Million-Dollar Business Advice
Every year, we do a round-up of the coolest young millionaires around. We're not talking Trump or Gates here; we're talking people just like you who took their favorite things--like hacking, sports and toys--and created successful, million-dollar businesses out of them. This year, we've asked a selection of our favorite millionaires to share some pearls of wisdom with you, the next generation of potential millionaires. Read on for their inspirational stories and their advice on what it takes to make it as an entrepreneur.
eEye Digital Security: Hacking
for a Good Cause
Marc Maiffret leads a colorful life. His office walls are dark blue. His hair color varies between black and green. He helped discover the infamous Code Red worm that stormed the Internet in 2001. It's all fitting for the 21-year-old "chief hacking officer" of eEye Digital Security. After all, his teenage hacker handle was "Chameleon."
With the help of co-founder, co-CEO and chief technology officer Firas Bushnaq, Maiffret turned his hacking hobby into a legitimate business. Introduced to Bushnaq by a friend, Maiffret took on hacking-related security work for Bushnaq's e-business solutions provider company, eCompany.
They saw a bright future in security and launched Aliso Viejo, California-based eEye in 1998, with funding from eCompany. Not bad for a then-17-year-old who dreaded going to school and turned to nonmalicious exploratory hacking out of sheer boredom.
Maiffret hasn't been bored since. Security is a hot issue today, and eEye provides advanced network security software to the tune of millions in yearly sales. "The thing I'm happy about is that my biggest passion in life, hacking and security, is something that actually makes for a good business," says Maiffret.
You can hear the enthusiasm and Southern California flavor in his voice when you talk to Maiffret. But the young entrepreneur also shows a maturity you'd expect from someone twice his age when he talks about eEye's five branch offices and 50 employees. "You feel the weight of 50 families depending on you," he says. "It can be a scary thing, but at the same time it's a really great feeling to have that much weight on my back."
eEye has separated itself from competitors not only with the strength of award-winning technology, but also with research. Their discovery of vulnerabilities in Microsoft's software products is largely responsible for the current push of "trustworthy computing." That work has helped Maiffret make the leap from being on the wrong side of FBI scrutiny as an at-home hacker to being a trusted FBI consultant.
"It's inspiring that some kid [who] didn't even finish high school actually worked hard enough and believed enough to get where I am today," he says. The color Maiffret and eEye are seeing now is a green light to go for a bright future.
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Funko Inc.: Bucks From Bobbleheads
Working in Washington's high-tech hub in 1998, all Mike Becker heard about was high-tech this and future that. So Becker took a look at what his fellow Redmonites were doing--and did exactly the opposite. Inspired by an article in Entrepreneur magazine and having long collected nostalgia-based toys and items from his childhood, Becker surmised "There's got to be people like me out there [who love nostalgia], where I could have a cool little business based on that love." Choosing to resurrect the bobblehead, Becker pulled out his life savings of $35,000 and took a business trip down memory lane.
Becker makes his "Wacky Wobblers" out of plastic rather than the fragile papier-mâché of the classic versions. Focusing on characters and personalities he enjoyed from the past, Becker chose Bob's Big Boy as his first licensing conquest. He convinced the distributor who sold to the gift shops in Bob's Big Boy restaurants it would be a hit, and after a couple thousand sold, he landed a big order for 13,000. Becker then applied his profits toward new licenses, characters and molds.
Becker's second licensing deal came with the help of a business acquaintance who is the licensing director at New Line Cinema. His break took advantage of the afterglow following the first Austin Powers movie, which resulted in shagadelic sales of 80,000 bobbleheads.
Becker's growing line of Wacky Wobblers (recent additions include Bozo the Clown, Lucky Charms and Pink Panther) helped Snohomish, Washington-based Funko Inc. reach $2 million last year without selling to large discount merchants. Opting instead for the small, cool, independent gift and specialty shops, Becker is content with Funko's volume, but has plans to diversify with other products, keeping with the nostalgic vibe he's created. And although he's now the one being approached by companies for licensing about half the time, the self-titled "chairman of fun" hasn't swayed on lucrative deals that didn't fit with his ideology, such as the promotional sports figures his competitors have jumped on. He continues to be the sole decision-maker judging which characters are Funko-worthy and vows to keep his small, eight-employee family-and-friend operation anti-corporate. "My dog's here every day, and we wear shorts and play video games like we wanted to in the beginning," Becker shares. "As long as I'm doing what I want to do and we're making a profit, I can't imagine anything better."
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Premier Snowskate: Reinventing Winter Sports
Anyone familiar with snowboarding knows its evolutionary line is shared with skateboarding, with legions of enthusiasts commonly engaging in both sports. One such bi-athlete, Andy Wolf, moved to Salt Lake City in 1994 to snowboard professionally, but found he couldn't indulge in his other passion, skateboarding, because of the snow-covered surroundings. Wolf toyed with the idea of a snowboard/skateboard hybrid that would allow for skate tricks without bindings on snow.
Naysayers only fueled Wolf's determination: While finishing his snowboarding career in 1999, he produced the first snowskate in his garage.
Wolf's decade-long involvement with big snowboarding camps in Mount Hood lent itself to R&D, and professional snowboarder friends received coverage in magazines when they gave his snowskate a try. Soon, Wolf was building a roster of big-name snowboarders, like J.P. Walker and Jeremy Jones. Sending out a simple black-and-white promotional video with a one-page catalog and order form, Wolf thought if he sold 1,000, he'd be ecstatic. Premier sold 5,000.
A licensing arrangement with the Yoshida Group in 2000 allowed Premier to tap into Yoshida's existing sales and distribution force. Sales for 2002 are expected to be about $2 million, and Premier's popularity has mountain resorts constructing snowskate parks in response. With plans to introduce an all-season line of products, Wolf, who grew up and now lives in Portland, Oregon, remains introspective of his parlay from world-class athlete to business owner: "I'm pretty damn lucky."
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Cloudveil: Keeping Cool on the Slopes
Talk about a gift that keeps on giving. When Stephen Sullivan received a pair of pants as a gift, he and friend Brian Cousins saw an entrepreneurial opportunity. Working at the same outdoor retail shop and sharing a passion for skiing and climbing, the friends banked on their belief that the pants' comfortable, lightweight Schoeller fabric would be the next big thing in active outdoor apparel. In 1997, they founded Cloudveil, purchasing the fabric from manufacturer Schoeller Textil USA and starting a new category of stretch woven fabric known as "soft shell."
Cloudveil's location among the mountains surrounding Jackson, Wyoming, presented some unique circumstances. Without many resources nearby, the company had to outsource distribution and pattern-making. Cousins and Sullivan have said no to plans to relocate Cloudveil, however--product development couldn't get any better where lifts, trails and lakes are minutes away from the office. "We can have a sample out the door and tested the same day," Sullivan explains. "That's something the bigger companies just can't do."
With 2001 sales of $2.1 million, Cloudveil's current challenge is becoming a major player in an industry shared with giants like Columbia. But with the tag line "Live close to your dreams," Sullivan and Cousins' dreams are already their reality
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TSE Sports and Entertainment: Mixing the Best of Both Worlds
Robert Tuchman used to dream about turning his love of sports into a plum sports anchor job. But after college he couldn't break into TV, so he took a position selling advertising for a sports publication. "I was selling advertising, [but] what the client really wanted was these value-added programs and packages," says Tuchman. When he pitched the idea to his company, they weren't interested.
A story in Entrepreneur magazine about a woman who started a sports-related business gave him the urge to set out on his own, and in 1997, he started New York City-based TSE Sports and Entertainment. Self-funded without so much as a computer, and unable to use old contacts because of a two-year noncompete agreement he'd signed with his previous employer, Tuchman began cold-calling companies. "The two years helped me learn patience," says Tuchman. Today, TSE's clients include IBM, Nabisco, Pepsi and Procter & Gamble.
TSE offers travel arrangements and other packages for companies that want to take their clients to major sporting and entertainment events, even bringing in athletes to meet with the groups. The strategy has helped the company reach $10 million this year. And with plans to expand into consumer sweepstakes, sponsorship sales and celebrity and athlete marketing services, Tuchman shows no sign of taking his eye off the ball.
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Blu Dot: Designing Furniture They Liked
As frustrated consumers when it came to buying affordable designer furniture, Charlie Lazor, John Christakos and Maurice Blanks--three former college housemates--often discussed getting together to give consumers a stylish American alternative to expensive European designs. But nothing happened until 1996 when Christakos, having earned an MBA in 1993, decided to take $50,000 he'd saved and leave his consultant job to start Minneapolis-based Blu Dot. He eventually persuaded Lazor and Blanks to join him (by then, each had a master's in architecture), and the trio began to collaborate on designs via fax and during weekend retreats. Lazor and Blanks would fly to Minneapolis once a month, while Christakos worked on the business aspects of the company.
Blu Dot's first line debuted in 1997 at a trade show in New York City and was picked up immediately by retailers. "The blocking and tackling of the business is 80 percent of what we do; design is maybe 20 percent in the end," says Christakos. They've been successful at both, with their designs now available at retailers like Bed Bath & Beyond, Crate & Barrel and Target, and have made their way onto shows like Friends, Saturday Night Live and Will & Grace. The company was recently selected as finalists for a National Design Award from the Smithsonian Institution's Cooper Hewitt National Design Museum for extraordinary contributions to design. Sales are expected to exceed $3 million by the end of this year.
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