Startup costs: $100
Believe it or not, IP intelligence technology provider Digital Envoy
Inc. was spawned from two serious sweet-tooths. Sanjay Parekh,
31, started buying candy from Costco and reselling it to his
telecom co-workers when he struck up a friendship with Rob
Friedman, 38, general counsel at the company and an Atomic Fireball
enthusiast. Soon, their friendship moved beyond candy cravings, and
they were bouncing around business ideas.
Parekh made an interesting discovery when visiting the FedEx and
Ikea websites in 1999: both prompted him to enter what country he
was in. "I thought that was kind of stupid," he recalls,
and the extra step slowed down his home dial-up session. "So I
architected a solution to that problem using IP addresses."
Friedman agreed that the technology--which provides general
information about an online user, such as the city, local
demographics and type of internet connection being used, based only
on the IP address--would help businesses. They launched Digital
Envoy Inc. in 1999, bringing along senior finance manager and
co-worker Dennis Maicon, 40.
Filing fees for corporate documents cost $100, and Friedman drew
up all the legal drafts. An article on the Red Herring website
about their business led to their very first client,
Advertising.com (now owned by AOL). Since they worked from their
homes, Friedman quips, "I negotiated that deal in my
bedroom." They also hired an intern and Friedman's cousin
to do programming work in the beginning.
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After moving into an office in 2000, they hired three more
employees. Friedman found $10 chairs, and opted for modular desk
setups rather than expensive cubicles. In their newest office, they
have cubicles, bought inexpensively from the office's previous
tenant. When it comes to traveling to trade shows and to see
customers, they've also found ways to save their Norcross,
Georgia, company money, using slightly out-of-the-way but much
cheaper flight options.
Digital Envoy now works with many major ad networks and sites,
and projects 2004 sales at less than $10 million. The company's
latest product, IP Inspector Fraud Analyst, allows companies to
fight identity fraud by verifying user identity in real time. They
are also combating fraud with a product that analyzes whether an
e-mail is really a phishing attack. Digital Envoy continues to
grow, but in many ways remains the same. Says Parekh, "One of
the philosophies we've always had is to do more with less
people."
Home Connections
Startup costs: $350
Brooks Swift, a self-proclaimed car audiophile in his younger days,
parlayed his electronics savvy into a business of his own in 2001
with Home
Connections, a Topeka, Kansas, company that services, sells and
installs home entertainment equipment.
Recognizing that no professional home audiovideo installers
existed in his town, Swift launched his company with just
$350--which paid for his home theater installation certification
through the Custom Electronic Design & Installation
Association, a global trade association. He already possessed the
tools needed to hook up the VCR, DVD player, TV and speakers on his
first job. Swift worked from home to handle business matters and
phone calls, so he had no overhead costs. And since he didn't
have to invest in inventory, he was able to use his clients'
deposits to buy the products they needed.
As luck would have it, one of Swift's neighbors worked for
The Topeka Capital-Journal and pulled some strings to get a
front-page article about Home Connections published. The exposure
led to new business, which Swift needed to fund his move into the
new-construction market. "People were building housing and
wanted to have home theaters and the whole-house audio system, with
speakers installed all around the house," explains Swift. He
bought tools and a vehicle, hired an employee and began approaching
builders, winning over many who were dissatisfied with their past
installers. Home Connections soon positioned itself as a specialist
in the burgeoning field.
There was one competitor, Aaron Koker, with whom Swift had
established a friendly business relationship. "It just made
sense to combine our forces," says Swift. The businesses
merged on New Year's Day in 2003, and the pair put some of
their profits, combined with a $70,000 bank loan, toward opening a
retail store, Home Audio Connections. Although they still
specialize in outfitting new homes, the retail location sells an
array of home theater options and gadgetry and provides turnkey
installations for any home.
But Swift, 25, is not one to rest on his laurels. In 2004, he
started alarm company Security Connection, and continues his lean
operational approach by having his wife, Kelli, run the business
from their home. Also focusing on new construction, Security
Connection pre-wires new homes so security systems can be readily
installed at the request of homeowners. With 2004 sales for all
three businesses projected at $1 million and plans to expand to
another city nearby, Swift continues to keep costs minimal:
"You have to stay lean; it's a very competitive
industry."
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