Business Rx: To go higher, duo needs to hire help

October 13, 2013
The Entrepreneurs

Ilene Miller and Lisa Friedlander are moms who joined forces in 2011 to launch Activity Rocket (www.activityrocket.com), a Web site to help parents find activities for their kids. BusinessRx first talked with the Activity Rocket founders in March 2012, and we caught up with them again. The pair was excited about the launch of their site — graduating from the previous beta version — and their company is poised for growth.

The pitch

Friedlander

“Parents can search Activity Rocket to find and compare activities and camps for their children – everything from cooking classes to soccer camps – searchable by type, location, price and schedule. The site has activities from large and small providers, including local agencies such as Montgomery County Recreation and national franchises such as My Gym. We have expert blogs, ratings and reviews, and coupons and discounts. We also have calendar tools and tools to share activity plans through social media.

“We’ve made some big changes. Now moms and dads can book activities through the Web site and sign up for a bunch of classes and camps at once, shopping-cart style. Imagine signing up one kid for a Kidball class at the same time you sign up another for an Academy of Fine Arts class. Instead of offering our service for free to businesses, they can choose one of three subscription packages that include increasing levels of benefits: free listing, basic listings with a $99 per month fee and premium listings at $199 per month.”

Miller

“We’ve had great success converting a good portion of our existing businesses to this paid model with our initial launch in the Washington region. But we’re still on a shoestring budget and we want to scale up quickly. Our goal is to fully scale D.C. and add on three to five cities pretty rapidly. We’re working on raising funding to do that now. Part of the feedback from angel investors was we needed a team that included experienced sales, marketing and technology people to round out the skills and passion that we’re already bringing to the table. How do you hire great talent on a shoestring budget?

The advice

Elana Fine, managing director, the Dingman Center for Entrepreneurship

“You’re really caught in a chicken-or-egg scenario of building your team to make yourself more attractive to investors, but not having the funding to actually make the right hires. You can’t always make the aspirational hires so early on. You have to figure out your absolute necessity and start there. It also helps to identify specific metrics that will justify making additional hires — that point where you are ‘taking off.’ Until you reach that point, find people who are willing to work for equity or commission-based incentives on the sales side. You could also consider employing a mystery-shopper model, where the parents that use your site can become Activity Rocket ambassadors to the businesses they frequent and make a commission when they sign up a new vendor.

“Even then, you could be banging your head against the wall trying to round out your team, only to go back to investors and find they still aren’t willing to invest. You may end up still having to prove the model to investors because many of them may not recognize the pain point of scheduling children’s activities. Consider another route to fund your growth.

“In addition to the subscription model, you might also want to consider testing a higher price point for national chains, or offering pricing tiers based on the number of locations an activity provider has. This way you can test multiple pricing models and bring in some larger contracts that might help fund the business.”

The reaction

Friedlander

“That’s actually a really viable approach — to somehow get up the food chain on the big chains. A couple of larger revenue partnerships could also immediately provide funding for some of the key hires we are currently sourcing.”

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