2nd Annual Million-Dollar Ideas

Our picks for the 15 best business ideas for 2001
15+ min read

This story appears in the January 2001 issue of . Subscribe »

If good ideas were easy to come by, everybody would be rich. And Pauly Shore's movie career might have been averted. That's why we're letting you in on some of the hottest trends in business today. If you want to become wealthy, in the fashion of Bill Gates, Donald Trump or Scrooge McDuck, you could do worse than consider capitalizing on one of these 15 business ideas for 2001.

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All-In-One Marketing Firm

Can we say multitalented? Sure, if you're talking about ID Society.com and its founders, Jonathan Webb, 28, and Adam Berkowitz, 27. Far beyond your typical marketers, these guys do it all-Web design, Flash development, CD-ROM business cards, printing, marketing and anything else a client could need. Says Berkowitz, "We help [clients] create their identities."

Started in 1999 from Webb's New York City apartment, the entrepreneurs tally their start-up costs at about $5,000 (for their two computers). The biggest initial hurdle was getting their name out to potential clients-and Berkowitz admits to one occupational hazard: In working so hard to market your clients, "sometimes you neglect yourself."

Thankfully, referrals and word-of-mouth have brought in so much business, ID Society has the luxury of turning away work that doesn't interest the partners. It's all part of the plan, according to Berkowitz. "We're growing fast, but [we want to grow] comfortably," he says-which means hopefully exceeding 2000 sales goals and expecting a 600 percent increase for 2001.

To be successful with this business, get acquainted with your client's target market so you can effectively market to it. For instance, urban marketing expert Ron Vos of Hi Frequency Marketing in Carrboro, North Carolina, has commissioned 200 college-age marketing reps to research his target market. Above all, running a marketing firm is "kind of like being in the restaurant business," concludes Vos. "You're only as good as your last meal."

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DJ Culture

Not long ago, DJs were nothing more than shadows in the backs of clubs, hoping for some free beer and spending cash in exchange for a long night of spinning records. But in the '90s, the market for quality DJs exploded, feeding a throng of ravers and club kids who created a multimillion-dollar industry devoted to DJ culture-including clothes, start-up record labels and record stores. "DJs are [ravers'] heroes," says Mike Grant, 35, founder and president of record label Moods and Grooves Records in Detroit. "Large companies recognize this and use DJs to sell equipment and clothing."

Along with the popularity come cries from the underground that music is being sacrificed on the altar of commercialism, given the proliferation of popular genres such as progressive trance. "[Popular genres aren't] thought of all that highly in the underground,"says John Bush, senior editor of the All Music Guide. "But it's where you'd make the most money."

While DJs will tell you the music always comes first, nobody's against making a buck, either. "I can make up to $10,000 a show," says K. Hand, 26, a Detroit-based electronic dance DJ who has been spinning records since 1988. "I had to work my way up from scratch," she says. "I didn't make much money at first."

Now that DJing is more prosperous, however, everyone wants to get in on the monied musical act. "Mixers and processors are making it easier for everybody to become a DJ," says Grant. "Pretty soon my grandmother will be DJing."

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Tween/Teen Fashion

Teens spent $160 billion in 1999. And KidsMarketing.com says tweens-those 9- to 12-year-old media darlings-are financially secure as well. Image matters here: According to the site's KidPulse E-Zine, tweens don't consider themselves kiddies. They're "culturally and brand aware." That fact, plus allowance inflation, has made it a viable market for manufacturers. GapKids and Limited Too have long prospered, but now Nautica, Tommy Hilfiger and Calvin Klein are jumping in. "More teens are buying status brands, so people who market clothing to teens are in competition not only with each other, but also with Gucci," says Karen Bokram, publisher and founding editor of Girls' Life magazine. But Bokram notes that in this market, smaller labels "stand a fighting chance" if they're stylish and reasonably priced.

For an entrepreneur entering the teen/tween fashion market, Bokram says starting in accessories and cosmetics is the way to go. Once you discover fashion is all-encompassing-from shoelaces to the sheets kids sleep on-the size of the market becomes obvious, as it did to Nancy Boyle, founder of Amber Mill Inc., the Lindenhurst, New York, creator of room décor brand Bullzye. Noticing that few companies were catering to teens' décor needs, Boyle, 36, developed the Bullzye concept (launched in 1999) and brought it to market with $75,000. After Nickelodeon.com sold her "Crystal Ice" selection, Boyle realized kids as young as 8 were choosing the merchandise.

Boyle, who projects 2001 sales of $500,000 and plans to expand into accessories and loungewear, reads teen lifestyle magazines and watches MTV to keep up with trends. And since the age of GrrrAnimals is over, we say, start brushing up.

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Downloadable Music

We've all heard about the controversy surrounding Napster and MP3.com, but did you also know there are other companies doing the same type of thing-legally? Take MCY.com, a New York City company that calls itself the "anti-Napster." Unlike most downloadable music sites, MCY pays royalties to its contracted artists. "We are working with the artists, not against them," says Bernhard Fritsch, founder and CEO of MCY.com. "When we have a digital download from our site, the customer pays for it, and we distribute the money to rights holders."

Presently, visitors to MCY's site can download individual songs ranging from 79 cents to $1.99 per song. But that's not how the company makes its money. "We cannot make any money if we have standard products you can find at the record store or on DVD or CD," explains Fritsch. This is why MCY features exclusive online events from superstars like *N SYNC, the Backstreet Boys and Michael Jackson as well as top artists that are not in record stores. Ninety-nine percent of the site's files are exclusive property. And unlike MP3 files, MCY's product is encrypted, making it virtually impossible for users to download and share the files. Sorry, Napster fiends-you're out of luck.

"There is a trend toward companies like us," says Fritsch, whose combined sales MCY.com last year were $4.2 million. "Napster showed that at least 20 million people are interested in getting music online. But artists, record companies and producers aren't going to let the music be given away for free."

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Mobile Appliances

While it's the in thing to call these things "wearable computers," mobile appliances have been around for centuries, if you go with the logic imparted on the "MIT Wearable Computing Web Page." Eyeglasses, for instance, have been around since at least the 1200s, and, more recently, ever since 1979, the Walkman let us simultaneously listen to music and juggle, if we wanted.

If you're tech-savvy, this field may be wide open. Can you think of one company that's dominating the wearable computer market? Can you even define the wearable computer market? Probably not. But it's coming. For instance, Aerospace Corp. recently announced it has created electronic suspenders for soldiers that will allow the military to send and receive information from the battlefield.

But you could have scored a D+ in physics or computer class and still be able to make money off this trend. For instance, ufunction is a company that makes women's clothes that have pockets designed for items like cell phones and mobile CD players. As ufunction notes in one of its press releases, there are 93 million telephone subscribers in the United States. Those are their customers-and potentially yours.

If you could design cellular socks that automatically hang up on telemarketers, we smell a hit.

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Gen Y Internet Portal

There are 56 million of them. They have billions to spend every year. They're between 10 and 22 years old. They're online, and they have access to credit cards. Say hello to Gen Y. "There's plenty of room for competitors in this space; it's a huge demographic with a lot of spending power," says Matthew Diamond, 32, CEO of Alloy Online Inc., a New York City-based site he founded in 1996 with COO Jim Johnson, 32, and built into a top Gen Y portal.

There's more to succeeding with a teen site than running *N SYNC contests and selling hip clothes. While Diamond sums up Alloy.com as "a teen community, content and commerce media company," the company also has an offline approach that includes a printed Alloy catalog, a teen book imprint, a wireless strategy and an interactive TV partnership with Liberty Digital. Each of these directs teens back to the main Web site, where products and ads drive revenue. "We thought it was very important to build an offline presence and then focus on very high margins," explains Diamond.

With 2.6 million registered users, Alloy seems to have a good understanding of what the Gen Y audience is looking for in a Web site. It takes a cool combination of young celebrities, fashion and make-up tips, dating advice, gear for guys, chats and contests.

Diamond has one main piece of advice for entrepreneurs looking to break into the online Gen Y market: "Build your brand," he says. "If you don't have a brand that everybody's going to know, you're not going to succeed as a Web site."

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Tech Education For Kids

While kids today are typically more computer-savvy than their parents, plenty don't have access to computer science training. And with the Commerce Department predicting that 1.4 million new skilled IT professionals will be needed in the next six years, now's the time to help kids develop the proficiency they're capable of.

Jim Beach, 33, and Douglas Murphy, 34, founders of American Computer Experience Inc. (ACE), know about being young and awed by new technology. Self-described "computer nerds," Beach and Murphy wanted to pick up skills but couldn't find instruction. To fill the void, they launched ACE in 1993, an Atlanta company that now instructs about 15,000 children each summer-in everything from pressing "power" to C++, Dynamic Flash and setting up a LAN-in 85 locations worldwide. Sure, an 800-line ran into their homes for two years, but the founders made ACE cash-flow-positive from the beginning, earning $56,000 their first year and about $6 million per year after that, all before VC funding.

ACE's sales should hit $15 million this year, and a VC infusion has allowed the company to expand its services into the after-school market and boys and girls clubs. That's on top of the classes (taught by undergrad computer science majors) already offered both in-person and online via ACEplanet.com, where for $15, 7- to 16-year-olds can take live courses. ACE also offers training camps for girls with allGIRLplanet, which is supported by women in high-tech positions. There will be more camps held this summer.

With the Internet education market reaping nearly $100 billion annually, you can bet on positive feedback . . . especially if you keep the focus on the kids. "Children should learn computers in a fun and engaging way," says Beach. "We teach them that it's cool to be smart."

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Business Club

Much as typewriters and black coffee have given way to computers and cappuccinos, old-style business clubs are morphing into modern-day dwellings of the Gen X set. Tech heads and creative types alike are taking to the part bar, part restaurant, part social-scene atmosphere of such clubs.

Work and socializing happily co-mingle at London's Soho House, a members-only enclave for trendsetters in the film and art worlds. Opened in 1995, the 3,000-member Soho House is complete with a 25-seat theater, bars, lounges, meeting rooms and a restaurant. "The greatest challenge is to [stay] refreshed," says owner Nick Jones, 37, "to keep reinventing [ourselves], and to never get conceited by the fact that we've got lots of people who want to join us-we know that [doesn't] mean we can take our focus off the day-to-day operations."

Nor can clubs forgo technology. As new business and social clubs pop up worldwide, older clubs are refocusing on technological advancements. The 1,300-member City Club on Bunker Hill in Los Angeles has recently added T1 Internet access, videoconferencing and wireless technology in its meeting rooms. Says general manager Larry Ahlquist, "We have to continuously create the environment that will make our members feel they have the competitive advantage at their fingertips."

The 1,600-member Plaza Club in Honolulu has undergone the same metamorphosis. Says manager Bryan Larrow, "Business entertaining has come a long way [since 1979] when the club was first opened, and productivity is just as important as camaraderie." The consensus? Opening a business club is not easy, but serving the elite members-only crowd has its perks.

Explains Jones, "If you're going to serve food and drinks, it's much nicer to serve it to people you like."

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Tech Training For Seniors

According to recent AARP surveys, aging baby boomers not only have more expendable income than any other maturing generation, but they also have an interest in life-long learning and a willingness to adopt technology faster, which makes the market ripe for entrepreneurs who focus on tech training for seniors. Take, for instance, Justin Maietta, 25, Dorian LeBlanc, 25, Drew Sigfridson, 24, Eric Fleisch, 25, and Paul Rohlfing, 25, who launched Dallas-based Pace Education in June 2000. The partners not only give regular classes at a few of the 300 retirement communities in the Dallas area, but also take their hands-on approach into clients' homes, offering personalized curriculums and a SmartBuyer program (which helps clients find and purchase equipment).

Even if you're low on cash, this business is an option: "There are very low initial costs because the customers provide the hardware and the space," says Sigfridson, whose company will likely bring in more than $350,000 in 2001. "It's a great way to incubate the service before we open storefront centers."

Keep in mind, though, some seniors have never used a computer (which means online courses will not reach this segment), and many have diminished eyesight and hearing. Some may also have difficulty maneuvering equipment, such as the mouse. Many community centers and nonprofit organizations are also offering tech training to seniors for free, so to be successful, you'll need to provide excellent, personalized service.

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Back in the 1930s, in Russia, there was a brief time when face-slapping was considered a sport: Two men would slap each other in the face until one of them, usually bloodied, gave up. Funny that it never caught on.

And yet other (perhaps less violent and silly) sports thrive. Like tennis. Since 1995, the tennis industry has spent more than $50 million to increase tennis participation in the United States, and it's worked wonderfully. Tennis ball sales have shot up more than 10 percent, and rackets are up an amazing 17.4 percent. Even ESPN and other national cable sports channels have benefited: Their tennis-match ratings have been on the upswing for years. All this interest has also benefited entrepreneurs like 33-year-old Chris Deverian, the CEO of Balle de Match, a sporty clothing company that promotes "the casual tennis lifestyle."

Deverian had been looking for a sports trend back in 1992, when he started Balle de Match in Irvine, California. At the time, he thought he would focus on the hip and happening volleyball crowd, but when he determined it was an oversaturated market, he looked elsewhere. Deverian got his start by following a national tennis tour and selling to the attending players and crowds. "We went out and met the tennis people," says Deverian, explaining how his company-which earned upwards of $2.8 million last year-became entrenched in the sport. "We had good, solid designs, a lot of hard work and lots of luck." Projections for 2001 are an astounding $3.2 million.

Deverian says there are a lot of opportunities in the tennis industry, but if you're daunted by it, certainly there are many other sports waiting to become the next hot thing. Russian face-slapping, anyone?

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Personal Chef

Some of us are so busy, we need personal chefs. And some of us are so busy because we are personal chefs-like Raffaele Antonio Scullari, 26, who runs Chef Antonio's Kitchen Inc., a San Diego company that specializes in personal cooking and catering, with an emphasis on Southern Italian fare.

"I come into the house once a week and prepare the entire week's meals," explains Scullari, who has two part-time assistants-so far. He has been running his sun-drenched enterprise only since 1999, but he's certainly discovered a booming trend.

In 1992, the United States Personal Chef Association had 15 members; today, it's well over 3,000. Meanwhile, the 1,400-member American Personal Chef Association is adding 50 to 60 members a month. It can be profitable for the chef, yet reasonable for the consumer, depending on what tax bracket that consumer is in, and if you already eat out every night or so, 10 meals generally cost anywhere between $240 and $340.

Just 10 customers, and already your yearly income is doing quite nicely. In 2000, Scullari pulled in $105,000, and he expects $249,000 for 2002. Plus, the hours are kinder to the personal chef than they are to the caterer (good-bye, weekends) or restaurant owner (good-bye, nights and weekends). The only question that remains is, What do you do when you can afford your own personal chef? Hire yourself, or the competition?

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It's hard to imagine paperbacks going the way of the Dodo and typewriter, but clearly, e-books are here to stay. While e-books will take in only about 1 percent of the $20 billion publishing market this year, it's estimated that by 2005, they'll consume 10 percent. And while your grandchildren may still curl up with a paperback on the beach in 2084, they'll likely study with an e-book, which allows for highlighting and note-taking sans paper and pen.

At least, that's the future as written by David Gray. He used to be a law student overwhelmed by cumbersome reading assignments. What he needed hadn't been invented yet: "I was looking for speed, integration with other source materials and research, and organization tools to manage all the documents," recalls Gray, 34.

And so, in 1990, Gray created Numina, focusing on the law school marketplace. Then, in 1998, he started WizeUp Digital Textbooks, a New York City-based company specializing in the relationship between technology and studying. The company produces digital editions of textbooks from mega-publishers like Houghton Mifflin and McGraw Hill. WizeUp could garner up to $500 million in the next five years.

Will paperbacks vanish? Only if customers don't want them anymore, says Gray: "The media itself-whether it's paper or otherwise-is less relevant than the value of the information and entertainment to the customer."

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Online Bartering

What's really old is suddenly new again. Remember in history class, reading how pioneers would trade a deerskin for a musket? Literally, by trading a buck, somebody would get a buck. It was called bartering. Today, the concept is back in a big way-online bartering is hot. The companies are everywhere on the Net: ExchangeAnything.com, BarterItOnline.com, Bigvine.com, BarterTrust.com, Barter.com, BarterNet Corp., Mr.Swap.com, WebSwap.com . . . need we say more?

Online bartering companies-for the occasional registration fee and always a transaction fee-provide a safe trading environment for businesses and individuals. You can trade services for products, or visa versa, or services for services, and so on. Nearly half a million businesses engage in online bartering today, but the National Association of Trade Exchanges predicts 1.2 million companies will join in the fun within the next 10 years. With all those processing fees, you could buy a lot of deerskin.


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Antiaging Products

No surprise here. People are getting older. And though we used to be content to watch Bob Hope specials and shuffle quietly into the night, no more. In 1993, antiaging products were a $325 million market. Not bad. But that quadrupled over the next four years, and by 2002, the market should be at $3.6 billion. That's a lot of jack, Jack, and it could be yours. Eighty-eight million North Americans are between the ages of 40 and 55 (those wonderful baby boomers!)-not to mention those middle-agers worldwide-and they're all waiting for you to tell them how to look or feel younger.

The leading retailers? Chain drugs stores, supermarkets and mass merchandisers (think vitamins and makeup), but you could also open your own health and natural foods store (they claim 33 percent of the market, the largest share). Or you could start a restaurant targeted at older, health-conscious eaters. You could advise companies on marketing to the antiaging market or publish a magazine aimed at that set. Just get on this trend now. You're not getting any younger, either.


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High-Tech Incubator

If your answer to the chicken or the egg question is "the chicken," then starting an incubator may be right up your alley. The National Business Incubation Association (NBIA) estimates there are more than 900 incubators in North America today, compared to 12 in 1980. But we're not talking about your parents' incubators; we're talking about hatching high-tech companies.

The NBIA estimates 40 percent of all incubators have a technology focus. One of these is San Francisco's Venture Frogs. Located in a 15,000-square-foot historic Cadillac showroom, Venture Frogs was founded by Tony Hsieh, 26, and Alfred Lin, 28, after they sold their previous company, LinkExchange, to Microsoft for $265 million in 1998.

Hsieh explains the basics of a good incubator in this way: "In addition to office space, it's also important to create an environment where companies being incubated can interact and share ideas and stories. We have a break room where people play foosball or talk shop while relaxing with people."

Aiming your incubator at a niche is as important as having expertise in your area. If you choose to operate as a for-profit incubator, that usually means charging a monthly fee for space and services as well as taking equity stakes in the companies being raised. And of course, remember you're there to help. Says Hsieh, "We started Venture Frogs so that we could invest in and advise other early-stage Internet companies and [hopefully] help them make fewer mistakes."

Starting your own tech incubator means keeping your eyes on the prize, particularly given the harsh climate for dotcoms. Says Hsieh, "We like people who work well together and have an opportunity to be No. 1."

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Contributors: Staff writers Michelle Prather, Gisela M. Pedroza and Nichole L. Torres; assistant editor Peter Kooiman; assistant technology editor Amanda C. Kooser; and Loveland, Ohio, freelance writer Geoff Williams

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