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The best
BUSINESS
BARS
EVERYTHING YOU NEED TO KNOW

ABOUT DOING BUSINESS OVER DRINKS.
W
HAT TO ORDER. THE FIRST FIVE
M
INUTES. W
HO PAYS.
W
HAT NOT TO LEAVE BEHIND
UH, A NEXTGEN iPHONE?
JULY 2010 | ENTREPRENEUR.COM
+
JUNK MAIL
NO MORE
DUKKY IS
CHANGING
THE APPROACH
TO DIRECT MAIL
Money: where to get it now
Groupon founder
Andrew Mason
at Chicago’s
Motel Bar
entjuly10subspine.indd 1 5/21/10 11:37 AM

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Entrepreneur + July 2010 2
table
+
of contents
+Features
24 The future has been
delivered—to your mailbox
Dukky is merging the junk in the mail
with social marketing and web technol-
ogy—and creating a staggeringly effective
marketing machine.
By Jason Meyers
63 The next mission:
autonomy
Some veterans are discovering the rigid
life of the military can be the ideal prepara-
tion for the freedom of entrepreneurship.
By Jennifer Lawler
76 Voices of
venture capital
Four leading venture capitalists offer their
takes on the ups and downs of VC invest-
ment, what captures their attention and
the best ways to seek out VC money.
By Gwen Moran
82 The bank
in your backyard
Building strong connections with
community banks can pay off during
uncertain economic times.
By Gwen Moran
94 Should you tap
your 401(k) to start
a business?
Thousands of Americans are using
retirement savings to start new busi-
nesses. Some thrive, others founder.
Is the gamble worth it?
By Julie Bennett
103 The big time
Multiple-unit ownership has taken over
the franchise world.
By Jason Daley
50 Best business bars
Entrepreneur’s guide to the best bars for doing business
across the country. Plus: Tips on what to order, when to dis-
cuss business, when to leave and how to not get drunk.
On the cover: Groupon’s Andrew Mason.
Photographed by John Cizmas
entjuly10 004-010 TOC.indd 2 5/21/10 12:13 PM

Jamz Yaneza
Threat Research Manager
Trend Micro
LAST YEAR ALONE CYBERCRIMINALS
STOLE OVER $40 MILLION FROM
SMALL BUSINESS BANK ACCOUNTS.
*
Like any good predator, cybercriminals go for the easy kill, and small businesses are a prime target. Using malicious
software called bots hackers break into computers, steal banking pass codes, and drain cash from small business
accounts before anyone notices. Many victims actually have an Internet security solution in place at the time of
attack, but it just isn’t good enough. Trend Micro’s Worry-Free™ Business Security is different. It provides all-in-one
protection that stops attacks like these before they reach you. You just set it and forget it. We do the rest.
©2010 Trend Micro Inc. All rights reserved. Trend Micro and the t-ball logo are trademarks or registered trademarks of Trend Micro Inc.
All other company and/or product names may be trademarks or registered trademarks of their owners. *USA Today
Think your current Internet security is good enough? Think again.
Try our free Threat Protection Toolkit and see what’s getting through.
trendmicro.com/threatprotection
“Think Again” Size A
Cyan Magenta Yellow Black
23404
05.06.10
PJA Advertising
bt
n/a Oris
M23404_ThinkAgain_pg_R3
Live: 7” x 10”
Trim: 8” x 10.75”
Bleed: 8.25” x 11.125”
TrendMicro_fp_0610.indd 5/7/10 9:20 AM PAGE 1 TrendMicro_fp_0610.indd 5/7/10 9:20 AM PAGE 1 TrendMicro_fp_0610.indd 5/7/10 9:20 AM PAGE 1 TrendMicro_fp_0610.indd 5/7/10 9:20 AM PAGE 1
Entrepreneur + July 2010 4
table
+
of contents
+Departm
ents
19 GOING FORWARD
Business Unusual
A former Wall Street analyst spins his yo-yo
passion into a million-dollar-plus business.
20 Ask a Pro
What should you do if an employee is lying
to you?
21 You Should Know
Israel Kirzner, economist and rabbi.
21 Jargon
22 Business Travel
The price of a Macallan single malt across
the country. And the places people work
when they work on vacation.
43 WEB
Website to Watch
Gowalla is part personal scrapbook,
part travel guide and part geo-specific
social network.
44 Build a Website
Tips on deciding how and where to host a
blog for your business.
48 ALMOST FAMOUS
From processing payroll to integrating IT,
outsourcing certain functions can mean
better talent at lower costs.
69 MONEY
Who’s Getting VC Now?
A company that aggregates and parses on-
line reviews gets a third round of funding.
70 Venture funding,
one dollar at a time
A peer-to-peer platform connects startups
with angel investors.
37 TECH
Shiny Object of the Month
The Magic Wand from VuPoint Solutions is
a scanner you can pull out of your pocket.
38 Mobile Entrepreneur
Yowza!! matches merchants’ coupons
with customers on the go, websites
that will help you customize your app,
and an app that aims to act more like a
travel organizer than just a booking tool.
40 Images from the cloud
Options for web-driven printing.
86 START IT UP
Wacky Ideas That Just Might Fly
There’s a story to every vintage garment
being resold on the site Chic and You
Shall Find—even if the story is fabricated.
88 College Startups
After graduation, two friends delayed
opening their business. Smart move?
90 Finance for Startups
Ten ways entrepreneurs waste their
hard-earned capital.
92 Strokes of Genius
128 Back Page
The worst business bar in America.
entjuly10 004-010 TOC.indd 4 5/26/10 11:53 AM

74693_UPS_UP0_180.indd
Peter Hopersberger / Heather Yuhas 3-22-2010 2:39 PM phopersberger_G5_06685
Client
Job #
Prefix
Trim
Bleed
Live
Line Screen
Product Code
Unit
Caption
THE UPS STORE - MBE
01-13950-048
74693
8” x 10.75”
8.25” x 11”
7.25” x 10”
300 dpi
000 - Mail Boxes Etc., Inc.
Magazine
Online or in-person.
Job info
Print Producer
Account Mgr
Art Director
Copywriter
Traffic
Art Producer
Scale
Proof #
Prepared by:
Southfield, MI • 248-354-9700
Hodge, Brent
Fries, Kalyn
Cathel, Karen
Kollin, Jimmy
Mazur, Betsy
Pohl, Holly
None
2
Approvals
Fonts:
UPSSans (ExtraBold, Medium), UPS Sans
(Regular)
Link Name:
74693_UPS_9_092_UU_4CSWOP.tif (CMYK; 384
ppi; 78%), UPS_lockedup_4C.eps
Used Swatches:
Cyan, Magenta, Yellow, Black
100%
by Saved at: From: Printed At
Fonts
Online or in-person. We’re the Nation’s Largest Printing Network*.
*Claim based on number of retail locations. Mail Boxes Etc., Inc. is a UPS
®
company. The UPS Store
®
locations are independently owned and operated by franchisees of Mail Boxes Etc., Inc. in the USA and by its
master licensee and its franchisees in Canada. Services, pricing and hours of operation may vary by location. See theupsstore.com/print for further details. Copyright © 2010 Mail Boxes Etc., Inc.
We Do More Than Shipping.
SM
Now it’s easy to create professional-looking documents,
presentations and brochures with help from The UPS Store. Just bring your documents into one
of our over 4,300 convenient locations or upload them to our online printing portal to print online.
Our printing experts offer a variety of paper stock, binding options and professional lamination.
To see a demonstration of our online printing, or to get started, go to theupsstore.com today.
theupsstore.com/print
Log on from anywhere, or walk in to any one of our more than 4,300 locations.
S:7.25”
S
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1
0

T:8”
T
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1
0
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7
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B:8.25”
B
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74693_UPS_UP0_180.indd 1 3/22/10 4:26:39 PM
UPSStore_fp_0510.indd 3/23/10 3:30 PM PAGE 1 UPSStore_fp_0510.indd 3/23/10 3:30 PM PAGE 1 UPSStore_fp_0510.indd 3/23/10 3:30 PM PAGE 1 UPSStore_fp_0510.indd 3/23/10 3:30 PM PAGE 1
Entrepreneur + July 2010 6
table
+
of contents
14 Editor’s Note
Forget about the cocktails: Bars are where brilliant ideas are
hatched, partnerships are struck and deals are done.
By Amy C. Cosper
16 Feedback
Our online readers respond: What was your most brilliant
idea?
66 Doing Good
An institute gives entrepreneurs the skills and network its
founders wished they’d had.
By Jason Daley
74 Personal Finance
Maintain your personal credit score so that it won’t
become a professional liability.
By Rosalind Resnick
120 Opportunities
How to be sure your franchise’s website pops into the No. 1 spot
in an online search.
By Tracy Stapp
+Colum
ns
114 Franchise Ink
At a dog agility training center, every mutt
learns a trick or two. And so do their owners.
By Tracy Stapp
14 Contributors
Put it on Entrepreneur’s tab:
Our designated drinkers went
barhopping (tough job, we
know) to find the best spots for
doing business.
P
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entjuly10 004-010 TOC.indd 6 5/26/10 11:53 AM

Your
business
helps
keep the
economy
going.
We help
keep you
covered.
You shouldn’t have to choose
between the health of your
business and your employees’
health care coverage. At
UnitedHealthcare, we offer a
breadth of plans that allows
you to choose the one that’s
right for your business, your
budget and your employees’
health coverage needs. It’s
one reason why we’re the #1
carrier for small business. Visit
uhctogether.com/ent or call
1.877.232.8831.
© 2010 UnitedHealthcare Services, Inc. #1 For Small Business claim based on UnitedHealthcare membership systems (May 2009) for groups with 2 – 99 employees. Insurance coverage provided by or through UnitedHealthcare
Insurance Company or its affiliates. Administrative services provided by UnitedHealthcare Insurance Company, United HealthCare Services, Inc. or their affiliates. Health Plan coverage provided by or through a UnitedHealthcare Company.
UHCEW443757-001
UnitedHealthcare_fp_0710.indd 5/18/10 9:44 AM PAGE 1 UnitedHealthcare_fp_0710.indd 5/18/10 9:44 AM PAGE 1 UnitedHealthcare_fp_0710.indd 5/18/10 9:44 AM PAGE 1 UnitedHealthcare_fp_0710.indd 5/18/10 9:44 AM PAGE 1
Entrepreneur + July 2010 8
+online now
from our
blogs
“While it may be tough to
gauge the financial prog-
ress of a small business on
a daily or even quarterly
basis, it’s still important to
set goals and monitor how
close you come to meeting
them. For example, if the
dinner crowd seems a little
thin at your restaurant
tonight, you can blame it
on the weather, the ball-
game or a number of other
factors. But if business
doesn’t pick up in another
couple of weeks, that might
indicate a more serious
problem—one that might
require a menu change, a
price cut or an even more
drastic measure.” —Rosalind
Resnick on “Helping Your Busi-
ness Keep Score”
table
+
of contents
[
GO ONLINE FOR exclusive video coverage of our monthly Innovators: Get winemaker James Stewart’s insight on Napa
Valley, Le Labo founder Fabrice Penot’s take on the future of fragrance and Dukky’s Shawn Burst’s views on the next
generation of direct mail, entrepreneur.com/innovators.
Innovation in Action
HAVE A BURNING business question? Our panel of small-business advisors is here to
help. Whether it’s marketing, tech, taxes or anything else that has you stumped, they
have the answers you need.
entrepreneur.com/ask
Ask Entrepreneur
200 Ways to Be More Productive
WHETHER YOU NEED to optimize your office space, get the latest cutting-edge gadget
or just do some good, old-fashioned delegating, our experts will help you get more
from your business—and your life.
entrepreneur.com/200ways
P
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entjuly10 004-010 TOC.indd 8 5/21/10 12:14 PM

In my small business
we have to make the right moves fast.
Cisco
®
Unified Communications helps by
keeping my team better connected and informed.
Now, whether in the office, warehouse or on the
road, my team knows what my customers want.
Decisions are made faster, and the right
produce can be stocked and delivered.
In my small business we move faster
thanks to Cisco’s approach to technology.
Follow Fresh Direct Produce and more heroes of
the human network at cisco.com/smallbiz
©
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S. Watz
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T. Renshaw / jw
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J. Grosfield
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J. Cassidy
3 1 03/05/10
Introducing Transit Connect. With a
versatile interior that maximizes available
space and an impressive 23 combined mpg, *
it was designed just for you.
Still Introducing Transit Connect. Since it’s
small enough to maneuver through tight
city streets yet boasts over 135 cubic feet of
cargo room, it was designed just for you too.
“ they were thinking
of me when
they designed this.”
Michael Priebe, Priebe’s Cakes & Pastries
“ actually, they were
thinking of me!”
Lisa Webster, HomeCrunch Personal Training
2010 Ford Transit Connect.
specific for everyone.
2010 North American Truck of the Year.
fordvehicles.com/transitconnect
2010 Ford Transit Connect.
specific for everyone.
2010 North American Truck of the Year.
fordvehicles.com/transitconnect
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FD-CMA-W07880
FCOM-00233
Consumer Spread
Park PrePress
Transit Connect NAIAS TOTY Ad (Consumer Spread 4/c Bleed)
S. Watz
N/A
N/A
T. Renshaw / jw
The Park
14.75" x 9.5"
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J. Wojno
N/A
N/A
J. Grosfield
N/A
C. Gale
N/A
N/A
L. Foster
J. Cassidy
3 1 03/05/10
Introducing Transit Connect. With a
versatile interior that maximizes available
space and an impressive 23 combined mpg, *
it was designed just for you.
Still Introducing Transit Connect. Since it’s
small enough to maneuver through tight
city streets yet boasts over 135 cubic feet of
cargo room, it was designed just for you too.
“ they were thinking
of me when
they designed this.”
Michael Priebe, Priebe’s Cakes & Pastries
“ actually, they were
thinking of me!”
Lisa Webster, HomeCrunch Personal Training
2010 Ford Transit Connect.
specific for everyone.
2010 North American Truck of the Year.
fordvehicles.com/transitconnect
2010 Ford Transit Connect.
specific for everyone.
2010 North American Truck of the Year.
fordvehicles.com/transitconnect
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Entrepreneur + July 2010 12
Vol. 38, No. 7. Entrepreneur (ISSN 0163-3341) is published monthly by Entrepreneur Media Inc., 2445 McCabe Way, Ste. 400, Irvine, CA 92614. Periodical postage paid at Irvine, CA, and
at additional mailing ofces. POSTMASTER: Send address changes to En­tre­pre­neur, P.O. Box 8542, Red Oak, IA, 51591-1542. One year subscription rates in U.S.: $19.97; in Canada: $39.97; all other
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editorial
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entjuly10 012 masthead.indd 12 5/25/10 11:09 AM
05252010111247

In 1996, Saylor Frase, President of
Nuspire Networks, was a student
at Central Michigan University starting
a fedgling web development company.
Today the company he co-founded
with Steve Whitener is one of America’s
fastest growing Managed Network
Security providers with a global client
list that includes Fox Broadcasting,
Subaru, GM and ADP.
Location has been a big part of this
success. That’s because Michigan
has helped Nuspire grow with
key business support and fnancial
resources. If you’re an entrepreneur
with a great idea, look into our
aggressive fnancial incentives,
world-class universities and
high-tech workforce. Log on to
MichiganAdvantage.org today
and fnd out how we can give
you the Upper Hand.
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President
Nuspire Networks
In Michigan, innovative companies
can get their start just about anywhere,
from a boardroom to a dorm room.
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Entrepreneur + July 2010 14
editor’s
+
note [
Make mine a mojito
A
dmit it: Business happens in bars.
You’ve done it. And if you haven’t,
you should. You do business with
people, and bars let people be people.
Actually, a lot of business happens in
bars. Not just the Gordon Gekko-sized
transactions—though, it turns out, bars
are where the producers of the upcoming
Wall Street sequel got some of their juici-
est material. “We got the best stuff for
the film over drinks,” Eric Kopeloff says
about drinking with actual Wall Street
honchos in “Where are you drinking?”
(Page 50). That is, “after breaking the ice
with a personal question.”
And it’s true: The comfort factor can’t
be overestimated. Bars set the stage for
relaxed, open conversations. The kind of
conversations that lead to a brilliant new
idea, a real partnership, a deal. The idea
for our special report on business in bars
was conceived, you guessed it, in a bar.
Yet the comfort factor also makes bars
dangerous. You’re far from the clear rules
and confines of the office. Plus, you’re
drinking. The same things that make bars
great for business can also make them a
disaster for business.
So we decided to draft our own rules,
and for that we consulted the Macdaddy
of Bar-dom at Esquire: Ross McCammon.
Throughout the report, you’ll find his
strategies for doing business in a bar—
how to make a powerful impression, and
stay sober while you’re at it.
With the help of experts across the
country, we put together the ultimate,
coast-to-coast guide to the best bars
for doing business. Not the generic
hotel bars that any out-of-towner could
find, but the places where the city’s
entrepreneurial elite hang—whether
it’s a quirky bar near MIT crawling with
biotech geniuses or a palatial enclave
in Midtown Manhattan, well removed
from the tourist throngs.
Finally, we asked cocktail guru David
Wondrich to name the country’s worst
bar for doing business—and curiously
enough, a really bad business bar is
sometimes what you need to gauge the
character of the guy across the table.
Because in a bar, you can tell, really
tell, who you’re dealing with. And you
can more easily detect the character of
a deal, too. So forget navel shooters and
Jaeger. It’s a long-standing tradition to
do business in a bar.
At Entrepreneur, we love business. And
we love bars. When the two collide, it is
serious business, indeed.
Amy C. Cosper
Editor in chief
Follow me on Twitter, @EntMagazineAmy
[Designated drinkers]
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This month’s special report on business bars (Pages 50-61) began with drafting a seriously credentialed group of writers to find the best
spots across the country—the ones that capture the entrepreneurial spirit of the city while serving up the proper atmosphere and some excellent beverages.
Let us introduce you:
Ross McCammon, the articles editor at Esquire who handles the magazine’s bars and drinking coverage, gets things rolling with “The Rules,” our guide
to biz bar etiquette, from who gets there first (you) to how to make a smooth exit…Monica Corcoran Harel defines what makes a business bar great in
“Where are you drinking?” She has covered L.A. nightlife for The New York Times and InStyle, and her book with the costume designer of Mad Men, The Fashion
File, comes out in November…David Wondrich names “The best business bar in America” (in Atlanta) and “The worst business bar in America” (Back Page:
Go see for yourself). He is a cocktail historian, Esquire’s drinks correspondent, contributing editor at Saveur and the author of Imbibe! From Absinthe Cocktail
to Whiskey Smash…Leslie Brenner (“The Macallan index” and Dallas) is the restaurant critic and dining editor at The Dallas Morning News and author of The
Art of the Cocktail Party...Bruce Schoenfeld (Denver and Minneapolis) is the wine and spirits editor of Travel + Leisure magazine…Paul Clarke (Seattle)
is a contributing editor at Imbibe magazine, drinks columnist for Serious Eats blog and author of The Cocktail Chronicles blog…After reviewing bars and
nightclubs for the Los Angeles Times, Max Jacobson (Las Vegas) pub-crawls the Vegas Strip and hosts a food and restaurant hour on NPR…Marie Morris
(Boston) is the author of Frommer’s Boston and Frommer’s Boston Day by Day travel guides…Marcia Gagliardi (San Francisco and Silicon Valley) publishes
a weekly e-column on San Francisco Bay Area bars and restaurants at tablehopper.com. Her book, The Tablehopper’s Guide to Dining and Drinking in San Fran-
cisco, was published in March...Regina Schrambling (New York and Philadelphia) is a longtime food writer in New York City who has earned a GED in the
mojito from Cuba…Chris Lewis (Washington, D.C.) is a freelance writer who previously covered pro golf for Sports Illustrated, where fellow sportswriters
rounded out his beverage education…Kelly Alexander (Raleigh, N.C.) writes on food and drink for The New York Times Magazine, Saveur and Newsweek and is
the author of the Clementine Paddleford biography Hometown Appetites. She prefers a Maker’s Mark Manhattan, and the next one’s on us.
entjuly10 014 ednote.indd 14 5/21/10 12:09 PM

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Entrepreneur + July 2010 16
+
feedback [
LAST MONTH we sent out a call to our Face-
book fans: The first person to send us their
picture reading Entrepreneur in front of the
White House wins a free one-year subscrip-
tion to the magazine. Three weeks later, 45 of you had responded and we had a winner:
Rusty Luhring, founder and CEO of SurvivalWare, who rode his bike from Alexandria, Va.,
just to take this shot. Now the hunt is on for July’s winner. Check out our Facebook page
for the secret locale: Facebook.com/EntMagazine
’Trep of the
month
Tell us about it
There’s a whole world of Entrepreneur
online, and our Facebook fans, Twitter
followers and discussion groups are
buzzing 24/7 about what matters to
entrepreneurs most. Come join the con-
versation with our editors and readers:
• Become our fan on Facebook:
facebook.com/EntMagazine
• Follow us on Twitter:
@EntMagazine
• Join our online community:
econnect.entrepreneur.com
ECONNECT
THREAD OF THE
MONTH: JUNE
What was your most brilliant idea?
Nicole Murray, via Facebook
So far, my new boating product. Rave re-
views from the boating community!
(anchorsuit.com)
Frank DeBlasi, via Facebook
Saving people money in a troubled economy.
(hoopladoopla.com)
Kris Wagner Wittenberg, via Facebook
Deciding to put “Be Good to People” on
a T-shirt (and trademark it).
(begoodtopeople.com)
31Projects, via Twitter
Bringing 2gthr SMBs & top students
through mktplace 4 consulting projects.
(31projects.com)
Ryan Hoffman, via Facebook
Created an on-site garden for growing
veggies and herbs on the roof and used it
for training and community outreach.
Click on econnect.
entrepreneur.com
and comment on
the thread of the
month for July:
What’s your favorite
bar for business—
and why?
What a kick
“NEVER IN A million years could I have imagined my-
self on the cover of Entrepreneur magazine. Not my
teachers or parents, either. A milk carton, maybe.”
—Tom Atencio, vice president of Affliction Clothing in Seal
Beach, Calif., in the May issue of Orange Coast magazine
Just call us wily
WELL, YOU GOT ME with “wily” on the cover of
your May issue (“Start a business for nothing:
Four wily entrepreneurs reveal tips, strategies
and free resources”). I read it on a plane. Damn
fine read. Really engaging and informative rag.
Nice work. I read it cover to cover—and all be-
cause of the word “wily.”
Steve Rosenfield, via text
„SHARE YOUR COMMENTS. Write to Letters, Entrepreneur, 2445 McCabe Way,
Ste. 400, Irvine, CA 92614; fax (949) 261-0234; or contact us at entmag@entrepreneur.com.
Letters may be edited for brevity and clarity.
In defense of Flash
MIKAL BELICOVE’S COLUMN (“Coolness has its price: Seven reasons to avoid using
Flash on your website,” May) was a huge insult to all Flash developers and people
who sell Flash websites.
I work for T8Webware, selling custom-built Flash websites to banks across the
nation. Eighty-five of the top 100 websites in the U.S. use Flash. Flash is installed in
over 97 percent of PCs in the U.S. After the initial load of a Flash site, the load time is
equivalent to an HTML site. And, of course, many of the most popular sites we all visit
require the latest version of Flash: Hulu, Facebook, ESPN, National Geographic. And,
finally, Google has been indexing Flash websites for more than two years.
Christina Peverill
Waterloo, Iowa
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Can a laugh line
become an indicator
of your bottom line?
PRAISE FOR DELIVERING HAPPINESS:
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Just like Tony.” – Seth Godin, Author, Linchpin
Available June 7 in bookstores everywhere
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Entrepreneur + July 2010 19
BUSINESS U
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IT’S LIKE WATCHING a ninja on steroids. In
one YouTube video, Pat Cuartero wows
the crowd with the fluorescent-colored
blurs of a move he calls Angel Wings,
which involves spinning two yo-yos in
opposite directions, over his head and be-
hind his back. He wins that contest.
Cuartero knows how to work the
business side of yo-yos, too. He’s
founder of YoyoNation, known for its
extensive store, active online community
and go-to industry blog. The company is
on track to hit $1.6 million in sales by
the end of the year. It opened a UK of-
fice in April and plans one in the Philip-
pines in the next month or two.
It all began back in 2005, when
Cuartero—a high school 2A yoyo champ
turned Merrill Lynch analyst—discovered
a higher purpose: getting more people
in New York City to play with yo-yos. He
funded startup costs with about $8,000
of credit card debt, and in his first five
months, he netted $32,000. It was
enough to persuade him to leave Wall
Street and develop his target market.
“We sponsored all the contests because
these were the people who would buy
cases, strings and bearings,” Cuartero says.
At the same time, he established an ac-
tive online community. “Forums are much
faster than newsletters as a way to reach
people who care. We have a 90 percent
conversion rate, so whenever we an-
nounced a new product, we’d sell out of it.”
YoyoNation stocks products for all skill
levels and styles—from a three-buck plas-
tic Duncan to the rare $549.99 hand-
made Oxy Ti titanium model—plus parts
to pimp out the toy, clothing and gear
(think Japanese skater boy). The site now
gets 37,000 unique visitors a month and
sells to fans in 79 countries.
“My dream was to make New York the
capital of yo-yos,” he says. “But we have
the potential to become a global brand.”
These days, you can spot Cuartero
walking around the city with yo-yos in
hand, working on his fundamentals (ask
him to show off something cooler than
Walk the Dog). “I don’t know what’s next,”
he says. “But you can bet YoyoNation will
be a part of it.” —Jennifer Wang
On the upswing: Pat Cuartero
turned his love for all things yo-yo
into a $1.6 million business.
Hopping
the fence
Trends, issues and data to keep you on top of your game going
+
forward
entjuly10 019-022 goingforward.indd 19 5/21/10 12:26 PM

Entrepreneur + July 2010 20
ASK A PRO

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Q:
What should you do if an
employee is lying to you?
A:
Much as you’ll want to call bullshit
on the spot, Pamela Meyer, author of
Liespotting: Proven Techniques to Detect Deception,
recommends you take a deep breath, then:
Gather Evidence. Wrongfully accusing
someone can seriously damage morale. Get
the facts in writing or e-mail and observe the
employee’s behavior.
Set up a time to talk. Most lying is done
by phone (scientists have actually studied
this). And, of course, lying is even easier with
e-mail. So schedule a face-to-face meeting
with the employee. Just remember: It’s not an
interrogation. Keep it professional by making
it easy for an employee to save face and say,
“I’m sorry, I must have misunderstood.” Ask
simple, open-ended questions (“What did you
do on Friday?” “How do you feel about your
work here?”). If the employee continues to
be evasive, change the subject until you have
reestablished rapport and then come back to
Topic L from a different point of view. Don’t
directly call the person out—it won’t accom-
plish anything.
Take appropriate action. If you discover
that an employee violated company policy or
the law, you must act—from starting proba-
tion to notifying authorities. If it’s something
less serious, just state that the company
doesn’t tolerate deceptive behavior.
Small-business owners are often victims of
employee deception because they’re too busy
to pay attention, Meyer says. “But don’t be
paranoid. It only matters if deception or fraud
is hurting your company. Social interaction
sometimes relies on white lies, and deception
is a fact of office life. If everybody was com-
pletely honest, we wouldn’t have any friends
or colleagues left.”—J.W.
Liar, liar
In search
of the truth:
Pamela Meyer.
The TELLS
IN POKER, they call it a
“tell”: A subtle cue that
gives away the weak
hand behind the player’s
bravado. Liars have their
tells, too, and Pamela
Meyer offers some of the
most common, drawn
from research, interroga-
tion methods and facial
recognition techniques
taught in intelligence train-
ing programs, police acad-
emies and universities.
• An asymmetrical smile
or frown, or shrugging
with just one shoulder.
• Extended eye contact
(honest people look
you in the eye only 60
percent of the time).
• Sitting completely
still, or moving just
one body part (a
single jiggling leg or
waving arm).
• Flashes of anger or
surprise that are
quickly repressed.
• Fidgety, quick touches
to the eyes or mouth.
• Over-talkativeness.
• Speaking more
slowly and deliber-
ately than usual.
• Lame denials and
vague statements
(“I don’t know what
you mean….” “I was
out….” “It was a
busy day.”)
• Repeating questions
or phrases to stall
for time.
You invest a lot of time in Facebook, and you have hundreds of fans and a really cool page—but what’s the payoff?
Now someone has an answer: Vitrue, a social media management company, has released the Social Page Evaluator,
a tool that measures the monetary value of Facebook pages. Using parameters such as fan interaction and frequency
of posts, it estimates the current and potential worth of your page (and anyone else’s). Let the Facestalking begin:
evaluator.vitrue.com
Facebook: You
can put a price
on friendship
going
+
forward
[
entjuly10 019-022 goingforward.indd 20 5/21/10 12:26 PM

Entrepreneur + July 2010 21

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g
84,000
The number of centenarians living in the United States. And speaking of centenarians,
8 percent of those surveyed in a recent poll had texted in the past year.
Sources: U.S. Census Bureau and United Healthcare
[
J
a
r
g
o
n
]

Dale Carnegie, the app
THE GRANDDADDY of management gurus—
If you want to gather honey, don’t kick over the
beehive—is now an app.
Seventy-four years after the publication
of Dale Carnegie’s How to Win Friends and
Influence People and 55 years after his death,
his advice is being downloaded by the thou-
sands, $2.99 for BlackBerry and 99 cents
for iPhone (a bargain compared with the
average Carnegie workshop fee of $1,600).
The app, Secrets of Success, is no Tap Tap
Revenge, but it does break down the core
Carnegie leadership principles, functioning
like a pocket-sized management prof and
personal cheerleader. “You can review some
sales pointers before a call or get a quick con-
fidence boost to help you close the deal,” says
Piera Palazzolo, senior vice president of mar-
keting at Dale Carnegie Training. “And there’s
a library of short videos that show the right
ways to talk to someone.”
So if you’ve struggled to pay sincere
compliments or sweet-talk willful em-
ployees, these are the scripts you’ve been
waiting for. Not to mention the arsenal of
inspirational quotes you’ll have, literally,
at your fingertips. Take it away, Dale—
Flaming enthusiasm, backed up by horse sense
and persistence, is the quality that most fre-
quently makes for success. —J.W.
Definition: A soft economic theory that links ’trep
activity with positive influence on the economy.
Usage: “Over the past 15 years, small busi-
nesses have created roughly 65 percent of all
new jobs,” President Obama said. “Through sheer
grit and determination, these companies have
weathered the recession and are ready to grow.”
(That’s what we call treponomics, dude.). —J.W.
Treponomics
You should
KNOW
Title: Economist, rabbi
Why you should care: In the
depths of the downturn, Joseph
Schumpeter’s theory of entre-
preneurs as forces of creative
destruction got all the ink. So now
that things are looking up, we’d
like to propose a new oracle: Is-
rael Kirzner, an anti-Schumpeter
who declares entrepreneurs are
economic stabilizers. Kirzner, a
New York University emeritus pro-
fessor of economics, explains in
his 1973 book, Competition and
Entrepreneurship: Undiscovered
profit opportunities are actually
market errors that need to be
corrected. Only after enough
competitors jump in and eliminate
that opportunity will the market
move toward true equilibrium.
Sure, it isn’t as sexy as Schum-
peter’s angry-god entrepreneur.
But in a world where small busi-
nesses are being called upon to
save the world, Kirzner’s view has
new resonance.
Memorable quote: “It is the
restoration, not the disruption,
that is brought about by the
entrepreneur.” —J.W.
ISRAEL KIRZNER
(BORN 1930)
entjuly10 019-022 goingforward.indd 21 5/21/10 12:26 PM

Entrepreneur + July 2010 22
going
+
forward
[
What summer vacation?
IT’S BEEN SAID that a good vacation is
over when you begin to yearn for your
work. But for some workaholics (you know
who you are), that means vacation never
really begins in the first place.
A recent Microsoft study on working
outside of the office reveals dreadful in-
sights about the places employees work
when they shouldn’t be working. The
Work Without Walls survey polled—on-
line, of course—3,500 adults around
the country. The conclusion? Business
trips aren’t the only time people work
on the road.
The most common provisional work-
places, at 37 percent, are wherever the fam-
ily happens to be vacationing. A surprising
number admitted to toiling in grocery stores
(10 percent) and parks (10 percent). Some
couldn’t manage to put the BlackBerry
down while camping (4 percent) or, no joke,
at a funeral (1 percent).
Men apparently find it harder to
put aside work: 43 percent of them
said they worked during family vaca-
tions, compared with 31 percent of
women. But please, guys, put away the
laptop while you’re on the can—12
percent of men confessed to working
in the restroom. —J.W.
$15
The Rattlesnake Bar
Ritz-Carlton
Dallas
$22
Oak Bar
Plaza Hotel
New York
$12
The Bar
The Peninsula,
Chicago
Chicago
$10
Heathman Bar
Heathman Hotel
Portland, Ore..
$18
Sidebar
Beverly Wilshire
Beverly Hills, Calif.
IF THERE’S such thing as the default
setting for a business drink, it’s a hotel
bar and a glass of Macallan 12-year-
old scotch, the single malt that’s a
natural for soothing anxious partners
or convincing uncertain investors. But
depending where in the country you’re
sipping it, Macallan can seem like a
bargain or a hideously expensive lux-
ury. Not surprisingly, it’s priciest with
a view of Central Park. But more than
twice what it goes for in Portland?
How do they price a pour, anyway?
“We base it on the cost price of the
bottle,” says Pradeep Raman, direc-
tor of food and beverage at The Pen-
insula, Chicago. “Depending on our
equipment cost and the cost of the
labor, we have a percentage markup.”
(Equipment=Glass. Labor=Pour from
bottle to glass.)
Raman says the hotel pays $42 for the
bottle. At 1
±
⁄≤ ounces per standard pour,
you get 17 pours per bottle at a cost of
$2.47 each. “On this our margin is 500
percent,” he says.
Only 500 percent! If the Oak Bar is
also paying $42 per fifth, its margin is
890 percent. Wait—why aren’t we in the
bar business?—Leslie Brenner
The Macallan index































entjuly10 019-022 goingforward.indd 22 5/21/10 12:26 PM

OK
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Notes
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The Now Network.


1-800-SPRINT-1 sprint.com/4G
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Sprint_fp_0610.indd 4/15/10 1:14 PM PAGE 1 Sprint_fp_0610.indd 4/15/10 1:14 PM PAGE 1 Sprint_fp_0610.indd 4/15/10 1:14 PM PAGE 1 Sprint_fp_0610.indd 4/15/10 1:14 PM PAGE 1
H
T
FUTU
THE
innovators
+

Just Dukky: CEO
Jimmy Treuting,
left, and founder
Shawn Burst.
entjuly10 024-026 innovators.indd 24 5/18/10 12:42 PM

Entrepreneur + July 2010 25
By Jason Meyers | Photography by David Johnson
T
here’s a reason people call
it junk mail—as much as 99
percent of direct-mail ads are
ignored, or cursed at, before
being tossed into the trash.
But Shawn Burst saw potential amid
the unredeemed coupons and “This week
only!” offers: What if it was possible to
combine a direct-mail campaign with
social media and other web technology?
What if he could make junk mail ex-
tremely valuable—not just to the people
who get it but also to the marketing
groups and businesses that send it out?
Two years ago, Burst founded Dukky, a
company dedicated to exactly that idea.
After 15 years in the direct-mail and
printing industries in New Orleans, Burst
knew that the most effective campaigns
have a good offer and a good mailing
list. But he also knew that even the best
lacked strong customer engagement and
truly measurable results.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
HAS BEEN DELIVERED—
TO YOUR MAILBOX
TURE
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k
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is m
e
rg
in
g
th
e

ju
n
k
in
th
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m
a
il w
ith
so
c
ia
l
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a
rk
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tin
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n
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o
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a
n
d
c
re
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a
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e
rin
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ly
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tiv
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m
a
rk
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tin
g
m
a
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h
in
e
entjuly10 024-026 innovators.indd 25 5/21/10 12:29 PM

Entrepreneur + July 2010 26
“We’ve been on this mission to build
a tool that would give every business, big
or small, an intelligent lead-generation
tool that closes all the holes,” Burst says.
What Burst and his Dukky partners
developed is, simply, a souped-up lead-
generation device. It makes print adver-
tising trackable, and it lets marketers
watch the progress of their campaigns in
real time. It builds a deep database—the
all-important mailing list—as it goes
along. And by adding social media—giv-
ing respondents a chance to share the
promotion on Facebook, Twitter or some
other outlet—it can make the despised
coupon-in-the-mailbox a full-on, viral-
marketing phenomenon.
In January, Dukky launched the first
version of its software platform. Within
months, it had more than 100 clients, in-
cluding Chik-fil-A restaurants and Stein
Mart department stores. It monitored
their campaigns in real time and col-
lected detailed information about their
customers (including e-mail address,
birthday and gender). It orchestrated
one campaign so effectively, the response
rate was an unheard-of 280 percent—
with no additional investment.
“This is going to be a game-changing
technology,” says Richard Birt, senior
vice president of customer analytics
and insights at KSL Media, an agency
in New York and Encino, Calif., that
buys advertising for clients. “In 30
years’ time, I consider it one of the top
three groundbreaking technologies in
database management.”
Burst is counting on it.
SAY DUCKY
Burst, a lifelong resident of the New Or-
leans area, attended Tulane University
and then went to work with his brothers
at their direct-mail and print facility,
where he was responsible for product
innovation. Dukky spun out of that busi-
ness and, when it started to gain traction
and attract funding, it became Burst’s
sole focus (his title is executive vice pres-
ident of sales and marketing).
A note about that name: It’s pro-
nounced ducky, as in rubber ducky. Early
on, Burst, a busy father of four, was doing
some strategic thinking in the shower.
“One of my only places of refuge,” he
says. “I looked down and there was a yellow
rubber duck. I thought about how ducks
fly in formation and how that related to
our co-op mail approach.” Because ducky.
com wasn’t available and because two-
consonant domain names were popular,
the company name was hatched.
According to the Direct Marketing
Association, more than 54 percent of all
advertising spending in the United States
goes into direct-marketing channels.
Spending in 2009 was more than
$149 billion; direct mail and catalogs
alone made up $44.4 billion of that.
Despite the big numbers, marketers
know the frustration of not being able to
quantify their results, and anyone sell-
ing advertising is acutely aware of the
demand for metrics. In a tight economy,
marketers want sales leads more than
they want anything else.
Meanwhile, social media has altered
how consumers make buying decisions.
Sure, people still look at ads in maga-
zines, and if they don’t TiVo, they may
even watch a commercial once in a while.
But chances are, they are paying more
attention to their connections on Face-
book and Twitter.
Dukky’s tool for bridging the online
and offline worlds is something called
a PURL: a personalized URL, or web
address, that is pre-populated with a
target customer’s data. That individual-
ized PURL—say, gift.com/johndoe—is
printed on a piece of direct mail sent to
John Doe. And the offer on the mailer re-
quires a trip to the Internet to redeem it.
It sounds like a hassle, but Dukky and
the marketers who use direct mail are
confident consumers will take that extra
step. “People’s online and offline lives are
pretty intermingled now,” Burst says.
The PURL leads respondents to a
microsite created exclusively for the in-
dividual customer. It mirrors the direct-
mail campaign and is where John Doe
ultimately gets what he wants: A coupon
he can print out, for example. But before
the payoff, he is required to share more
information about himself, which is then
collected and tracked via Dukky’s platform.
Finally, John Doe is offered a quick way to
share the offer with friends through social
media: If he likes the offer, he can post it to
his Facebook page, or Twitter, or whatever
social gizmo. No pressure.
The end result: A deep connection
with customers before they even set foot
in the store. A rich database for future
Anatomy
of going
viral
Or, how Dukky turned
a chicken biscuit into
a marketing bonanza
1. Chik-fil-A of Covington, La., sends
5,000 pieces of direct mail offering a
free chicken sandwich or chicken biscuit
with online registration. Each piece fea-
tures a PURL, a personal URL, unique
to each recipient.
2. To get their free chicken biscuit,
customers must click onto their PURL
and supply their name, e-mail address,
birthday and gender.
3. Customers then are offered the
opportunity to share the biscuit giveaway
via social media, text message or e-mail.
Added incentive: They and the people they
share the offer with can win free Chik-fil-A
sandwiches for a year.
4. Using the Dukky dashboard, mar-
keters track respondents through every
step of the process, measuring how many
people activated the free sandwich card,
how many shared the offer, etc. Through
sharing, the Chik-fil-A offer is extended to
14,000 people.
5. More than 1,300 customers
redeem the original offer—a 26 percent
conversion rate—and the Chik-fil-A store
captures 3,400 names and e-mail ad-
dresses for future marketing efforts.
innovators
+

entjuly10 024-026 innovators.indd 26 5/21/10 12:29 PM

Entrepreneur + July 2010 27
marketing. And—incredibly—a good
chance that the customer himself will
become a viral marketing agent.
The firsT wave
Dukky takes the most effective form of
direct marketing—an offer that requires
the customer to interact with the com-
pany—to the next level, “by combining
that interactivity with social media,” says
Richard Joutras, CEO of the Segerdahl
Group, a direct-mail printer in Wheeling,
Ill., that uses the Dukky platform. “It’s
direct marketing on steroids.”
In the case of Stein Mart—which had
never done an interactive direct-mail
campaign before Dukky—it exceeded its
expectation of 2.5 percent offer redemp-
tion by 16 times and got a list of 5,500
potential customers.
“Not only are we exponentially raising
the numbers, but now Stein Mart has a
list of people they didn’t have before,”
says Jimmy Treuting, CEO of Dukky.
Chik-fl-A had even greater success.
Rick Gonzalez, the owner of the franchise’s
store in Covington, La., used Dukky’s
platform on a direct mailing of 5,000 free
sandwich offers. He received an incred-
ible 14,000 responses, thanks to the offer
going viral, and, more important, he built a
strong database for future promotions.
“I had tried for eight months to build
an e-mail database and had 150 names,”
Gonzalez says. “After the four weeks of
this campaign, I had 3,400 names.”
It’s almost as though Dukky is re-
moving the perceived infuence of the
marketers by making the consumers
themselves the advocates for a product
or service. “It’s the difference between
kicking the door in and throwing some-
thing at you, and ringing the doorbell
and showing you what we want to sell
you,” Joutras says. “If it’s the right offer,
people will want to use it.”
That’s an important point about what
the Dukky platform doesn’t do: Create the
actual campaign. “Our tool is not a silver
bullet,” Burst says. “If you have a crappy
list and a crappy offer, our tool might
only make it a bit less crappy.”
Dukky lets marketers fgure out how
good the campaign is as it is in progress.
As customers are accessing PURLs and
sharing offers on Facebook, marketers
can see the regions where it’s working
best, how long customers spend in differ-
ent phases of the process, who their best

It’s dIrect
marketIng
on ...
steroIds.

Shawn Burst: He
aims to make Dukky
a lead-gen leader.
entjuly10 027-034 innovators.indd 27 5/25/10 10:30 AM
05252010103047
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employees-at-no-cost
*
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company insurance.
*There may be indirect administrative costs. © 2010 Afac Incorporated. NAD0981
Premiums are 100% employee paid.
Employees pay only for the coverage they want and need, and your company
pays nothing at all.
Protect and care for your employees with Aflac.
Even when there’s no budge in your budget, you can still make sure your
employees are getting the complete coverage they need. Coverage that helps
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coverage possible. Aflac is a cost-effective way to provide additional
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employees-at-no-cost
*
-to-your-
company insurance.
*There may be indirect administrative costs. © 2010 Afac Incorporated. NAD0981
Premiums are 100% employee paid.
Employees pay only for the coverage they want and need, and your company
pays nothing at all.
Protect and care for your employees with Aflac.
Even when there’s no budge in your budget, you can still make sure your
employees are getting the complete coverage they need. Coverage that helps
you attract and retain the best workforce—all at no cost* to your company.
Aflac complements your existing benefits package
at no cost
*
to your company.
As an employer, you want to provide your employees with the best insurance
coverage possible. Aflac is a cost-effective way to provide additional
coverage where major medical may fall short.
Aflac can help attract and retain employees at no cost
*

to your company.
When employees are considering where to work, great benefits are a top
priority. Strengthening your coverage with Aflac’s competitively priced
policies shows potential hires how much your company cares.
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Entrepreneur + July 2010 34
advocates are, and so on. That allows
marketers to rank customers based on
how much they help attract new custom-
ers. Or as Adam Boalt, Dukky’s interac-
tive director, puts it: “Our clients love
watching their campaigns come alive.”

NEXT: SMALL BUSINESSES
Boalt, who founded an interactive mar-
keting agency in Washington, D.C., and
West Palm Beach, Fla., helped Burst
develop the software platform. The
third Dukky principal, Jimmy Treuting,
was one of the original investors in the
company and a veteran of online startup
ventures, and in January he joined the
company as CEO.
Since the software was launched in
January, Dukky’s efforts have landed
more than 100 customers, Burst says.
For Dukky’s enterprise clients—the
direct-mail printers and ad agencies—
the software license fee is $999 per
month. Those outfits can use and brand
the tool however they choose and use
it with any of their own clients. They
upload their lists into the system and
pay anywhere from 2 cents to 6 cents
per PURL, based on the volume of their
campaigns. Burst projects sales this
year to be $5 million.
Dukky is beta testing a version for
smaller businesses—including those
that don’t have the budget for a market-
ing agency. The most basic subscription
level for small businesses is $99 per
month, which allows for three campaigns
and 350 leads into the database. Bigger
packages are available for larger busi-
nesses that need more campaigns and
more database entries.
Ultimately, that tool could be distrib-
uted via any number of outlets that have
access into small businesses, from IT sys-
tems integrators to companies that provide
services such as web hosting and online
directories to small businesses. Even big
guns like Google are being discussed; Burst
sees the potential to integrate the Dukky
tool into Google AdWords.
The licensing strategy has led to
$3 million in private equity raised to
date, including an undisclosed amount
from LongueVue Capital in New Orleans.
“What attracted us was the opportu-
nity to bring offline companies online
and the software-as-a-service model,”
says Rick Rees, general partner and co-
founder at LongueVue. “The scalability of
that business model is tremendous.”
Dukky is also exploring applications for
print media advertising and mobile tagging
technology and how to take those consum-
ers directly to advertisers’ PURLs.
Actually, say Burst and company, they
are exploring every avenue they can
think of.
“In the end,” Burst says, “we just want to
be known as the best and easiest-to-use
lead-gen system for any size business.”

CAMPAIGNS
COME ALIVE.

Adam Boalt: Dukky’s
interactive director.
innovators
+

entjuly10 027-034 innovators.indd 34 5/21/10 12:31 PM

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From the corner office to the corner coffee shop,
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The new USB-powered Canon imageFORMULA P-150 Scan-tini Document Scanner.
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Canon_fp_0510.indd 3/19/10 2:31 PM PAGE 1 Canon_fp_0510.indd 3/19/10 2:31 PM PAGE 1 Canon_fp_0510.indd 3/19/10 2:31 PM PAGE 1 Canon_fp_0510.indd 3/19/10 2:31 PM PAGE 1
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SHINY OBJECT OF THE MONTH
tech
+
department
Scan when you want to
A new hand-held imaging tool takes
the planning out of scanning
THE MAGIC WAND from VuPoint Solu-
tions may be the sleeper productivity
tool of the moment: It’s a scanner you
can put in your pocket.
The 10-inch long, 7.5-ounce imag-
ing scepter captures a high-quality scan
of any photo, pattern or text up to 8.5
inches wide. And it’s one-button simple
to operate. Fire it up, slide it smoothly
across the work and out comes a reason-
ably high-resolution, desktop-quality
image of the original. No additional
lighting required. Hundreds of images
can fit into the 32GB max microSD card,
and scanned content can be stored to
your computer via a USB connection.
VuPoint, based in City of Industry,
Calif., specializes in low-cost, easy-to-use
gadgets that retrofit older technologies
into newer high-tech trends. “We see to-
day’s small businesses archiving and re-
cording important company documents
with the Wand,” says Brant Williams,
VuPoint executive vice president.
The gadget, which retails for $99.99,
is far from perfect. The control screen is
so small that managing the scan library
is best done on a PC. And be sure to edit
all documents generated by the optical
character recognition—some text trans-
lation can be rough.
Still, there's a legit small-business
handiness to something that puts a busi-
ness-class image-capture tool in the palm
of your hand. No smartphone camera
comes close. —Jonathan Blum
Entrepreneur + July 2010 37
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BSJ¬EBJBJ3SL+7
Entrepreneur + July 2010 38
[ tech
+

mobile entrepreneur>>>
WHEN GREG GRUNBERG first entered
the pop culture consciousness playing
aspiring entrepreneur Sean Blumberg
on the hit prime-time drama Felicity, it
was a classic example of art imitating life.
Felicity co-creator J.J. Abrams, Grunberg’s
lifelong friend, drew inspiration for Sean’s
crackpot business schemes—among them
edible marzipan boxer shorts, flavored
pen caps and the mysterious condiment
Smoothaise—directly from Grunberg’s
own pre-fame professional pursuits, in-
cluding Yogurt Runners, a frozen yogurt
delivery service catering to Hollywood
studios and agencies.
Now a television fixture thanks to
subsequent roles in Alias and Heroes,
Grunberg has another breakout hit to
add to his résumé: Yowza!!, the mobile
coupon solutions startup he founded
with veteran software developer August
Trometer. Already downloaded by more
than a million iPhone and iPod touch
users since launching in June 2009, the
free GPS-based Yowza!! application iden-
tifies special offers and discounts within
a consumer’s immediate vicinity. Mer-
chants work with the company to tailor
deals, and cashiers redeem the Yowza!!
barcode no differently than they would
scan a traditional paper coupon.
Grunberg formulated the Yowza!! con-
cept while shopping with his family. “We
were in Bed, Bath & Beyond when I real-
ized we forgot the coupon in the car—and
the reason you shop in that store is so you
can get 20 percent off,” he says. “As I’m
walking back to the car, I’m thinking, ‘This
sucks. There has to be a better way.’ Every-
thing just came together from there.”
Grunberg connected with Trometer
via Twitter, and together they created the
Yowza!! app before ever meeting in the real
world. “We agreed it has to be simple—it
doesn’t have to have bells and whistles and
doesn’t have to be complicated,” Grunberg
says. “If my mom cannot use this app on
a daily basis to make her life better and
easier, then it’s not worth it.”
Yowza!! is expanding its horizons be-
yond nationwide retail chains, introduc-
ing a self-serve sign-up option optimized
for small, locally owned merchants. For
$49 per location per month, retailers
and restaurateurs can offer as many as
three coupons at a time, creating new
deals within minutes via the web. Be-
cause the Yowza!! app orders offers in di-
rect relation to user proximity, there’s no
preferential treatment afforded to larger
companies. And to sweeten the deal,
Yowza!! also supplies a welcome packet
including decals to alert consumers that
mobile coupons are accepted, as well as a
training guide for staffers.
“Yowza!! is so inexpensive compared
to what retailers are doing now,” Trom-
eter says. “They’re paying newspapers
lots of money to reach a lot of people
who will never see their ad or clip it
out. We allow merchants to market to
people who are already nearby—peo-
ple with money in their hands who are
looking to spend it.”
Next up: A Yowza!! affiliate program
encouraging users to sign up local busi-
nesses, awarding them a 25 percent com-
mission based on the business’s monthly
sign-up fee on all referrals for the first year
of the account.
“We look at Yowza!! as more of an adver-
tising platform than just an application,”
Grunberg says. “It’s all about helping and
rewarding the retailer, and getting people
back into stores.” Sounds much more ap-
pealing than Smoothaise. —Jason Ankeny
Coupons get a move on
Yowza!! matches merchants with customers on the go
Yowza!!: Co-founders
August Trometer, left,
and Greg Grunberg.
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Entrepreneur + July 2010 39
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Everyone seems to have different ideas about
how best to book travel online. Some people use
Expedia, others Travelocity or Orbitz. Some even still
swear by airline websites. That so many methods exist
means there are a lot of choices, but also a lot of chaos.
TripIt has figured out that you will run into more of the
latter than the former as a businessperson who travels frequently
and works closely with other frequent travelers. Instead of being just an-
other booking tool, the free TripIt app looks to make sense of the chaos by
being like a travel organizer. It collects your confirmation e-mails from booking sites
to create electronic master itineraries that can be viewed on any device and shared
with co-workers. A TripIt Pro version ($69 a year after a free 30-day trial) tracks fre-
quent flyer points and flight delays and sends text alerts to you and your inner circle.
All this sharing makes TripIt sound like a social media application and that’s
exactly where it’s heading. Its newest feature, TripIt Groups, lets you build and
view travel maps with itineraries and status updates for everyone in your group,
even your entire company.
So much organization—but still no word on when the app will be able to
pack for you. —Dan O’Shea
Customize your app
Where to go to create a mobile strategy that will set you apart
IN A CROWDED MOBILE WORLD, there is hope for small businesses looking for unique
apps. Modular, customizable development tools can help you add the features you want
without having to start from scratch. Here’s a look at some resources. —Ericka Chickowski
APP OF THE MONTH
>>
BuildAnApp (buildanapp.com)
BuildAnApp lets users quickly create mo-
bile apps through assorted standard tem-
plates and a six-step wizard. The platform
then creates an app and pushes it out to
multiple device types, including iPhone,
Android, RIM and Windows Mobile. Build-
AnApp offers a free 30-day trial, charges
$19.99 for submissions to the Apple App
Store and $14.99 per month for unlim-
ited updates to customer apps.
>>
Mobile Roadie (mobileroadie.
com) Designed originally for bands and
performers looking to create custom
applications that offer a way to share
photos, videos, music, news and show
dates with fans, this iPhone and Google
Android compatible DIY app platform
service could also be used by busi-
nesses to share custom content with
customers. Setup starts at $499, with a
$29 per month hosting fee.
>>
Canvas (gocanvas.com) If your
organization is considering developing
some internal tools for in-the-field staff-
ers such as sales personnel or auditors,
it might be worthwhile to hit up the
Canvas mobile app store for businesses
before you hire a consultant. Canvas of-
fers mobile apps that suit the needs of
businesses in a variety of industries. The
service is $20 per month for unlimited
applications on a single device.
>>
dotMobi Instant Mobilizer
(instantmobilizer.com) More focused
on mobile websites than applications,
dotMobi enables small businesses to af-
fordably use their existing online content
on various mobile web platforms. The
dotMobi Instant Mobilizer transforms PC-
based websites into mobile-ready websites
meant to be viewed on the small screen.
The service is available for free from dot-
Mobi domain reseller partners.
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A METHOD FOR
TRAVEL MADNESS
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Entrepreneur + July 2010 40
tech
+

SMALL-BUSINESS PRINTING took a couple of unique turns this year: First, Google an-
nounced plans for Google Cloud Print, which will be built into the coming Google
Chrome operating system and would allow any web-connected imaging device to
crank out documents from any PC or mobile device. Then, FedEx Office announced
that it is rolling out 12,000 new networked printers in its retail stores to support di-
rect printing from smartphones and cloud imaging.
Meanwhile, printer makers are hustling to show off their web-ready imaging de-
vices that will meet the needs of small businesses. Here are our picks for business
printers that should rock the cloud. —J.B.
A look at some new options for
web-driven printing
Images from the cloud
Epson WorkForce 610 ($199)
What gets this printer on the cloud imaging list is not only
its blistering print speed of 38 pages per minute, but also its
Wi-Fi networking and impressive set of PC-free printing op-
tions. Besides PC-less printing of photos, the 610 supports
several direct-print options for digital files. If you do it right,
you can keep your business collateral stored on your printer
and then print things such as brochures, cards and enve-
lopes with one touch as you need them. That’s pretty slick.
Canon imageCLASS MF8050Cn ($499)
Canon does a great job here with legit laser print color, a full
suite of fax and networking options and a professional user in-
terface that even the technically challenged can manage. Don’t
ask the 8050 to make lots of copies: It cranks out a feeble eight
pages per minute. But the 8050 has remarkable scan-to-USB
functionality, where images can be mastered to portable jump
drives. For a street price of less than $500, what's not to love?
Lexmark Pinnacle Pro901 ($299)
Here's a sales hook: a black-and-white ink jet replacement
printer cartridge that’s just $5. But that's not why Lexmark
made the cut. The company has done a great job integrating
smartphone app-like features into its 4.3-inch touch-based
interface. Called myTouch, the technology lets you create one-
touch shortcuts for your most popular print jobs.
HP 9250c Digital Sender ($3,199)
This workhorse is an enterprise-level document
scanner that can digitize a mind-boggling 55 black-
and-white pages a minute (3,300 pages per hour)
and ship the content directly over any small-business
network. When printing steps onto the cloud, busi-
nesses facing a mountain of office paper could find
the 9250c the way to turn that useless pile into real
business information. Keep this unit on the radar.
’t
ght
er in

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department
Gowalla is erasing
the line separating
the real world from
its virtual counterpart
GOWALLA IS EQUAL PARTS per-
sonal scrapbook, travel guide and
geo-specific social network. Like
archrival Foursquare, Gowalla lets
consumers check in at restaurants,
bars and related points of interest
worldwide via GPS-enabled mobile
devices. Users can recommend lo-
cations to friends, share photos and
notes on their experience and even
earn passport-inspired “stamps”
and digital rewards for their efforts.
“Gowalla is about recording and
sharing favorite places with friends,
and the social status that comes
along with that,” says CEO Josh
Williams. So far, the Austin, Texas,
company has raised nearly $11 mil-
lion in venture financing. “We’re
tapping into a basic human desire
to associate with a sense of place.”
A growing number of people be-
lieves Gowalla is the place to be: As of
April, more than 250,000 “Gowalla
Passport Holders” from 170 coun-
tries had checked in, and usage is
increasing by more than 60 percent
every month, Williams says.
“Our core group of users isn’t just
hipsters and Silicon Valley types.
We also have a significant number
of moms going out on the weekends
and sharing information on their fa-
vorite parks,” Williams says. “We want
Gowalla to provide a rewarding, fun
and entertaining experience that en-
courages users to explore the world
around them.” —Jason Ankeny
Foursquare,
watch your
back
The Gowalla app is
optimized for most
major smartphone
platforms, includ-
ing Apple’s iPhone,
Google’s Android,
Research In Mo-
tion’s BlackBerry
and Palm’s webOS.
Gowalla has also
expanded to
Apple’s iPad.
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The site generates
revenue via sponsor-
ship deals with brands
such as Chevrolet and
fast-food chain Chipo-
tle. Merchants are
reaping the benefits:
When One Taco, in
Austin, Texas, adver-
tised free tacos, it
sold 12 for every one
it gave away.
PROMOTE
Gowalla spotlights
featured destina-
tions and attractions
in cities large and
small. In addition to
specific site recom-
mendations, Gow-
alla also suggests
“trips”--e.g.,
citywide pub crawls
and themed
walking tours.
EXPLORE
Gowalla constantly
updates the
whereabouts and
activities of users
as they check in at
destinations rang-
ing from trendy
nightclubs to salons
to fast-food fran-
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chances are a Gow-
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FOLLOW
Entrepreneur + July 2010 43
entjuly10 043-046 webdept.indd 43 5/21/10 12:33 PM

Entrepreneur + July 2010 44
Creating a business blog may be a simple part
of your online strategy, but how and where to host it?
WHEN PLANNING A BUSINESS BLOG, the
first question is often the most difficult:
What is the best domain hosting strategy?
You have three options, each with
benefits and drawbacks:
Standalone domain (e.g., business-
name-blog.com): A standalone domain,
also known as a top level domain, is
separate from your business’s website
domain. That can often be a good
thing because:
• The blog extends your brand through a
separate domain.
• Once indexed, the blog provides
a unique search result for your
business.
• Quality back links from your blog to
your business website may raise the
website’s search engine ranking.
• Including a city or state in the domain
name, such as www.your-town-gar-
dening.com, might help generate local
search results.
Hosting your blog on a separate do-
main may seem ideal, but it does have
BUILD A WEBSITE
When choosing a domain name
for your blog, you may be
tempted to pack it with key-
words to improve your search
ranking (for example, chicago-
illinois-landscaping-gardening.
businessname.com). Avoid the
temptation. Stuffing keywords
into your domain name can
result in penalties for keyword
spamming. In addition, none of
your customers will be able to
remember such a long domain
name. If you do include a key-
word or two, be sure to sepa-
rate all words with hyphens, so
that search engines can identify
them as separate words.
Avoid keyword
overkill
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Mikal E. Belicove is a market positioning, social media and manage-
ment consultant specializing in website usability and business blog-
ging. When he is not working or ghosting blog entries for clients,
Belicove can be found musing about the world on belicove.com and
can be reached at mikal@belicove.com.
The best blog spot
drawbacks: Maintaining separate sites
requires more time and effort, and any
inconsistencies between the two sites
could cause brand confusion. Also, the
new blog must build its own search en-
gine authority starting from scratch.
Subdomain (e.g., blog.businessname.
com): Like a standalone domain, a sub-
domain is considered a separate entity
by search engines. It carries many of the
same potential benefits and drawbacks as
a standalone domain but offers one ad-
ditional benefit. You can, with most host-
ing services, set up several subdomains
on a single account, so you can present
unique content for different products
and services on different domains; for
example, ceoblog.businessname.com and
companyblog.businessname.com
Subdirectory (e.g., businessname.
com/blog): Many businesses host their
blogs in a directory (folder) on the web-
site domain for three good reasons:
• Accessing the website and blog
through a single hosting account saves
time and money.
• The blog immediately benefits from
the main domain’s existing search
engine ranking and contributes to im-
proving it.
• Subdirectories let you organize blog
content into highly descriptive URLs that
search engines love to index and rank.
Of course, hosting your company’s
blog and website on the same domain
can work against you, too. If your website
lacks authority and trust, it can nega-
tively affect your blog’s popularity and
search ranking—and vice versa.
Examine your business goals and re-
sources and carefully consider your op-
tions when deciding on a URL strategy.
Moving a blog later, though possible,
is often difficult and carries the risk of
losing the search engine authority you
invested so heavily in building.
web
+
department
entjuly10 043-046 webdept.indd 44 5/19/10 1:44 PM

A positioning strategy behind the world’s
most successful entrepreneurs, including
Donald Trump, Robert Kiyosaki, and Suze
Orman, branding yourself as both author
and entrepreneur seems like a marketing
must for anyone seeking to share their
expertise, grow their personal brand and
their business.
Sure, you’ve thought about it—having
the credit “best-selling author”
accompany your name. The prestige,
immediate credibility, and competitive
advantage that come with authoring a
book are undeniable.
Chances are you’ve already considered
taking your message to the page, but have
been stumped by what to do next.
Is your goal to build your reputation,
increase your recognition and grow your
business? If so, a self-published book
hiding in the back of a room isn’t going to
do the trick. Knowing this, Entrepreneur
Press, a leading publisher in the small
to midsize business category, developed
a new publishing option:
Entrepreneur House Authors.
Entrepreneur House Authors is a full-
service, publishing and marketing
solution perfect for entrepreneurs
seeking to grow their brand and their
business by leveraging their book. Under
this innovative publishing program,
Entrepreneur Press and its parent
company Entrepreneur Media Inc.
present visionaries, like you, with the
means to publish your book, gain
exposure by the millions, and
ultimately, become the recognized expert
in your field.
“We help entrepreneurs share their
expertise through publishing a book, and
then we work with them to use that book
to further define their identity, establish
their credibility, build their reputation,
and grow their business,” explains
Leanne Harvey, director of marketing,
Entrepreneur Press. “We do this using
the reach, media exposure, business
partners, and publishing expertise of
Entrepreneur—something that no other
publishing option can compete with.”
Combining Entrepreneur magazine’s
readership of three million, and
Entrepreneur.com’s six million unique
visitors per month, with a multitude
of esteemed online business partners
including AOL.com, MSNBC.com,
FoxBusiness.com, and WashingtonPost.com,
Entrepreneur offers “author-preneurs”
invaluable face time with millions of
potential clients worldwide.
“Working with Entrepreneur Press has
given me the opportunity to broaden
my online platform and in turn, grow my
business and my company,” says Susan
Gunelius, author of Kick-Ass Copywriting in
10 Easy Steps. “Little did I know that
partnering with Entrepreneur Press would
lead to my becoming a featured columnist
on Entrepreneur.com reaching millions
of readers per month. My relationship
with Entrepreneur Press has opened a
multitude of doors for me to network
with people around the world, share my
passion and expertise about marketing,
branding and copywriting, and grow my
business significantly.”
Partnered with Entrepreneur Press,
entrepreneurs seeking publishing success
get the editorial benefit of working with
a traditional publisher and the backing
of Entrepreneur Media, Inc. a respected
voice in the media community and
trusted brand for more than 30 years.
“The team at Entrepreneur Press has
literally helped me create an entirely new
brand and career. No other publisher
I have worked with so fully supports
their authors with publicity, marketing
expertise, and the type of creative
brainstorming that comes with only
the best of the best,” says Dr. Dani
Babb, author of Finding Foreclosures and
The Online Professor’s Practical Guide to
Starting an Internet Business. “Without
their expertise, incredible exposure, early
assistance and believing in my work with
a real strong partnership, I would have
had a much tougher road to get to this
place today. Thanks to Entrepreneur
kicking off things, I have a two hour
weekend show on Entrepreneurship on
Fox Business and am the go-to person for
numerous national media outlets. They
are THE BEST!”
If you’re writing a book and are
seeking a publisher who will help
you elevate your brand and grow
your business, visit:
entrepreneurhouseauthors.com.
Build your brand and
grow your business
-Glenn Croston, author of 75 Green Businesses You Can Start
to Make Money and Make a Difference and Starting Green
ADVERTISEMENT
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Entrepreneur + July 2010 46
THE POPULARITY OF USER-REVIEW sites
such as Yelp and Citysearch can be excel-
lent resources for inexpensive publicity for
a small business. The downside? The inevi-
table bad review can cause havoc if it’s not
handled with savvy.
“There is an enormous level of trust be-
tween social network user and social network
user—much more so than between a brand
and end-user,” says Carisa Miklusak, co-
founder of social media marketing company
SoMedios in Vancouver, British Columbia.
She calls Yelp “the online Consumer Reports.”
To combat an unfavorable comment
and lone star rating, Miklusak suggests you
publicly address a complaint, politely ex-
plaining your organization’s side of a dis-
pute or correcting erroneous information.
For example, a poster who warns against
patronizing an eatery because of its un-
healthy offerings could be met with a re-
buttal describing low-calorie options and
a link to the restaurant’s menu. “That way
you appear like a transparent organization
that takes feedback seriously,” she says.
If you identify a poster as what Miklu-
sak calls an “influencer”—someone with
lots of sway thanks to a popular blog, say,
or a Yelp or Citysearch following—con-
sider reaching out via e-mail, phone or
message. You could offer to rectify a bad
experience or a coupon to try your service
again. Be polite but firm. Bolster an image
of confidence in your product.
If a negative post remains, encourage
other customers to leave positive yet candid
comments. This will push the negative one
down and out of sight.
Or follow the lead of The Art of Charm,
which coaches men on dating and social
skills. The Los Angeles and New York firm
boasts all positive reviews on its Yelp pro-
file. Co-founder Jordan Harbinger tracks
down negative posters and persuades them
to revise their comments.
A “blatantly unfair and abusive review
from someone who had never done business
with The Art of Charm” annoyed Harbinger.
“After trying to resolve the situation dip-
lomatically, I sent the message to her boss
to let him know how she was representing
herself online,” he says. “The review was re-
moved almost immediately.” —Emma Johnson
Tool Features Best for Where to find it
Clicky
Provides a full spectrum
of easy-to-digest web
analytics such as traffic
patterns, segmented
visitor information and
campaign tracking.
Business-rele-
vant analytics
for non-techies.
getclicky.com
GoingUp!
Offers a spate of free “lite”
versions of its web analytics
and SEO analytics tools--like
SEO Optimizer, which gives
optimization information
based on which keywords
you’d like to target.
Search engine
optimization. goingup.com/seotools
Crazy Egg
Measures a site’s usability
by offering heat maps,
overlays and lists that give
a window into users’ be-
haviors and habits while
they’re on your site.
Site design,
usability assess-
ments.
crazyegg.com
4Q
Provides free online surveys
that quickly query users
why they are on the site
and whether they found
what they needed.
Supplement
to traditional
analytics tools.
4qsurvey.com
Kontagent
Provides metrics on the
“virality” of your social
media applications or
services, such as Facebook
apps. Can track how many
people signed up for an
app after receiving notifica-
tion from Facebook, how
many times it is mentioned
in a feed and so on.
Social media
marketing. kontagent.com
Assess for less
From nay to yay
SMALL-BUSINESS OWNERS DON’T NEED to be mathematic geniuses or search engine
optimization gurus to build and tweak effective web-based marketing campaigns. Nor
do they necessarily need to hire expensive consultants or throw money at pricey ana-
lytics tools. A number of free, easy-to-use web analytics tools has cropped up to sat-
isfy the needs of the typical small business—and we’re not just talking about Google
Analytics, either. Here are a few lesser-known free analytics tools that may be worth
checking out. —Ericka Chickowski

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What to do about bad reviews
on customer feedback sites
web
+
department
entjuly10 043-046 webdept.indd 46 5/19/10 1:44 PM

Client: Verizon Wireless (VZW)
Product: Business
Job #: M10VW038
Ad #: 86
Headline: The 3G Network
Visual: Man/Taxi
Space/Color: Page Bleed 4/C
Publication: Entrepreneur
Bleed: 9.25”x 11.375”
Trim: 7.5”x 10.25”
Live: 6.75”x 9.375”
Gutter: None
AD: Vi Luong
CW: Ralph Calderon
CD: None
AP: Celeste Holt-Walters
PP: April Gallo
Created by Interface Graphics, a
division of McCann Erickson
Print/Export Time: 5-11-2010 3:04 PM
Print Scale: 100%
User Name: erick.wilson
Proof #: 2
PM: Claribel Cardenas
Account: None
InDesign Version: CS4
Version Code: None
Color Specs: None
Document Name: IG_M10VW038_86_02.indd
Document Path: ME Production:Volumes:ME Production:Verizon:ME:Magazine:M10VW038:IG_M10VW038_86_02.indd
Font Family: Trade Gothic (Bold Condensed No. 20; Type 1), Myriad Pro (Black, Light, Regular, Semibold, Bold, Light Condensed; OpenType)
Ink Name: CMYK
Link Name: IG_SMB_Taxi_MRG.psd (529 ppi; CMYK; ), IG_phones_skype_MRG.psd (1722 ppi; CMYK; ), IGS_MAG_VmarkV2MRG.psd (564 ppi;
CMYK; ), vz_pri_g_100_K.ai
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THE 3G NETWORK
YOU WANT WHEN
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DEPENDS ON IT.
A small business owner’s day is full of critical moments. Times when what stands between you and
success is the ability to connect wirelessly to information while on the go. To the Internet. To an
important file. To sales data. These are 3G moments. So before your next one, be sure to remember:
when you want your 3G Network to work, you want Verizon. To learn how Mobile Office Solutions
can help put your business on the map, visit a Verizon store or call 1.800.VZW.4BIZ.
verizonwireless.com/onthemap
See verizonwireless.comfor details. Visit verizonwireless.com/skypemobile for more information. ©2010Verizon Wireless.
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Entrepreneur + July 2010 48
almost
+
famous
DESPITE THE STIGMA often associated with
it, outsourcing is widely used for a variety
of business functions—and it’s not always
about finding the cheapest solution. The
smartest small businesses farm out the
functions that aren’t their core expertise,
which adds value and saves money.
“What they keep in-house is the
competitive differentiator,” says Jagdish
Dalal, managing director of thought
leadership for the International Associa-
tion of Outsourcing Professionals and
president of JDalal Associates, an IT and
business process outsourcing company
in Hartford, Conn. “Amazon immediately
thought about using UPS for distribu-
tion. Dell kept its marketing and design
in-house and the rest was outsourced.”
Here’s a look at functions that any
small business should consider outsourc-
ing at various points in their evolution.
—Ivy Hughes
C-level talent: As your business grows
and you need more assistance with mar-
keting and financial services, consider
contracting with a for-hire chief market-
ing officer or an accounting team that
can act as your off-site CFO. Doing so
can help you get high-priced strategies
without the high price.
Human resources: Healthcare packages
and employee benefits are constantly
changing. A benefits firm can help you
find the best and most affordable pack-
ages for your situation. “You need to find
someone flexible enough to adapt to you
and have the products and services for
you as you become a larger organiza-
tion,” says Mark Perlberg, president and
CEO of Oasis Outsourcing, which pro-
vides outsourced HR services nationwide.
Legal: Small businesses should out-
source this function. Law firms are
Tools for farming out
Skype: A free downloadable service, Skype has voice, video and text chat capabili-
ties that allow real-time vendor interaction—even overseas. skype.com
Google Docs: This free online platform offers virtual files that let parties view
and edit projects, presentations and graphs, eliminating the constant exchange
of e-mails. docs.google.com
Basecamp: This virtual project management tool (starting at $24 per month)
lets teams interact by creating to-do lists, tracking deadlines, sharing files and
logging project hours. basecamphq.com
SurveyMonkey: This free service isn’t just for research—it’s also good for collecting
feedback on projects and for managing schedules. surveymonkey.com
adept at circumventing local, state and
federal laws and will save you from ex-
cessive legal headaches.
IT: Much of the offshore outsourcing
industry caters to IT services—but be-
cause of increasing costs and concerns
with quality control, many companies
are bringing the function back onshore.
“Rates onshore have dropped because of
offshore outsourcing,” says Bill Hayduk,
president of professional services firm
RTTS in New York, which provides off-
site software services. “Over the last 10
years, there have also been infrastructure
problems offshore with power outages,
quality of skill sets, finite resources and
sometimes software quality.”
Website strategy: The most effective
way to create a well-designed, easy-to-
navigate website—complete with the
most appropriate search engine optimi-
zation tools and other marketing func-
tions—is by leaving it to the experts.
Check out local web design companies
that will work with you to custom de-
velop your site.
COLLABORATION PLATFORMS THAT HELP
YOU STAY CONNECTED TO YOUR VENDORS
Not just
cheaper
From processing payroll to
integrating IT, outsourcing
certain functions can mean
better talent at lower costs
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Intelligence you need
entjuly10 048 almost famous.indd 48 5/21/10 12:18 PM

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From the venture capitalists’
plush hangout in Silicon Valley
to the cool spot in Cambridge
where ID badges dangle over
tech startup plans, here is
Entrepreneur’s guide to the best
bars for doing business across
the country—and the one bar
that beats them all (would you
believe it’s in an airport?)
*
TH
E
R
U
L
E
S
I work at Esquire, and we drink on occasion. We drink when things need to be cel-
ebrated, contemplated, figured out—but languidly, casually, without a clear goal in mind.
We drink for defined periods of time and not all that often, but we drink. We drink with
each other or with people we’re getting to know. We drink in the conference room. We
drink at bars. We drink to build relationships, to learn things. We’re not looking for an
escape but the opposite of escape. We don’t want to lose something but gain something—
an idea or a partnership or a new way of looking at our existing ideas and partnerships.
Serious stuff, if you think about it. We think drinking is good for business when done the
right way. So there are rules that we’ve worked out from drinking, from sharing knowledge
about drinking in the magazine, from being around people who know more about what we
drink than we do. And the rules are like this…
Because this isn’t really about
cocktails. It’s about business.
By Ross McCammon
THE BEST
BUSINESS
BARS
WHERE
ARE YOU
DRINKING?*
Choosing a bar is your
opening move. Be sure
you make the right one.
By Monica Corcoran Harel
“I
hate the office,” growls Doug
Ellin, the creator and execu-
tive producer of the hit HBO
series Entourage. “I’d much rather do
meetings in a great bar, where people
aren’t nervous and you can relax and
be more creative.”
Even on the show, Ellin rarely allows
his achingly suave characters—Hol-
lywood actors, agents, producers and
directors—to broker a deal in a board-
room. Dark bars, pulsating nightclubs
and old-school lounges that serve
epiphany-causing martinis are the set-
tings for onscreen business maneuvers.
“You just need to find the right place
and become a regular,” says Ellin, who
personally favors a sleek sports bar
called Goal in Los Angeles. “I do my
meetings there, back to back.”
Finding a corner booth that substi-
tutes well for your corner office, how-
ever, is no flimsy pursuit. Choose the
right bar and you’ve found the place
to deepen a connection, make a pitch,
close a deal—and, not least of all, en-
hance a client’s opinion of you. But the
refreshing ease that comes with clinking
glasses can melt as quickly as crushed
ice if the lights suddenly dim low and
Lady Gaga starts blaring.
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entjuly10 050-061 bars1.indd 50 5/18/10 12:27 PM

Entrepreneur + July 2010 51
SO WHAT
MAKES
A GREAT
BUSINESS
BAR?
HERE
ARE THE
ESSENTIALS:
Discreet seating.
A booth is optimum, but a corner table
or tables with at least 3 feet between
them will do (anything closer invites
eavesdropping). Chairs should be
comfortable, too.
Friendly, attentive
staff. Whether it’s the bartender,
server or host, you should have a go-to
person at your favorite haunt, who al-
ways looks out for you and your guest.
Being neglected or mistreated does not
reflect well.
The maitre d’ or hostess often dictates
where you sit, so Ann Marie Sabath, cor-
porate etiquette consultant and author
of Courting Business: 101 Ways for Acceler-
ating Business Relationships, recommends
some reconnaissance beforehand. “I like
to introduce myself and then have some-
one call me by name when I arrive later
with a client,” she says. And to get the
best table, she pre-tips $20.
Ellin avoids places with haughty serv-
ers. “I want to get treated well,” he says.
“And they have to be alright with the fact
that I could be sitting in a booth for four
hours.” Indeed, Ellin recalls a successful
meeting with actor Martin Landau at the
Polo Lounge in Beverly Hills that lasted
six hours.
Compelling crowd.
You don’t need to be surrounded by ce-
lebrities and moguls, but the place should
be filled with interesting, professional-
minded people. In essence, your peers. It
goes without saying that a rowdy atmo-
sphere or a pickup bar is unsuitable for
sealing a deal.
“I like a quiet but interesting crowd,
compelling décor and enough space to
put down a computer,” says Douglas Mer-
rill, former Google CIO and author of the
new book Getting Organized in the Google
Era. His favorite haunt is Citizen Smith
in Hollywood, Calif., a cavernous lounge
and restaurant that feels like a mash-up
of a Scottish castle and an Aspen lodge.
For Merrill, who’s amassing a team for
his top-secret technology startup, con-
ducting interviews at a bar sends out
the right message. “An office meeting is
better for a corporate deal. There’s more
structure and pressure,” he says. “But
doing an interview at a place like Citizen
Smith shows that we’re an interesting
company.”
Manageable din.
You never want to be somewhere that
suddenly packs up and requires you to
scream negotiation points across the
table and distracts from the business
at hand.
“Can I hold a conversation in the
room? That’s my first question. I don’t
want to yell in a meeting,” says Eric Ko-
peloff, a producer who works closely with
Oliver Stone. When he and the director
met with top financial honchos to re-
search the upcoming sequel Wall Street:
Money Never Sleeps, 75 percent of their
appointments took place in Manhattan
bars that had minimal noise. The young
turks liked the Rose Bar in Gramercy
Park; older power execs roosted at Mid-
town’s Monkey Bar.
“We got the best stuff for the film
over drinks after breaking the ice with
a personal question,” Kopeloff says. “In
some cases, we needed to ask them about
using locations to shoot, like a trading
room floor, and we could strike a deal
right there.”
Full range of
liquor. A client may opt
for a domestic beer, but top-shelf
brands of alcohol and good wines
are a must. You may want to cel-
ebrate a deal with a single-malt scotch or
Champagne. Plus, you don’t want to limit
anyone’s choices.
Good lighting. This
is not only key for reading facial cues, but it
also sets the right tone for business. Too dark
can send the wrong message; too bright can
be unflattering. If you’re unfamiliar with the
bar, ask the maitre d’ whether the lights are
turned down at a certain hour.
Good food. You never
know when negotiations will extend past
cocktail time. Lots of great bars offer
interesting snacks, such as fancy spiced
nuts or Kettle Chips. Unshelled peanuts
and popcorn don’t cut it. Otherwise, look
for an appealing bar menu with sophisti-
cated small plates.
Kelly Cutrone, the no-nonsense New
York fashion publicity guru and star of
Bravo’s reality show Kell on Earth, has a
business meeting almost every weeknight
and prefers the Café Bar at the Carlyle
Hotel or the lounge at the Soho Grand.
“The scene is laid back, you can get a
bar menu, and the service is top of the
line,” she says. “Once you have all that
covered, the meeting becomes a little more
liquid and things really start to flow.”
Decent décor. This
place is an extension of your office. If
you’re into a hip, retro ’60s vibe, your
bar should reflect your taste and per-
sonality. If you prefer Chesterfield sofas
and mahogany paneling, settle in at a
place with a clubby, masculine setting.
But sometimes, you must defer to your
client. If out-of-towners crave a taste of
the hottest scene, go with it.
“If I have CEOs or creative directors of
fashion brands who are coming into town
and want the supertrendy scene, I have to
take them there,” Cutrone says, with a groan.
“But I don’t get much business accomplished
other than proving to them that I have
enough power to get a really great table.”
MONICA CORCORAN HAREL IS A LOS ANGELES
WRITER AND AUTHOR SPECIALIZING IN THE
CULTURE OF KEEPING UP APPEARANCES.
>>
1
You called the meeting, you get to the bar early. Even if you didn’t
call the meeting, you get there early. Because if you get there early, you
begin defining relationships. Not only between you and the people you’re
meeting with, but between you and the bar itself: the cocktail waitresses,
the bartenders, the guy sitting next to you. You have come to this bar for
relationships. You might as well begin making them.
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Entrepreneur + July 2010 52
T
H
E

B
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10'(.'9
5176*
ATLANTA
A
merica has many fine
bars in which to do
business—dark, clubby
places with lots of brass
and leather and hand-
rubbed oak, where you practically
have to part the hush with your
hands. One Flew South is not one
of those: It’s clean and modern, and
there’s a distinct lack of darkness,
brass or hush. That’s not to say it
isn’t a fine place—the host couldn’t
be more welcoming, the bartenders
are skilled, and the drinks are made
with all the attention to craft that
one expects from a state-of-the-art
21st century cocktail bar.
But here’s the thing: To meet in
those other bars, you’ve got to get
there first. All too often, that involves
transporting yourself to an airport,
clearing security, waiting around to
board, flying, disembarking, snagging
a taxi into town, checking into a hotel
and then doing it all in reverse the
next morning. This is where One
Flew South scores major bonus
points. Its address, you see, is in
Terminal E of Hartsfield-Jackson
International Airport.
That’s right, it’s an airport bar,
although unlike just about any other
such establishment in the United
States, it’s one where you’re treated like
a person to be welcomed, not a prob-
lem to be gotten rid of. That means you
can fly in (remember also that Atlanta’s
a hub), settle your business over a per-
fectly made Old-Fashioned or two and
a Kobe burger, saunter over to your
gate and fly home. All you have to bring
is a briefcase. In fact, the only thing to
stop us from wishing that there were
a branch in every hub is the effect it
would have on the hotel business.
—David Wondrich
TIP: To get into the spirit of the
place, order a classic Aviation—
gin, fresh lemon juice and
cherry liqueur.
GO: One Flew South, 6000
N. Terminal Parkway, At-
lanta. (404) 816-3464
2
You can sit at the bar. But standing’s better.
When you stand, you are able to receive. You are on
the level of those who will approach you. You’re not in
a position of weakness. You’re in a position of author-
ity. Or at least parity. Anyway, you got there first. So
you stand and wait. With a drink.
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Entrepreneur + July 2010 53

&#..#5
AL BIERNAT’S
B
uying a baseball team?
Finessing a merger with
a rival airline? In Dal-
las, these are the kinds
of deals that start with a
single malt at the bar at Al Biernat’s,
the power steakhouse in Big D’s tony
Oak Lawn district. Southwest Airlines
founder Herb Kelleher’s a regular; so
is Travelocity founder Terry Jones. It’s
a hangout, too, for Dallas Stars hockey
players, Mavericks basketballers and
rockers from Roger Waters to Jon Bon
Jovi. When Nolan Ryan’s investment
group bought the Texas Rangers base-
ball team earlier this year, the deal, it is
said, was cut at Al’s.
One reason is owner Al Biernat
(pronounced Ber-NAY) himself: He’s a
master networker, matching up bank
presidents with wealthy investors or
suavely leaking a rock star’s visit to
the Morning News gossip columnist.
“If I know someone’s in a similar
business, or somebody can help
somebody else,” Biernat says, “I try to
connect them.”
Until recently, walking in off the
street, you’d never guess that this
was the red-hot center of Dallas
business schmoozing. The 12-year-
old restaurant’s horseshoe-shaped,
domed bar was a bit in-your-face
and not exactly private, with only a
couple of tables off to the side.
Now Biernat is expanding the
bar to “make it more conducive to
business,” with five comfy booths
and a better connection to the
patio, where Kelleher, for one, is
in the habit of ducking out for a
smoke. —Leslie Brenner
TIP: Make yourself known to the
very friendly Biernat, who works the
dining room every day except Sunday
and Monday. You never know who
he’ll introduce you to.
GO: Al Biernat’s, 4217 Oak Lawn Ave.,
Dallas. (214) 219-2201
.15#0)'.'5
THE CHATEAU MARMONT
I
n 1939, Columbia Pictures founder Harry Cohn famously barked, “If you
must get in trouble, do it at the Chateau Marmont.” And, sure, steamy
shenanigans still ensue at this exclusive hotel perched above Sunset
Boulevard. But for lots of Hollywood directors, executives and agents,
the patio and sunken lobby—with its asthmatic but still elegant antique
décor of overstuffed wing chairs and silk upholstered couches—are ground zero
for discussing scripts and poaching talent. The alpha-inclined covet the divans
and striped settees in the very back of the lobby, which offer a panoramic view
of the space and a clear vista of who’s en route to the back garden and patio.
Rubbernecking is unavoidable. Everyone from Harvey Weinstein to Drew Bar-
rymore has been spotted toasting a three-picture deal or a potential producing
partnership; stars such as Courtney Love and Jake Gyllenhaal have been known to
wander the property as if they were born in one of the bungalows. (Director Sofia
Coppola’s next film will be mostly set here, too.) Those looking to be ogled opt for
the tables and wicker bistro chairs on the outdoor patio, edged with lush palm trees.
A producer’s status can expand exponentially after being seen huddled with a Cam-
eron—Diaz or Crowe—over a bottle of Beaujolais. (You pay for the scenery, with
wine starting at about $15 per glass; dinner reservations are strongly encouraged
after 6 p.m. on the patio, but you can get away with ordering just an appetizer to
split.) Waiters are efficient but can be insouciant at times. It all works, though. Even
the moguls take a cue and stop scowling. —Monica Corcoran Harel
TIP: For more privacy, ask for one of the tables that line the garden and
gothic archway.
GO: The Chateau Marmont, 8221 Sunset Blvd., Hollywood, Calif. (323) 656-1010
Your order is one of two
things: a beer or a whiskey
on the rocks. The beer is safe.
The whiskey is less safe. But
so much more interesting and
potentially rewarding. Because
when you order a scotch (good
when drinking with the Japa-
nese) or a bourbon (good when
drinking with the Americans)
or a rye (good when drinking
with the Southerners—or other
Americans or the Japanese),
you are suggesting that you
are committed. A whiskey isn’t
a beverage, it’s a drink. And a
drink is an experience. And
it would suggest to those you
are meeting with that you are
about to have an experience
that could lead to more experi-
ences. Also, a whiskey will get
you drunk. But you are not
going to get drunk tonight.
3
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Entrepreneur + July 2010 54
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Drinks should be ordered confidently, explicitly, specifically. You
should have an idea of what you want before you even walk inside. You
should scan the taps before you even get to the bar. Unless you’re sitting
at a table too far away from the bar to see the taps, never ask, “What do
you have on tap?” It’s too easy to find out for yourself. Also, beer on tap
is generally no better than beer in a bottle. Bars don’t clean their taps
enough. They get gunky. Bottled beer is consistently fresher. It’s true.
$15610
MIRACLE
OF SCIENCE
BAR+GRILL
D
on’t let the T-
shirts, messenger
bags and occa-
sional ID badge
dangling from a
belt fool you—serious business
transpires at Miracle of Science
Bar+Grill, the cool gathering
place for the tech and biotech
powerhouses by MIT.
A large, open room on the
edge of funky Central Square,
Miracle of Science is a magnet for
tech execs, robotics researchers,
grad students and the occasional
venture capitalist discussing their
latest gene-therapy breakthrough,
when Zipcar is going public and,
of course, video games. The beer
selection is decent, with a dozen
or so options. Wine, however, ar-
rives in juice glasses.
Every seat has a good view of
the whole place. If the weather’s
fine, try to stake out a spot by
the big window next to the
bar—it’s marginally quieter.
And if your deal-making goes
overtime, that giant chart that
appears to be a periodic table of
the elements is actually the menu,
which features breakfast, lunch
and dinner, including outstanding
burgers and vegetarian dishes.
—Marie Morris
TIP: After you use the nearest
scrap of paper to capture the idea
that’s going to get your robot
army funded, don’t forget to take
it with you—the bartenders regu-
larly toss out cast-off napkins fes-
tooned with scientific data. (Oh, if
you happen to have a next-gen
iPhone, grab that, too.)
GO: Miracle of Science
Bar+Grill, 321 Massachu-
setts Ave., Cambridge, Mass.
(617) 868-ATOM
4
If you’re ordering beer,
it should not be a light
beer. Light beers are weak
beers. They are tentative.
They are for weak people.
No one has ever wanted
to enter into or continue
a relationship with a weak
person. Order anything
else: a Guinness, a Bud-
weiser, whatever IPA is on
tap, etc.
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entjuly10 050-061 bars1.indd 54 5/18/10 12:37 PM
BSJ¬EBJBJJ+ò3L
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Entrepreneur + July 2010 56
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6
Always drink what you want. There’s a thing that happens in meetings
at a bar or even over lunch. The first person orders a beer. The second
person orders a beer. The third and fourth people order beers. You are
the fifth person. You don’t want a beer. You want a whiskey. Do you order
the beer? You do not. You order a whiskey. More often than not, you will
find that the second through fourth persons will change their orders
based on your order—the rogue order. Because they never wanted a beer.
No one should ever drink anything in a meeting at a bar they wouldn’t
drink by themselves.
8
0'9;14-
GILT
I
n a city with 16 million
eyes—and ears—hotel bars
are the savviest places to
meet in Manhattan for a
drink and a deal. You get
private-club service with no Page
Six attention (unless you want it).
And while the usual suspects, such
as the Four Seasons and the King
Cole Room in the St. Regis, will
always have their fans, the smart
money lately is being spent at the
Palace Hotel in Midtown.
The subtly neon-lighted bar at
Gilt, the hotel’s Michelin two-star
restaurant, exudes downtown en-
ergy and uptown sophistication.
“Gossip Girl” has filmed there, and
this year’s East Coast Oscar party
was staged there, so the crowd has
a properly starry mix of youth and
gravitas. Plus the hotel itself attracts
an elegant international clientele
(no tripping over wheelie bags if you
enter through the lobby).
The designers retained the
room’s late-1800s detailing, with a
vaulted ceiling multiple stories up,
but added the perfect oval bar to
maximize people-watching. Tables
line the walls and fill a second
room; all can be reserved.
The noise level is perfect: You
can hear your guest, your neighbors
can’t hear you. Drink prices are
steep but not horrifying ($17 for
a glass of Arneis). And the liquid
menu is minimalist, with no futzy
cocktails, so you can get right down
to business. —Regina Schrambling
TIP: To really dazzle a client,
enter the bar through the lobby
but head straight to the courtyard.
This summer, for the second year,
drinks will be served al fresco,
with a view toward St. Pat-
rick’s Cathedral. No bar in
Midtown can rival it.
GO: Gilt, 455 Madison Ave.
(at 50th Street), New York.
(212) 891-8100
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Entrepreneur + July 2010 57
9#5*+0)610
&%
PROOF
W
ashington, D.C., boasts a
higher per capita alcohol
consumption rate than
any state in the union.
But it’s also a town that
goes home early—so what you want is a
great place for a lunchtime tipple. And there
is none better than Proof, a hip spot on G
Street Northwest, midway between the Capi-
tol and the K Street corridor, the lawyer-
and-lobbyist center of gravity. The wine list
is superb (witness the ’47 Château Cheval
Blanc), but the cocktails nearly steal the
show (simple, clean, with distinctive ingre-
dients such as Douglas Fir eau de vie).
Amid the thirty- and fortysomething
professionals, you might spot White House
Chief of Staff Rahm Emanuel, Secretary
of Energy Steven Chu—or Bruce Spring-
steen. Sommelier Sebastian Zutant recalls
passing a table to hear former Secretary of
State Condoleezza Rice remark to the Brit-
ish ambassador, “This could affect 9 mil-
lion people!”—Chris Lewis
TIP: Proof nods to its across-the-street
neighbor, the National Portrait Gallery,
with a slide show of the museum’s col-
lection. And naming the subjects—Duke
or Satchmo? John Adams or John Quincy
Adams?—makes for cool, easy bar chat.
GO: Proof, 775 G St. N.W., Washington,
D.C. (202) 737-7663
There are some drinks no one
should ever order during a busi-
ness meeting. No light beers, as
stated previously. No rum and Cokes.
Not because this isn’t a serious
drink (it’s a serious drink in the right
context—if you’re in a beach bar in
Cuba, for instance) but because it is
too closely connected to nonserious
drinkers. No gin and tonics unless it’s
hot outside. No drinks ordered off the
cocktail menu. There is great risk here.
When you order off the cocktail menu,
you risk that the drink comes in a very
tall glass with too much accoutrement:
oranges and cherries and umbrellas,
etc. Then you’re the one sitting there
with the stupid drink. You don’t want
to be the one with the stupid drink.
7
If you don’t drink: Order a club soda on the rocks with lemon. There is no shame in
club soda.
8
5#0(4#0%+5%1
SEASONS BAR AND LOUNGE
T
he “lousy economy” hiatus is over, and Sea-
son’s beloved pianist Michael Udelson is
back with his classic repertoire of ... wait? Is
that Radiohead? Why, yes, it is.
Tucked away on the fifth floor of the Four
Seasons is this highly polished lounge—offering three
luxurious rooms, discreet spacing between substantial
tables, a view of downtown and … a few surprises.
Grab one of the corner tables with the high-backed
leather chairs. The bar opens at 2:30 p.m., ideal for late
afternoon meetings, maybe between sessions at nearby
Moscone Convention Center. Bartender Sierra Zimei is
known for classic cocktails with a twist. And one of her
signatures—you’ll spot it on many tables—is the Trust
Fund, made with Plymouth Gin, St. Germain, orange
marmalade, mint and Champagne. —Marcia Gagliardi
TIP: The bar snacks are the civilized kind that won’t
make a mess on your suit, so don’t hesitate to order the
duck spring rolls or the Olives Three Ways, which come
de-pitted, of course.
GO: Seasons Bar and Lounge at the Four Seasons, 757
Market St., San Francisco. (415) 633-3737
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5+.+%108#..';
MADERA LOUNGE
T
he tech crowd isn’t exactly known for surrounding itself with glam-
our. The clubhouses tend to be more like frat houses—at least until
about year ago, when the plush Rosewood Sand Hill Hotel opened on
a golden ridge above Stanford University.
Suddenly the Valley boys grew up, and the hotel’s Madera Lounge
became the VC watering hole. A few minutes from Sand Hill Road’s tech offices,
not to mention VC and private equity firms, the place offers a taste of the good
life promised by the next killer deal: rich woods, serious art, a sweeping view of
the Santa Cruz Mountains, battalions of people eager to please ... it’s all here.
The bar’s sliding doors are often flung wide, and tie-free meetings are de rigueur
on the terrace (quieter meetings sometimes take place in the adjacent library).
Celebratory toasts usually involve a big-ticket bottle of wine off the 900-label
list, or maybe $120 glasses of Johnny Walker King George V single malt.
When the sun sets, the music goes up and the scene factor kicks in—offering
a chance to meet the movers and shakers you may never “get a meeting” with.
The crowd ranges from mega-preneur Marc Andreessen to former 49er Ronnie
Lott, who is, by the way, quite successful in private equity investments these
days. —Marcia Gagliardi
TIP: Sand Hill Road office hours tend to be flexible, so regulars come early and
stake out tables, especially in the summer.
GO: Madera Lounge at Rosewood Sand Hill Hotel, 2825 Sand Hill Road, Menlo Park,
Calif. (650) 561-1540
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Entrepreneur + July 2010 58
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So, the perfect drink. There are many, of course. Some guidelines: It
should be a drink that no one can screw up. It should be a drink that
every bartender knows how to make. It should be a drink with ingredients
that every bar has. If we had to settle on one though, we’d go with an
“Old-Fashioned, no fruit.” If you have any doubt that your bartender won’t
know how to make an Old-Fashioned, then order bourbon (or rye, if they
have any) on the rocks with a dash of bitters. A little trivia if you need
it: The Old-Fashioned is the first cocktail. First made in 1806. Whiskey,
sugar, water and bitters. And no fruit. (The fruit—muddled orange and
cherry—is an adulteration that came much later. Which is a shame.)
5'#66.'
PURPLE CAFÉ
AND WINE
BAR
S
eattle is the kind of
city where talking
shop is as likely to
take place over a venti
soy latte as it is over a
Walla Walla Syrah. But when it’s
time to swap the coffee mug for
a wine glass, Seattle’s business
crowd heads for Purple Café
and Wine Bar in the downtown
financial district, a place that
draws financiers from Morgan
Stanley and Kibble & Prentice,
executives from Nordstrom
and Microsoft, as well as en-
trepreneurs from the biotech,
communications and high-tech
industries. ’Treps take note:
Thursday and Friday evenings
are particularly popular with
the neighboring finance and
legal firms.
Purple’s décor might be de-
scribed as medieval modern, with
massive candelabras hanging
beneath a ceiling of woven sheets
of steel. Rising behind the bar is a
two-story column housing 5,500
bottles of wine, from Willamette
Valley whites to Tuscan reds (the
bar has an extensive beer and
cocktail selection, too). Like the
rest of Seattle, Purple has a casual
vibe, but there’s a good chance
that guy in jeans and nerd glasses
is the latest grenache-sipping
millionaire in a city known for
creating more than a few.
—Paul Clarke
TIP: Some of the details surround-
ing JPMorgan Chase’s 2008 pur-
chase of Washington Mutual were
worked out in Purple’s upstairs
dining room.
GO: Purple Café and Wine
Bar, 1225 Fourth Ave.,
Seattle. (206) 829-2280
10
At some point, order
and pay for a round.
Doesn’t matter if you are
the one being courted.
Order a round. You are
capable of ordering and
paying, so you do.
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Entrepreneur + July 2010 59
Do not get drunk. To aid this,
come hydrated and well fed. And
don’t drink too much. How much to
drink? Don’t drink more than the
most senior person at the meeting
(client, partner, co-worker or the
potential version of all these). To
ensure this, order a “water back”
with your first order. Drink at least
half a glass of water for each drink.
Sinatra supposedly did this. Even
if he didn’t, you should. If you start
with a whiskey, switch to beer after
the second one.
12
/+00'#21.+5
THE LIVING ROOM
S
ince summer 2008, when the Living Room opened as the W Hotel’s
street-level bar inside the historic Foshay Tower, top executives
from Target’s nearby corporate headquarters and downtown’s
law firms, ad agencies and software houses have gathered beside
local luminaries such as Minnesota Vikings owner Zygi Wilf to sip
single-malt scotches and cocktails such as the Epiphany (vodka, elderflower
liqueur, Champagne).
A cocktail lounge done up in black and magenta, its atmosphere is more
nightclub than country club (as you’d expect from a W), yet business suits, not
party dresses, fill its banquettes deep into the dinner hour. The spacious room
has varied arrangements of couches and tables to facilitate semiprivate meet-
ings, and its noise level—a hum, not a roar—encourages discreet conversation.
(Be warned, though, DJs start playing music at about 10 p.m. Fridays and Sat-
urdays. The clientele turns decidedly younger, and the business crowd departs
in a rush.) There are appetizers—from truffled deviled eggs with caviar to jerk
shrimp—but most everyone is there to talk and drink. —Bruce Schoenfeld
TIP: The Speakeasy, a secondary space with a hidden entrance off the bar, is
boardroom-equipped with full AV capabilities.
GO: The Living Room at the W Minneapolis, 821 Marquette Ave., Minneapolis.
(612) 215-3700
11
And, for chrissakes, never ask about specials. Asking about
specials in a bar is like asking a shoeshine guy for extra polish.
.#58')#5
SAGE
A
t Sage, chef Shawn McClain’s hot spot in the new
Aria Resort in CityCenter, you won’t run into
tour groups from Idaho, or anywhere else. The
place exudes power and glamour, for one thing.
For another, it’s in a far corner of the resort.
Behind the bar are two of the city’s master mixologists:
Tall, feisty Leann Kelly and the more circumspect Jeff Wat-
son. Kelly, a force of nature from Columbus, Ohio, loves to
joust with her clients (who follow her from gig to gig) but is
all business when it comes to making cocktails.
You might spot Mayor Oscar Goodman at the black granite bar
or even a famous chef, such as Jean-Georges Vongerichten, here
to powwow or taste one of the latest creations from a terrific bar
menu. The Vancouver Island Kusshi oysters topped with piquillo
peppers and Tabasco sorbet is hard to beat. —Max Jacobson
TIP: Ask for Table 94, in a quiet corner. It affords a view of
the bar and entrance, so you won’t miss a thing.

GO: Sage at Aria Resort & Casino, 3730 Las Vegas Blvd.,
Las Vegas. (702) 590-7111
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entjuly10 050-061 bars1.indd 59 5/21/10 12:37 PM

Entrepreneur + July 2010 60
B
E
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T

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B
A
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14
Only bring up business after the first drink. You’ve allowed people
to relax. You’ve allowed them to get their bearings. The only business that
happens before the second drink is the business of drinking. Which is
serious business. (See the first 13 rules.)
%*+%#)1
MOTEL BAR
L
eave the formal hotel
bars downtown to the
suits: The Motel Bar in
River North is where the
city’s startup culture
gathers. That’s why Andrew Mason
is in his element here. Motel Bar
is where Mason—who founded
Groupon, the hugely popular,
crowd-driven deal site—takes his
meetings when he wants to get out
of the office. It is also where Group-
on’s own crowd gathers: The out-
door patio (weather permitting)
and the bar’s leather-backed, half-
round booths offer plenty of spots
for poring over the next round of
funding to the next big idea.
That’s just what owner Hubie
Greenwald intended when he
designed the place: A bar that
offers old-school cocktails and
sophistication for new-business
types. Bartenders concentrate on
the classics: the Tom Collins and
Jameson Fizz, plus sazeracs, side-
cars, gimlets and grasshoppers.
The menu was originally inspired
by room-service classics—not ex-
actly promising—but Greenwald
expanded beyond club sandwiches
to offerings from steak frites to
four-cheese flatbread.
You can still find Greenwald’s
vintage bar guides, shelved in one
corner of the bar. Take a look and
decide what to order next while
you await an audience with the
Groupon guru or another of Chi-
cago’s upstarts. —Jason Meyers
TIP: Mason, a vegetarian, recom-
mends the mac and cheese. And an
Old-Fashioned.
GO: The Motel Bar, 600 W. Chicago
Ave., Chicago. (312) 822-2900
13
A few words about
restroom breaks: Uh …
not too many. Monitor
your intake. Looks weak.
Anyway, you might
miss something.
1
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At the Motel:
Groupon’s
Andrew Mason.
entjuly10 050-061 bars1.indd 60 5/18/10 12:28 PM

Entrepreneur + July 2010 61
&'08'4
CHURCHILL BAR
I
t would seem wise for today’s politicians to avoid smoke-filled
rooms, but Churchill’s cigar bar—inside Denver’s storied
Brown Palace hotel—has nevertheless become the after-hours
clubhouse for state legislators of both parties. Done up in
fine-grained oak and maroon leather, the bar also attracts the
wildcat prospectors of the state’s oil and gas industries. They’re the
ones right out of the region’s romantic past, sipping afternoon single
malts, moaning about dry wells and providing a colorful backdrop for
the rest of us. Later, top attorneys and Qwest and Wells Fargo execs
settle in beneath the cloud of blue smoke and munch complimentary
blue-cheese-stuffed olives. —Bruce Schoenfeld
TIP: Need to lobby your legislator? Wait until the day’s session is
over, then watch Churchill’s fill up with white shirts and gray suits.
GO: Churchill Bar at The Brown Palace Hotel, 321 17
th
St., Denver.
(303) 297-3111
2*+.#&'.2*+#
TRIA
P
hiladelphia has quietly become the capital of the beer culture—gastropubs with the most esoteric brews on tap are the
keys to gentrifying any neighborhood. But they aren’t always the most sedate spots for doing business. That’s where
Tria comes in. The stylish and cozy bar, just off ritzy Rittenhouse Square, has a world-class beer list but also specializes
in wine and cheese. Order a Porterhouse Oyster Stout, a craft beer from Dublin that’s a rarity in the United States, and
maybe a shared plate of cured meats or cheeses, or just an order of the most popular small plate: figs poached in Port,
stuffed with Gorgonzola, toasted and set atop prosciutto. The crowd skews young—20- to 40-year-olds—and is mostly profes-
sional, but everyone is looking for a great place to gather with no distractions: no television, Internet or karaoke. Just a smart
oasis to have a drink and talk. And unlike so many business bars, it’s decidedly female-friendly. —Regina Schrambling
TIP: Send a subtle message by ordering the Sly Fox Phoenix pale ale.
GO: Tria, 123 S. 18th St., Philadelphia. (215) 972-8742
15
Things to talk about: You could talk about kids. People enjoy
talking about their kids. You could talk about sports—but only if
you actually know something about sports. People who talk about
sports but don’t know anything about sports might as well be talking
about the weather. Things you shouldn’t talk about: the weather, the
cocktail waitress, religion, politics, the guy in your party who just
got up from your table to hit the john. You could talk about booze,
maybe. You could talk about how rye is made from rye. And scotch is
made from malt. And bourbon is made from corn. And vodka is made
from pretty much anything: potatoes and wheat and grapes and lots
of other things. You could talk about how the difference between a
good bartender and a great bartender is how long they shake a mar-
tini—a drink doesn’t start getting cold until after the 15th shake.
1
6
Here’s when you leave: You leave
about 30 minutes after you’ve deemed
that business has been taken care of.
You leave before you’ve gotten drunk.
You leave in a position of strength.
There are three phases of a long night
of drinking. There is the first half, when
no one is having any fun, when things
are a little awkward and you’re feeling
everyone out and they’re feeling you
out. There’s a second half, when things
are fun, when things are comfortable,
when things are still intelligent and
when work is getting done. And then
there is overtime. Overtime is tricky.
This is the time when work has been
done, when you are still feeling good,
when you could stick around for a little
while. You could go either way, you
know? “Another drink?” someone asks
you. “Come on!” they say. The answer
is: You have to get going. You’d love
to, though, really. But you’ve gotta get
home. Whether or not you go home is
unimportant. Maybe you do. Or maybe
you go to another bar, where there
aren’t so many rules. The point is, these
aren’t your friends. These are people
you’re doing business with. Big differ-
ence. And when you’re doing business,
you quit while you’re still pretty much
sober. That is: ahead.
&
ROSS MCCAMMON IS AN ARTICLES
EDITOR AT ESQUIRE MAGAZINE.

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4#.'+)*0%
THE WILD TURKEY BAR & LOUNGE
O
K, so we’re sending you to a big, red barn—really, a big, red barn—perched on a commercial
strip above Highway 70 and telling you that this is the best place to strike a deal in the entire
Research Triangle. And we are saying this without irony, because The Wild Turkey Bar &
Lounge has been a cross-sectional hotbed of local politicos, big pharma executives and tech
tycoons since it opened in 1984. And, yes, it’s in the Angus Barn restaurant, a rambling, kid-
friendly steakhouse. But suspend disbelief and go directly upstairs to the Wild Turkey lounge. There you will
find a seriously kooky haven of masculinity, a clubby room with heart of pinewood, leather armchairs and
ledges decorated with hundreds—hundreds—of garish ceramic Wild Turkey bourbon decanters.
And why should you stay? Because everyone else is already here: On any given night you’re likely
to encounter Marc Basnight, president of the North Carolina Senate, Raleigh Mayor Charles Meeker,
SAS and GlaxoSmithKline bigwigs. The atmosphere may be pure good ol’ boy, but the crowd is highly
evolved. And it flocks here because the lounge was literally the first bar in town: When North Carolina
repealed its “brown bagging” law, the Wild Turkey lounge opened immediately, a beacon for folks in a
Baptist-run town who’d never had a proper bar. It helped that owner Thad Eure’s father served a 52-
year term as North Carolina secretary of the state. So folks here decided to do business at this bar a
long time ago, and they haven’t changed their minds since. And those other folks who drive their
Priuses and don’t care to smoke cigars have clearly found a home here, too. —Kelly Alexander
TIP: Stay away on Friday and Saturday nights. Deals get done here Monday through Thursday.
GO: The Wild Turkey Bar & Lounge, 9401 Glenwood Ave., Raleigh, N.C. (919) 781-2444

s
entjuly10 050-061 bars1.indd 61 5/18/10 12:28 PM

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Entrepreneur + July 2010 63
T
he close connection between military service and entre-
preneurship became clear to Mike Haynie shortly after
he began teaching at Syracuse University in 2006, after
serving 14 years in the U.S. Air Force.
“Entrepreneurship confers a sense of autonomy
and control that many veterans fnd exceedingly attractive after
an extended period of military service, where individual auton-
omy and control is ‘given up’ for the greater good of the organiza-
tion,” says Haynie, assistant professor of entrepreneurship at the
Whitman School of Management at Syracuse.
He also notes that veterans often find it difficult to
apply the knowledge and skills they learned in the military to
civilian employment.
“Entrepreneurship becomes a mechanism through which they
can leverage that prior knowledge toward a vocational path,” he says.
“I thought, ‘Why don’t we take something we do well and develop a
venture to leverage the skills of our veterans?’ ”
That venture is the Entrepreneurship Bootcamp for Veterans
With Disabilities. The program, which Haynie founded in 2007
and has expanded to six universities around the country, is of-
fered at no cost to veterans with disabilities. The goal is to teach
them how to become entrepreneurs and to help them develop
strategies to overcome their specifc challenges. More than 200
veterans—including the two profled here—have completed the
program, and 150 more will have completed it within the next
few months.
“At its core, entrepreneurship is about the ability to create
and grow a sustainable venture in a resource-constrained envi-
ronment,” Haynie says. “This is a skill learned well by all military
folks, and they recognize that skill as a competitive advantage in
a startup environment.” >>
the next
mission:
autonomy
Some veterans are discovering that the rigid life
of the military can be the ideal preparation for the
freedom of entrepreneurship
By Jennifer Lawler | Photography by David Johnson
entjuly10 063-065 vets.indd 63 5/25/10 9:56 AM
05252010095716
Entrepreneur + July 2010 64
J
ohn Raftery’s descriptions of what it was
like in the military are pretty much in-
terchangeable with those of what it was
like to start his own business.
“If something needed to be done, you
figured it out,” he says, “If you didn’t
originally have what you needed, you had
to find your own resources.”
Raftery entered the U.S. Marine Corps
in 1999, serving in the infantry and then
in a reconnaissance battalion. He went
through several deployments, including
Operation Iraqi Freedom in 2003. After
being discharged in August 2003, Raftery
tried to give his career some direction.
“I held about six jobs afterwards, try-
ing to figure out where I fit once I left the
military,” he says. He went to school and
studied to become an accountant then
started working at a healthcare company in
2005—which didn’t exactly allow him to
experiment with new ideas and take risks.
So Raftery applied to the Entrepreneur-
ship Bootcamp for Veterans With Dis-
abilities, becoming one of the first veterans
accepted into the program. The outcome of
his boot camp tour was Patriot Contractors,
which he launched in 2007. The Red Oak,
Texas, company provides commercial and
government clients with building and archi-
tectural specialties, including wall protec-
tion, countertops, vanities, fire protection,
signage and other items.
“We accessorize buildings,” Raftery
says. “We work with general contrac-
tors. We’ll propose a package to come in
at the end. We’re the last contractor in
there, finishing everything out.”
His working in smaller groups as part
of a military recon team helped Raftery
understand how to get the best out of a
staff and figure out how to apply the capa-
bilities—and deal with the limitations—of
others. “It was really hands-on,” he says.
“When we went out on an op, we knew we
had to depend on one another.”
Patriot earned about $750,000 in reve-
nues in 2009 and is on track to earn three
times that much this year, Raftery says. But
the first year of figuring out the right di-
rection was difficult and uncertain—more
situations normal for a veteran of combat.
“It gave me not only the confidence to lead,
but also the willingness to go after new
things,” he says. “It eliminated that fear of
going into uncertain situations.”
For Raftery, military service and the
experience of starting and running a
business can be summed up the same
way: “It’s not just an ordinary job.”
JOHN RAFTERY
President,
Patriot Contractors
THE
COMMERCIAL
BUILDER
entjuly10 063-065 vets.indd 64 5/24/10 9:33 AM

Entrepreneur + July 2010 65
B
rian Iglesias didn’t come out
of the military wanting to be
a filmmaker—he knew he
wanted to be one when he
went in. But his experience
as a combat-decorated U.S. Marine gave
him one skill in particular that helped
him achieve his goal.
“We have the ability to thrive in chaos,”
Iglesias says of military personnel—Ma-
rines in particular. “My peers don’t come
out of college or business school with the
same skills. You need to have experience
and time on the ground doing it.”
Iglesias enlisted in the Marines in 1995,
worked his way through the ranks to cap-
tain and graduated from Temple University
with a film degree in 2002. He was de-
ployed to Iraq in 2003 and again in 2004,
then he set out to pursue a film career.
“I tried to do it on my own, to build the
experience and connections, but it just
wasn’t happening,” Iglesias says. Military
training, though, had prepared him to deal
with the adversity of trying to launch.
“Plans don’t survive the first contact,”
Iglesias says. “Once people start shoot-
ing, the plans go out the window. Things
go wrong, things break, the mission
changes. You’re literally planning and
executing at the same time.”
Iglesias enrolled in the Entrepre-
neurship Bootcamp for Veterans With
Disabilities in 2008 and by 2009 had
launched a small independent film com-
pany called Veterans Inc.
His first movie, Chosin, a documentary
on the Korean War, was completed this
year. It attracted the attention of Mad-
Media production company, which is
making a $100 million 3-D war movie
based on it, with Iglesias as an executive
producer: 17 Days of Winter will dramatize
a little-known battle during which 15,000
U.S. troops escaped from an overwhelming
force of Chinese soldiers—all while liber-
ating nearly 100,000 Korean refugees.
Iglesias, who forecasts more than
$200,000 in Veterans revenues this year,
and his filmmakers interviewed 185 Ko-
rean War veterans in 27 cities and finished
the documentary in a year, doing what
needed to be done to make it happen and
applying a main tenet of the Marine Corps.
“Living out of a van, filming it our-
selves and editing it in the spare bed-
room—you have to be able to suffer for
the dream,” he says. “We are trained to
put the mission ahead of personal com-
fort. You have to be able to gut it out.”
BRIAN IGLESIAS
President and CEO,
Veterans Inc.
THE
FILMMAKER
entjuly10 063-065 vets.indd 65 5/24/10 9:33 AM

doing
+
good
Entrepreneurs who give back
[
THE FUNDING SYSTEM for a social entrepreneur typically relies more on donations
than money from angel investors, venture capitalists or even family and friends.
Unreasonable Institute in Boulder, Colo., however, plans to rewire the way social entrepre-
neurs bring their ideas to market. The institute’s intense 10-week program provides 25 bud-
ding, big-hearted twentysomethings drawn from six continents the equivalent of an accelerated
MBA—along with a high-powered social network and possibly some startup dollars.
“We were all trying to create some large-scale change in the world,” says Tyler Hartung,
who along with fellow University of Colorado at Boulder grads Daniel Epstein, Teju Ravilo-
chan, Vladimir Dubovskiy and Nikhil Dandavati founded the institute last year. “But we
realized we lacked the skill, the knowledge, the networks—all the tangible things needed
to create that impact. We want to give those tools to other young entrepreneurs.”
Expectations for the 25 fellows, selected from 285 applications and 34 finalists, are
high. The institute, funded by $6,500 tuition fees raised by each fellow, hopes to give the
entrepreneurs the skills to make their ideas sustainable, scalable and transferable to other
countries. The goal for each endeavor is to eventually affect 1 million people.
The fellows participate in workshops on business plans, branding and the basics
of financial and legal issues. A steady stream of 50 mentors—ranging from Coca-
Cola execs to angel investors to authors and artists—provide guidance.
“It can be isolating to be a social entrepreneur,” says New York-based fellow Emily
Kerr, whose Liga Masiva helps farmers in the Dominican Republic sell their sustain-
able coffee directly to cafes and the public. “The business world is not set up for us.”
The institute experience helped fellow Matthew Kochman—whose M.E.S.S. Ex-
press (the acronym is for “Moving Every Student Safely”) sells cards for prepaid cab
rides to help Cornell University partygoers get home safely—develop a broader view
about safe transportation. ”Now we’re going to use part of our proceeds to support
transportation in India,” Kochman says.
At the end of the program in early August, the fellows will vote on how to divvy up
a $150,000 “Village Fund” among the group’s for-profit entrepreneurs. Hartung and
his colleagues are planning a second U.S. institute, and an international version.
“Just putting this together, we’re having so much fun,” Hartung says. “We’re al-
ready billing this as the best 10 weeks of our lives.” —Jason Daley
The Unreasonable Institute
A fast-track program aims to give altruistic entrepreneurs
skills and funding to effect large-scale change
Entrepreneur + July 2010 66
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Hair here: Unreasonable Institute found-
ers, from left, Nikhil Dandavati, Vladimir
Dubovskiy, Tyler Hartung, Teju Ravilochan
fashion a mustache a la Daniel Epstein,
who recently grew his.
entjuly10 062 doinggood.indd 66 5/19/10 1:49 PM

For nonGuerrillas fundraising is a mystery
that is about as unpredictable as the
weather. One minute they are flooded
with donations, the next they are in the
midst of a serious drought. However,
Guerrillas are not taken by surprise with
the winds of financial change; they know
they can become a fundraising force
of nature because they understand the
Golden Rules of fundraising success.
Rule 1: Know Your Donors
Individual donations are the backbone of
nonprofit support. Ninety percent of most
nonprofit funding comes from individuals.
That is why a donor list with much more
information than names, addresses and
phone numbers is important. If you’re
thinking like a Guerrilla your list will
have details about your donors lifestyles
such as where they eat, vacation, play,
hobbies, achievements, favorite sports
teams, and other small but important
details. Once you have your donor list
you are ready to impress them with
your knowledge and love of people.
This interest in people will be evident in
your marketing, and in the way you treat
your donors.
Rule 3: Help Donors
Find Personal Fulfillment
People want to make a difference.
They are seeking personal fulfillment
through supporting your cause. When
your organization can find a way to help
people solve their problem of finding
fulfillment though charity work, they will
be more willing to jump on board to help
your cause. They support you because
they can feel good about themselves
while making the world a better place.
The easy part for them is; they only have
to write a check. The hard part for you is
coming up with a creative way to show
the need for donations in a way that is
also compelling to the perceived needs of
the donor.
Rule 5: Respect Your Donors
Guerrillas know that there’s a world of
difference between donor care and donor
attention. Your marketing can say all the
right words and tell donors how important
they are to you, but unless you take the
concrete steps beyond those words they
won’t believe you. Do this by making
sure that everyone in your organization
who deals with donors pays very close
attention to them. Each donor or
volunteer for that matter should feel
unique and special after they’ve
contacted you or been contacted by you.
Rule 6: Focus on
Current Supporters
Why do you think that it costs five times
as much to raise a donation from a new
donor than from an existing one? The
answer is easy…because the price is
high to find a new donor while the price
is free to find an existing one. That is
why it is so important to keep in touch
with your current donors. This has the
effect over time of constantly increasing
donations while reducing your marketing
investment. You already have a list
of your donors. Go back to it often
to update information on them, keep
communicating with them so when it’s
time to give, it will be easy for you to ask.
One other way to focus on current
supporters is to have them focus on
themselves. You do this with a focus
group of your most involved donors, but
you could certainly try it with those who
give the minimum as well.
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Entrepreneur + July 2010 69
[Who’s getting VC now?]
money
+
department
The opportunity in opinion
ANDY CHEN CARES about what other
people think. He is the co-founder of
PowerReviews.com, which provides prod-
uct- and service-review platforms and
social commerce solutions to retailers
and brand marketers. When someone
likes or dislikes something, Chen wants
to know—and so do the companies that
use his platform, including Staples, REI,
Drugstore.com and Toys “R” Us.
Chen and fellow founder Robert Chea
came up with the idea of creating a review
platform that companies could access in
lieu of building, maintaining and moder-
ating their own when they were working
about 12 years ago on an online sporting
goods retail site they co-founded. “We
launched a customer-review feature on the
site, and it was extremely popular,” Chen
says. “Customers liked it, and it was a very
effective way for us to acquire customers.”
He also saw the popularity and influence
of reviews on sites such as Amazon and Zap-
pos. So in 2005, the duo decided to create
a company that would collect the review
data and parse it several ways for the benefit
of both customers and consumers. Power-
Reviews.com landed $7 million in Series A
funding in December 2005 from Silicon Val-
ley venture capital firms Menlo Ventures and
Draper Richards, allowing the team to launch
and begin building its infrastructure. One of
PowerReviews’ advantages is that it verifies
many of its reviewers through a verified buyer
process. This helps ensure that reviews aren’t
being flooded with biased accounts.
PowerReviews proves the value of filtered, aggregated
customer feedback by closing a third round of funding
Their instincts were right on. A report
from consulting company Deloitte this
past April found that nearly two-thirds of
customers read online reviews. And 43
percent either confirmed their decision or
changed their minds based on the online
reviews. But PowerReviews did more than
just provide places for people to spout off.
Chen and Chea built another site, Buzzil-
lions.com, that aggregates the reviews
from their 3,500 e-commerce sites into a
single place, now housing more than 10
million reviews that visitors can access.
As the company grew over the next
two years, it faced heated competition
from other startups such as Bazaarvoice.
com and Retrevo.com. In 2007, the team
needed to fuel growth and turned once
again to its partners in a $15 million Series
B funding round led by Lehman Brothers
Venture Partners. “We liked the idea. And
we liked the team,” says John Jarve, manag-
ing director of Menlo Ventures. “They’re
just a committed, fun group of people.”
The second round established the firm’s
infrastructure and position in the market-
place. However, Chen knew that to grow,
he would need to invest in a sales team.
That would mean about $5 million to $6
million—too little of an ownership stake
for most VCs to get newly involved. Could
he go back to the well a third time?
The answer was yes and, in March,
PowerReviews secured $6.1 million
more from its existing investors. That
money, Chen says, will be used to de-
velop new products and to get new
customers, primarily through hiring
salespeople to hit the bricks and show
companies what PowerReviews can do
for them. The company had a small sales
team of four people. Now there are 10,
with possible plans to hire more.
“Sales is a profit-generating activity
when it’s done right,” Chen says. “So
there’s an uncapped capacity to ab-
sorb more salespeople as long as they
continue to sell.”
In addition, the company will add
more client support for its more than
900 customers and continue to expand
the functionality of its platform. “This is
a constantly changing world,” Chen says.
“We need to constantly innovate and im-
prove and make our tools and technology
different.” —Gwen Moran
Talk to me: Andy Chen,
PowerReviews co-founder.
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Entrepreneur + July 2010 70
AS THE GLOBAL credit crisis grinds on,
it’s getting tougher than ever for start-
ups to secure financing. Commercial
and industrial loans authorized by U.S.
banks—including small-business fund-
ing—declined at an annual rate of 21
percent in the first quarter of 2010,
and venture financing can be difficult
to obtain. Many venture firms receive
as many as 5,000 business plan sub-
missions each year, but only about 10
percent are seriously considered, and
less than 2 percent are awarded fund-
ing—not to mention that the process
can sometimes take years, often killing
promising businesses in their infancy.
Bill Clark believes there’s a bet-
ter way. A former portfolio manager
in PayPal’s risk management division,
he witnessed the contraction in small-
business credit opportunities and
responded by launching in July Mi-
croVentures, an Austin, Texas, peer-to-
peer platform connecting startups with
a growing pool of angel investors from
across the U.S.
money
+

Venture funding, one dollar at a time
MicroVentures connects startups with angel investors
“Businesses are having problems going
to the banks, and venture firms won’t even
look at an idea if you don’t have a proven
track record,” says Clark, MicroVentures’
CEO. “There are other ways to get fund-
ing, but they’re also difficult. At Micro-
Ventures, we realize that, and we’ll look
at every single business plan, get to know
you and give you a chance.”
MicroVentures charges startups an
initial $99 application fee—assuming
the basic business concept passes mus-
ter. The applicant then pays an addi-
tional $250 to cover due diligence costs
before the plan is formally presented to
investors. At the outset, the site will serve
companies seeking between $50,000
and $250,000 in funding, but it plans to
expand that to $1 million by the end of
the year. MicroVentures claims 10 per-
cent of the funds raised.
Investor enrollment is free, with
would-be VCs permitted to pony up
anywhere between $250 and a “soft
cap” of $5,000 per company. Clark says
MicroVentures signed on 35 investors in
the first week alone and expects to add at
least 1,000 more before listing a startup
on the site.
“We supply all the information in-
vestors need to make a decision on
whether or not to invest, and we facili-
tate dialogue between the investor and
the business,” Clark says.
“We also cut through all the red
tape. There’s a reason why nobody else
is doing this—there’s a lot of paper-
work. After I came up with the idea,
it took weeks and weeks of back-and-
forth with the SEC before I finally got
a yes.”
Although MicroVentures plans to
focus on a number of verticals, Clark
says he expects green technologies and
social media to emerge as investor hot
spots. “We’re not looking for companies
that take 10 years and multiple fund-
ing rounds to become profitable—we
have to look at making money for our
investors,” he adds. “But if you have a
great idea and a great business model,
we will work with you.” —Jason Ankeny
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entjuly10 069-072 money.indd 70 5/21/10 12:19 PM

entrepreneur.com/e2010
entrepreneur.com/e2010college
The most prestigious awards for
entrepreneurs passionately making
an impact on their industries,
employees and communities.
WHO WILL BE NEXT?
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Entrepreneur + July 2010 72
EVERY SMALL-BUSINESS owner knows that one way to inexpen-
sively build a client base is to get referrals from satisfied clients.
But how do you induce existing clients to refer new ones to you?
You should just ask. Business and marketing consultant
Pinny Cohen in Fairlawn, N.J., points out that the people his
clients refer tend to “match that client in outlook and per-
spective, so when a good client refers people, they are usually
good clients. Make sure the person you’re asking a referral
from is your all-star client.”
Cohen himself focuses on word-of-mouth referrals to help
keep costs down. “My hourly rate has gone up over the
years, but any one of my clients can refer another client
to me, and I offer that new client the same grandfa-
thered hourly rate as the referring client gets,” he
says. “Instead of spending on advertising—and I
don’t spend a penny—I’d rather pass on the savings
to the customer.”
Many entrepreneurs reward their clients for their
referrals. Garde Robe, a luxury wardrobe storage service
in New York, relies heavily on referrals. “New-business reve-
nue generated by a member is automatically deducted from
the existing member’s account,” says Doug Greenberg, the
company’s vice president of sales and marketing “If your
monthly membership fee is $1,000 and you refer a new
member who pays $1,000, your fees are comped for at
least a month—or more, in some cases.”
Some firms reward both the existing and the new cus-
tomer. VoicePulse, a Voice over Internet protocol service
provider, offers existing customers the opportunity to
send an e-mail to their contacts with a referral code.
If the referred person signs up for service, both cus-
tomers get a credit to their accounts.
Other small-business owners offer gift certifi-
cates for items clients would enjoy—think house
cleaning services, chocolates, flowers, spa days,
theater tickets and the like.
Finally, don’t forget one old-school incentive: a
straightforward thank you.
“It sounds simple, but a handwritten thank you
goes a long way,” says Alexandra Mayzler, owner
of Thinking Caps Tutoring in New York. “Incentive
programs, especially in service industries, aren't
always appropriate, and genuine thanks go a long
way.” —Jennifer Lawler
money
+

Put your customers
to work for you
Client referral incentives can be a valuable
and inexpensive way to build business
Percentage of small businesses that expect to make capital outlays in the next three to six months.
19
%
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Source: National Federation of Independent Businesses, Small Business Economic Trends May 2010 (based on a survey of 2,176 small-business owners)
entjuly10 069-072 money.indd 72 5/21/10 12:19 PM

Nearly 15 years ago, GEICO became a proud part of Warren Buffett’s famed holding
company. Back then, the Gecko was one of the hardworking people — sorry, reptiles — in
our GEICO offices. Now he’s helped GEICO become not only the third-largest car insurance
company in the country, but also the fastest growing. Which is no surprise. For over 70 years,
GEICO has worked hard to save people hundreds on car insurance. So why not give the Gecko
a call to see how much you could save? You’ll find he’s easier to reach than Mr. Buffett.
A proud history of savings and reliability, backed by
the strength of Warren Buffett’s Berkshire Hathaway Inc.
(Note: the above portrait is not Mr. Buffett.)
A SUBSIDIARY OF BERKSHIRE HATHAWAY INC.
Some discounts, coverages, payment plans and features are not available in all states or all GEICO companies. GEICO is the third-largest private passenger auto insurer in the United States as reported by A.M. Best 2008 market share data, June 2009.
Government Employees Insurance Co. • GEICO General Insurance Co. • GEICO Indemnity Co. • GEICO Casualty Co. These companies are subsidiaries of Berkshire Hathaway Inc. GEICO Gecko image © 1999-2010. GEICO: Washington, DC 20076 © 2010 GEICO
GEICO - Entrepreneur - Lamp
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Entrepreneur + July 2010 74
personal
+
finance
By Rosalind Resnick
W
hen it comes to managing your
money, three little digits wield
tremendous power over your
future—and as with your cholesterol and
your weight, you ignore them at your peril.
That’s right. I’m talking about your
FICO score, the number that tells credit-
card issuers, mortgage lenders and other
consumer finance companies how safe it
is to lend you money.
As a business owner and entrepreneur,
you’re probably pretty savvy when it comes
to negotiating credit terms with banks and
vendors. Consumer credit is a whole differ-
ent game, however.
“There are a lot of credit myths out
there,” says Dan Meder, vice president
of business information services at Ex-
perian, one of the nation’s three leading
credit bureaus. “Good credit is really
about managing your balances.”
Here are Meder’s tips for maintaining
a winning credit score:
Pay your bills on time—every time.
Stretching out payments to vendors
can be a good way to manage your
company’s cash flow, but it’s a bad
habit to get into when paying your
personal credit card bills. Any late
payment is reported immediately
to the credit bureaus, dinging your
credit score, boosting your interest
rates and making it difficult for you to
get more credit. What’s worse, it can
affect your ability to get business fi-
nancing as well.
Keep small balances on multiple cards.
Unlike in the business world, where “rela-
tionship banking” is often rewarded with
lower rates, credit-card companies get ner-
vous when they see a cardholder carrying
one or two cards that are maxed out or with
balances that are bumping up against the
credit limits. “If your balances are too high,
there’s a perception that you’re living off
credit,” Meder says. Although you may want
to charge everything on a single card to
get as many reward points or frequent flyer
miles as possible, it’s a good idea to spread
out your spending on multiple cards and
stay well within your credit limits.
Don’t shift your balances from card
to card. It’s tempting as CFO of your
own business to take advantage of those
zero percent APR offers that you get in
the mail and to shift your balances to
the card that’s charging the lowest in-
terest rate. But if you do that with your
personal cards, you’re flashing a warning
sign to the credit bureaus that you don’t
have enough money to pay your bills.
Says Meder, “It’s better to pay off debt
than just move it around.”
Don’t apply for too many cards at one
time. Your applying for too many per-
sonal credit cards, credit lines and other
financing makes credit bureaus wary—
even if you never use the money. You’ll
improve your credit score and obtain
more credit if you build up your credit
history over time and make your lenders
feel as comfortable with you as a con-
sumer borrower as they are about you as a
business borrower. “Apply for credit judi-
ciously,” Meder advises. “A lot of inquiries
in a short period of time indicates risk.”
Don’t file for personal bankruptcy. As a
business owner, it’s OK to fold your cards
and start over. Consumer finance com-
panies are less forgiving, however, and a
personal bankruptcy filing can stay on
your credit report for as long as 10 years.
That’s why, no matter what happens to
your business, it’s important to do what-
ever it takes—a second job, a loan from
mom and dad—to pay your bills and keep
your personal credit score intact. Beware
of companies that offer to “consolidate”
your consumer debts. Settling with a
lender for less than you owe will hurt your
credit score for many years. And cutting
up your cards to eliminate temptation will
only make your credit score worse.
What should you do if your credit is
shot? Don’t give up, Meder says. Credit
scores are snapshots of the past, not pre-
dictors of the future. There’s no shortcut to
reestablishing credit, but you can rebuild
your credit history over time by making
payments promptly, maintaining low bal-
ances and spending responsibly.
Rosalind Resnick is
founder and CEO of
Axxess Business Con-
sulting, a New York
consulting firm that ad-
vises startups and small
businesses, and author
of Getting Rich Without Going Broke: How
to Use Luck, Logic and Leverage to Build
Your Own Successful Business. She can
be reached at rosalind@abcbizhelp.com or
through her website, abcbizhelp.com
Keep your credit clean
Protect your personal financial history so that
it doesn’t become a professional liability
Your credit report score, which can
range from 300 to 850, depends on
a number of factors, including your
credit payment history, current debt,
length of credit history, credit type
mix and frequency of applications for
new credit.
HOW DO
YOU RATE?
760

850
700

759
660

699
620

659
619
EXCELLENT
GREAT
FAIR
POOR
VERY POOR
Lender typically will offer
its best interest rates.
You shouldn’t have
trouble getting loans at
decent interest rates.
You may qualify for loans
but interest rates are
likely to vary.
Interest rates will be very
high, if you qualify.
It is doubtful you will
qualify for a loan.
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entjuly10 074 finance.indd 74 5/21/10 12:21 PM

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The
venture
capital
v ices
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ENTjuly10 076-080 vcroundtable.indd 76 5/19/10 12:31 PM
05192010123752
Entrepreneur + July 2010 77
venture
capital
of
CES
By Gwen Moran
I
f your business plan is to
start fast, grow big and
sell or go public, then
venture capital might
be the way to fund that
plan. In addition to an infu-
sion of capital, you usually get
access to the brain trust and
contacts at the VC firm, provid-
ing experience and leverage for
your fledgling enterprise.
The National Venture Capi-
tal Association says that 2010
got off to a rocky start, but VC
investment was still up more
than $1.3 billion over the first
quarter of 2009. Still, that’s
an 18 percent drop from the
fourth quarter of 2009—which,
overall, was a dismal year.
To help you navigate these
ups and downs, we asked four
early-stage VCs in various sec-
tors to discuss what you need
to know to get a leg up in the
competitive VC marketplace.
Four leading
venture capitalists
offer their takes
on the ups and
downs of VC
investment, what
captures their
attention and the
best ways to seek
out VC money
)))
ENTjuly10 076-080 vcroundtable.indd 77 5/19/10 12:31 PM

Entrepreneur + July 2010 78
Bo Peabody
(Village Ventures,
Williamstown, Mass.)
specializes in early-stage
consumer media, retail
and financial services.
Jason Mendelson
(The Foundry Group,
Boulder, Colo.)
specializes in early
entrepreneurial ventures
in many sectors.
Nina Sabieri
(Castile Ventures,
Waltham, Mass.)
specializes in early-stage
tech companies,
especially in mobility,
communications,
software, security
and digital media.
Bryan Stolle
(Mohr Davidow
Ventures, Menlo Park,
Calif.) specializes in
early-stage personalized
medicine, digital and
cleantech companies.
How should entrepreneurs interpret
fluctuations in the VC market?
Sabieri: In a way, 2009 didn’t have a
chance to become its own year. The
meltdown happened just a few months
earlier. Everybody was trying to sort out
all the problems of Wall Street and other
areas and how that was going to affect
us. When we came into the second half
of 2009, some of those questions were
answered. I’m not saying necessarily
answers that we liked, but at least it was
less of an unknown. We saw an increase
in revenue, booking and volume in our
businesses in the second half of 2009.
We are optimistic for the rest of 2010.
Stolle: I would say that less money out
there is good news for good entrepre-
neurs. There was too much money in
venture capital, and that had negative
consequences for everybody. When
there’s too much money, you end up with
12 companies funded in a sector where
there’s really only room for two or three.
You don’t want a bunch of marginal com-
panies funded because then there’s so
little oxygen that nobody survives.
Peabody: I didn’t really see a change.
There just aren’t that many venture
capitalists interested in content-driven
media. They don’t like how labor inten-
sive it is to create it, so they gravitate
more toward media technology instead
of the type of companies I invest in.
Mendelson: From a historical standpoint,
VCs have achieved tremendous returns
investing in early-stage companies. There
are a number of funds that have started up
just for that purpose. You have the rise of
the super-angel—individuals who are mak-
ing 40, 50 or more investments out of a
several-million-dollar pool of capital.
How does your firm find companies
and make decisions about investing?
Stolle: It’s rare that an unsolicited busi-
ness plan shows up on the doorstep and
becomes funded. We have large networks
of trusted colleagues and advisors, and
we have more brought to us through
those networks than we can handle or
deal with. Even then, the ratio of what we
fund is probably one in 20.
Sabieri: We are hands-on from the min-
ute we meet with the entrepreneurs—all
through the process and through the
building and managing of the business.
If we don’t believe in the entrepreneur
or his or her vision, then we don’t invest.
We want to make sure that we’re being
a true partner and a true believer as we
go through the process. But, by design,
we are a smaller and more focused firm,
and that’s how we guarantee that we stay
close to our entrepreneurs.
Peabody: We have close relationships
with a group of funds that we know well
and are predisposed to show us deals.
About 50 percent of the deals we do
come from one of the funds in our net-
work referring them. The others come
from being out there in the press and in
the community, saying this is what I do. If
you spend enough time on the website
and you spend enough time Googling
me and reading stuff I’ve written, you’ll
know that I don’t invest in social media.
But if you have a company that fits what I
invest in, then contact me.
Mendelson: For us, the biggest source
is referral from our inner network. That
could be a former entrepreneur coming
back with a new deal, which is a large
source of deal flow. Entrepreneurs or
executives of companies that we have
invested in in the past may refer their
friends and family. We also have a lot of
deal flow from people contacting us cold.
In several of our investments, we had no
connection at all with the entrepreneurs.
What business elements make you say,
“Wow,” or are immediate red flags?
Stolle: We put a lot of weight on the
What the pros say will get a startup
funded: a great idea but more important,
the team to build it and the passion to
keep going despite obstacles.
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ENTjuly10 076-080 vcroundtable.indd 78 5/21/10 12:41 PM

entrepreneur + July 2010 79
entrepreneur. What we look for is some-
body who has real, deep knowledge and
experience around the problem they’re
trying to solve or the solution they’re try-
ing to create. starting a company is an
irrational act, and building a company
is an unnatural act, so it takes some real
passion from that company builder to get
through all the million things that are
going to be in the way. Beyond passion,
we ask, ‘Are there people who want to fol-
low this entrepreneur?’ No entrepreneur
ever built a company solo. You build it by
building a great team and that team goes
and wins.
Peabody: What i like to see is a site that
is growing traffc consistently without
spending money on marketing. Or, if
they are spending money on marketing,
they’re spending in a fashion that looks
scalable and proftable. When i see a site
that went from 5,000 uniques to 15,000
to 50,000 to 75,000 to 125,000 over a
relatively short period of time, that gets
my attention. it’s rare that i see a site
that has six to 12 months of real, organic
traffc growth. The company doesn’t have
to be proftable, but its traffc needs to
be growing in a way that seems to make
economic sense. And i like to see that
they’ve done work with the ad networks
and understand how to manipulate them.
Sabieri: We are looking for people who
have a particular solution that, when it
gets applied to the market, will change
the dynamic of the market or create a
new market, providing people with a
new opportunity to work, or play or live.
We’re looking for people with vision, who
are defnitely experienced and credible
in their felds. They have to have a com-
plete understanding of what they want
to build and how they’re going to build
it. if entrepreneurs are too dismissive of
what can go wrong, that’s not appealing.
Because life is not just about everything
going perfectly fne.
Mendelson: First is the idea. But the
team is more important than the idea. Al-
ways has been, always will be. so you can
have the cure for cancer but a crummy
team, and it will fail. if you have a great
team and kind of a medium idea, you
can usually do OK. Because we invest in
things, not sectors, we tend to be ahead
of the curve, which is both helpful and
harmful. sometimes we are too ahead of
curve and invest in something a little too
early, but that’s a risk we take.
If I’m an entrepreneur seeking early-
stage funding, how do I start the VC
process?
Sabieri: Well, frst, you have to deter-
mine if venture capital is the right source
of capital for your business. A lot of
people don’t quite take that step. There
are companies that need to grow in a
more organic way, or it may take a longer
period of time to get to the next phase.
And not every business needs to become
a huge business that is sold or taken
public, which is the goal of most venture
capital investments.
Stolle: Get online and fnd frms that
sound like they are interested in what
you do. Look at the companies they’ve
invested in and what the principals say
in their writing. Then go talk to people
in and around the space. This is where
your lawyers and accountants can be
helpful. it’s where other entrepreneurs
can be helpful. Get opinions on what
7,986
Number of VC deals in 2000
$100.4
trillion
Amount of VC investment in 2000
2,868
Number of VC deals in 2009
$17.7
trillion
Amount of VC investment in 2009
Source: PricewaterhouseCoopers/National
Venture Capital Association MoneyTree Report
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Entrepreneur + July 2010 80
frms like this kind of thing. Let’s say
it’s social gaming. Who’s doing deals in
social gaming? And are they still invest-
ing? Because sometimes you kind of get
over-invested, or at least you get fully
invested in a category you don’t want to
do anything else.
Mendelson: Once you fnd the early-
stage frms online, read their websites.
Look for those that show a real depth in
their thinking. If there’s a connection,
use it. Maybe you went to my college, we
grew up in the same hometown, or you
are a drummer, like I am. Whatever it is,
fnd something that connects and use it.
Then, you reach out with a personalized
e-mail—not just cut-and-paste. Say that
you’re looking for money, explain why
you think we’re a good ft, show me you’ve
read some of my blog or heard me speak.
Then use the personal connection. That
shows that you really did your homework.
Peabody: The best way is to go through
your personal networks. People say they
don’t know anybody. Yes, you do. You
know someone. Your father or mother or
your grandfather or your aunt or your
uncle or your professor or somebody
knows somebody. I don’t ever buy that
in this world of vast social networks, you
can’t fgure out a way to get yourself to
someone who will be able to get your
plan in front of a venture capitalist.
What kinds of companies are you
looking for now?
Peabody: Anybody who knows me knows
that I’m really looking to invest in a food-
and-wine site. I think the category is way
underfunded. Beyond that, I’m pretty
focused. I have a list of 15 verticals that I
want to be in, and I’m sort of going down
that list pretty methodically. Financial
services and food and wine are at the top. I
also think video is going to change dramati-
cally the vertical publishing business. It’s
something that’s going to be just one part of
a broader health site or travel site or tech-
nology site for us, but it’s really important.
Sabieri: Video delivery is important to
us now, whether that has to do with the
application, infrastructure or interface.
We’re interested in companies working on
delivery of video, no matter where or what
service we’re using. Security continues
to be a topic, from physical security to
virtual security to digital security. Finally,
e-business infrastructure is another area
that continues to be important.
Stolle: In IT, the cloud is the next big
platform shift. We’re moving to a world
where computing is just like electric-
ity. You plug a cable into the wall and as
much juice as you need, as much computer
power as you need, as much storage as you
need—you know it’s all there. And you pay
for it just like you pay for electricity, on a
consumption basis. So what we’re looking
for are things around the infrastructure
of the cloud: the new hardware, the new
infrastructure software, the new manage-
ment software that’s required to operate the
cloud and the general security for the cloud.
Mendelson: There are a lot of things
that excite me. Obviously I have a soft
spot in my heart for anything that is kind
of techie, media and music. I get to
spend a good part of my day talking to
people who are in these spaces, and that
is the best part of my job.

GweN MoRAN iS A fReelANCe buSiNeSS
wRiTeR bASed AT The JeRSey ShoRe ANd
Co-AuThoR of The CompleTe IdIoT’s GuIde
To BusIness plans.
54%
Internet
Cleantech
Media/
Entertainment
Software
46%
39%
15%
0%
33%
37%
32%
43%
40% 60%
25%
30%
20%
20%
26%
Increase
Stay the same
Decrease
Investment in 2010 in the following sectors will:
30%
Biotech
Wireless
Medical Devices
Semiconductors
30%
36%
34%
0%
29%
38%
5%
31%
40% 50% 60%
64%
33%
34%
20% 10% 30% 70%
37%
Increase
Stay the same
Decrease
Investment in 2010 in the following sectors will:
On the VCs’ wish lists: companies that
involve a food-and-wine site, fnancial
services, video delivery, music, and
operating and securing the cloud.
Source: “Venture View: 2010 VC Predictions,“ a survey of 350 VCs across the u.S. in November and december 2009
by the National Venture Association
ENTjuly10 076-080 vcroundtable.indd 80 5/21/10 12:42 PM
05212010124815
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Entrepreneur + July 2010 82
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M
arilyn O’Neill’s company needed money. Nautilus Environmental, the
San Diego environmental consulting frm she launched in 2004, had
grown quickly. But to continue growing, O’Neill needed about three-
quarters of a million bucks—smack in the middle of a recession and on
the heels of her company losing about $170,000 during the downturn.
At the same time, the bank she had used since 2006—and the one that held her $550,000
line of credit—increased its loan audits from once a year to four times a year. “I didn’t think we
should have to do that,” she says. “Then the CEO was fred by the board, and it started looking
like things were unstable.”
So O’Neill began looking to other banks, large and small, in search of funding. Over the course
of a year, she talked with about 10 of them, but one community bank in particular, Security Busi-
ness Bank of San Diego, took an interest in her company. The manager eagerly courted Nautilus and
seemed to understand the business.
“He was working so much harder on making this happen than my current bank was,” she says. “He
kept coming back to me, saying, ‘OK, we have these losses in 2009. Help me understand them so I
can explain them in a way that gets us through the process.’ ”
In March, O’Neill closed a $709,000 Small Business Administration loan with Security Business
Bank. The money paid off the $498,000 balance on her existing line of credit and gave her about
$200,000 to shore up her cash reserves.
Yes, it took a year for her to get to that point, but that kind of due diligence is exactly what in-
dependent business owners need to practice when choosing a fnancial partner, says Richard Bar-
rington, personal fnance expert at MoneyRates.com, a fnancial information site that compares
interest rates of various products. Choosing the right banking partner means looking far beyond
great rates and convenient hours, especially in recessionary times.
>>
THE BANK
in your backyard
Building strong connections with community Banks can pay off
during uncertain economic times
By Gwen Moran
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F
irst, some good news: Activity in
loans backed by the Small Busi-
ness Administration and other
commercial lenders showed signs
of renewal in the frst quarter of the year,
partly the result of more than $1 billion
in loan guarantees from the American
Recovery and Reinvestment Act. And
there have been additional proposals to
loosen lending to small businesses. In
February, the White House announced
plans for the Small Business Lending
Fund, which would transfer $30 billion
from the Troubled Asset Relief Program
(TARP). Now, the fund needs to wind its
way through the legislative process.
Meanwhile, small businesses still need
to fnd money. Conventional wisdom
says it’s better to be a big fsh in a small
pond, but larger banks may offer more
experience in and access to international
services or a greater variety of fnancial
products and services, says fnancial ad-
visor Bruce Fenton, managing director of
Atlantic Financial, an investment frm in
Norwell, Mass. Some may be able to pro-
vide easier access to ancillary business
lines in insurance or investing services.
However, the sheer size of many large
banks makes it diffcult for even midsize
companies to have much infuence.
That was Julie Parrish’s gut instinct.
Parrish and Heidi Kennedy are co-
founders of Coupon Girls. Last year
they shelled out nearly $40,000 to
successfully defend their website, Hot-
CouponWorld.com, against an allega-
tion of trademark infringement. Parrish
and Kennedy knew they needed a line
of credit but were afraid that their pri-
mary bank, Wells Fargo, wouldn’t look
too benevolently upon them. Coupon
Girls is a fedgling business whose own-
ers found each other online seven years
ago and have never met in person—
Parrish lives in West-Linn, Ore., and
Kennedy lives in Gillette, Wyo. Their
credit scores were “in the low 700s,”
says Parrish. And before Parrish’s hus-
band was deployed to Iraq last year,
the couple took out $150,000 in loans
to renovate their 1977 home, and she
racked up $20,000 in student loans
obtaining her master’s degree in busi-
ness administration.
“We made some choices, with three
kids, that if something should happen to
him, the house is secure and I have the
skills to support the kids,” she says.
So Parrish went into her local bank hop-
ing to borrow money to help pay her at-
torneys, and within a few days they secured
a $40,000 line of credit. Parrish says the
bank’s manager pushed for the line be-
cause he believed in their business.
“There are three reasons why a small
business would tend to favor borrowing
from a community bank,” Barrington
says. “One is cultural ft. Another is lower
overhead. And, a third, is useful interest
in the community.”
Barlow Research, a Minneapolis banking
market research frm, fnds that 73 percent
of small businesses that bank with small
banks consider themselves “very satisfed”
vs. 50 percent of large-bank customers.
Large banks are defned as those with
$50 billion-plus in assets; medium banks
are those with $1 billion to $50 billion
in assets; and small banks have less than
$1 billion in assets.
Small-business lending plans are on
the rise among smaller-bank customers,
too, says Linda O’Connell, managing di-
rector of small-business banking for Bar-
low. Sixty-eight percent of small-bank,
small-business customers plan to borrow
at their primary bank in the next year,
compared with about one-third the year
before. Sixty-one percent of medium-
bank customers and 51 percent of large-
bank customers plan to seek loans.
Regardless of the size of the bank,
however, you should make decisions
based on how eager the institution is to
get your business.
“Don’t limit yourself to one size of
bank,” Barrington says. “After all, com-
munity banks only represent 23 percent
of the industry by assets, but they repre-
sent 97 percent of all banks by number
of banks.”
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C
hoosing the best banking part-
ner requires research and nego-
tiation. First, Fenton says, find a
bank with a strong manager with
whom you’ll be able to build a relationship.
The relationship has always been impor-
tant, the financial advisor says, but it has
been tougher to cultivate in recent years
because mergers and acquisitions have
created more mega-banks.
Robert C. Seiwert, senior vice presi-
dent with the American Bankers Associa-
tion, suggests meeting with your bank
representative and asking what kind of
experience he or she has with businesses
like yours. Your banker should have some
expertise in your industry so that he or
she understands the business and can
help bring solutions to your firm. Make
sure that the bank is capable of handling
special needs, such as letters of credit
or other tools for international transac-
tions. Also, ask if you’ll have access to
other advisors in the bank—if you have
a problem, will the bank provide all of its
resources to help you find solutions?
Once you’re satisfied with the people
portion of the decision, look at the bank’s
stability. The FDIC Bank Data section of
its website (fdic.gov) includes information
on bank health markers such as assets and
liabilities. In addition, Bankrate.com’s “Safe
and Sound” rating system measures the
capital adequacy, asset quality, profitability
and liquidity of banks and credit unions by
using more than 20 tests and rates each
bank on a five-star scale. This is important
because if a bank fails, FDIC-insured ac-
counts are protected up to $250,000,
but loans and lines of credit have no such
guarantees and may be frozen or come due.
If you’re looking for a loan from your
bank, don’t shop just by rate, Seiwert
warns: “There’s nothing more costly to a
small business than the wrong loan at a
great price.”
A bank that demands more collateral
than is necessary or reasonable can hurt
your business, no matter how low an
interest rate you get. Pledging too much
collateral limits your options to borrow
again when you need it for growth or
other reasons. Terms and interest rates
are often negotiable, especially at smaller
banks, where the chain of command to
the ultimate decision-maker is shorter.
If you need a loan in a short period of
time and the bank you’re talking to has
a minimum of a two-month turnaround,
you need to keep looking, Barrington
says. Your local Small Business Develop-
ment Center can provide a list of SBA
preferred lenders who often deal with
small businesses.
Besides building a relationship with
your banker, keep your options open
to best serve your business. Parrish
and Kennedy still have an account with
Wells Fargo in case they ever need to
tap the muscle of a bigger bank. In fact,
one of their web developers is a Wells
Fargo client, so they deposit their pay-
ments to him directly into his Wells
Fargo account so that they clear more
quickly, which helps the pair manage
their cash flow.
Like anything else, the more research
you do upfront about your prospective
bank, the better decision you’ll be able
to make, making it more likely you will
find a long-term home for your busi-
ness’s financial needs. That’s the experi-
ence Nautilus Environmental’s O’Neill
had with her community banker.
“Going through the process made
me feel that as we go forward with our
plans to invest,” she says, “he would be
there in the same way to support me
and help me.”
GWEN MORAN IS A FREELANCE BUSINESS
WRITER BASED AT THE JERSEY SHORE AND
CO-AUTHOR OF THE COMPLETE IDIOT’S GUIDE
TO BUSINESS PLANS.
Credit unions may be an-
other source of loans dur-
ing tight credit times. Less
than one-third of credit
unions make business
loans, but they are the fast-
est-growing loan product
at those that offer them,
shooting up 10 percent last
year, says Pat Keefe, vice
president of communica-
tions, of the Credit Union
National Association.
Credit unions are finan-
cial institutions formed by
an organized group of peo-
ple with a common bond.
Credit union “customers”
are actually members who
own shares of the credit
union and pool their as-
sets to provide loans and
other financial services to
one another. Unlike banks,
credit unions are not-for-
profit, owned by members
and mostly operated by
volunteer boards.
Business owners usu-
ally need to be credit union
members to obtain loans.
Membership criteria vary,
but most credit unions allow
the immediate family of
members to join. Being a
member of some churches,
social, professional and civic
groups may give you entree
to a credit union. And more
than one-third of credit
unions have “community
charters,” which allow
them to serve specific
geographic areas.
To get a loan from a
credit union, business
owners need to be well-
prepared. “Credit unions, as
cooperatives, are very con-
cerned about limiting risk to
their member-owned, coop-
erative institutions,” Keefe
says. “As a result, par-
ticularly in business lending,
credit unions are careful
lenders—they have rigorous
underwriting standards and
rely on experienced staff in
business lending to guide
their decisions.”
Not surprisingly, credit
unions report fewer
charge-offs than banks:
0.59 percent vs. 2.36
percent in 2009. How-
ever, they are interested
in making loans. CUNA
surveys show that credit
unions become involved in
business lending to offer
more services to mem-
bers, to respond to inter-
est from members and to
stimulate loan growth.
The average amount
of a credit union business
loan is $220,000, and
credit unions are limited
in the amount of business
loans they can make,
which may not exceed
12.25 percent of their
asset base. Legislation is
pending in the House of
Representatives and Sen-
ate that would increase
that cap to 25 percent.
General business ser-
vices tend to be limited at
credit unions, Keefe says.
Most offer basic deposit
services such as free or
low-balance checking, sav-
ings accounts and money
market accounts. How-
ever, less than half offer
specific business check-
ing or premium business
checking options. Services
such as sweep accounts
and account analysis indi-
cate that only a few credit
unions are serving larger,
more complex businesses.
To find a credit union
near you and one that of-
fers business loans, go to
creditunion.coop. —G.M.
THE CREDIT UNION OPTION
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Entrepreneur + July 2010 86
[
WACKY IDEAS THAT JUST MIGHT FLY
start
+
it up Time to launch a business and get out from under The Man
If that
mini dress
could talk …
Well, actually, it does—on a
new vintage website where
every garment has a “past life”
YES, IT’S A BIG, pink 1980s blazer—
heavy on the shoulder pads and maybe
even a little dumpy.
Ah, but in Brenna Egan’s mind, it is a
garment with a simmering past: “Thalia
forced herself to hit a Venice Beach Sat-
urday barbecue after a long day on set
styling a burgeoning pop star. She meant
to only stay 15 minutes, but ended up
closing the party down after a long, ro-
mantic kiss and a date on the books the
following Monday with Cole, a mysterious
music mogul. She was glad she brought
her Peaches 'N' Cream blazer to avoid the
late night beach chill while she canoodled
with her new prince charming . . .”
Price: $58, plus shipping.
Egan is the creator (and apparently, bud-
ding novelist) behind Chic and You Shall
Find, a new website specializing in stylish
vintage clothing. The web, of course, is over-
stuffed with vintage sites, but what makes
Egan’s stand apart—and compulsively read-
able—are the “Past Life” descriptions she
writes for every single garment.
For a mustard yellow mini dress:
“When she awoke early, she found her-
self bathed in the hot August sun, sur-
rounded by empty red cups and The
Who’s ‘Teenage Wasteland’ blasting from
someone's room. She could already tell
that this year would be epic.”
For suede short-shorts: “Tawny had
spent the winter cross-country skiing
across Idaho and was more than ready to
ditch her cold weather garb. But when the
sun started shining, she couldn't bear to
part with her fave leather vest. So, being
the innovative girl that she was, she re-
fashioned it into a pair of bangin’ short-
shorts and rocked them all summer long.”
Egan—a former West Coast fashion
editor for OK! magazine and fashion
assistant at Vogue—says she begins con-
cocting the stories right after she zeros
in on a garment. The more inspiring
the piece, the easier the back story. She
launched the online store in February
after years of dreaming about owning her
own vintage store—a prospect that, in
this economy, ultimately felt too risky.
“The web was the perfect answer,” she
says. “I could parlay my styling skills and
writing skills. It’s all the good things I like.”
The site offers a wide, and well-cu-
rated, selection, with most of the pieces
priced at less than $100. Nearly every
item sells quickly, Egan says, and the big
challenge is getting fresh merchandise
posted fast enough.
Aside from hunting down covetable
clothes and writing tall-tales copy, Egan
also acts as the site’s photographer and
model booker, shooting professionals
and amateurs (her friends, mostly) at
her house in Los Angeles.
“That’s why I’m super picky about
what I buy,” she says. “Posting each piece
is a labor of love.” —Emili Vesilind
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o
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o
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It’s all material: Brenna
Egan, creator of Chic and
You Shall Find.
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Entrepreneur + July 2010 88
start
+
it up
COLLEGE STARTUPS
RICH ABERMAN AND BILL CLERICO faced
a tough decision as they approached the
end of their senior year at Boston Col-
lege. Start an innovative online-payment
processing business, or start a new job
and grad school?
In the end, they decided to go the safe
route—Aberman set out for law school
at New York University and Clerico took
a job as an investment banker at Jeffer-
ies—and they promised themselves that,
one day soon, they’d get back to starting
their business. But all too quickly, they
saw themselves getting sucked into the
workaday world and their entrepreneur-
ial ambitions slipping away.
“It only gets harder to start a company
as time goes on,” says Aberman, 25. “As
you get used to a salary, you start get-
ting comfortable with a certain lifestyle,
which becomes hard to leave for the un-
certainly of being an entrepreneur.”
Clerico was worried that if he tried
starting a company and failed, he would
be six months out of school with no rel-
evant job experience or tangible success.
“In hindsight, I think that was a dumb
fear,” says Clerico, 24. “You can always
go get an entry-level job.”
So after just a few months, they
changed course: Aberman left law school
and Clerico quit his job, and they founded
WePay, an online system for groups to
manage their funds. They scraped by on
income from odd jobs—Aberman taught
LSAT courses while Clerico did technol-
ogy consulting—as they worked to get
their business off the ground.
“We just kind of did what we had to
do to make rent every month,” Aberman
says. “And it’s completely doable, too.
There’s the fear of not having any money,
but in actuality, you can usually find a
way to scrape up six or seven hundred
bucks to make your rent payment.”
The decision paid off, and a little
over a year after founding the company,
Aberman and Clerico have raised nearly
$2 million for WePay from high-profile
Internet investors such as Max Levchin,
Eric Dunn and Ron Conway.
WePay launched its service March
30, allowing individuals and groups all
over the world to establish an account
and collect money in a variety of ways—
from paper checks to credit cards—and
then use a debit card to spend the
money in the account. They already
have several thousand users, ranging
from sports teams to fraternities to
groups of roommates managing rent and
utilities. WePay collects transaction fees
ranging from 50 cents for bank account
payments to 3.5 percent of credit-card
payments for each payment received;
outgoing transactions are free.
Aberman and Clerico were able to get
their college business idea back on track
after a minor detour, but they strongly
recommend starting right out of college.
“You have the degree under your belt,
and you haven't tied yourself into a par-
ticular lifestyle or career path,” Aberman
says. “If you take a risk, and it fails, the
worst that happens is that you have a
unique experience that you can use as an
impressive factor to get you into gradu-
ate school or to rock a job interview.”
Adds Clerico, “If you wait until you
work for a few years or go to graduate
school, you are just piling on reasons
not to take the risk, and you reduce the
chances that you ever will.” —Joel Holland
Risk it when you’re young
Why you shouldn’t wait to start your business:
You may never get back to it.
1 Less downside. (“No kids or
mortgage.”)
2 No lifestyle addiction. (“You can
survive on very little and work
long hours.”)
3 No career path to disrupt.
4 Recent grads can use their alma
maters as a resource (first cus-
tomers, mentors, etc.).
5 It’s a lot more fun than a job.
P
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E
v
a

K
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l
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o
Go for it: WePay
co-founders Bill
Clerico, left, and
Rich Aberman.
Five reasons to start
a business right out
of college
From Rich Aberman
Joel Holland, 25, is the founder and CEO of Footage Firm in Reston, Va. He
can be reached at joel@joelkentholland.com.
entjuly10 086-092 StartItUp.indd 88 5/19/10 1:54 PM

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Entrepreneur + July 2010 90
start
+
it up
FINANCE FOR STARTUPS
The easiest way to raise money
It’s simple: Don’t spend it. Here are 10 ways
entrepreneurs waste their hard-earned capital.
IF ENTREPRENEURS COULD recover all
the time and money they waste, our GNP
would soar. I can’t prove that scientifi-
cally—researching the topic would be,
well, a waste of time and money—but
I’ve seen it often enough, in business
plans, on income statements (including
my own), during bankruptcy proceedings
and just looking around.
To win the startup game, you need to be
a miser with your money. You need to spend
it on things that will make you a success, not
on what will simply make you feel or look
like one. You need to pander to what your
customers need, not to what you need.
So before you sign that check, swipe
that credit card or sign that contract, ask
yourself, “Will this bring me business?”
If the answer is no, consider it one less
dollar you need to beg, borrow or spend.
Based on my experience, here are 10
of the most common ways entrepreneurs
waste money:
1
Custom logos, fancy letterheads
and other icons of success. They
may make you feel like an entrepreneur,
but they don’t bring home the bacon.
Instead, design your own with one of the
many templates that come packaged with
your word processing software. They in-
clude matching business cards, letterhead,
envelopes and invoices. You can find tem-
plates in the Project Gallery of Microsoft
Word or the Template Chooser in Apple's
Pages. If you need more choices, HP.com
and Avery.com offer free templates for use
with their specialty forms and paper.
2
Fancy offices. Speaking of bacon,
maybe the dining room isn’t the
ideal office, but working there beats not
eating. If you don’t need a formal office,
don’t pay for one.
3
A company car. The latest luxury car
doesn’t make you a better business-
person, it makes you a poorer one. If the
wheels you have already get you back and
forth to the grocery store, new ones are a
waste of money. Just be sure to log your
business travel so you can deduct the usage.
4
A slicker-than-you-can-afford
website, brochure, sign, ad, etc.
In the beginning, good enough is often
good enough.
5
Consultants. Sorry to say, many of
them will borrow your watch to tell
P
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©

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Entrepreneur + July 2010 91
you what time it is. If it’s not rocket sci-
ence, figure it out for yourself.
6
Falling for the pitch “You’ll be get-
ting in on the ground floor.” You’re
not in a position to be someone else’s ven-
ture capital. If a rep for a new advertising
outlet gives you the hard sell about how
wonderful it’s going to be, invite them
to call you back when they can prove it.
Leave the experimenting to others.
7
Starting a business because your
friends love your idea. It’s one
thing to like or even love an idea—it’s an
altogether different thing to be willing
to plunk down money for it. There’s no
substitute for test marketing where real
money changes hands.
8
Basing your marketing strategy on
what you think is wonderful. Good
chance your customers are nothing like
you (or them you). Instead, research your
market thoroughly. What do they read?
What do they eat? What do they watch
on TV? Then craft your message based
on what appeals to them, not you.
9
Underestimating the competition.
Or worse, thinking you don’t have
any. Any business plan that proudly
states it has no competition earns itself
an immediate place in my round file. If
you don’t understand your direct and in-
direct competition, you don’t understand
your market. And if you don’t understand
your market, you may be trying harder
and harder to get better and better at
something you shouldn’t be doing at all.
10
Thinking that your product
or service is what sells. Here’s
the sad truth: A great marketing strategy
beats a great product every time. Business
owners can (and will) go on and on about
their wonderful products or services. The
successful ones spend their time schem-
ing about who’s going to buy it and how
they’re going to reach them. Products
don’t sell, marketing does. —Kate Lister
Kate Lister is a former
banker, small-business
investor and veteran en-
trepreneur. Her books and
websites include Finding
Money: The Small Business Guide to Financ-
ing and Undress For Success: The Naked
Truth About Making Money at Home.
P
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©

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entjuly10 086-092 StartItUp.indd 91 5/19/10 1:54 PM

Franchise Opportunities
or Call 1-800-553-5776
©2009 L.C.E. Inc., LC Trademarks, Inc., 2211 Woodward Ave., Detroit, MI 48201. 19448
The Best Kept Secret Is
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Entrepreneur + July 2010 92
start
+
it up
Strokes of genius
Evernote [evernote.com]
In the old days (let’s call them the ’90s), jotting
down a note required, well, actual jotting. Now
there’s Evernote, a free service that saves digital
messages, notes and photos and indexes them for
easy searching. Archive documents and texts for
projects, snap photos at conferences, record meet-
ings … and, as the site says, “remember everything.”
Even if you don’t want to.
Do Hit Chair [droog.com]
Michelangelo thought every block of stone has a statue inside it; Marjin
van der Poll sees a big cube of steel and thinks there’s a chair in there
somewhere. Van der Poll’s Do Hit Chair is basically a big hunk of stainless
that arrives with a sledgehammer. Pound away until you’re happy with the
shape, or just not as angry anymore. —Jennifer Wang
Buzzuka [buzzuka.com]
Be honest. Have you found “the wow?” If it seems impos-
sible to create an elevator pitch that reflects the brilliance
of your idea, sign up for Buzzuka Pitch Studio, a free site
that helps you create (or jazz up) your 30-second spiel.
The Scapegoat Mega Mini Kit
[amazon.com]
What price perfection? $6.95, plus tax. The soft white
scapegoat exists to take the blame for your office
drama and wrongdoings. And since it comes with stick-
pins, it apparently has voodoo powers as well.
entjuly10 086-092 StartItUp.indd 92 5/19/10 1:54 PM

Visit today to get things done for your business.
Designed
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The Fastest
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• No experience necessary– TLE provides
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• First TLE opened in1980
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Qualifications: $150,000 cash and $400,000
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“Child Care was named as one of the Hottest Franchise Sectors by Entrepreneur Magazine”
LearningExper_fp_0710.indd 5/18/10 9:43 AM PAGE 1 LearningExper_fp_0710.indd 5/18/10 9:43 AM PAGE 1 LearningExper_fp_0710.indd 5/18/10 9:43 AM PAGE 1 LearningExper_fp_0710.indd 5/18/10 9:43 AM PAGE 1
Worked for them:
Nelson and Lisa Neyer
used their 401(k)
to start a Bark
Busters franchise.
W
THOUSANDS OF AMERICANS ARE USING RETIREMENT
SAVINGS TO START NEW BUSINESSES. SOME THRIVE,
OTHERS FOUNDER. IS THE GAMBLE WORTH IT?
entjuly10 094-101 startupfea.indd 94 5/18/10 10:58 AM

By Julie Bennett | Photography by Jeff Clark
I
t sounds so easy. In this time of tight credit, you can still fnance a new business or franchise by rolling your retirement
funds into your new company. You pay no income taxes or early withdrawal penalties, avoid debt and have money avail-
able immediately to rent a space, pay a franchise fee, hire employees, buy equipment and pay yourself a salary. And this is
all sound, the frms that arrange these rollovers say, because they are “based on long-standing provisions of the Internal
Revenue Code.”
For thousands of startups, these rollovers are working. Last year, 4,050 businesses—60 percent of them franchises—were
launched with retirement rollover money, according to FRANdata, an independent research frm. These new entrepreneurs
started ventures that range from data processing companies to fower shops, created more than 60,000 new jobs and added
$8.3 billion to the nation’s economy. And the lingering recession, says Steve Rosen, CEO of FranNet, a franchise broker frm
based in Louisville, Ky., is only making retirement rollovers more attractive. >>
Worked for them:
Nelson and Lisa Neyer
used their 401(k)
to start a Bark
Busters franchise.
Entrepreneur + July 2010 95
401
(
k
)

Should you
tap your
to start your
business?
entjuly10 094-101 startupfea.indd 95 5/18/10 10:58 AM
05182010110214
Entrepreneur + July 2010 96
“Bank credit is tight,” Rosen says, “and
housing values have dropped so much
you can’t get a home equity loan. These
rollover plans let you invest in yourself
instead of investing in the stock market.”
Indeed, one of the early adopters,
Gary Cote, used $60,000 from his
401(k) in 2005 to start Sunray Tech-
nology Ventures, a Palm Desert, Calif.,
provider of high-speed Internet access
to hotels. “I didn’t want to borrow money
or mortgage our home to the hilt,” Cote
says. “Using my retirement money gave
me independence. We’ve been proftable
since 2007 and had revenues of
$2.2 million last year. I have 10 employ-
ees, and I can’t say enough about the
scenario that allowed us to provide for all
these people.”
Although the mechanism for rolling
retirement funds into business start-
ups has been available for decades, the
practice began in earnest in 2000, when
industry founders and former business
associates Leonard Fischer, now CEO
of BeneTrends Inc. of North Wales,
Penn., and Steven Cooper, now CEO of
SDCooper Co. of Huntington Beach,
Calif., introduced the concept at the
annual convention of the International
Franchise Association. “We were the
hit of the show,” Cooper says. Rollovers
gained momentum during the early
2000s but fell out of favor during the
boom years before the current recession,
when credit was easily available.
Today, they are so popular that
Rosen estimates 35 percent to 40 per-
cent of all new franchisees recruited
through his broker network last year
tapped some or all of their retirement
funds to get started. So far, an esti-
mated 10,000 small businesses and
franchises have been launched nation-
wide with retirement money.
But if you’re considering joining them,
you should be aware that retirement
rollovers are not as simple as they sound.
Obviously, you are putting your nest egg
in jeopardy. Less obviously, you are also
agreeing to pay a rollover plan provider
an annual fee for the life of your busi-
ness and, some tax experts warn, risking
increased scrutiny from the Internal Rev-
enue Service. Although few rollover plans
have been questioned until now, the IRS
has signaled that it may begin looking at
them more closely.
The “long-standing provision” behind
these plans is ERISA, the extremely com-
entjuly10 094-101 startupfea.indd 96 5/18/10 10:58 AM
05182010110214
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Entrepreneur + July 2010 97
plicated and easy-to-violate Employee
Retirement Income Security Act of 1974,
which enables employees to be respon-
sible for their own retirement plans.
The three main administrators of
rollover plans—SDCooper, BeneTrends
and Guidant Financial Group Inc., of
Bellevue, Wash.—have tweaked ERISA
rules into a neat three-step program.
You pay one of them a fee of about
$5,000 and it’ll do the rest: Move your
current 401(k) or IRA (self-directed
IRAs are not eligible) into an ERISA
proft-sharing plan, which then be-
comes the retirement plan for your new
company. That plan buys up the stock
of your new C-corporation. Once the
funds have transferred, they become
tax-free capital for your business. In
essence, you are spending the money
on your own corporation instead of
for stock of another company, such as
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Entrepreneur + July 2010 98
General Electric or Goldman Sachs.
“You then open a corporate checking
account,” Cooper says, “and pay yourself
back for whatever you’ve spent money
on and pay our fees.” Like the other
providers, Cooper charges an annual
fee—$800 to $1,440 a year—to fle
documents required by the IRS to make
sure your new “retirement plan” remains
safely qualifed.
Because maintaining the plans is com-
plicated and expensive, you may think
that only people who have no other op-
tions for fnancing a business are using
them. But a FRANdata survey of about
500 of BeneTrends’ 3,077 active clients
shows that many of them are far from
desperate. In fact, 89 percent of respon-
dents have college or postgraduate de-
grees, and 60 percent of them used other
sources in addition to retirement money
to fund their businesses. Almost half of
them were able to fnance their invest-
ments by using only a portion of their
retirement plans, and one-third tapped
into only 10 percent to 30 percent of
their assets.
But a contingent of CPAs, tax attor-
neys and pension experts, including Ste-
phen Dobrow, immediate past president
of the American Society of Pension Pro-
fessionals and Actuaries and president
of Primark Benefts in San Francisco, is
concerned that the IRS is about to crack
down on both rollover plan promoters
and their clients.
“These plans are operating in a gray
area, and I’m afraid they’ll come back to
bite their users in the butt,” Dobrow says.
He points to an IRS memorandum, issued
in October 2008 by Michael Julianelle,
director of employee plans, that calls
such plans “ROBS” (Rollovers as Busi-
ness Startups) and begins, “Although we
do not believe that the form of all these
transactions may be challenged as non-
compliant per se, issues such as those de-
scribed within this memorandum should
be developed on a case-by-case basis.”
The 15-page memorandum shows IRS
auditors the ways ROBS plans can slip
out of compliance. These rollovers are
legal only because they exchange one
type of retirement plan—your 401(k)—
for another, the proft-sharing plan set
up in your new business. You are the
custodian of that plan and, therefore, must
follow strict ERISA rules, which you can
violate by not offering eligible employees
participation in your new retirement plan,
Five years later
What happens to entrepreneurs who use their retirement funds to start businesses? to
fnd out, we caught up with four entrepreneurs who had used their nest eggs to launch
franchises in the mid-2000s. Here’s what they did and how it turned out. —J.B.
eNTrePreNeur: WiLLiam miTcheLL, charLoTTe, N.c.
in 2005: took $200,000 out of his 401(k) plan to help pay for his Primrose school at
eastfeld village, which provides day care and after-school programs for 170 children.
in 2010: “Our school is full, with waiting lists, we’re proftable, and my wife, Polly,
and i are having fun,” Mitchell says. “if i’d left my 401(k) alone, it would have been
devastated in the stock market in 2008, just like everyone else’s.”
eNTrePrNeuer: darWiN seim, PorTLaNd, ore.
in 2005: Withdrew the entire $400,000 in his retirement accounts, combined it
with $600,000 he’d earned from selling another business and opened a Mr. trans-
mission auto repair franchise.
in 2010: seim closed his shop in 2008—“We never had a proftable day,” he says
—and fled for bankruptcy this spring. “We spent all the money we had,” he says,
“and at age 55, i’m a working guy again. When you’re putting your retirement at
risk, don’t be in a hurry to start a business. Make sure you’re getting a good value
for your money.”
eNTrePreNeur: reNee coLWeLL, NeW York
in 2005: invested $100,000 of her 401(k) in CMit solutions, a small-business
computer support franchise.
in 2010: Colwell sold the business to a competitor 18 months later. “i made a little
proft,” she says. “Was this wise from a fnancial point of view? it was a lot of risk
and my 401(k) is probably worse off than it was before. But i would do it all over
again, because i learned what owning and running a business is like.”
eNTrePreNeurs: NeLsoN aNd Lisa NeYer, saN cLemeNTe, caLif.
in 2005: Used all the $85,500 in their retirement plans to start a Bark Busters
franchise. “i couldn’t tell my dad until four years later that we’d cashed out our retire-
ment savings,” lisa says.
in 2010: their franchise is proftable, and “we have no debt, because we paid cash
for everything,” nelson says. the neyers have other savings, and nelson says they
“should be able to sell at a nice proft when we’re ready to retire.”
entjuly10 094-101 startupfea.indd 98 5/18/10 10:58 AM
05182010110214
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Entrepreneur + July 2010 100
not fling proper reports with the IRS, fling
a report with an improper valuation of the
stock owned by your corporation’s retire-
ment plan, or by not diversifying the plan’s
investments. If the IRS fnds you have vio-
lated ERISA rules, you could have to pay
taxes and penalties on the money you took
out of your 401(k), plus additional fnes.
Compliance is easy when starting out,
when you are the only employee and the
stock value is low. In the BeneTrends sur-
vey, almost three-fourths of clients have
only one to three employees. Of the rest,
14 percent employ seven or more, and 3
percent have 21 or more workers. Half of
all clients’ employees participate or plan
to participate in their employers’ retire-
ment plans, and the IRS wants to make
sure the plans are viable.
Melissa Labant, tax technical manager
for the American Institute of Certifed
Public Accountants in Washington, D.C.,
says the memorandum “is as strong a
warning as the IRS can give. They don’t
come out with this type of guidance
often and it could mean they are prepar-
ing to audit many of these plans.”
Dobrow notes that the IRS expressed
concern about another ERISA twist a
few years ago involving insurance poli-
cies, “then threw the book at everyone
and imposed fnes of hundreds of thou-
sands of dollars. I believe ROBS are in
the next wave.”
But BeneTrends co-founder Fischer
calls that IRS memo “the best thing that
ever happened to us.”
“It showed us how to comply with the
law,” he says. “Our business doubled the
following year.”
Benetrends’ outside attorney, Kath-
leen Nilles of Holland and Knight in
Washington, D.C., says she, too, sees the
memo “as a road map for how to do this
right. Although it’s stated negatively—
‘This is how we catch people’—it lays out
what i’s to dot and t’s to cross in this very
complicated area of the law.”
All the major plan promoters promise
to help out if you are audited; one even
guarantees that it will pay all fnes and
legal fees should the IRS rule against
you. So far, the 10,000-plus ROBS in
existence have drawn only a handful of
IRS audits, and most of those ended well
for the business owners, the plan provid-
ers say.
But Randy Gegelman, a tax attorney
with Faegre and Benson in Minneapolis,
Minn., warns, “The IRS goes in waves.
When they fnd a practice, they spend
time understanding the scope of it and
then begin active challenges, which I
These rollovers exchange one type
of retirement—your 401(k)—for
another: the proft-sharing plan set
up in your new business.
entjuly10 094-101 startupfea.indd 100 5/18/10 10:58 AM
05182010110215
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• The most comprehensive
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information available, ranging
from the most basic “how-to’s”
to the most advanced regulatory
and legal aspects.
IFA is the only international
organization that represents all
segments of the franchise industry.
We know franchising.
Thinking about FRANCHISING?
Think Franchise.org
Visit www.franchise.org today.
IFA_EnthalfMarch09.indd 1 1/21/10 12:28 PM
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Entrepreneur + July 2010 101
expect will be their next step. These ar-
rangements are intended to be used for
retirement investment, not seed money
for your business.”
The IRS would not comment directly
on whether it anticipates a crackdown on
ROBS. “I can say the memo is still on our
website and we point people to it,” says
IRS spokesman Dean Patterson.
Cote isn’t worried, because his roll-
over started both a business and a rich
new retirement plan. He opened his
Sunray retirement plan to his employ-
ees (six of the 10 contribute) and
moved some of its funds into stocks
and bonds. He hires professional ap-
praisers to evaluate the assets in his
plan, and every year his provider,
Guidant, helps him fle detailed reports
with the IRS. “My own retirement plan,”
Cote says, “is worth substantially more
than the $60,000 that was in it fve
years ago.”
JUlie Bennett is a FreelanCe Writer
sPeCializing in sMall BUsiness and
FranCHising.
BeFOre tHe rOllOver,
tHe gUt CHeCk
Before deciding to fnance a business startup with your retirement account, here
are some things to consider:
• Could cashing out a portion of your retirement funds on your own be
safer, and more cost-effective? if you are younger than 59 ½, you’ll have to
pay ordinary income taxes, plus a 10 percent penalty on the money, but you’ll
have no restrictions on its use.
• Do you have time to rebuild your retirement fund? “about a quarter of the
clients fail,” says gary anderson, president of West Coast Business appraisal in
san diego, who conducts simple appraisals for startup clients of sdCooper and
smaller rOBs plan providers. Obviously, the younger you are, the more time you
have to replenish your nest egg.
• Read the IRS memo at irs.gov/pub/irs-tege/rollover_guidelines.pdf. are
you comfortable with such complicated rules and with depending on an ira roll-
over frm to help fle your taxes every year?
• Consult with independent advisors. look for a fnancial planner, a CPa famil-
iar with erisa issues and an attorney specializing in taxes. in other words, you
want experts “who do not have a stake in your decision,” says Melissa labant,
tax technical manager for the american institute of Certifed Public accountants
in Washington, d.C. —J.B.
entjuly10 094-101 startupfea.indd 101 5/18/10 10:58 AM
05182010110215
Call 800-274-6229 today.
Or go to entrepreneur.com/subscribe
Don’t miss a tip, don’t miss a
technique, don’t miss a single piece
of information that could save you
thousands of dollars. Learn what
other smart business owners know,
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®
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YOUR BUSINESS
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big
time
Multiple-unit
ownership has
taken over the
franchise world >>
By Jason Daley
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entjuly10 103-107 franchise.indd 103 5/18/10 10:54 AM

Entrepreneur + July 2010 104
W
hen he was growing
up in the 1960s, Greg
Cutchall watched his
father put in long
hours running an A&W
Root Beer franchise in Omaha, Neb., and
he swore he’d never work in the food
industry. But 40 years later, Cutchall is
deep into franchised food.
The CEO of Cutchall Management Co.
owns 43 restaurants from six different
concepts, including Sonic Drive-Ins, Fa-
mous Dave’s Barbecues, Paradise Bakeries
and Cafes and a Rock Bottom Gold Medal
Tap. His operation, one of the 100 biggest
employers in Omaha, has more than 1,800
full- and part-time workers on the payroll.
Cutchall’s multi-unit, cross-branded fran-
chise business is a far cry from the single-
unit model his father labored over, and it’s
different from what most people envision
when they think about a franchise.
“In the past, franchisors did just look
for single-unit operators or concept
developers,” Cutchall says. “Now they
are beginning to realize that franchise
groups can be good partners that un-
derstand the business. Franchisors are
drawn to me because I’ve been running
franchises successfully for 24 years.”
Cutchall’s multiple-unit operation isn’t
an anomaly; over the last two decades,
multi-unit franchising has blossomed, and
multi-unit owners—from mom-and-pop
operations with a handful of locations to
“mega-’zees” with hundreds—have become
the dominant players in the franchise
world. In fact, multi-unit ownership is so
prevalent, it has its own magazine, and
there are two conferences dedicated to
the industry, including the International
Franchise Association’s new multi-unit
conference. These days, to understand
franchising, you need to get a handle on
how and why multiple-unit ownership has
taken over the franchise world.
According to research by IFA, more
than 50 percent of all franchises are
owned by just 20 percent of franchisees.
“The vast majority of unit growth over the
last 25 years or so comes from multi-unit
franchising,” says Marko Grunhagen, fran-
chise researcher and the Lumpkin Distin-
guished Professor of Entrepreneurship at
Eastern Illinois University. “It’s a strange
phenomenon. The reason franchising is so
popular and successful is the assumption
that the owner has a particular interest
in their unit and pours their sweat into
it. But multi-unit owners create a chain
within a franchise system. So why would a
company franchise instead of just starting
a corporate chain?”
The answer, is, of course, complicated.
From the franchisor’s perspective, put-
ting its brand in the hands of experi-
enced, well-capitalized franchisees can
help accelerate growth and keep the
number of franchisees it works with small
and more manageable.
Multi-unit owners are able to open
their stores more quickly and effciently.
For franchisees, Cutchall says, “There
are a lot of effciencies. From the offce
aspect, you can use the same accounting
staff, the same marketing people, and
there’s some effciency in cross-market-
ing brands.”
Gene Carlisle, whose Memphis-based
Carlisle Corp. operates 97 Wendy’s res-
taurants, says the size of his operation
helps him get discounted building materi-
als, allows him to do his own construc-
tion without fnancing—both resulting
in signifcant savings—and centralizes
human resources, accounting and other
administrative tasks that are typically big
line items for single-unit operators.
“We’re able to spend several million on
training and capital, things a single-unit op-
erator could never do,” he says. “Some peo-
ple are gifted and talented in some areas,
like managing people, or doing construction
and fnance. But when you put all those hats
on one guy, he’s not going to do great in all
those areas. As a single-unit operator, there
are lots of things you do better, but there
are also a lot of things you miss.”
For franchisors, multi-unit franchisees
offer similar economies of scale. “There
are effciencies in marketing, in purchas-
ing, in brand awareness,” says Kevin
Kruse, vice president of franchise devel-
opment for Colorado-based Einstein Bros.
Bagels, a fast-growing company that works
only with multi-unit franchisees. “Giving
someone an area to develop allows them
to really work with commercial brokers to
fnd the right sites over time.”
“Ten years ago, we thought offces
with more square footage was bigger
and better,” says Jim Ramsay, senior
vice president for franchise sales for
Century 21. “Now we have a hub-and-
spoke model. Our secondary offces can
be smaller, 500-square-foot storefronts
in more visible locations, almost like
boutique offces.
“It is a change for our brand. We like
to have stronger, bigger operators and
let them branch out. They beneft from
using the same back offce, the same
signs and other effciencies.”
Food service, tax preparation and
real estate frms tend to dominate the
multi-unit world, with fast food at the
top. Service brands such as plumbers
and cleaners are often able to expand
their territories by adding staff or extra
vans, but food service has to invest in
real estate and a whole slate of manag-
ers to expand.
Mike Bidwell, president and COO
of the Dwyer Group, which franchises
brands such as Mr. Rooter, Glass Doc-
tor and The Grounds Guys, says service
Multi-unit franchisees can use the
same accounting staff, the same
marketing people and beneft from
the same effciencies.
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entjuly10 103-107 franchise.indd 104 5/18/10 10:54 AM
05182010105528
Entrepreneur + July 2010 105
NPC INterNatIoNal
INC.
• Overland Park, Kan.
• 1,100 Pizza Huts and
WingStreets
• CEO James K.
Schwartz
• Founded in 1962 by
one of the frst Pizza
Hut franchisees, NPC
went public in 1984
before being bought
by the Merrill Lynch
Global Private Equity
Firm in 2006.
aaFeS (army & aIr
ForCe exChaNge
ServICe)
• Dallas
• 803 A&W Restau-
rants, Baskin-Robbins,
Seattle’s Best Coffee,
among others
• Maj. Gen. Bruce A.
Casella
• Founded in 1895. Rev-
enues in 2008 were
$10.8 billion.
CarrolS
reStauraNt grouP
• Syracuse, N.Y.
• 559 Burger Kings,
Pollo Tropicals, Taco
Cabanas
• President Daniel T.
Accordino
• Founded in 1960, the
group operates in 17
states, employs more
than 16,000 people
and pulled in $816 mil-
lion in 2009.
brands suffer if their owners don’t keep
their hand on the tiller. “We go into
people’s houses, and there’s lots of things
that can go wrong with the customer
experience. These businesses aren’t con-
ducive to passive management.”
Grunhagen would classify Cutchall
and Carlisle, both hands-on owners,
as organic, entrepreneurial multi-unit
franchisees. But for many franchisees,
once they go beyond 10 or 20 units,
their roles change, he says. “If they have
20 units here and 20 units there, the
bottom line becomes more important.
Instead of trying to maximize profts
at each location, like a single-owner
would, they try to increase a point or
two throughout the system. One type
of multi-unit franchisee see franchises
purely as investment and see franchise
systems as a good opportunity.”
As a result, some of the biggest players in
the franchise game are management compa-
nies with dozens, even hundreds, of stores.
Take, for example, HMSHost, which runs
more than 300 restaurants in airports and
rest stops, and NPC International, which
operates 1,100 Pizza Huts and WingStreets
and brings in $600 million per year.
Not everyone is impressed by the
mega-sizing trend. Fiorenzo Bresolin,
the Florida area developer for Teriyaki
Experience, a Canadian concept expand-
ing into the U.S., says that personal
involvement is key to getting a franchise
right. “The best results from a consumer
standpoint come from franchisees who
are there and passionate about what
it is they’re doing,” he says. “I used to
take my daughters to McDonald’s, and I
could always tell the difference from one
run by someone who owns a single unit
versus someone who owned 10 or 15. Of
course, there are always exceptions.”
Doc Cohen would put himself in that
category. The Tomball, Texas-based en-
trepreneur runs 29 stores, including
Great American Cookie, TCBY and Pretzel
Times. He started in 1979, baking his own
cookies at a mall in Lafayette, La. “You’ve
heard of the Dunkin’ Donuts guy? ‘Time
to make the doughnuts?’ Well, that was
me,” he says. During the past 31 years, he’s
acquired more cookie shops, sold them,
bought them back and diversifed his hold-
ings, but he insists he’s still hands-on and
that operations are his chief priority.
“Every day I look at every store’s sales.
I’m constantly looking at sales, cost and
labor, the three biggest items under our
Source: Multi-Unit Franchising magazine
The three largest restaurant franchisees in the country
1 2 3
The big three
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entjuly10 103-107 franchise.indd 105 5/21/10 12:42 PM
05212010124815
Entrepreneur + July 2010 106
control. I’m thinking about who to
promote. I don’t have less passion
than when I had just one store.”
Cohen says today’s franchisees are
looking for a bigger challenge than
running a single unit. “When I came
into the business, there were a lot of
mom-and-pop franchisees who didn’t
know how to run a business,” he says.
“Today, people are more sophisticated
and their skills lend themselves to
running multiple-unit franchises and
putting together solid teams.”
Having area managers and supervi-
sors who feel invested in the store is
vital to running a tight ship. “It’s all
about interviewing and having a good
instinctual feeling and understanding
what their expectations are,” Bresolin
says. “Finding a manager is like pick-
ing a girlfriend or spouse. You want
to make sure there’s a meeting of the
minds, a consensus.”
A huge growth area for multi-unit
franchisees has been diversifcation
of brands. Many franchise systems
are beginning to offer multiple
brands—for instance, Yum! Brands
offers KFC, Taco Bell and Pizza
Hut—to keep experienced franchi-
sees investing in their company if
they’ve saturated their local markets or
are interested in reducing their single-
brand exposure.
“Franchisors used to look down on
owning two concepts, and they wanted
you to concentrate solely on their sys-
tem,” Cutchall says. “But over the last 10
years, that’s changed. Working with mul-
tiple concepts keeps you fresh. You’re
hearing new ideas from several different
directions. It’s defnitely more responsi-
bility, but it’s something that keeps me
vibrant and interested.”
Cohen has seen how multi-branding
can improve sales. “I’ve been able to take
locations that might be borderline and
turned them into viable businesses, like
adding a pretzel store next to a cookie
franchise,” he says. “Multi-branding has
really worked for me over time.”
Not only that, Grunhagen says, “There’s
an effort by multiple-unit franchisees to
diversify and spread the risk,” pointing out
that an upscale franchise may take a hit in
a recession while a concept with a lower
price point might prosper.
Despite the positives associated with
multiple-unit franchising, there are
potential risks for franchisors and fran-
chisees. Grunhagen says that mul-
tiple-unit franchisees might forget
that they are franchisees and begin
butting heads with the franchisor.
Large franchisees may expect spe-
cial treatment or discounts. They
could block product introductions,
or try to force their own changes
on franchise systems—or decide to
change systems unilaterally.
If a large franchisee does go
rogue, it could be a nightmare;
franchise contracts are notoriously
diffcult for franchisors to cancel,
and once bullying franchisees are
in the system, they may be around
for 15 or 20 more years, depending
on their contracts.
Cohen warns that franchisors need
to be careful when handing out large
multi-unit contracts. “It scares me
when I see a new or young system sell-
ing large areas,” he says. “They need
to keep their options open. What if a
guy gets the rights to develop Texas,
opens three stores and decides that’s
enough? You never know what a can-
didate’s going to be like.”
That’s why Einstein Bros. is most
comfortable giving a single franchisee
just fve to seven at a time. “The big-
gest potential problem is that they may
not be able to keep up with the develop-
ment schedule and may tie up a signif-
cant territory,” Kruse says. “If you’re not
developing in a timely fashion, it can hurt
everyone related to the brand.”
The little guy, however, shouldn’t be
afraid that the big boys are taking over.
The single-unit owner/operator is still the
gold standard for many franchisors—in
fact, McDonald’s is primarily run by
franchisees with one or two restaurants.
Multi-unit franchising, for the most part,
isn’t designed to drive the little guys out of
business. Instead, it’s part of the matura-
tion process of the franchise world, and
it gives more sophisticated investors and
successful owner/operators a way to stay
invested in franchising.
Carlisle says just because he’s big, he
doesn’t have any undue infuence with
Wendy’s. “There are about seven of us
that have 100 or more Wendy’s,” he
says. “But nobody jumps when we call.
They are very protective of their small
franchisees. Nobody gets left out.”

Jason Daley is a freelance writer
baseD in MaDison, wisc.
Franchisors are
offering multiple
brands (say,
KFC and Pizza
Hut) to keep
experienced
franchisees
investing in
their company.
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entjuly10 103-107 franchise.indd 106 5/28/10 9:25 AM
05282010092556
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Fiesta Insurance Franchise Corporation is an authorized
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See what our
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SPECIAL ADVERTISING SECTION
If you’ve been waiting for the right time and watching for the right opportunity to
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Kumon North America is the largest and fastest-growing
supplemental education provider in the world. As a
major force in the lives of millions of children, our
special challenge is supporting individual franchisees
who can bring the power of Kumon to their community
and find success, one child at a time.
The United States, with a renewed focus on education,
has seen a growing interest in supplemental education
programs. Parents sense an increased urgency to
provide extra academic and cognitive support as well
as enhanced skills to ensure their children’s success.
In this marketplace, the opening of a new Kumon Center
is most welcome in any community.
Kumon.
Not just a business, but a purpose.
Becoming an educational franchisee is not just
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Whenever we want to be inspired, we look no further
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Mr. Kumon attended the prestigious Osaka University,
where he majored in mathematics.
As a parent, Toru Kumon had a goal that many of us
share: he wanted to help his child learn elementary
math, and make high school easier. This prompted
him to develop the learning materials that would
eventually become the basis for the largest supplemental
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Combining his dedication with his ability to formalize
this learning approach, he founded the Kumon Institute
of Education. Toru Kumon’s Method is rooted in the
belief that every child possesses unlimited potential and
the innate desire and capacity to learn. Once spared the
anxiety of keeping up with others, every child can not
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Since its inception, more than 16 million Kumon
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The Kumon company continues to improve and
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While never losing sight of Kumon’s purpose, it’s
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The costs to start up and operate a Kumon Center
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Preliminary Training, the medium for your advertising,
the cost of a personal computer that meets our
minimum specifications, and how many assistants
you employ at your Center.
We look for financial stability, with investment capital
of $50,000 and a net worth of at least $100,000.
While the work schedule is flexible, we require a full-time
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Centers have been led by retired teachers, mothers
with grown children who love volunteering in their
community, and entrepreneurs who want to mix local
civic-spirited activities with buildinga business.
For more information contact:
Deven Klein, VP Franchise Development
Kumon North America
300 Frank W. Burr Blvd.
Teaneck New Jersey, 07666
866-633-0740
dklein@kumon.com
www.kumon.com/franchise
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Since 1992, CruiseOne has become the nation’s leading
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So what’s the secret to our success? Some follow
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Taking place in person in our Fort Lauderdale HQ
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newest Franchise Owners:
“My husband Dale and I purchased our CruiseOne
franchise in 1996. When we were trying to make the final
decision, we asked ourselves, ‘what is the worst case
scenario if it doesn’t succeed?’ We have never needed to
find out. It’s overwhelming to think of all the incredible
experiences we have had since coming onboard.”
-Becky Piper, Strongsville, OH
In 1998, I was a potential franchisee with no travel
industry experience. After careful research,
CruiseOne was the clear choice. The personal
attention CruiseOne offered me from day one allowed
me to grow professionally and become successful.
Today, my business is flourishing and I’m a proud
member of the CruiseOne Advisory Board.”
-Ralph Santisteban, Miami, FL
We have always wanted to own a small business,
so after researching several franchise opportunities,
we came onboard with CruiseOne in 2009. CruiseOne
offered us an excellent family-friendly way to start
a home-based business with a modest investment
and to become involved in an industry that we love:
travel! The training and support from the corporate
office is excellent. We are so excited about our future
with this business.
-Phil & Tyra Hilliard, St. Simons Island, GA
“I spent a decade working for an airline. After 9/11,
I accepted a severance package and founded a PR
firm. Over the past few years, I’ve been yearning to get
back into the travel business. When my husband and
I recently took a cruise, I was hooked! I researched
extensively for a business model that would let me
continue running my PR firm while rediscovering my
passion for travel. CruiseOne consistently surfaced
as the top choice. Today, I am a CruiseOne franchise
owner having the time of my life!
-Valerie Harris, Atlanta, GA
CruiseOne is part of the International Franchise
Association (IFA), Cruise Line International
Association (CLIA), Better Business Bureau (BBB)
and Entrepreneur magazine’s “Top 500.”
To embark on a new journey with us,
log onto www.CruiseOneFranchise.com or
call 800-822-6506.
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CruiseOne
Becomes Top
Franchise


Among Experts
and Novices Alike
SPECIAL ADVERTISING SECTION
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The Sport Clips Story
by Gordon Logan, Founder and CEO
In the mid-1990s, we realized that the traditional men’s
barbershop was disappearing, fancy unisex salons
were popping up everywhere, and there really wasn’t
anywhere a guy could go for a great haircut in a fun,
friendly place at a reasonable price.
Gone are the days when a guy had to endure
smelly perms and girl talk just to get a haircut.
Our answer? Sport Clips.
Today, after just 15 years, our unique concept for
men’s and boys’ haircutting—with a fun, sports-themed
environment, TVs playing sports at every chair, and
popular amenities like our massaging shampoo, hot
towel treatments and our neck & shoulder massages—
has made Sport Clips the #1 fastest-growing haircutting
franchise in the country - Men’s or women’s.
And that’s really saying something, since the haircutting
is a recession resistant industry, that generates over
$60 billion in annual sales! In our relatively short time
in business, we’ve already surpassed $500 million in
sales. So it’s no wonder that today, we have over
700 locations all over the country, with more opening
every week!
Why is this a great business to be in?
First, starting with a huge underserved
market. There are roughly 150 million men and boys
out there with almost no other place to go. So when
they find us, they tend to love us and keep coming back.
You can’t beat a large, loyal customer base like that!
Second, it’s a fun business. Our clients love
Sport Clips, they enjoy being here, and our owners enjoy
their end of the business, too. Especially if they like
sports, since we have all kinds of tie-in possibilities with
local teams.
Third, flexibility. The perfect multi-unit franchise
opportunity that lets you keep your current job, while
putting a day-to-day manager in place to grow your
business with your guidance. Sport Clips support
systems are designed for business people with no
industry experience.
Our clients and our franchisees aren’t the
only ones who like us.
Since you obviously read and respect Entrepreneur
magazine, you probably already know we’ve been
ranked in Entrepreneur’s Top 500 Franchises for twelve
consecutive years, and in the past five years, we have
ranked in both their Top 100 Franchises and their
Top 50 Fastest Growing Franchises. Sport Clips ranked
21st overall in Dun & Bradstreet’s (D&B) AllBusiness.
com “2009 AllBusiness AllStars,” as well as a “Top 10
Franchise for Veterans.”
If you’re looking for a new business opportunity…
Clients often tell us, “The minute I walked in the door,
I knew this was a great place.” You’ll be happy to hear,
our owners usually feel the same way.
For information, call 1-800-872-4247, ext 240.
Email Requestinfo@SportClips.com or visit us online at
SportClips.com.
Text “OWN” to 77039 now to receive our franchise
information direct to your phone.
(Must have $100K liquid, $300K net worth)
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We started by inventing
a whole new category.


And that led to 15 years
of unstoppable growth.
SPECIAL ADVERTISING SECTION
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SPECIAL ADVERTISING SECTION
All Vending Business
Opportunities Are
NOT Created Equal!
Alco-Buddy Allows Socially
Conscious Entrepreneurs
to Provide a Worthwhile
Community Service and
Generate Tremendous Profits!
According to Mothers Against Drunk Driving, someone is
killed by a drunk driver in the U.S. an average of every 45
minutes. It’s scary stuff that only people like Alco-Buddy
President John Berlingieri and his family know all too well.
“I lost a cousin to a drunk driver,” he says, “so finding a
way to prevent other fatalities was important to me.”
Traveling in Europe a few years back, Berlingieri
encountered all the inspiration he needed to get started
doing just that. “It struck me hard that this was something
we needed back home, and that we could do it better
than anyone else.” That confidence combined with his
need to make a difference fueled Alco-Buddy’s multi-year
commitment to create the most advanced, durable and
high-quality breathalyzer vending machine of its kind to
date. The Alco-Buddy was born.
“It is an ongoing moneymaker, and the marketplace is
wide open,” he continues. “The individuals who’ve already
bought ten machines from us are finding they only want
to purchase more.” In fact, Alco-Buddy is racing just
to keep up with the demand in his Long Island-based
manufacturing plant. That’s not surprising when you
consider the huge number and practically limitless variety
of potential venues that would welcome an Alco-Buddy’s
arrival. Lodges, VFWs, bars, stadiums, college campuses,
restaurants, catering and event halls of all sizes…the list
goes on and on.
For liability reasons, Alco-Buddy is labeled that it is For
Entertainment Purposes Only. However, its precision
is quite good, and anything that draws a person’s
attention to the fact that they may have had enough is a
good thing. According to Alco-Buddy, law enforcement
officers of all kinds tend to agree.
To curb the rate of drinking and driving and ultimately
have a measurable positive impact on the problem, the
company envisions a day when the Alco-Buddy is a
familiar fixture in every alcohol-serving establishment
nationwide, as well as internationally. In fact, his well-
conceived business opportunity has been designed with
that specific goal in mind.
Berlingieri’s awareness that Alco-Buddy’s success is every
bit as much about quality and customer service as it is
about quantity has resulted in the company’s imminent
release of a machine that accepts not only cash, but debit,
credit and gift cards as well. Additionally, the newest
machines are fully wrapped and UV-protected, providing
increasingly superior durability. And it’s all been done at a
cost to investor/owner-operators that is a full 50% below
that of Alco-Buddy’s closest competitors.
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For more information on franchise go to,
WWW.ALCOBUDDY.COM and fill out an
application or contact us at 1 888-925-2628
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Entrepreneur + July 2010 114
franchise
+
ink
A success story
Run, jump,
beg, shimmy
M
aybe you’ve seen them on TV:
Dogs jumping over hurdles,
weaving around poles and run-
ning through tunnels at lightning speed,
all at their owners’ commands. And
maybe you’ve looked over at your dog
and thought, “We could never do that.”
Jaime and Mark Van Wye beg to differ.
At Zoom Room Dog Agility Training, they
teach people and dogs of all ages, sizes and
backgrounds to blaze through doggy ob-
stacle courses. The idea isn’t necessarily to
get the dogs into national competitions—
though, indeed, some do—but to make
obedience training fun instead of a chore.
Jaime, a professional dog trainer,
and Mark, a marketing expert, opened
their first Zoom Room in 2006 in Cul-
ver City, Calif. After just a year, they
had more than 500 canine clients. “It
becomes a big part of people’s lives,”
Jaime says. “We’ve actually had to in-
vent new classes because people keep
asking, ‘What’s next?’ ” So far, there are
sessions on dog acting, scent tracking,
therapy dog training and a four-legged
version of pilates, “pup-lates,” for core-
strengthening. Of course.
As they prepared for the Septem-
ber opening of their second location
in Hollywood, after having sold the
first to a franchisee last year, they sat
down with Entrepreneur and their dog,
Clyde, a shaggy komondor who makes
up in enthusiasm what he lacks in
agility. —Tracy Stapp
This is such a unique business.
Why franchise?
Jaime: The model franchises really well.
It’s very dependent upon the owners’ re-
lationships with their clients, and I know
pet owners are crazy about their dogs.
Mark: People are looking for affordable
stuff they can do with their family—in-
cluding the dog—so we actually saw a
bump in business during the recession.
At Zoom Room Dog Agility
Training, every mutt learns
a trick or two. And so do
their owners.
How much do you charge?
M: We don’t set prices for our franchi-
sees. At the Culver City location, group
classes are $25 per session and private
training is $75 an hour.
How do you market the business?
M: We’ve been pursuing story-cen-
tered national coverage. For example,
we just sponsored America’s Best Dog
Trick Contest online, and we got great
press from that. We also got invited
to host a dog park for the MTV Movie
Awards in June.
Do you have to be a dog trainer to own
a Zoom Room?
M: It’s almost better not to have dog-
training experience. If someone comes to
us and we know they’re smart, ambitious
and get the concept, we can teach them.
Jaime has developed an online curricu-
lum for our franchisees that’s like a grad-
school course in animal behavior.
J: It takes eight to 12 weeks, and we re-
quire that they volunteer in an animal
shelter as well. After that, we bring them
out here for hands-on training.
So what do you look for in franchisees?
M: Really good communication skills. This
really isn’t a dog business, it’s a people
business. And the clients—the two-legged
ones—are the ones paying the bills at
the end of the day, so it’s all about giving
them an amazing experience.
Fess up. Can any dog do agility?
M: Absolutely. We've had a 14-year-old
beagle, a 3-pound Chihuahua and even
two deaf dogs take our classes. It's a
wonderful medium for fostering commu-
nication skills and building confidence,
which is really what we're about.
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Good boy: Mark and
Jaime Van Wye with
their dog, Clyde.
entjuly10 116 franink.indd 114 5/26/10 11:50 AM

®
Be part of a
growing and innovative company!
Home based “business in a box” system
Visit our website at GarageExperts.com/franchise for more information.
Or call us at: 1.866.997.3787 · Ìnternational: 1.310.632.1039
The GarageExperts® system is designed to be a home
based business. And don’t worry, not all of your jobs will
be complete garage makeovers, you will actually sell more
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only $1,600; customers love it and you can install it in 1 day!
Ìs it proftable? The coating materials for that foor are only
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· Floor Coatings · Cabinets · Ceiling Storage · Wall Storage


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GarageExperts_fp_0110.indd 11/23/09 11:15 AM PAGE 1 GarageExperts_fp_0110.indd 11/23/09 11:15 AM PAGE 1 GarageExperts_fp_0110.indd 11/23/09 11:15 AM PAGE 1 GarageExperts_fp_0110.indd 11/23/09 11:15 AM PAGE 1 GarageExperts_fp_0110.indd 11/23/09 11:15 AM PAGE 1 GarageExperts_fp_0110.indd 11/23/09 11:15 AM PAGE 1
Entrepreneur + July 2010 116
Add one of the fastest growing QSR concepts to
your portfolio. Bojangles’
®
was listed as one of eight
restaurants in the “25 Franchise High Performers”
*

across all industries by the Wall Street Journal, and
was ranked #1 in the franchise chicken category by
Entrepreneur.
**
Learn more by calling 1-800-366-9921 or visit bojangles-franchise.com
This is not an offering to purchase a franchise. Offerings are made by Franchise Disclosure Document only.
*The Wall Street Journal, February 12, 2008. **2007 Entrepreneur Franchise 500.
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Entrepreneur + July 2010 117
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Entrepreneur + July 2010 120
+
opportunities
A focus on franchisees
Top of the heap
Here’s how to be sure your franchise’s website pops into the No. 1 spot in an online search
G
one are the days when people
picked up bulky phone books to
find the nearest pizza parlor, dry
cleaner or electrician. Now a click on a
computer, GPS or smartphone does the
trick—a great development for small
business owners, if they know how to
make their listing pop to the top of a
search ranking.
But too many franchisees assume that
their franchisor has that covered, when in
fact, the task of search engine optimiza-
tion, or SEO, rests largely with the fran-
chisee. “Even franchisors that do handle
SEO often don't do a great job of it,” says
Erik Whaley of marketing company Lo-
cation3 Media in Denver. “So we really
encourage franchisees to take the matter
into their own hands.”
Whaley is the director of Local
Search Traffic, a division that specializes
in helping franchisees with their search
engine listings, for fees starting at $99
a year. His group manages more than
120,000 franchise listings—and found
that a shocking 42 percent of them con-
tained errors in basic information such
as addresses, hours of operation and
even business names.
It’s not always a matter of benign
oversight: Some companies will “hijack”
competitors’ listings—signing in as the
business owner and entering incorrect
information—to keep customers from
finding them.
So how can you be sure your franchise
is well represented on the web? Here are
Whaley’s tips. —Tracy Stapp
Check your listings.
At least once a month, search for your
business on search engines such as
Google Maps, Yahoo! Maps, Bing Maps,
Superpages.com, Local.com, InfoUSA
(a database provider) and NAVTEQ (a
GPS provider). Look for a button or
link that reads “Are you the business
owner?” or “Claim your business’s list-
ing.” This will allow you to edit your
company’s information—and keep
anyone else from doing so.
Include basic info.
Update your address, phone number,
hours of operation, brief description, cat-
egories, e-mail address and website. Be
sure the description clearly defines what
your business does.
Enhance your listings.
Include products or services, a logo, pho-
tos, coupons, videos, accepted payments,
and other details customers should know.
Create a keyword theme.
Determine which search terms are relevant
to your business’s core products, services
and location, and incorporate this keyword
theme into your listing’s content.
Encourage customer reviews.
Ask customers and business partners
to write reviews. The more active the
website, the higher its position in a
search ranking.
Track and measure success.
Look at how you rank in the listings, and
use coupon codes and in-store surveys to
track how customers find you. Use web an-
alytics for more detailed results; look at the
referral report to see if visitors are coming
from Google Maps or other local sources.
Use location check-in apps.
Mobile check-in apps such as Four-
square, Gowalla and Yelp are huge. Make
sure you list with these sites, too.
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SEO help: Erik Whaley
of Location3 Media.
entjuly10 000-000 opps.indd 120 5/26/10 11:51 AM

]
opportunity mart
Entrepreneur + July 2010
USE ARTICLE
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The worst

business bar
in America
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And why, sometimes, it’s exactly the bar you want
M
cSorley’s is not the best bar in which to do business. In fact, it’s probably
the worst. It’s old—over 150 years—and it’s rickety and it’s not exactly
clean. Plus all it has to drink is beer, the service is brusque at best, and the
food could more accurately be termed “grub.” What’s more, any table with empty
seats must be shared, and because the beer is cheap and it’s far too easy to drink too
much of it, the people you’re sharing with tend to the loud and boisterous.
All of that’s why I like to hold meetings there. Not all the time, mind you. McSorley’s
isn’t for planning or strategizing, and it’s definitely not for closing the deal. It’s a place
for figuring out who it is you’re dealing with. McSorley’s, you see, is a sort of people-
meter. Say, for instance, the party with whom you’re engaged is seated in the chair by
the door, right under the pay phone, and that phone rings. How long does it take him
(or her—McSorley’s has been letting women drink there since 1970) to figure out that
it’s his responsibility to answer it? If he lets it ring 10 times before answering, he might
be a little dim. When he does answer, does he do so with good humor and grace? If not,
be warned. If he just lets it ring, also be warned: You’re dealing with someone who feels
too important to answer a phone. The same could be true if he quails at the thought
of drinking ale or eating corned beef hash, although that could also be because he’s
delicate. Neither is a good quality in a business relationship.
On the other hand, I’ve seen people with whom I’m planning to do business
embrace the McSorley’s experience too tightly—have a dozen rounds of beer,
talk drunken nonsense, order seconds of the hash, take belligerent offense at the
waiter, try to make time with the married Belgian woman with whom we were shar-
ing the table (she would have none of it). That, too, is very good to know.
McSorley’s is a tough test, but a fair one: For every high-hat or frat boy I’ve
seen revealed there, I’ve also seen a casual business acquaintance become a
friend. Sometimes the worst bar is the best bar. —David Wondrich
>> McSorley’s Old Ale House, 15 E. Seventh St., New York (212) 473-9148
Entrepreneur + July 2010 128
entjuly10 132 backpage.indd 128 5/26/10 11:52 AM

Bridgestone Corporation
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LET’S GO FURTHER ON ONE GALLON OF FUEL.
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1001 Fannin Street, Suite 500, Houston, TX 77002
TRAFFIC LEGEND
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