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CAREERS

The Story of My Start-Up

Seven entrepreneurs talk about late nights, no paychecks, and big dreams.

Email|Print|Single Page| Text size + By Janice O'Leary
June 1, 2008

FUMI MATSUMOTO AND JOE CHUNG Founders and chief executives of e-commerce giant Allurent (CAMBRIDGE)

THE BRAINSTORM: Shopping online isn't fun. It doesn't even try to be fun. You put something in your shopping cart, backspace, and it disappears. Post-dot-com crash, people started innovating. Things like Google maps came about. When we saw that, we said, "That's game changing." We wanted to combine that technology with e-commerce to make online shopping more like shopping in a real store. We wanted to bring the fun back into shopping.

FIRST STEP: In 2004, we commissioned a study of shopping. The researchers followed people around stores and learned what drew people inside - it wasn't price or free shipping, but what felt like a great experience. At Sephora, people are really into the samples and following up on what they've heard or read about. We realized that all shopping online was treated as one thing. But stores are very different. In e-commerce, they were all similar. So we developed a super-practical module that would make the checkout experience easier, and launched it in early 2006.

THE FINANCING: We raised money from Polaris venture capitalists and an investor, GSI Commerce. Fumi and I put our own money in, and our families have invested.

HOW ARE THEY DOING NOW? We're not profitable yet, but we weren't supposed to be yet; we're still in the investment phase. We've grown from two to 56 employees. A case study showed that our new checkout application for Anthropologie is 24 percent better than their regular one. That's a huge number; it translates into millions of sales. We've seen some interesting trends with the recession. About half of our customers are freezing up a bit. The other half is saying this is a great opportunity to shift more business online.

ANNE KIM Founder of toy company Simplymini (WELLESLEY)

THE BRAINSTORM: In 2005, a cousin from Korea sent a bunch of toys to my kids. Of all the things in the box, they loved the stickers the best. They could put them on characters and peel them off to change outfits, like an updated version of Colorforms. I thought this would be great for American girls. I researched it in my pajamas, making calls to Korea at night because of the time difference.

FIRST STEP: I had to name and redesign the product for Western markets. I took the foundation from what they were doing in Korea, but designed a cleaner look for the US market. The Korean products looked too busy. I got my daughters in on the development, and they told me what they liked and didn't.

THE FINANCING: My husband and I financed it ourselves. It costs a minimum of $50,000 to $100,000 to start. You make a lot of mistakes, especially with the shipping and packaging. Then there's warehousing and advertising. You don't know until later what was a waste of money. The manufacturer once put everything on a plane and sent me a $5,000 bill instead of going through my shipping agent, something I didn't even know I needed at first.

HOW IS SHE DOING NOW? We have two sets of fashion stickers and characters on Amazon and at Target. It's in 18 states now. Next up is a third set of travel that features Paris, London, New York, and Australia, which adds a culture piece to it. Next I'd like to do a dollhouse girls can decorate with on-and-off stickers. All the money I make I put back into the business; I paid myself $100 last year.

NAOMI BAR-YAM Executive director and founder of the Mother's Milk Bank of New England (NEWTONVILLE)

THE BRAINSTORM: I was first exposed to milk sharing when my oldest son was born, and we were living overseas. He was only 4.5 pounds, so he was in the NICU. Another mom didn't have enough milk, and I was the only mom with extra, so I shared. Then, about seven years ago, my dad was very sick. There had been anecdotal evidence that mother's milk can be palliative for cancer. I thought I would arrange for a milk bank to send him some, but I discovered there were none in New England. The first milk bank in the US was in Boston; it was downright embarrassing that there wasn't one [now].

FIRST STEP: I put together a listserv of 100-plus people interested, and immediately got many e-mails from people who wanted to donate. We decided the bank would be community based, rather than part of a hospital. Then we had to apply for nonprofit status.

THE FINANCING: Everyone's volunteering, and we're doing some private fund-raising. We've submitted grant proposals, too. Once it starts, we don't pay the moms for milk, but there are some processing fees for testing that will eventually cover operating costs. [She recently won $10,000 as a winner of the monthly best business contest from ideablob.com.]

HOW IS SHE DOING NOW? [The] plan now is to set up a temporary location to receive processed milk from another bank in Ohio, then fund-raise and set up a permanent lab. Initially, we'll send donors to Ohio for screening. Then we'll take our own donors here and process the milk ourselves. At the same time, we're trying to make people and physicians aware that banked milk is still good. Banked milk does cut back on some nutrients; immune factors in particular become compromised. Ideally, it should be used as a supplement. But compared to formula, banked milk is much better for babies. We'll be running this summer and accepting donations.

ALEX WHITMORE AND LARRY SLOTNICK Founders of Taza Chocolate (SOMERVILLE)

THE BRAINSTORM: It was Alex's idea. He and I worked together at Zipcar. He left and traveled to Santiago, Chile, Oaxaca, Mexico, and Cuba and was wowed by all the artisan chocolate he tasted. He discovered no one in this country was doing stone-ground chocolate.

FIRST STEP: Finding a space to make the chocolate. Then we had to figure out how to ship the machinery from Oaxaca to Somerville. [The stones are] like Fred Flintstone's tires: about 5 inches thick, 10 inches in diameter. We had to source our beans. I wanted this to be a sustainable venture, so finding farmers who had already gone through organic certification was important.

THE FINANCING: Alex and I and Alex's parents invested. It was a little under $250,000 for the first year to get it going. We didn't take any loans, and we put any profits back into the business.

HOW ARE THEY DOING NOW? We've expanded from renting one space to three, and business is growing, even with the recession. We get new customers every week. We sell an inexpensive luxury product, so folks who buy it have a fair amount of discretionary income. Either that or they're addicted to our chocolate! The size and frequency of reorders has dropped off a bit or gone steady, but what's countering that is that we're just starting to break into more markets. We're in about 200 stores now, mostly in New England. We've just gotten into New York. In the fall, we'll be in Portland and San Francisco. People seem to like that we're the only stone-ground chocolate in the country. We're profitable. We do pay ourselves, but it's the same rate we pay someone who wraps our chocolate bars - about $10 per hour.

KEVIN COHEE CEO of OneUnited, the first black-owned Internet bank (BOSTON)

THE BRAINSTORM: The idea of a black-owned bank wasn't really my idea to start. It began as an outgrowth of the end of slavery, as a necessary structure to give newly freed black Americans financial literacy and access to capital. But because of a lack of educational opportunities and expertise, those early banks were mismanaged.

When I started OneUnited in 1996, I was building on everything former US Senator Edward Brooke had done in the 1980s as chairman of the Boston Bank of Commerce, the city's only black-owned bank, and the accomplishments of all those before him. I saw that what we needed was a national bank, not just a local one, to serve as many communities as possible.

FIRST STEP: First we had to change the name from Boston Bank of Commerce to reflect the national mission, then we needed a presence in other cities. We bought black-owned banks in Miami and Los Angeles. From the start, it was never about one community. We recognized the Internet offered the perfect opportunity to transcend geographic boundaries, and we have grown at a phenomenal rate because of it. We were competing with the big banking dinosaurs, but technology leveled the playing field.

THE FINANCING: Fortunately, the bank has always been profitable, so we could use the bank's own profits to support the online component. Our shareholders supported us because they get paid dividends.

HOW IS HE DOING NOW? One United became the first black-owned Internet bank. When I first bought the bank, it had $55 million in assets and customers only in Massachusetts. We now have $750 million in assets and customers in every state. We're profitable, even in a recession. The past quarter was one of our most profitable ever. Our flagship online savings account is regularly rated one of the top three in the country.

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