota with a great idea. We encourage all entrepreneurs with an idea to enter, as well as businesses that are less than five years old and generate less than $1 million in annual revenue.

 

We have a lot of med-tech companies in the state. How does a start-up compete against a life-changing technology company?
The Minnesota Cup has six divisions, so entries only compete against those in the same division. Med-tech entries are part of the bioscience division and will only compete against medical device, life science, bio-tech, and drug delivery and diagnostics ideas.

 

Most entrepreneurs think they have the greatest business or idea. What criteria do you use to objectively decide who moves on?
Ideas are great, but we also want to see a team and a plan that can make the great idea a reality. Here are some of the criteria our judges will be looking for in the initial entries:

 

- Does the idea have breakthrough potential? Can it achieve scale at some point?
- Is there a clearly defined market need, and can the product/service address this need?
- Is the market understood and are competitors acknowledged?
- Is the business model clear and appropriate for market/business?
- Is a team present that can make it all happen?
- Are preliminary sales and marketing plans in place—and do they make sense?
- Does the operating/execution plan make sense?
- Are key risks the business may face and potential mitigation plans addressed?
- Is a high-level financial overview and a path to profitability included?

 

How has the competition grown since its inception, and how many entrants are you expecting this year?
The competition has grown from a few hundred participants the first couple years to over 1,000 participants the past couple years. We expect over 1,000 participants again this year. As far as prize money goes, we started with around $40,000 and are now over $150,000.

 

What has happened to the companies that succeeded in the competition in the years past?
The 2009 and 2010 finalists have gone on to raise over $30 million in capital since their participation in the Minnesota Cup. Additionally, two companies were subsequently acquired after their participation. Many other participants have gone on to successfully form their businesses, create jobs, and secure significant distribution agreements and partnerships. The Minnesota Cup is very proud of the track record of our alumni.

 

How does someone go about signing up?
Ideas are accepted at minnesotacup.org. Entrants need to create an account for the 2011 competition and then fill out a contest entry form, which consists of a 100-word executive summary and brief descriptions of the product or service, market/competition, sales/marketing plan, and operating plan.

 

For those planning to participate, do you have any advice?
The Minnesota Cup competition is an opportunity that all entrepreneurs in Minnesota should take advantage of, because the experience will help participants to better articulate their idea and develop a winning business plan. Additionally, we would encourage participants to take full advantage of all the opportunities they have to network with and get connected to resources and people that may be able to help them advance their ideas. One of the most valuable benefits that participants routinely tell us that they get out of the competition is an incredible entrepreneurial network.

 

To learn more or to sign up for this year's competition, visit minnesotacup.org.

This year’s Minnesota Cup winners will be featured in the December issue of Twin Cities Business. To read about the 2010 Minnesota Cup winners, click here.

The Latest Tool for Tracking Down Deals

Start-up: Locate My Deal

 

Founded: 2011

 

Location: St. Paul

 

Key players: Joseph Rueter, Nate Kadlac, Neil Berget, and Aaron Kardell

 

Funding: Self-funded

 

Web site: locatemydeal.com

 

According to tech bloggers, this year’s SXSW focused on daily deal start-ups. With the recent success of sites such as Groupon and Living Social, entrepreneurs are hungry to get a piece of the action.

 

Aaron Kardell and the three other cofounders of Locate My Deal developed a Web site and app that compiles deals from multiple sources and groups them together based on the user’s location. The platform makes it easy for users to browse through a collection of local deals without having to sift through an endless number of e-mails and mailings.

 

What started as a Friday night pitch is now one of a handful of local start-ups that launched from November’s Startup Weekend.

 

Kardell shares his expertise on getting an app ready for the market:

 

Everyone seems to be launching the next Groupon, and you appear to be capitalizing on that. Tell us more about how Locate My Deal works.
I recently counted 29 daily deal sites with a presence in the Twin Cities. As much as I love getting a deal, I don’t want to sift through 29 e-mails every morning.

 

Daily deals are getting a lot of attention because the deals are substantial—often 50 percent or more off. But they represent a rather limited subset of all of the deals available to consumers. Numerous restaurants offer $10 off a $30 purchase, for example, and don’t require purchasing the deal on a specific day in advance.

 

Our goal is simple: We want to provide the one place for consumers to get access to all local deals. We currently provide that access through an iPhone app, Web site, and mobile Web site. And an Android app is coming soon. So far, we’ve gathered a few hundred thousand deals in over 15,000 cities. And we make those all readily available to consumers—tied to a specific location—so you can find something nearby and use it immediately.

 

The deals come from multiple sources, like Groupon, Living Social, Valpak, Money Mailer, and even Craigslist. You can instantly see on a map where the nearest deal is—whether it’s for a restaurant, retail store, or service business. Many of the deals can be redeemed just by showing your phone to the merchant. And for the daily deals, we provide a simple interface at the top of the app to quickly browse all of them.

 

We’re also experimenting with digitizing the Sunday circulars and placing those in-app. So if you scroll on the map to a Best Buy, for example, you can easily view all their weekly specials.

 

Your app is free. How do you plan to monetize?
The app is free and will remain so. We get a percentage of sales made through our site and apps. Over time, there will be a variety of opportunities for merchants to sponsor featured deals.

 

Signing up currently requires an invitation. Is this part of a beta process or is there a marketing angle?
We’re still in private beta, so access requires an invitation. People can “move to the front of the line” in waiting for an invite by telling their friends about Locate My Deal through Facebook, Twitter, or e-mail.

 

What has the process of developing and implementing your app been like?
It’s been really great working with such a high-caliber team. Everyone brings something unique to the table. Nate is one of the best designers in the Twin Cities. Neil and Joseph have valuable shared experience from their start-ups Extendr and Curation Station. Everyone has a very pragmatic desire to get the right things done at the right time.

We continually adjust our priorities based on where opportunities are and the feedback we’re getting from private beta testers. The first version of our iPhone app was in testers’ hands in November. It’s exciting to see how much has changed and improved since then.

 

Aside from press coverage, how do you plan to spread the word?
There are some natural points in the app that allow users to share great deals they’ve found with one another. So we hope to spread through word of mouth and are providing ways to encourage that. In addition, we’re talking with a number of potential partners—national brands, media companies, etc.—that would have a mutual interest in spreading word about our app in connection with their deals.

 

Finally, I’ve learned a few things along the way about marketing apps through iGarageSale and MobileRealtyApps.com that will fit very nicely with our strategy, as well.

 

Based on your app experience, what advice can you share with us?

Two things come to mind: First, apps need to provide continuing value for long-term engagement. Apps like Facebook, Twitter, and many games encourage long-term repeat usage because there’s always a reason to come back. And then there are a number of apps that only get used once. With everyone's desire to have an app, sometimes more thought needs to be given as to why people will desire to come back to use the app a second and a third time.

 

Second, I believe that for many apps there are a variety of effective monetization strategies that go beyond having consumers pay to download the app. Take the MobileRealtyApps.com business I’m involved in: Consumers benefit by downloading a free home search app. Brokers and agents benefit through leads generated by the apps from interested and engaged home buyers. And MobileRealtyApps.com benefits when brokers and agents benefit.

 

To learn more about Locate My Deal, visit locatemydeal.com or check out this video overview.

Whooznear Helps You Discover Who’s Here

Start-up: Whooznear

 

Founded: 2011

 

Location: Maple Grove

 

Key players: Richard Perry, founder; Joel Gerdeen, vice president of technology; and Sonja Brown

 

Funding: Self-funded

 

Web site: whooznear.com

Social media has improved our lives by increasing interaction within personal and professional networks. On the other hand, it’s given us an excuse to hide behind our computers.

 

The question stands: Is social media negatively affecting how we interact with people in the real world? Minnesota entrepreneur Richard Perry thinks so, and he has a way to fix it.

 

With the help of his team, Perry launched Whooznear (pronounced “who’s near”), a mobile application that is connecting people online, in person. The app, which is set to be available in the coming weeks, provides smartphone users with information about others in physical proximity. Users dictate what information is displayed about them. The connection between phones is made using Bluetooth, which ensures that users are near each other.

 

After spending the past year building his app, Perry offers insight about starting an app-based business:

 

So, you’re bringing back face-to-face interaction? Tell us more about Whooznear.
Someone figured out how to communicate with friends and strangers around the world, but no one knows who’s next to them at the coffee shop. I used to write software that connected two computers, so when the iPhone was announced and it had Bluetooth, I said, why not two phones in a closed space? People are usually stumped at who to talk to in a crowded room—coffee shop, classroom, bar, etc. And, everyone is looking for something, whether it’s a friend, mate, job, car buff, etc. I thought the possibilities were endless.

 

Do users need to have the app open at all times to use it?
When you walk into a room, you turn on the app and change your profile to reflect what you want to share about yourself. If you’re walking into a bar, it would be different than walking into church, for instance. You click the near tab and it probes for others in the room that have their Whooznear app looking for others. Then, the information is exchanged and you can read the attributes of the others, choose the “best” person to talk to by sending a text message, or just go introduce yourself.

 

The question with apps is how you make money. What route are you choosing for revenue?
Like most, you give it away for free and when it goes viral, you start charging whatever the market will bear—99 cents, $1.99, $4.99, on up. The trick is the marketing plan. We will start with universities to help it spread. Also, conventions, airlines, bars, etc. We will also co-brand it with companies that have customers who gather at coffee shops, airlines, and the like.

 

What has surprised you the most in your beta?
Not much, really. I’ve been in the software business most of my career, so there have been few surprises. The logistics have been a little problem, as we’ve used developers in three countries around the world.

 

Once your app officially launches, how do you plan to spread the word?
We are hoping to close on $200,000 of angel funding by next month to market a few universities and gauge our rate to “virality” (my word). Then, we’ll determine how much venture capital it will take to capture the world.

 

For others who are looking to develop a mobile app, any words of advice?
Study hard. Angry Birds (one of the most successful apps available) was Rovio Mobile’s 51st attempt at a mobile game. There are so many good apps on the market and it is so crowded that I wonder if it’s too late for the iPhone. There is still plenty of room in the Microsoft or Blackberry market. It better be well thought out, and you’d better have the developers ready. Most developers have a day job and are very busy after hours as well, because everyone has an idea for a “cool app.”

 

To learn more about Whooznear, visit whooznear.com

An Online Tool Guides Green Thumbs

Start-up: PlantJotter

 

Founded: June 2010

 

Location: Maple Grove

 

Key players: Barb Hegman, founder; Kelly Heikila, developer and programmer; and Norm Orstead, Web designer

 

Funding: Self-funded

 

Web site: plantjotter.com

I said it last week and I’ll say it again: spring is right around the corner. With the extended daylight and warmer weather, it’s a bit more convincing this week.

 

That means it’s approaching the time for gardening.

 

A well-maintained garden is a thing of beauty. And it doesn’t take an expert gardener to recognize when someone has a great idea for a gardening business. About this time last year, Barb Hegman launched PlantJotter, a Web site offering gardening enthusiasts a centralized platform for keeping track of their efforts.

 

Hegman and her team have put together a subscription-based site that allows gardeners to journal, list, organize, and store just about anything that has to do with their gardens. It also provides a database of plants and plant care information, saving the user time and money—which can be used for, well, more gardening.

 

Hegman answers some questions about her business:

 

Please tell us what PlantJotter is all about.
PlantJotter is a Web-based application for gardening enthusiasts. Users are able to keep centralized and integrated records of their gardening efforts—journal entries, photos, a maintenance calendar, and plant lists. The site features a general task list of what to do and when, as well as a plant database enabling users to quickly create their plant inventory. In April, there will be plant care information they can reference for what to do in each season for common perennial plants. This will be expanded to other plant categories such as vegetables and ornamental shrubs.

 

PlantJotter serves a niche of dedicated gardeners who subscribe to the wisdom that keeping records helps you to become a better gardener—better in the sense that you remember what is growing and where, what worked and what didn’t, and to help prevent waste by not over fertilizing, watering, buying more mulch or annuals than you have space for, etc. Outside of the practical applications, it is also rewarding to keep a history or diary of your work.

 

What made you take the leap and launch the site?
I felt a need for such an application and the idea for the site has been germinating for years. I was ready for a career change and decided to dedicate myself to education in the horticulture industry, pursuing a Master of Agriculture in horticulture at the U of M. I also spent at least a year meeting and talking to Web developers. The idea wouldn’t leave me, so with the support of my husband I dove in.

 

You’ve chosen to generate revenue through subscriptions instead of advertising. How did you come to that decision?
This was a hard decision. Clearly, the model of most sites is to generate revenue through advertising. However, I hoped to create a different experience, where the site is private and entirely the users’ information. This is really a practical application to keep information normally stored in a disparate fashion—in notebooks, photo albums, calendars, file folders, plant tags in shoe boxes, etc. It’s free of information that doesn’t pertain to you.

 

Since your launch, what has surprised you the most (good or bad)?
How experienced gardeners subscribe to the wisdom of keeping a journal and records, but aren’t ready for new technology. On the flip side, the newer, younger gardeners, who only know current technology, aren’t yet convinced of the wisdom of keeping records.

 

How are you getting the word out about PlantJotter?
Some advertising on gardening sites. Also utilizing Twitter and Facebook, as well as attending and exhibiting at horticulture-related events and even some AM radio talk shows.

 

While I knew it served a niche audience and is a discretionary expense on the part of the consumer, I’ve been surprised at the amount of marketing and advertising it’s taking. Print marketing is not resulting in trials and subsequent conversions. But, I guess that is not surprising given this is an Internet-based product/service.

 

Do you have any advice for other potential entrepreneurs with an idea?
Research. Talk to as many people as you can, allow them to disagree, but don’t be discouraged. Implementation takes longer than you think, despite your enthusiasm.

 

To learn more about PlantJotter, visit plantjotter.com

Turning Bikes Into Bucks

Start-up: Velolet

 

Founded: January 2011

 

Location: Minnetonka

 

Key players: Dan Cleary, founder

 

Funding: Self-funded

 

Web site: velolet.com

Although it doesn’t feel like it, spring is right around the corner. It’s almost time for one of Minnesota’s favorite warm weather activities: biking.

 

This year, Minnesota biking enthusiasts are in for a treat. Thanks to a local entrepreneur and his new online bike rental business, cyclists will have an opportunity to turn their hobby into a money-making venture.

 

Dan Cleary and his team just launched Velolet, an online platform that allows individuals to rent their bikes to traveling cyclists. The service provides a low-cost alternative for cyclists who want to bike while they’re away, but don’t want to deal with the hassle or cost of shipping their bike. For individual bike owners and bike shops, Velolet offers the opportunity to make rental income on their bicycle(s).

 

Although the site launched less than two months ago, Velolet already has several listings and has begun generating revenue. Cleary tells us more about the venture he founded:

 

Please describe for us what Velolet is and what makes it unique?
Velolet provides bike owners (shops and individuals, called “listers”) with a user-friendly platform to safely rent their bikes to traveling cyclists. Bike owners list bikes on Velolet.com for free and earn rental income from traveling cyclists.

 

Bike owners set their own rates and availability. Velolet provides $1 million of liability coverage per reservation. There are no up-front insurance premiums to pay—a small fee is deducted only when the lister makes a transaction. Velolet manages the entire process online (bike search, reservation, waiver releases, credit card payment processing), which reduces administration time and hassles at stores.

 

For traveling cyclists (renters), Velolet is the centralized online hub to find quality bikes to rent. Renters find a bike by doing a quick search on the site. No need for them to call and interrupt store employees or people at work. And, it saves the $200 (each way) airline charge to bring your bike—not to mention the hassle of packing/unpacking. Velolet charges a minimal, per-reservation service fee to the traveler for the service.

 

Is Velolet a new concept or are you creating a better business model?
It’s an adaptation of an existing rental model for the bike industry, which traditionally doesn’t have a mechanism in place to safely and easily rent bikes to travelers. It creates additional revenue for the bike industry that would otherwise go to the airline industry. That is good for local bike shops, distributors, and manufacturers. And it is an idea that can translate and expand globally.

 

Minnesota has a strong bike community, but outside of our state, what’s the market potential for Velolet?
Minneapolis serves as the model for all the top biking communities. (Bicycling magazine names the top 50 bike-friendly cities.) Cyclists and triathletes, a growing number, travel for business and vacation to many of these destinations. They need and want to get their rides in when they travel. Wherever they are, that is where Velolet wants to be. There are 5,000 local bikes shops in the United States and millions of cyclists that have bike inventory of their own that can be made available to travelers. At Velolet, we always talk about filling the entire map with bike icons (bikes available to rent) because that is where the renters and listers exist—and that is where we want to be.

 

What's been your biggest challenge so far?
Awareness. The model definitely holds up when we can grab the attention of bike shop owners and individuals. That shows with the quick adoption in Minneapolis even though it’s winter. We are working with key companies in the bike industry that have the reach we need and are developing some strategic plans that will be a game-changer for us.

 

As a start-up, how are you generating interest from both renters and bike owners?
We have a bike shop in the southwestern part of the United States that within two weeks has already generated thousands of dollars in rental income. Currently, we don’t promote or market down there, so it’s great to see real revenue being generated, especially in a tech start-up like ours. In addition, we’ve captured quite a few listers in the Minneapolis area over the past two months. The typical Minnesota winter isn’t the best environment for rentals, but the map of Minneapolis is filling up with bike icons waiting for the first spring thaw. We anticipate rentals here will jump and prove to be a model for our key target cities.

 

Do you have any advice for other entrepreneurs?
Always be selling your product or service. It’s easy to focus all your attention on trying to improve your product/service incrementally, especially for tech-based products. However, if you pitch your idea to potential customers/clients, they will provide the invaluable feedback you really need. Go test the waters. Challenge the idea against others and see if you really have something.

 

To learn more about Velolet, visit velolet.com.

The Tech Attorneys

 

Start-up resource: StartupLawyer.MN

 

Web site: startuplawyer.mn

If you asked any entrepreneur what his or her least favorite business responsibility is, most would say it’s the detail work—drafting contracts, managing the books, completing employee paperwork, legal filings, etc.

 

Very few entrepreneurs enjoy these tedious tasks. But they’re essential to the success of any business, so most bootstrapping entrepreneurs do it themselves. Not because they want to, but as a cost-saving measure. The problem is, by nature, entrepreneurs are big-picture people, which can leave a lot of room for error.

 

Sam Glover and Aaron Street understand this dilemma and have created a solution. The tech entrepreneurs/business lawyers have started an affordable and structured legal services company, StartupLawyer.MN, catering specifically to tech start-ups. In addition to their first-hand knowledge of running a start-up, they’ve created an attractive pricing structure based on a flat-rate monthly subscription fee. They provide entrepreneurs the choice of four monthly packages ranging from $199 to $1,999 per month, with no additional fees.

 

Cofounder Aaron Street shares more about his small business resource.

 

Please tell us what StartupLawyer.MN is all about and how you’re different from other law offices.
We represent Minnesota tech start-ups as business and legal advisors. (Our tagline is “business lawyers for geeks.”) Our main differentiation from most other lawyers is that we bill on a monthly subscription basis, not hourly. Our monthly subscriptions allow tech start-ups to budget for their legal needs ahead of time—and without hourly billing, our clients don’t hesitate to call or e-mail us with questions before problems arise.

 

With such a niche, you guys must have a background in the start-up world.
In addition to representing tech start-ups in our law practice, we are also entrepreneurs. Our primary venture outside the law practice is a publishing company we co-own, Lawyerist Media, the leading law practice blog on the Internet. Lawyerist provides daily content helping lawyers to grow their practices and become better businesspeople.

 

Start-ups are trained to bootstrap. How is your pricing structured to accommodate that?
Our subscription pricing, with membership rates starting at under $200 a month, offers new, small, or bootstrapped companies a rate they can afford and—just as importantly—one they can foresee. Whether they are on our basic subscription package or a larger package, all of our pricing is up front, with no surprise invoices at the end of the month.

 

What do you see as the most needed piece of legal advice for entrepreneurs?
Our clients value us not just because of our willingness to be innovative in our pricing, but also in our innovative approach to solving their needs. As tech entrepreneurs ourselves, we offer all the standard legal services a new company needs—business formation, contracts, independent contractor agreements, etc.—but we also provide strategic advice on starting and growing their businesses.

 

Without giving away the farm, do you have any overall legal advice that you’re willing to share with us?
A lot of tech entrepreneurs—especially bootstrappers—feel smart enough to figure everything out themselves. My biggest piece of advice is rather than trying to figure out the answers to legal questions yourself, and rather than going to a free online legal forms site, give us or another attorney representing tech start-ups a call. We’re always happy to get coffee with new entrepreneurs, and can—at a minimum—get you pointed in the right direction with much less risk than doing it all yourself.

 

How can people learn more about you and your services?
Call or e-mail us, or if you go to our Web site, we have a simple form you can fill out to schedule a free coffee with us.

DraftStreet Puts a New Spin on Fantasy Sports

Start-up: DraftStreet.com

 

Founded: August 2010

 

Location: Minneapolis and New York City

 

Key players: Brian Schwartz (CEO), Jeremy Elbaum (chief marketing officer), Mark Nerenberg (chief product officer), and Michael Kibort (chief operating officer)

 

Funding: Started with personal contributions. Raised additional funds from friends and family. Recently secured a large round of funding from angel investors.

 

Web site: draftstreet.com

 

For sports fanatics, there’s nothing like playing in a fantasy league. Nearly every sport has one, and thanks to a handful of really good Web sites, it's easier than ever to join in.

 

But if there’s anything to complain about, it’s that drafting a team at the beginning of a season leaves a lot to chance. You pick your players and hope for the best.

 

A new Minnesota start-up, DraftStreet.com plans to change that. It developed a site that allows fantasy sport players to essentially draft a new team each day (or week, depending on the sport). It works much like online poker, offering players a menu of games that are available to join. Each game varies depending on several variables, including sport, duration, and level of investment, to name a few.

 

Although the site just recently launched, the four founders have already managed to raise an impressive $1.6 million in funding. Cofounder Mark Nerenberg shares more:

 

Please tell us more about DraftStreet.com and how you differ from other fantasy sport Web sites.
DraftStreet offers daily and weekly fantasy leagues for cash. Typical fantasy leagues are played over a full season. We have created interesting game formats for users to compete against other users while drafting new teams for just one night. It offers an opportunity for new kinds of strategy and also a chance to put your fantasy skills to the test over many iterations—and avoid having an entire season ruined by getting unlucky with an injury or two.

 

How big is the market potential for you?
Fantasy sports is one of the fastest growing industries in the world, and our short-term model is attracting a whole new breed of players. There is a unique entertainment value to what we offer, and the initial response has been overwhelmingly positive. In terms of potential, I’ll be cliché and tell you the sky is the limit.

 

Some consider fantasy sports to be a form of gambling. What kind of obstacles have you encountered as a result?
Actually, fantasy sports is specifically singled out as a “skill game” according to the U.S. Supreme Court. There are certain aspects that differentiate fantasy sports from sports betting or gambling, and we have to make sure we follow all current legislation.

 

What’s been your biggest challenge so far?
As with any start-up, there are bumps in the road, but we have done a good job being prepared for anything that comes our way. One of our biggest challenges has been keeping up with users’ requests for new features. We pride ourselves on keeping open lines of communication with our users. It’s pretty cool when someone e-mails customer service with a new idea, and they see it on the site two weeks later.

 

You’re operating in a highly competitive industry. What are you doing to capture the mindshare of your target users?
We have an amazing marketing team. We have created very simple, highly effective promotions that make partnering with other Web sites easy and mutually beneficial. Once users get to DraftStreet.com, we don’t disappoint. Our user-friendly layout, wide variety of games, and loads of content put us head and shoulders above the competition. Finally, our customer service is the best in the industry. If you have a problem, we will fix it. And it is always easy to speak to an actual person whether via phone or e-mail, 24/7. Keeping our customers happy is without question our number one goal.

 

Based on your online experience, do you have any advice for other dot-com entrepreneurs?
It is vital to the success of any start-up to know your strengths, and more importantly, your limitations. Surround yourself with good people and always be open to help and advice. Prepare yourself for an emotional roller coaster, but stay focused and don’t panic.

 

To learn more, visit draftstreet.com.