The Inn Crowd

This story appears in the February 1999 issue of Startups. Subscribe »

You could easily classify computer hardware supplier Optimus Solutions LLP as an overnight success. Last July, when Mark Metz, 35, and his three partners, James Davie, 33, Sean Murphy, 31, and Ed Flachbarth, 31, decided to leave their positions with Sun Data Inc. for a shot at entrepreneurship, time limitations left them scrambling for a temporary location. After a few phone calls, the partners discovered that most temporary office spaces in the area required a three- to six-month commitment. Instead of signing a lease they felt was too lengthy, the budding entrepreneurs checked their new company into the Wingate Inn.

Metz says the biggest advantage of staying at Wingate was that the Inn lived up to its motto: "We're built for business." During its stay, Optimus took the slogan literally; working from one conference room and two suites, the company doubled its size and pulled in half a million dollars. While it's clear from the company's sales that life at Wingate was all about business, a few clients affectionately addressed their faxes to the "Love Shack."

After a two-week stay, Optimus packed its bags and headed for new 15,000-square-foot headquarters in Norcross, Georgia. Strangely enough, the office is directly across the street from the Wingate.

"I don't think we could say enough about how well we did out of a hotel," says Metz. With projections for 1998 at $20 million, it seems Optimus is doing even better in its permanent home.

Bad Calls

Businesses We'd Like To See: A service that makes those obligatory, but odious, phone calls you keep putting off (Aunt Edna's birthday, your blind date from last Thursday, the former college pal you have nothing in common with anymore). Using virtual technology, they imitate your voice and congratulate/dump/chat . . . so you don't have to.

Rumor Has It . . .

Rumors on the web.

By Laura Tiffany

So, did you hear about the guy who broke the news of the release of Apple's Mac OS X on his Web site last year? Or how about the one who posted sketches of Starship Trooper bugs on his site before the film was released, and then posted the cease-and-desist order when Sony protested?

In a virtual world where a netizen from Nantucket can chat with a CEO anonymously at 3 a.m., rumors on the Web have become hot business. The Web has opened the gossip gates to anyone willing to spend hours combing chatrooms and e-mail for hot dish to post on anything from Hollywood (Harry Knowles of http://www.aint-it-cool-news.com fame posted the Starship Trooper sketches) to Washington (Matt Drudge, anyone?).

Mac rumor-monger Ryan Meader posts info on upcoming Mac systems which he culls from inside sources and readers on his site (http://www.macosrumors.com), sometimes with--and sometimes without--Apple's approval. Meader, 20, started Black Light Media in Portland, Maine, to run Mac OS Rumors and several other Web sites. When he launched the site two years ago, it averaged about 4,000 hits a day, but the number of visits skyrocketed when Meader scooped former Apple CEO Gilbert Amelio's resignation. Now the site averages 85,000 hits per day, and brings in thousands per month from advertisers like Byte magazine and even Apple itself.

Meader is quick to point out he always checks rumors against his own background information and is careful not to post anything decidedly anti-Apple. "It took a while for people to understand these things are [just] being considered," he says. "Apple is planning to do them, but may change its mind." Then why do so many people log on to read what are just rumors, anyway? Meader claims, "You can't get this information anywhere else."

Gimme Shelter

In need of tax relief?

By Cynthia E. Griffin

Think Uncle Sam never gives you a break? Think again: The 1999 fiscal-year federal budget includes several provisions that offer entrepreneurs tax relief.

If you sell products or services over the Internet, the Internet Freedom Act ensures you won't have to worry about new state or local taxes for three years. Under the act, local governments that have not already done so are prohibited from imposing an Internet access tax, nor can they levy "discriminatory taxes" on transactions that are not similarly taxed in non-Internet commerce. This means, for example, that if you sell products in multiple states and are not currently taxed by the states into which you sell, new taxes cannot be passed.

• Other provisions in the budget include:
• Giving small-business owners an additional year to deduct research and development costs. The tax credit has been extended until June 30, 1999.
• Allowing self-employed workers to fully deduct health insurance premiums for themselves and their families in 2003 instead of 2007. The acceleration also changes the level of deductibility for other years. Now you can deduct 60 percent of the cost from 1999 to 2001, and 70 percent in 2002.
• Extending the tax credit for hiring hard-to-place low-income people under the Work Opportunity and Welfare-to-Work programs. This deduction was scheduled to end in April but has been extended through June 1999.

Trend Spotters

What's hot and what's not.

By Karen Axelton

For business owners, knowing what's hot and what's not isn't just a matter of hip--it's a matter of survival. Here, three ways to stay on top of trends:

• Let your fingers do the walking. Check business listings in your Yellow Pages to see which industries are growing. Categories crowded with new companies (such as "Cellular Telephones," for example) mean opportunity.
• Take a 'stand. Once a month, scan the nearest newsstand to see what's new. Magazines are a good indicator of hot consumer markets: Recently launched Spanish-language versions of Glamour and People, for instance, reflect the growing clout of Latino consumers.
• Verb it. Keep your eyes and ears peeled for nouns being turned into verbs; The Futurist magazine says such a transformation usually signals a rising trend. Access, network and parent--not to mentiontrend itself--are just a few nouveau verbs pointing the way to profit possibilities.

Think Rich

What makes a millionaire?

A recent survey by U.S. Trust of the wealthiest 1 percent of Americans gives insight into the attitudes of successful, affluent business owners.

The average affluent business owner:

• comes from a poor, lower-class or middle-class family
• had first job at age 10
• began working full time at age 18
• started a business at age 29
• puts in a 60-hour work week

Source: U.S. Trust Survey of Affluent Americans

Painting The Town

Polish up your start-up ideas.

By Laura Tiffany

Travel back in time--say, about four years. When a woman wanted to polish her nails, she had an endless array of pinks and reds to choose from. Fast forward and peruse any cosmetics counter today, and you'll find a rainbow of colors--from baby blues to glitters and metallics.

The $132 million nail polish market (and that's only 1997 mass market sales) was jolted out of the ordinary a few years ago with the extraordinary colors offered by start-ups like Hard Candy. And new entrepreneurs on the scene refuse to let polish innovation rest.

"Bringing a polish line to the market is not an easy feat," says Cyndy Drummey, editor and publisher of Nails, a trade magazine in Torrance, California. "You really have to have a unique story. [It could] depend on product quality, packaging, marketing or the personalities of the owners." Despite that, many small companies are still finding success with unique lines.

Although Respect Inc. mainly deals in trendy, unisex accessories, it is its very '90s version of the mood ring that's making a name for the company. Polish Mood Shades (P.M.S.), nail colors that change shades with the wearer's mood, are named with tongue-in-cheek plays on negative p.m.s. stereotypes like Bloated Blue/Pouty Pink. Launched last June, P.M.S. caught a quick buzz, and by September, co-founder Jenai Lane had visited "The Rosie O'Donnnell Show," and Madonna had sported the polish. "Nail polish is still a very hot market if you can make something that's unique, but also fun, loud and irreverent," says Lane, 30, whose partner in the San Francisco company is Jane Whitney, 34.

Anthony Gill and Cristina Bornstein began their New York City business after the success of a conceptual art show featuring a piece with nail polish. "We had seven nail polish colors [reflecting] your individual chakra system," says Gill, 31, who started Tony & Tina Vibrational Remedies in early 1997 with Bornstein, 30. "You have seven energy points from the base of your spine to the top of your head. Each has its own electromagnetic vibration that corresponds to the vibration of certain colors." Their products relate to this theory, with names like Ambition (red) reflecting how the colors affect the wearer.

Ripe Inc., on the other hand, has innovated by combining traditional and new shades to create a line of 70 hues, from earth tones to light metallics, with lower price points than the competition. "I think people have latched onto nail polish because it's a cheaper item, but it allows them to express themselves," says Anna Levinson, 22, who started the Los Angeles company in 1995 with her sister Sarah, 19.

Is there still room for improvement in the nail polish industry? "You'd think there wouldn't be, but there are plenty of innovations," says Drummey of Nails. Trends to watch: matte-finish polishes, modified French manicures and men's nail polish. Next step: Branching out into full cosmetic lines, as Tony & Tina and Ripe have already done.

Contact Sources

Black Light Media, http://www.blacklightmedia.com

Nails, 21061 S. Western Ave., Torrance, CA 90501, http://www.nailsmag.com

Optimus Solutions LLP, (770) 447-1951, http://www.optimussolutions.com

Respect Inc., (415) 512-8995, http://www.respectus.com

Ripe Inc., (888) 307-2618

Tony & Tina Vibrational Remedies, (888) 866-9846