2nd Annual E-List
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For several months now, we've been feverishly planning our 2nd Annual e-List of hot Net millionaires. Well, feverishly isn't really the right word. Truth be told, it was a cakewalk to select this year's netpreneurs. It wasn't so much about finding them, of course-because they're around every corner, men and women alike. The real trouble was narrowing down the list. By no means exhaustive, this year's roundup aims to show you how a great idea can go a long way in netland-as long as you have the creative follow-through to make it happen.
Bitstream Underground Inc.Names/ages:Michael Koppelman, 34, and Charles Hermes, 34
Company/description: Bitstream Underground Inc. is a full-service ISP.
1999 sales: $2.1 million
2000 projections: $4 million to $5 million
Freaks and geeks: During a time when people were just discovering the Internet and AOL was still a virtual unknown, Bitstream Underground Inc., a bulletin board service (BBS) for music lovers, was conceived while its founders were working at Prince's Paisley Park Studios in Chanhassen, Minnesota, in 1994. Koppelman and Hermes, two long-haired, earring-wearing ex-musicians, wanted a cool BBS-one that wasn't "geeky and run by anal, technical dweebs."
Try a new bit: With a devoted fan base and the demand for dial-up Internet accounts increasing, Koppelman and Hermes acted fast to transform Bitstream into an ISP. Armed with a $55,000 loan from their local Riverside Bank and personal credit cards, the partners' out-of-pocket expenses totaled just $1,500 each, and that was all for computer equipment. One year later, in 1995, the ISP arm was born, and before Koppelman and Hermes knew it, prominent clients like Prism Studios Inc. and DentistWorld.com were walking through the doors, along with millions of dollars. "People take us seriously as a business even though we're still pretty much long-haired, earring-wearing ex-musicians," says Koppelman.
Technical difficulties: A lack of business and technical experience didn't get in the way for Koppelman and Hermes-they taught themselves. "We ordered a communications server, and I didn't even know what they looked like or what they did," says Koppelman. "There were immense technical challenges in that we had no clue how to even plug this stuff together."
Love what you do: "Running a business is different, and it's something you need to love in order to succeed at it," says Koppelman. "For us, it's been a long, hard and extremely exciting road. At this point, I think we do enjoy being involved with operating the company. We've been able to do what we love in the context of running our own business."
iKidStore.comName/age:Kathleen Tobin, 35
Company/description:iKidStore.com features children's name-brand products and also raises money for charities.
Based: San Francisco
1999 sales: N/A
2000 projections: $2 million-plus
Family ties? You'd think that having 16 siblings and 35 nieces and nephews would've prompted Tobin's vision for iKidStore.com, which reaps advertising revenues and affiliate fees from kid brands spanning Gap Inc.'s babygap to FAO Schwarz. But the childless (yet prepared) 13-year marketing and advertising vet says it was actually her co-op marketing efforts for former employer Bank of America that did it. She realized the Internet's potential for providing a similar marketing service to "time-poor" children's goods consumers.
On your marks: "I came up with the idea last August, locked myself in my apartment for a week and wrote the business plan," Tobin recalls. "I left my job on September 30 and started calling [potential] partners October 1." By iKidStore.com's November 9 launch, she had scored 50 partners and 100 links.
No sob stories here: Fortunately, associates Tobin had previously worked with on ad accounts heard about her plan, contacted her and invested a combined $1.3 million for holiday advertising. "It's all been a miracle," says Tobin.
Although an influx of competitors crowding the market is likely, she's confident her position as a pioneer, her stores of venture capital and her willingness to donate a nickel of every dollar of net profit to charity will keep her at the forefront. She encourages customers to give as well. Says Tobin, "No matter what happens, this has been the greatest experience of my life."
Name/age:Farhad Mohit, 31
Company/description: BizRate.com rates e-commerce Web sites for consumers.
Based: Los Angeles
Sales: The company does not release sales figures, but according to the Los Angeles Times, it's worth $500 million.
Something new: Dressing more for comfort than for corporate life, Farhad Mohit makes his own rules and has carved a niche for BizRate.com by making it less scary for consumers to shop online. He started BizRate.com in 1996 after a job at a consulting firm showed he wasn't meant for the rat race. Back to school at Pennsylvania's Wharton School of Business in Philadelphia, Mohit decided not to interview for jobs at all and concentrated solely on the Net.
Healthy fixation: His Net obsession spawned the business plan for BizRate.com as a class project. And failure was not an option-no interviews equaled no job offers. But having no other options actually helped during the rough times (and there were plenty). Just two days after deciding to move to Los Angeles for the start-up phase, one of his partners quit for a more secure corporate job. And his other partner, friend and former classmate Henri Asseily, 29, (BizRate.com's chief technical officer), was thinking about joining his family's business. Thankfully, he didn't. Mohit also hired David Reibstein, mentor and former vice dean of the Wharton School, for much-needed guidance and expertise that proved critical in getting financing.
On the map: Today, BizRate.com is the 47th biggest Web site and the 13th largest e-commerce site (according to Media Metrix), and it lists about 3,600 online merchants. A recent partnership with Consumer Reports Online promises even more success. Farhad Mohit's advice to entrepreneurs? "Make the jump. Until you're fully immersed and don't have any other options, you don't know what you're capable of."
Name/age:Ben Narasin, 34
Company/description: Fashionmall.com Inc. is a specialty shopping portal for the fashion and beauty industries.
Based: New York City
1999 sales: Analysts say $3.7 million
2000 projections: Analysts say $6 million
You want to what? Before starting Fashionmall.com in 1994, serial entrepreneur Narasin fulfilled a lifelong passion by starting and designing for a men's sportswear company called Boston Prepatory Co. Narasin's venture flourished during the 10 years he was there, but he foresaw limitations in an era of retail consolidation. "You were either a megabrand or a niche player competing on price," he says. "The Internet seemed to have unlimited upside." But when Narasin pitched Fashionmall.com as a marketing brand to help his own and other designers get publicity via the Net, it was impossible to secure funding because people didn't see the Web site's value.
Hanging by a thread: Starting a business-to-business dotcom with $250,000 (from investors and prior earnings) has its ups and downs. It was iffy when Narasin bluffed calling it quits to get investors to foot the bill for a nearly missed payroll period. ("There was no way in hell I would've shut it down," he says.) But screw-ups are less painful of late: Narasin says he's made his mistakes on the cheap. "I'm lucky we didn't raise a lot of money in the beginning because we would've spent it prematurely," he reasons.
Stitches in time: Increasing traffic from 500,000 "user sessions" last October to 2.5 million in December required dedication. And the site has raked in over $15 million for this year's first quarter. But this candidate for Most Likely Not To Retire would pull all-nighters every weeknight before he'd sacrifice weekends with his wife and two children. Says Narasin, "It's not like I sit in a yoga position and chant all day, but ultimately, you've got to have balance in your life."
Boutique Y3K Inc.
Company/description: Boutique Y3K Inc. is an e-commerce fashion consulting firm for merchants and retailers like Nine West and Jones Apparel. Its services include strategy, design and marketing.
Based: New York City
1999 sales: $350,000
2000 projections: $5 million to $7 million
I'll take it all, please: Pagkalinawan had been president of Montreal e-commerce solutions provider Abilon International's U.S. division for six months when, in 1998, an investment gone wrong allowed her to leverage her severance package and acquire the company for $1. She then changed the name to Boutique ("for service-focused") Y3K ("for the future of shopping").
I am woman: The number of women executives in Silicon Alley ventures is growing, but only about 10 percent own companies with 10-plus employees, according to Pagkalinawan. That's why she aspires to go where few women have gone before: public. "That's the ultimate American dream," she says, "because it shows that not just your peers and the business community believe in you, but the general public does as well."
Help! Pagkalinawan feels kinda funny about being chosen as one of the women achievers appearing in Procter & Gamble's summer ad campaign benefiting women's organizations, as she's only accomplished "10 or 20 percent" of what she wants to accomplish. But she has no qualms about admitting she hasn't succeeded alone: "Every person that has come into my life has expanded my growth exponentially."
Any perks? Well, when your new office is located on the corner of Fashion Avenue (Seventh Ave.) and 25th Street (the heart of Silicon Alley), there are bound to be some advantages. She recently raised $15 million in venture capital from Vantage Point Venture Partners. And the occasional 50 percent discounts for fashion buys don't hurt.
Name/age:Bill Nguyen, 28
Company/description: Onebox.com is a communications application service provider.
Based: San Mateo, California
1999 sales: Sales just started
2000 projections: $1 million-plus with more than 2 million users. The company has recently been acquired by Phone.com of Redwood City, California.
Watch and learn: With only eight credit hours left, Nguyen dropped out of college at Houston Methodist University and began his journey to success. He became a financial analyst and participated in an entrepreneur-in-residence program at a VC firm before starting Onebox.com in 1998, his fifth start-up. "Watching other people do it is the way to learn," says Nguyen.
Taking advantage of natural resources: Starting a business in Silicon Valley has its advantages. With a support structure already in place, Nguyen found it wasn't difficult for him to get capital, a solid banking relationship, an office manager, office space, furniture and an HR manager when he started.
Eureka! "From an intellectual standpoint, you figure this is like the Gold Rush," says Nguyen. "You have all these brilliant people from all over the world coming to Silicon Valley to prove they have the best idea. Competing against the brightest people and succeeding- is the most rewarding thing for me."
Name/age:Wayne Irving II, 29
Company/description: SpinRecords.com features downloadable music and gives independent and unsigned musicians an Internet presence.
Based: San Diego
1999 sales: $450,000
2000 projections: $17.5 million
Tuning in: An ex-Marine from central Florida with no industry experience thinks he can go up against mega online-music distributor/promoter MP3.com-and survive? You bet! While running a Web development firm, Irving took an Internet record shop, SpinRecords.com, and turned it into one of the Net's most prolific digital music distributors.
Purchasing his domain name for a mere $140, Irving built SpinRecords.com as a thank-you to a record-store-owner friend, but he soon fell in love with the digital music model and, in 1999, started hounding VC firms and banks, pushing his innovative "farm label" concept. But with no contacts, Irving found himself $300,000 in debt. Then it happened: The day after he made an appointment to file for bankruptcy, two investors offered him $15 million.
All you need is love: Irving had always held independent musicians in high regard-his father had played gigs in Florida surf bars, and his great aunt and uncle had their own country band. But his compassion grew tenfold when he did a little homework on the industry by catching episodes of VH1's Behind The Music. "I was amazed by what I found," recalls Irving. "You can get a tremendous education from VH1 on what these labels and producers have done to these bands. I suddenly became so passionate about it."
Lust for life: SpinRecords.com's motto is "showing the love," and Irving, no industry insider, says he doesn't know how to screw over bands. What SpinRecords.com does provide its more than 600 indie bands is love in the form of advertising and concert-footage production, and also posts videos, digital downloads, band info and sells CDs on the site.
The future's so bright: With a staff of friends and former industry experts, Irving has partnered with up to 100 print publications and incubates nine other companies. "We've spent very little on marketing," says Irving, "and we have more traffic per band than any other music site."
Name/age: Paul Batra, 27
Based: Markham, Ontario
Sales: As owner of several software companies, Batra reportedly pulls in $50 million annually.
Major appliances: In 1997, Batra saw the quick growth of the Net and wanted a piece of the action, deciding Internet appliances were the way to go. The hard part was getting the word out-not many folks knew what Internet appliances were. And WebSurfer had to get past the stigma that computers held. "[At the time] a lot of people had a fear of PCs and felt [they were] too complicated," says Batra.
It came to me in the middle of the night: Ever wanted to surf the Net without turning on that pesky computer and sifting through programs you really don't need? Batra did. And he saw the profit he could rake in if he came up with a way to get fast, easy Internet access to John Q. Public. Now in cahoots with Earthlink, WebSurfer, which employs the only device of its kind that uses Intel technology, provides easy Net access to the masses.
Old softie (sort of): The success of the WebSurfer hardware (a small box that sits on top of the TV called Innovator WebSurfer Pro) has made it possible to introduce more and more software into the marketplace. Says Batra, "We're really becoming a pure software company." WebSurfer plans to go public next year and hopes to become a major player in broadband Internet software. To all you aspiring Internet players out there, Batra offers one piece of advice: "Go out there and pick a unique twist to the business. Dominate in one focused area."
A recent survey of netpreneurs found . . .
- 69% of respondents say their e-businesses are profitable.
- Almost half of respondents don't plan to go public.
- Most netpreneurs plan on starting an average of five online businesses in their lifetimes.
- 67% see themselves as pioneers on the Net.
- More than a quarter say they would have gone into corporate life if it weren't for the Internet (eek!).