Archive for October, 2006

Tech Stars Brighten Northern Skies

October 11, 2006

With a number of Nordic technology startups snagging eye-popping venture investments recently, one could be forgiven for feeling a sense of déjà vu. After all, in the late 1990s, Scandinavia became a breeding ground for rising European technology stars, especially in the mobile arena. But after the dot-com bubble burst, many of those entrepreneurs—and the companies they founded—fell to earth with a thud.

In recent weeks that giddy feeling has started to return to the region dubbed “Silicon Fjord.” Rebtel, a Swedish company that offers free mobile phone calls using Voice over Internet Protocol (VoIP), became the latest outfit to hit the jackpot, securing $20 million from Geneva-based Index Ventures and Benchmark Capital of Menlo Park, Calif.

Indeed, venture capital has been pouring back into the region with relish. Swedish companies alone snagged €852 million ($1.07 billion) in startup and growth capital last year, according to the European Venture Capital Association. That nearly matches the peak set in 2001 and is more than twice the amount raised in the trough year of 2003.

SECOND MARRIAGE. What’s more, this time around the startups are a lot better run. The dot-com experience reinforced the importance of having a solid business plan based on profitable, long-term growth, not just a hot fad. The crash also gave rise to a generation of entrepreneurs who lived through failure, an experience many venture capitalists consider highly educational and desirable.

“At the end of the ’90s you could do a PowerPoint presentation and get backing,” says Hjalmar Winbladh, co-founder of Rebtel, and a self-described “serial” entrepreneur who previously founded a mobile software company called SendIt that was bought by Microsoft (MSFT) for $150 million. Windbladh says it’s more difficult to get seed funding now, but argues that greater rigor is better for the long-term health of the entrepreneurial culture.

The rebirth of entrepreneurial spirit in Scandinavia is owed in part to a recent batch of inspirational success stories. The Goliath, of course, is Skype (EBAY), the VoIP software company founded by a Swede and a Dane and acquired by eBay for $2.6 billion this year. But there’s also Oslo-based Opera Software, which is a leading supplier of browsers for mobile phones and set-top boxes, and Trolltech, also in Oslo, which has carved out a niche in Linux-based software for handsets.

TAKING THEIR TIME. The main lesson learned by these Nordic startups is that there’s rarely such a thing as overnight success. Opera CEO Jon von Tetzchner and co-founder Geir Ivarsy developed one of the world’s first Web browsers in 1994 in the labs of Norway’s national phone monopoly, Telenor. But when the big telco didn’t want to take the project further, the duo struck out on their own, zeroing in on the gap in the market for browsers on mobile phones and other non-PC devices.

Telenor “gave us a flying start,” Tetzchner says, but years of hard work lay on the road to eventual success. Though Opera remains an also-ran in PC browsers, its software is now used in more than 17 million mobile phones. The publicly-traded company generated revenue of $23 million last year.

Eirik Chambe-Eng, co-founder of Trolltech, had an equally tough path. When he and co-founder Haavard Nord approached the Norwegian agency in charge of fostering startups in the mid-1990s, they were told “Guys, the job market is good, go get good jobs,” Chambe-Eng recalls. They rejected the advice, but “it was an uphill battle all the way.”

COATTAILS OF SUCCESS. It took a year before Trolltech started generating any revenue, and the pair had to rely on their wives’ incomes until the company was up and running. But it paid off: Trolltech booked sales of $17.7 million in 2005 and listed on the Oslo Stock Exchange earlier this year.

Now, industry watchers are poised for a new crop of startups to emerge from the region, inspired by the likes of Trolltech, Opera, and Skype. “Scandinavia has created world-class entrepreneurs who’ve gone on to build world-class services,” says Danny Rimer, general partner at Index Ventures, which backed Skype. “That has been amplified in the past few years. Success breeds success.”

It helps that there has been a sea change in attitude toward entrepreneurs since the dot-com bubble burst, says Rebtel’s Winbladh. “Failing is not seen as bad as before.”

MOVING ABROAD. Yet for all the inspiration and technical expertise, entrepreneurs say there are elements of Scandinavian society that still must change if entrepreneurialism is to flourish. One big sticking point: It’s tough to motivate employees by giving them stock options because options are taxed at high personal income tax rates when they’re exercised.

It’s thus “very difficult to employ people who can share the upside…which is what you need to grow,” says Winbladh. As a consequence, some entrepreneurs say, startups move headquarters abroad at their first opportunity to ensure they can attract the best talent.

There are encouraging signs of change. Many entrepreneurs say, for instance, that they expect the new center-right Swedish government to usher in a more startup-friendly environment. Others call for more collaboration between government and industry to keep the entrepreneurial breeding ground fertile. “It won’t happen on autopilot,” said Eilert Hanoa, founder of Mamut, a Norwegian company that makes business software for small to midsize enterprises.

Source

The spark is back in the north. After all, who doesn’t dream of being the next Skype?

Bright Ideas from Young European Minds

October 9, 2006

By Andy Reinhardt

Europe’s economic growth may lag that of the U.S. and Asia, but there is no shortage of ambitious young people with good ideas itching to pursue their dreams and start their own businesses. In this first ever BusinessWeek.com competition to identify promising young entrepreneurs in Europe, we asked our visitors to nominate candidates until Oct. 1. Now, for the next month, we’re hoping you will look at the intriguing group of nominees in the following slide show and pick the biz whiz you think shows the most promise. Browse through, cast your vote, and we’ll report later on the winner and runners-up.

Tristan Cowell

IC-Innovations

http://www.ic-innovations.com
Sheffield, England
Age: 25

Despite its name, IC-Innovations has nothing to do with integrated circuits. Rather, it’s an ideas factory started two years ago by Tristan Cowell, then a recent geography graduate from University of Nottingham. The seed was planted when Cowell’s mother was looking for a way to display her Christmas cards and he noticed a strip of Velcro sticking out of her sewing basket. His “Eureka moment,” as Cowell calls it, was the idea of sticking the cards to a strip of Velcro hanging from the wall.

After incorporating in 2004 and exhibiting at trade shows in England, Cowell had his big break thanks to a 100,000-unit order from Asda Wal-Mart. But his local suppliers couldn’t possibly produce that volume in time for the 2005 holiday season, so Cowell hopped a plane to Shanghai, lined up manufacturing, and made the deadline. Since then, he has rolled out Photo Hangups, Fridge Hangups, and three other novelties for displaying cards and photos. Revenues in the year ended last June hit $285,000, and Cowell figures they’ll quadruple this year. For Cowell, who has had business schemes since he was a teen, this is only the beginning.

Ben Woldring

Bencom

http://www.bencom.nl
Usquert, The Netherlands
Age: 21

Child prodigy or early entrepreneurial itch? Ben Woldring started his first company in 1998 at the age of 13, and now ranks as one of The Netherlands’ best-known young entrepreneurs. That first site, known as Bellen.com, was a place where consumers could go to compare prices and rate plans for mobile phone services.

Since then, Woldring’s company, called Bencom, has expanded to eight sites that offer clear, detailed information about fixed-line and mobile phone plans, Internet services, and utilities. The comparison services are free of charge to users. How does Woldring make money? After reading Bencom reviews, consumers can also subscribe online to the phone or utility services of their choice, and Bencom gets a referral fee. Bencom also makes money from banner ads and licensing its tools ot telecom providers and resellers. Revenues are in the “multiple millions of euros,” Woldring says.

Karm Singh

Desitouch

http://www.desitouch.com
London
Age: 25

Imagine a Web site that’s a blend of iTunes, MySpace, and YouTube, but stocked with Bollywood movies, soundtracks, and Bhangra music, and you get an idea of what Karm Singh is up to with Desitouch. A British-born Indian who built his first Web site at 16, Singh is fiercely proud of his cultural heritage yet firmly planted in the high-tech West.

His inspiration, dreamed up while studying computer science at King’s College, London, was to combine the two. Even the site’s name, which juxtaposes “desi,” the Indian word for “tradition,” with a “.com” suffix, fits the bill. Visitors can download South Asian music and videos in a variety of formats, and upload their own media from PCs or mobile phones. Singh aims to make money from transaction fees and advertising.

The self-financed Desitouch.com launched only a few months ago, but Singh expects to reach 100,000 hits a month by December. “I aim to be the world’s No. 1 South Asian entertainment Web site,” he says. At this rate, he might get there.

Lars Duursma

Debatrix

http://www.debatrix.nl
Rotterdam, The Netherlands
Age: 24

Teaching people how to constructively argue is the novel business concept behind Debatrix, based in Rotterdam. The company was started in early 2005 by Lars Duursma, the reigning world debate champion in the non-native English-speaking category. Clearly, Duursma is a believer in the power of persuasion. While a student at Erasmus University, he was hired by several Dutch firms and agencies to give speaking and debate training. “Then the entrepreneur inside me said, ‘Why not do this yourself?’” he says.

Less than two years later, Debatrix is one of the top four Dutch providers of persuasion training. It also coordinates debates for governmental bodies and companies such as ING that want to use an interactive format to present new ideas and generate discussion. Duursma is boosting his own visibility right now with a series of weekly newspaper articles analyzing the rhetorical skills of Holland’s major politicians.

With 15 freelance trainers on board and a growing roster of clients, Duursma looks to be well on his way to improving the quality of arguments in The Netherlands. That’s a goal every country might aspire to.

James Gibson

BinFix Ltd.

http://www.binfix.co.uk
Nottingham, England
Age: 24

Necessity, invention’s mother. Back in 2002, when James Gibson was a student in sports management at Brighton University, his roommate complained that nobody ever emptied the overflowing trash pail in the kitchen or replaced the bin liner. “What we need is a liner that comes up from the bottom of the bin,” the roommate said. Lightbulb moment. Gibson became obsessed with the idea and, improbably, turned it into a company.

In 2004, he moved to Nottingham and applied for space at a local business incubator. By last year, he had filed for a patent, developed a working prototype, and started looking for manufacturers. The product: a triangular cardboard box, stuffed with extra-thick trash bags, that lives at the bottom of the can. Pull one bag out, and another comes up to take its place.

A few trade shows and an award for household cleaning product of the year by Grocer magazine got BinFix noticed, and Gibson started getting orders from supermarkets. But building a company with the scale to compete against giants like Proctor & Gamble looked too daunting, so Gibson decided to license the concept to an as-yet-unnamed consumer products company. Now, with a potential royalty stream of tens of thousands of pounds annually, Gibson is pursuing a raft of new business ideas. Clearly, a young entrepreneur to watch.

Marvin Dominic Andrä

Bagpax Cargo Systems

http://www.bagpax.com
Saarbrücken, Germany
Age: 24

Like most inventions, Marvin Dominic Andrä’s “a-ha” moment came from a real-life experience. Asked by his father to take some garden clippings to the dump, Andrä was startled while driving by a spider that climbed out of the load and nearly got on his face. Had he been an arachnophobe, Andrä says, he might have crashed the car.

Thus was born BagPax, a series of padded liners that fit in the truck or back of a car and protect it from messy payloads-whether dirty children’s toys, sandy beach togs, or bug-laden compost. “Germans like clean cars,” says Andrä, who has sold hundreds of the patent-pending BagPax, which cost from $38 to $62, over the Internet and through German auto shops. Big contracts are on the horizon.

Andrä, an economics graduate from Saarbrücken University, set up BagPax from the beginning as a “virtual” company, with suppliers and partners in Turkey and Poland and a call center in Karlsruhe. For now, the trunk liners are only sold in Germany, but “it could work elsewhere, too,” Andrä says. Spoken like a true entrepreneur.

Neil Waller

Information Websites Ltd

http://www.marbellainfo.com
London
Age: 22

While earning a degree in business administration from University of Bath, Neil Waller went to work for a private-equity firm in London. But like most Brits, he hankered for getaways to the sunny south coast of Spain-especially the resort of Marbella. Yet Waller was disappointed in the quality of information available on the Internet about hotels, restaurants, and local events there, so he decided to set up his own Web site.

Thus was born Marbellainfo.com, whose traffic has increased fivefold in the past few months and now has 33 sponsoring companies. Waller’s real surprise, though, was how quickly Marbellainfo.com evolved from a site aimed at tourists into a community site used by local residents to find services and exchange information. Seeing an opportunity for other such tourist-cum-community sites, he and his business partner are now aiming to roll out similar such sites for the Algarve region in Portugal and Dubai. Someday, he says, he hopes to offer a network of hundreds of cities. Not a bad dream for a guy who was just looking for fun in the sun.

Julien Genestoux

Jobetudiant

http://www.jobetudiant.net
Lyon, France
Age: 23

French youth rallied this year against an aborted plan to make it easier for companies to hire and fire young workers. But they’re certainly eager to find jobs, as entrepreneur Julien Genestoux has quickly discovered. As a student at engineering school Insa in Lyon in 2000, he couldn’t find any summer job listings on the Internet. So three years later, he decided to build his own jobs service aimed specifically at students.

Now, a year after its launch, Jobetudiant (literally “student job”) has 200,000 registered job-seekers, an average of 10,000 open job postings every day, and should book more than $100,000 in revenues this year. Genestoux, now a business graduate student at Essec, outside Paris, thinks he could triple that in a few years. Listings are free, but lots of advertisers pay $64 per ad for higher placement, and many students pay up to $3.80 per month to see new postings via e-mail before they hit the site. More than 50% of revenues come from advertising. Genestoux attributes his success vs. larger rivals such as Monster to greater specialization. Looks like he has found the right formula in a country that needs to put more people to work.

Grant Lang

Mozzo

http://www.mozzo.co.uk
Southampton, England
Age: 24

As a business management and marketing student at Southampton Solent University, Grant Lang helped make ends meet by working in bars and cafés. But he was also passionately interested in sustainable development and local community. In March, 2005, he found a way to tie it all together by starting a coffee company, called Mozzo, that sells organic “Fair Trade” beans and helps local artists gain recognition.

Lang first tried to open his own coffee shop, but couldn’t raise enough money. So instead, he bought an Indian rickshaw, fitted it with solar panels and a wind turbine, and launched an eco-friendly coffee cart. To top it off, he hung the works of local painters on the sides of the cart and played local bands over the boom box. The bright red cart garnered attention, and soon stores and cafés asked to resell his beans. Last May, Lang started a coffee distributor, which he figures will notch sales of $225,000 in its first year. To stay true to his values, Lang will donate 5% of profits to community causes.

Next year, he finally aims to open that coffee shop, while continuing to branch out into other Fair Trade imports. Lang is convinced he can build Mozzo into a “sustainable lifestyle” brand. He’s in pretty good company: The success of The Body Shop, among others, proves that entrepreneurs can do well while doing good.

Fathi Said

Ecommerce Holding

http://www.ecommerce.com
Freistadt, Austria
Age: 24

German-born Fathi Said has the distinction of having launched and lost his first company, Web hosting outfit Hosting-Network Inc., by the time he was 20 years old. He says he got into business with the wrong partner-and clearly, the collapse of the firm, which hit $7.5 million in annual revenues in 2002, still hurts.

So guess what Said did? He started another Web hosting company in 2003-this time called Ecommerce.com. Headquartered in Austria, but with its main data center in Kentucky, Ecommerce has attracted 80,000 customers and plays home to more than 150,000 Web sites. The company has 130 employees in five countries, and revenues should hit $12 million this year.

Matt Roberts & Irfan Badakshi

Bean2Bed Ltd.

http://www.bean2bed.com
Birmingham, England
Ages: 23 (Roberts) and 25 (Badakshi)

Back in Matt Roberts’ second year at Aston University in 2002, a bunch of friends came up for a weekend birthday party. An offhand comment planted the seed of his future inspiration. “Somebody said, ‘I wish I could flatten out this beanbag chair and sleep on it,’ ” recalls Roberts.

Two years later, Roberts and buddy Irfan Badakshi had run with the concept. They met with designers, worked through 44 prototypes, rejected polystyrene pellets, maxed out their student loans, and unveiled Bean2Bed at a home show in July, 2005, at Earl’s Court. The finished product is, in effect, a mattress filled with crumb foam that stuffs into a corduroy, denim, faux suede, or imitation fur sack the size of a beanbag chair. One minute it’s a comfy chair in the corner, and then presto, it’s a bed.

Thanks to publicity and word of mouth, Roberts and Badakshi have sold thousands of Bean2Beds, which cost $285 to $475. They’re available on Amazon.co.uk and more than a hundred stores in Britain. The company figures to book sales of more than $570,000 this year. Not bad for the aftermath of a college party weekend.

Matteo Böhme

Matteoevents

http://www.matteoevents.de
Dresden, Germany
Age: 24

A self-confessed inline skating fanatic, Matteo Böhme began organizing skating events five years ago at the age of 19. His great knowledge of the sport and the skating scene in Dresden made him a natural to set up and manage local competitions and celebrations.

But now, Matteoevents, the company he set up in 2001, has blossomed into something bigger: a general events management business with three full-time employees and 25 contractors. Böhme presides over a group that has managed events for Red Bull, local breweries, and even the family day at the nearby AMD chip factory. Böhme may have been just a skating dude once, but now he’s got a growing business on his hands.

Matthew Hubbard

Reels in Motion

http://www.reelsinmotion.co.uk
Stoke-on-Trent, England
Age: 24

Three partners, all recent graduates in media from Staffordshire University, started Reels in Motion in late 2004. It was a classic entrepreneurial gambit. “Given how creative we wanted to be, we felt we wouldn’t be doing ourselves justice to give our talents to a larger organization,” says co-founder Matthew Hubbard. “So we just went for it.”

The trio found office space in a local business incubator supported by the Enterprise Fellowship Program, which provided administrative support and a business mentor. They started to make a name for themselves producing educational and training DVDs, especially in the area of special-needs education. Hubbard knew the subject from personal experiences.

Now business is starting to come in over the transom. Turns out there’s healthy demand in the West Midlands for the talents of three ambitious filmmakers who wanted to go their own way from the start.

Joav Ben Jaakow

BJ Bewässerungstechnik

http://www.benjaakow.de
Lengfurt, Germany
Age: 22

When Joav Ben Jaakow was just 15 years old, he and his parents went into business together importing state-of-the-art drip irrigation systems from Israel and selling them to farmers in Germany, Austria, and Switzerland. Now, eight years later, the younger Jaakow is the manager of the business and will become its top shareholder when it’s converted into a limited liability corporation next year.

“We started in a garage, just like HP,” Jaakow says. The whole family helped with packaging products, sending out bills, and other jobs. The younger Jaakow even dropped out of school for a while to help grow the business. Now the Ben Jaakow company has 10 full-time employees and books nearly $4.5 million a year in business.

Wayne Berko

Uni-versalExtras

http://www.universalextras.co.uk
London
Age: 24

Working as an extra in a movie: It’s a quick, easy way for students to make cash, and you can’t deny the glamour of being in a film. But, it turns out, production companies don’t always have an easy time finding extras, especially in off-beat locations. And many people interested in being extras don’t know where to look for jobs.

Enter Uni-versalExtras, a matchmaking Web site launched a year ago by Wayne Berko. The site has now signed up 30,000 students who want to work as extras. Film companies find them there, and Berko takes a 15% cut. He has recently expanded as well into professional extras, who pay a one-time $20 fee to post their profiles. Already the site gets 800,000 hits per month, and Berko aims to start selling ads to sponsors who want to reach his attractive student demographic. Lights, camera, startup!

Source

Europe’s Young Entrepreneurs

October 9, 2006

Entrepreneurialism knows no borders. Though the popular image of the startup centers on American—and, increasingly, Asian—enterprises, Europe also is alive with small companies. All told, there are 23 million small to midsize businesses in the European Union, accounting for about 75 million jobs and much of the Continent’s employment growth. And with many large corporations increasingly sending jobs elsewhere, young people are attracted as never before to the idea of starting their own businesses.

To be sure, Europeans still tend to be more risk-averse than their counterparts in the U.S. and Asia. The culture of entrepreneurialism isn’t as well developed—nor is the infrastructure of business mentors, startup support services, and risk financing. But for a growing class of young entrepreneurs with good ideas and a strong work ethic, those impediments don’t matter. Their passion to succeed overcomes the barriers.

Governments, too, are waking up to the job-creating capacity of startup businesses. The European Commission is spurring high schools across the 25-nation bloc to offer courses in business, including encouraging students to set up small companies. Initial studies suggest that up to 20% of students enrolled in such courses try to start their own businesses after graduation.

GLOBAL PERSPECTIVE. Britain, meanwhile, is setting the pace in its support of business incubators, where entrepreneurs can set up shop in subsidized office space and work with mentors to develop their strategies and business plans. From 25 such facilities in Britain in 1996, the number has now surged to 270 around the country, according to figures from the Trade & Industry Dept. Britain also now hosts nearly 100 science parks, up from 39 in 1998.

One advantage many European entrepreneurs seem to enjoy is a more global perspective. Many are multilingual and have lived or worked abroad. “We are starting to see very interesting companies forming that are capable of competing on a global basis from day one,” says Danny Rimer, general partner at venture capital firm Index Ventures in Geneva. “It’s partly generational, but also a case of success breeding success. Companies like Skype have served as an inspiration to a whole generation.”

Since the middle of the summer, BusinessWeek.com has set out to find the best examples of this new European spirit. We asked readers to nominate outstanding entrepreneurs age 25 or younger, and now we present the candidates in a slide show that showcases their remarkably imaginative and successful businesses. You can view the presentation and cast your vote on the last page for the entrepreneur who seems the most promising. We’ll present the results of the voting in November.

FROM EUREKA TO EARNINGS. What all the nominees share is a spirit of adventure and opportunism. For many, the inspiration for their businesses came from a momentary observation that lodged in their minds and became the seed of a startup. Overflowing garbage cans in a college apartment? That gave James Gibson the idea for trash-bin liners that pop up from the bottom of the can. Partygoers trying to sleep on a beanbag chair? That was enough to inspire Matt Roberts and Irfan Badakshi to develop a plush chair that morphs into a bed.

Similar “Eureka” moments made other young entrepreneurs diverge from the safer course of corporate careers into the treacherous waters of a startup. Tristan Cowell’s mother was looking for a way to display her Christmas cards, and now the 25-year-old Brit presides over a thriving business that sells all manner of gewgaws for displaying photos on walls, refrigerators, and doors. Marvin Andrä, 24, of Saarbrücken, Germany, turned a harrowing trip to the dump into the inspiration for BagPax, removable soft-shell containers that save car owners from dirtying the trunks of their cars with refuse.

For many young entrepreneurs, starting their own companies is a way to unite different threads in their lives. That was what moved 25-year-old Karm Singh, a British-born computer science graduate of Indian heritage, to launch a Web site called Desitouch.com that features music and video from South Asia. Something like a cross between iTunes, MySpace, and YouTube, but for Bollywood productions and Bhangra music, and it has already attracted a strong following from the South Asian community at home and abroad.

THE WEB WAY. A similar passion moved Grant Lang, 24, to start a coffee company called Mozzo. Sure, Lang loves coffee. But he’s also a big believer in organic products and “Fair Trade” business practices that give growers decent wages and work conditions. He also loves art and music. So he pulled them all together into a “sustainable lifestyle” coffee brand that espouses environmental and social responsibility—and makes money.

Then there’s Lars Duursma, 24, from Rotterdam. The reigning world debate champion in the non-native English-speaker category, he has a passion for good language and clear argumentation. Now, he has leveraged his skills into a thriving consultancy that teaches politicians and corporate leaders how to communicate better.

Of course, today’s young entrepreneurs grew up with the Internet, so many of their businesses revolve around the Web. Dutchman Ben Woldring, 21, launched his first Web site at 13 and now offers his compatriots four online comparison sites that let them shop for the best rates on fixed and mobile phone service, Internet access, and utilities. Austria’s Fathi Said, 24, started a Web hosting business at 18 and lost it at 20, then started another that’s even more successful.

TRADITION THRIVES, TOO. The Web is also home to Julien Genestoux’s Jobetudiant.net, a job site aimed at French students that has already attracted 200,000 registrations. London’s Wayne Berko is running a similar site—but aimed solely at getting students and professional actors jobs as film and TV extras. And Britain’s Neil Waller has turned the notion of an online travel site on its ear. He launched Marbellainfo.com to give British travelers better information about the Spanish coastal resort city, only to discover that the locals liked using it just as much. Now he aims to launch travel-and-community sites for other popular destinations.

Despite the Web’s allure, some entrepreneurs are sticking to more traditional fare. Matthew Hubbard, 24, started a film and video production company in the West Midlands that has gotten traction producing media for special education programs. Matteo Böhme turned his love of inline skating into a thriving events-planning business in Dresden. And Joav Ben Jaakow started a business with his parents when he was 15, importing and reselling drip irrigation systems in Germany.

The variety of ideas is dazzling, and the energy and excitement of these young entrepreneurs is infectious. Take a look at our slide show to learn more, and then be sure to send a vote of support to the entrepreneur who you think has the best idea. Europe is hungry for more examples of such derring-do and optimism.

Source

Star Search – Getting the nod from celebrities

October 1, 2006

To get out the word about their yoga gear, Doreen Hing and Jennifer McKinley, co-owners of $100,000, Boston-based Plank, began by pitching magazine editors. But they kept hearing the same refrain: Come back when a celebrity starts using your products. Hing and McKinley didn’t happen to know any stars, so they went to Hollywood. Since January, 2005, the pair have attended many industry gift shows, donated their products to celebrity gift bags, and participated in events that precede big awards shows and festivals. The payoff: Their hip, high-end yoga goods have been mentioned in Self magazine and by Access Hollywood as being used by actresses Natalie Portman and Ellen Pompeo, star of the ABC hit Grey’s Anatomy.

In our celebrity-drenched culture, millions of people take their cues on what to wear, where to go, and how to decorate their homes from movie and TV stars. But there’s no direct route to getting your product into a celebrity’s hands. “Unless you are a big company, you can’t buy your way to celebrities,” says Marc Gobé, co-founder of New York branding consultant Desgrippes Gobé Group. “It’s not easy to get to them and that’s why, when you do, it makes it so authoritative.” Celebrity ties also may open retailers’ doors. “A retailer may already be excited about a product, but a celebrity connection helps sell it to their customers,” McKinley says.

Making that connection requires effort and luck. But if your product doesn’t have that elusive cool factor, forget it. “You need to be in the know about what the next big thing is,” says Gobé. And just because Denzel Washington is your favorite actor, if you’re selling tennis rackets and he doesn’t play, your odds aren’t good. “There has to be a connection between your product and a particular star,” says Richard Laermer, owner of RLM Public Relations in Los Angeles.

Reaching celebrities usually means finding their managers, marketers, publicists, and stylists. Ideally, they will pass your product to a star or ask you to donate your goods to gift bags—the infamous swag celebrities receive just for showing up at award shows and other industry events. The downside of contributing to gift bags is that you can’t be sure a celebrity used or liked your product. For that, you’ll have to follow up with the star’s representatives—if you can find them. “No one will give you publicists’ names,” says Hing. You can scour the media for their names or try sites such as www.whorepresents.com, where you can search for names of agents and managers.

Hing and McKinley have had better luck at events where they can meet people face to face. After spotting a Plank booth at the Los Angeles gift show, the owners of The Silver Spoon, an entertainment marketing company, invited the company to be part of a two-day pre-Oscars event in February, 2005. That’s where Hing and McKinley managed to give a tote to Natalie Portman’s publicist. A week after the show, they got permission to use Portman’s name in connection with the bag in their publicity materials. Since then, Plank has contributed to gift bags for the Emmys and the MTV movie awards.

You can search for similar events online by using terms such as “pre-Oscars” or “gift lounges,” or tracking down the names of the entertainment promotion companies that run them. Costs range widely. Plank’s founders spent $3,000 on the pre-Oscars event and were invited to participate in the gift lounge before the 2007 Sundance Film Festival, which cost $20,000. In all, Plank has spent about $35,000 since 2004 marketing to celebrities. That includes the value of freebie merchandise, fees to participate in events, and travel costs. The founders say the expense has been worth it. In September, the company was one of 28 invited by the Accessories Council to exhibit during New York’s Fashion Week—and to take another shot at stardom.

Source