Young Millionaires: Class of 2004 Think it's nearly impossible to become a multimillionaire before you're 40? Meet 23 young entrepreneurs who did just that--and learn the inside secrets to their success.
Duwop
Company description: Manufacturer of specialty makeup and body creams
Founders: Christina Bartolucci, 39, and Laura DeLuisa, 37
Location: Glendale, California
Projected 2004 sales: $5 million
Behind the Scenes: Cristina Bartolucci and Laura DeLuisa met and found their inspiration in the trenches, doing makeup and hair on movie sets. "An actress would come in [with puffy eyes] in the morning and have to look perfect at 7 a.m.," says Bartolucci. "We would pack [her] eyes with gauze soaked with ice water, which was uncomfortable and messy." To solve the problem, the pair invented their first product, I gels, in 1999. Today, signature products like Lip Venom lip gloss and Revolotion body makeup are popular with fans including Jennifer Aniston and Kelly Ripa.
Loose Lips: "When [we] first started the company, I was doing graphics in a copy store, and this kid came up to me and said, 'DuWop? What a great name. Is it registered?' I said, 'I don't think so,' and he said, 'Let me register it for you,'" says Bartolucci. "In front of me, in the store, he went online and registered, and stole our name. It took us three years and a lawsuit to get it back. So now, no matter how excited I am, I take a deep breath and think 'Is silence the best response here?'"
Rein It In: After distribution of DuWop products exploded thanks to a zealous sales rep, Bartolucci and DeLuisa realized they didn't want to be a mass-market brand. They scaled back distribution and now offer their products in specialty boutiques, such as Henri Bendel and Fred Segal, as well as upscale retailers Nordstrom and Sephora. The pair hopes the new strategy, combined with a full line of products now in development, will take DuWop to more than $10 million in sales in the next three years. -Nichole L. Torres
Expeditiontrips.com
Company description: Internet-based adventure travel company specializing in expedition travel
Founders: Ashton Palmer, 32, and Kristy Royce, 35
Location: Seattle
Projected 2004 sales: $6 million
No Fear: Driving snowmobiles in Antarctica, working at jungle camps in the Amazon, camping in the Australian Outback-as former expedition leaders on cruise ships, Ashton Palmer and Kristy Royce had done it all. But in 1999, this husband-and-wife team set out on a new adventure: starting their own travel agency. With no previous business experience, the couple, who first met at a youth hostel in Australia, faced the challenge head on. "Our whole lives up until that point had been filled with risk," says Royce. "So for us, this wasn't too risky."
Perfect Niche: Palmer and Royce stand out from other travel companies by specializing in trips on small cruise ships to remote locations where the highlight is the destination, not the amenities onboard.
Teamwork: A $200,000 investment from a family member more than covered the couple's $100,000 startup costs. However, because the money was doled out in increments, they were forced to work nights at restaurants and forgo salaries for the first year and a half. The rough roads have only strengthened the pair. Says Palmer, "Together, we were able to create something that neither one of us could have done individually."
All Work and Some Play: Once or twice a year, Palmer, Royce and their staff of six get out and experience the trips themselves. "It's important to remember how amazing these trips are," says Royce. "You forget after a year or so, so you've got to go out in the field." -Sara Wilson
ePrize
Company description: Interactive promotion agency
Founder: Josh Linkner, 34
Location: Farmington Hills, Michigan
Projected 2004 sales: $15.5 million plus
Get Up and Go: From an initially self-funded startup in 1999, ePrize has blossomed into the world's top interactive promotion agency. The company helps bridge the gap between the offline and online worlds by turning anonymous consumers into permission-based customers, with the lure of fun, interactive web promotions.
Dotcom Crash Course: Whenever you come across a company so strongly connected to the internet, you have to ask how they survived the dark days of the dotcom crash. Josh Linkner saw it coming in mid-2000 and began to shift away from serving the venture-backed (and soon to be extinct) dotcoms that made up most of ePrize's client list. "We had to adapt our complete strategy and company to service the large brands that would be around to pay the bills," explains Linkner.
The Campaign Trail: With more than 900 completed advertising campaigns and a client list that reads like a who's who of large U.S. corporations, ePrize is miles beyond its nearest competitor. The company signed on 17 new major brand accounts, including Circuit City and FedEx, in the first quarter of 2004 alone.
All That Jazz: One word you'll hear a lot from Linkner is creativity. His background as a jazz guitarist, pianist and singer has helped him bring an artistic attitude to his business. "Jazz is [about] a very improvisational, creative-type of environment," he says. "I look at what we're doing as a company much the same way. Instead of notes, you're working with people and technology."
The Future's So Bright: A spirit of innovation and evolution is driving ePrize toward its next goal: $30 million in sales by 2007. But it's not all about the bottom line at this company. Top-notch customer service and quality employees are two principal areas that spark ePrize's engine. Says Linkner, "Some day, a company will come along and put us out of business, so it might as well be us." -Amanda C. Kooser
Online Soccer Emporium, Web Infrastructure & Medical College
365 Inc.
Company description: Online sales of licensed soccer and rugby apparel, and a soccer and rugby news outlet and database
Founder: Bernard Frei, 39
Location: Birmingham, Alabama
Projected 2004 sales: $6 million
The Globe-Trotter: Hailing from Sydney, Australia, Bernard Frei wanted a new start in the States and surprised many in the sporting world by choosing Birmingham for his online rugby and soccer emporium. "[There's] this absolute astonishment that this range of product is available not only in the U.S., but [also] out of Alabama," Frei says.
By the Book: With no background in website design or e-commerce, Frei needed more than just his passion for rugby and soccer to build his internet presence. He spent 1998, his business's first year, with an internet guidebook on his lap, learning as he went. "My business basically kicked off in a spare bedroom with a ton of advice from friends and an HTML code book."
Just Do It: At age 18, Frei received an unforgettable piece of advice from a prominent Australian businessman. "It was basically to get on and do it now, and not to hang around," says Frei. "I think so many business plans end up sitting around and never get used, and that's a shame."
The Almighty Dollar: "The worst mistake [I made] was never having the time to get around to getting serious financing," says Frei. "Because of that, we've missed major opportunities."
Mr. Big Stuff: Over the years, Frei has built business relationships with sportswear giants such as Adidas and Reebok. And it was the partnership with Adidas that secured 365 Inc. its biggest coup to date: having soccer superstar David Beckham sport the company's gear in TV ads. Says Frei, "His name and brand recognition in the U.S. is just driving our sales beyond our wildest dreams." -N.L.T.
CI Host
Company description: Web-hosting and data center infrastructure provider
Founder: Christopher Faulkner, 27
Location: Bedford, Texas
Projected 2004 sales: $45 million plus
What's the Score? C I Host commands some impressive figures: 210,000 customers, as many as 5,000 new customers every month, 8,000 resellers around the world, a 37,000-square-foot data center and 9,000 servers. Another interesting number: 15. That's the age at which Christopher Faulkner started his first business selling baseball cards and sports memorabilia out of a small storefront in Bedford, Texas. Now he helps businesses like that one get online.
From Fanzine to Business: There have been a few stops along the way. "I've started 201 corporations, and 197 of them failed miserably, which is a life lesson that I learned. To be successful, you have to fail along the way," says Faulkner. He built his first website as a fanzine for the band Pearl Jam in 1995, and by the end of the year, he was running a fledgling version of C I Host out of his apartment.
Growth Spurt: C I Host soon outgrew Faulkner's apartment and today has offices and data centers in Bedford, Texas, as well as Chicago and Los Angeles-and soon, London. And Faulkner has done it all without the help of VC financing or loans. "We're debt-free," he says. Bootstrapping and growing at a breakneck pace aren't the easiest things to reconcile.
The Host With the Most: Faulkner keeps the ship sailing smoothly by maintaining 15-hour workdays. Busy as he is, he always has time for his customers. How many CEOs do you know who conduct their own weekly internet chat for all comers? Faulkner's experience and business savvy belie his age. Fortunately for C I Host, he could be at the helm for a long time to come. -A.C.K.
Antelope Valley Medical College
Company description: Accredited medical college that provides EMT, medical assistant and paramedic training, as well as training in other areas
Founders: Marco Johnson, 38, and Sandra Johnson, 39
Location: Lancaster, California
Projected 2004 sales: $7.5 million
Good Medicine: As a firefighter, Marco Johnson too often witnessed deaths that could have been prevented-if someone at the scene had taken immediate action. So in 1997, he began offering medical training classes in his community. His wife, Sandra, arranged for the place and time, and secured students, while Marco taught classes in CPR and first aid. "[Sandra] got tired of me coming home and complaining, 'I wish someone would've started CPR or first aid before we got on the scene,'" Marco recalls. "I thought maybe a few more lives could've been saved."
Growing Up: Since those early days, demand has grown: The college now employs 42 staff members and certifies nearly 8,000 people per year in CPR and first aid. At the behest of students, Antelope Valley started EMT, licensed vocational nurse, medical assistant, medical billing and paramedic certification programs. Their biggest mistake early on, says Marco, was not thinking in big enough terms about the business or seeing its full potential.
Playing Catch-Up: In the beginning, the couple had to use their day-job salaries to keep the fledgling school afloat-while rent payments sometimes fell behind. "It was always a repetitive circle," remembers Sandra. "We would be behind on our home expenses, and then some money would come through the business and we were able to catch up again, until we got to where we are today."
Active Duty: Still an active firefighter, Marco plans to retire within the next year to focus on building the school with Sandra, who recently quit her paralegal job. "When I go to the fire station, the last thing on my mind is this operation, because I know Sandra has the same thoughts and same attitudes I do about the business," says Marco. "Being best [friends] and business [partners has] helped the balancing act." -N.L.T.
Modular Furniture, Ad Agency & Serial Entrepreneurship
LoveSac Corp.
Company description: Chain of stores (about half are franchised) specializing in modular furniture
Founder: Shawn Nelson, 28
Location: Salt Lake City
Projected 2004 sales: $30 million plus
A Bag Is Born: At age 18, Shawn Nelson was watching TV on the couch when he decided "a huge beanbag thing" might be more comfortable. He bought 14 yards of vinyl, cut it into a baseball shape, and spent three weeks filling it with anything soft he could find. The finished LoveSac was 7 feet wide, and everyone who saw it tried it out-and loved it.
Pocket Power: When neighbors started placing orders, Nelson decided to start his company almost as a joke. With free help from his friends, he made the LoveSacs in his parents' basement and sold them at trade shows, events and even the drive-in. Business was moderate at best, until he got a call on his cell phone that changed his life: a quarter-million-dollar order from Too Inc., which was looking for a back-to-school offering for its Limited Too stores. "I answered the phone and said, 'Twelve thousand LoveSacs? Sure, no problem. That's what we do; we're the best in the world at it,'" remembers Nelson.
Hard Road: Undaunted, Nelson amassed $50,000 in credit card debt building a factory. He worked 19-hour days and slept at the factory. "It nearly broke me emotionally, physically, mentally," Nelson says. "My hands were cracked and bleeding. We finished the order [for Too Inc.] but ate up all our profits." Just when things seemed darkest, a deceptively simple idea presented itself: Open a mall store. Not just any store, but one designed from the beginning to look like an upscale chain-even before it was a chain. It paid off: With some 55 stores, about half of them franchised, LoveSac is looking at sales topping $30 million this year.
Looking Forward: "We're headed toward owning [the market for] oversized living," says Nelson, who dispenses with all modesty where his business is concerned. "We're going to have a catalog that'll be three inches thick, selling everything that's over-the-top, bling-bling, LoveSac-get-out-of-our-freaking-way."
Unstoppable: No one fully expected LoveSac's success-not even Nelson himself. He says being committed to solving any problem is vital to his-and any entrepreneur's-success. "Decide that there is always a way," he says, "and you'll find that there is." -Jonathan Riggs
CCM Marketing Inc.
Company description: Media buying advertising agency specializing in the direct-response market
Founders: Suzy da Silva, 33, and Nicole Licata, 35
Location: San Luis Obisbo, California
Projected 2004 sales: $30 million
Directly Speaking: Suzy da Silva and Nicole Licata met in 1998 while working at a direct-response advertising agency, and the lack of ethics they sometimes witnessed inspired the pair to branch out on their own in 2001. "We wanted to do something that would treat the clients better," says Licata, "because direct response in general is a not-so-upfront industry. A lot of people take your money and don't tell you why they're taking it."
Timing Troubles: After the partners started their business in July 2001, the 9/11 terrorist attacks nearly put a quick stop to their venture because nobody was watching or buying from infomercials-it was all news all the time. To get through it, the pair went to TV stations directly to look for compromises and ad rate reduction deals that would help everybody-their clients, the stations and themselves-to survive. "Everyone had to be a team at that point," says da Silva.
Know Thyself: Says Licata, "We're both salespeople, so we have a lot of people watching over what is not our strong point-accounting. If you see a weakness in your business and you don't [understand] it, don't pretend you do. Hire somebody."
One Big Family: During the lean times after 9/11, da Silva and Licata vowed they wouldn't lay off a single employee. Though they had to forgo their own paychecks for a time, and each gained 25 pounds from the stress of it all, they kept their promise. Says da Silva, "We didn't want people out in that kind of environment. It's like a family here." The result: incredibly loyal employees and a knowledge that the duo can get through anything-including successfully losing their stress-related pounds. -N.L.T.
Lifestyle Marketing, Online Fashion Consulting & Wine Shop
Cornerstone Promotion, The Fader magazine
Company description: Lifestyle marketing company, culture magazine
Founders: Jon Cohen, 36, and Rob Stone, 36
Location: New York City
Projected 2004 sales: Approaching $20 million
Fresh Alternative: Music industry veterans Jon Cohen and Rob Stone launched Cornerstone Promotion in 1996 to help music companies promote artists to niche audiences-but they quickly realized the same nontraditional, grass-roots approach could be applied elsewhere. Now Coca-Cola, Disney, Microsoft and Sony-Ericsson are among the roster of corporations seeking out Cornerstone's cultural and marketing know-how.
Immersed: With 25 being the average age of Cornerstone's staff, they can speak with great authority on youth culture. "This company was built by people who live, eat and breathe what they do here," Cohen attests. "They love music, film, the lifestyle of what this place is all about, and that's the important thing we look for in a new hire."
Youth Brigade:The Fader magazine was born in 1999 to promote Cornerstone's website and soon took on a life of its own. "With Cornerstone being so service-oriented," says Stone, "we wanted to build something that represented our taste and our values, how we saw culture at the time." The magazine's initial lack of distribution and Cornerstone's preference for alternative marketing methods set the foundation for their FARM (Field Activation Research Marketing) Team. Paid team members ranging from ages 18 to 25 (many were loyal readers) first spread the word about The Fader by acting as "ambassadors" and meeting with influential people-such as college radio station programmers, talent bookers, and young photographers and writers-to introduce the magazine. Today, The Fader is a subscription-based magazine with eight issues per year, while the FARM team creates word-of-mouth for Cornerstone projects and keeps Cornerstone in the know on the latest buzz.
Broadened Horizons: The magazine's new division, Fader Films, has released its first project, and two more films may appear at Sundance 2005. With offices in Chicago and New York, the co-founders hope to spread their marketing genius to Europe and Japan. -A.Y.P.
eFashion Solutions LLC
Company description: Operations management for fashion manufacturers' e-commerce sites
Founders: Edward Foy, 33, and Jennifer Foy, 32
Location: Secaucus, New Jersey
Projected 2004 sales: $25 million to $30 million
ePioneers: In the dotcom heyday, Edward Foy and fellow Calvin Klein Jeanswear sales account executive Jennifer Silano thought more clothing manufacturers should use the internet as an added revenue stream. Launching eFashion Solutions in 2000, they took their business model to fashion trade shows, where they touted their turnkey package: eFashion Solutions would design the signature website, manage the customer call center, handle fulfillment, and even provide reverse logistics. The couple, who also married that year, kept working toward their dream, even while credit card debt mounted.
Full-Service Appeal: "We focus on what we call the 'wow factor'-constantly wowing our first client and our second client so the industry would talk about us," says Jennifer. After landing the trendy juniors line XOXO as their first client, word-of-mouth quickly drew other pop culture brands seeking an online flagship store, such as urban apparel giants Baby Phat, JLo and Rocawear. In September, the Foys added international websites to the mix.
Focal Point: In the beginning, Edward remembers trying to offer their services to just about everyone. "We weren't focused enough on our industry, where our knowledge was." When they did land fashion-minded clients, they tried too hard to do everything for them. Appreciative for the business, the Foys would do extra work gratis. When certain clients started regarding this as a right, policy changed. "Now we service to the letter of the contract," says Jennifer.
Branded: The Foys take great care to build the eFashion Solutions brand. "We don't have the money Coca-Cola has to build this brand around our name," says Edward, "so it's the experiences people have with us." -A.Y.P.
All Star Wines & Spirits
Company description: Upscale wine and spirits shop
Founder: Craig Allen, 35
Location: Latham, New York
Projected 2004 sales: Approaching $5 million
Worms to Wine: At age 6, Craig Allen launched his first business-selling worms. His friend dug them up, his mom sold them, and Allen oversaw the operation. Years later, armed with a marketing degree, Allen turned down a career at Procter & Gamble to stay at the liquor store where he worked and learn more about wine. "Wine is something that's recession proof," says Allen. "It's a product that lends [itself] to a very social atmosphere."
Strong Spirits: Compiling the best ideas from hundreds of stores, Allen designed his from the ground up, showcasing tens of thousands of bottles. But before he could even open his doors, he was caught in a series of battles against the state of New York. Most significant was a six-month struggle that finally won New York alcohol retailers the right to be open for business on Sundays.
Doing Overtime: Despite the legal battles, Allen has grown the business by double digits almost every month for the past six years. His current project: launching a wine bar and tapas restaurant next to his store. To top it all off, he uses his business to give back to the community, having founded or co-founded three annual charity wine-tasting events that net $150,000 a year. What's his secret? Says Allen, "My slogan from Day One has been: We're not smarter than anyone else, but we're willing to work a little bit harder." -S.W.
Online Referrals, Cell Phone Sales & Multimedia Publishing
Reply.com
Company description: Online referral source for automobiles, real estate, home improvement and financing
Founders: Behnam Behrouzi, 23, John Truchard, 32, and Payam Zamani, 33
Location: Walnut Creek, California
Projected 2004 sales: $20 million
Coming to America: The story of how Reply.com was founded has more twists and turns than a Hollywood movie. It begins with how Payam Zamani got from his home country of Iran to the United States. At age 16, Zamani was smuggled out of Iran to escape the extreme religious persecution that members of the Bahai Faith were subjected to. He came to America in 1988 with $75 and no knowledge of English.
Paint the Town: The entrepreneurial bug first bit Zamani during a summer as general manager of Student Works Program, a student-run painting franchise at the University of California, Davis, where he met fellow student (and future vice president of sales) John Truchard in 1992. "Since Payam and I both enjoyed the experience, it was natural for us to talk about future opportunities," says Truchard.
A Portal Is Born: Remember AutoWeb.com? A co-founder, Zamani left AutoWeb six months after taking it public in 1999. "I always felt that there was a lot left undone," he says. "I wanted to get back in there and rebuild that concept." And that's just what Zamani and his team did.
Next Step: In 2001, Next Phase Media was launched and later became Reply.com. Besides automobiles, Reply.com is a gateway for real estate, home improvement and financing. All the content is free to the consumer. Since Zamani's nephew, Behnam Behrouzi, had been an entrepreneur since high school, Zamani pulled him in. As CTO, Behrouzi played a pivotal role in building up the technology to power the new venture. "Our vision was to eventually do with services what Amazon did with products," says Behrouzi.
Going Public: The co-founders made the decision to not touch any VC financing, instead opting to bootstrap the business. That has paid off. Behrouzi, Truchard and Zamani have big plans for Reply.com. An IPO could be in the works early next year. "Five years from now, Reply.com [will] be a household name," says Truchard. At the rate they're growing, you can expect it to be even sooner. -A.C.K.
Progressive Telecom
Company description: Wholesaler and distribution of cell phones and accessories
Founder: Art Alaniz, 33
Location: Edinburg, Texas
Projected 2004 sales: $60 million plus
Mother Knows Best: Many successful businesses have been started in a spare room. Art Alaniz launched Progressive Telecom from a room in his mother's house in 1997, even while he was living in another city and working a full-time job. "She was fine with it," says Alaniz. "She knows I've always had an entrepreneurial spirit." The room was home to shelves full of used cell phones, a desk, a phone and a fax machine.
Quit Your Day Job: "When I opened the company, it was just a way to make a little extra money," Alaniz explains. Business in reselling used mobile phones, particularly in the underserved Mexican market, was booming. And Alaniz was soon faced with taking the next leap of quitting his well-paying day job and becoming a dedicated entrepreneur. He took a 50 percent pay cut and moved in with his mother to get the business going-quite a change for the young bachelor. But it paid off. Progressive Telecom now thrives in larger digs with 140 employees and five locations-two in the United States and another three in Mexico. And, of course, Alaniz has his own place these days.
You Say You Want an Evolution? What began as a newspaper ad offering to buy used cell phones has evolved into a business that specializes in new phones and refurbished mobiles. Though the Latin American market was key in getting Progressive Telecom off the ground, the company now does about half of its business in the United States and half in Latin America. But Alaniz isn't stopping there: He has his eye on the Asian market. "We're not even at the tip of the iceberg," says Alaniz. "This could be a billion-dollar company." -A.C.K.
Tokyopop Inc.
Company description: Multimedia publishing company specializing in English-language "manga"-Japanese comic books
Founder: Stuart Levy, 37
Location: Los Angeles
Projected 2004 sales: $60 million plus
Well-Read: While working in Japan, Stuart Levy-fluent in Japanese-initially rebuffed friends there who urged him to read manga. Once he relented, he was bowled over by the movielike experience. He thought, "There are tons of people back at home who would dig this if they could read it in English." He was right: Today, in addition to Tokyopop's 40 manga titles, there's Cine-Manga, Tokyopop's line of books based on movies, TV shows or sports; anime TV shows; DVDs; and other books supporting products. Titles on Star Trek and the NBA are in the works.
The Producer: Levy doesn't relegate himself to just one aspect of the business-he enjoys both the business and creative sides, writing stories and composing music for some projects. Ultimately, he considers himself a producer. "A producer gets the team together, handles the finances, but is also totally involved in the creative [process]."
Pay Up: "I don't mean to sound too old school or anything, but in my opinion, you've got to pay dues," says Levy. He scoffs at the notion that starting a business is as simple as deciding on a concept and easily raising millions. Instead, he urges a realistic approach to what entrepreneurs must go through to achieve their dreams. "You can't go out and buy a home, have a kid, and do all those things and start a business. You should do it and understand you have to sacrifice everything of your own private life-[you have to] live, sleep, eat, breathe it. You're not going to have a life."
Firmly Rooted: Regarded as everything from foolish in the beginning to a genius now, Levy remains grounded-even though his company comprises a sizable chunk of the U.S. manga industry, estimated at $90 million to $110 million last year: "You should try to stay focused on your goal and not be swayed either way by people giving you too much props or too many insults." -A.Y.P.
