Every entrepreneur encounters challenges that are unique to his or her industry. In biotechnology and manufacturing, there are steep up-front costs. In software and Web development, talented programmers can be hard to find and harder to compensate.
But then there are challenges common to the founder of any new venture: securing financing, breaking into new markets and hiring employees, among others. Capital Business, in collaboration with the Northern Virginia Technology Council, assembled a roundtable of entrepreneurs to share their experiences.
Sam Aparicio is the founder of Tysons Corner-based Ringio, a software maker that allows companies to keep a file on each customer that pops up on the computer screen when they call.
Christopher Blitz created LuxSynergy in Fairfax to provide touch-screen kiosks with information about local businesses and sights in areas frequented by tourists.
Nicholas Hartigan started Reston-based Off Peak Training to provide professional certification courses on nights and weekends. The company also works with companies to develop in-office training programs.
Want to explore the globe and stay green? Irene Lane formed Greenloons to help travelers find and book vacations that minimize their environmental footprint. The company also partners with larger travel agencies and offers consultation services.
Karen Sorber is the founder of Micronic Technologies in Herndon, a firm that has invented an apparatus that desalinates and purifies groundwater.
Is the current economy good or bad for your business?
Aparicio: “It’s great if you’re working in something that’s disruptive and you are not relying on economic growth in order to grow yourself. You’re relying on your ability to take business away from whatever is the incumbent thing you’re trying to disrupt.”
Lane: “It’s both good and bad. My space being travel, there’s going to be a set of people that just have to travel. That’s in their consciousness to do so. The flip side of that is to gain new travelers ... it’s a bit tough to get those folks on board with it when they’re inundated with messages of value vacations of $20 a day. So far it’s worked well in terms of growth, but the explosive growth has not occurred because of the state of the economy.”
How are you finding the conditions to be for entrepreneur pursuing capital?
Sorber: “Getting people to write checks is harder in an economy that’s uncertain, even though the stock market seems to be doing well. We just had an individual who is very, very wealthy who wanted to invest just decide that they didn’t want to risk failure because they’re uncertain about the economy.”
Aparicio: “The way I see the state of fundraising in D.C. is [that] it’s getting incrementally better every year. The angel investor community is getting more organized. There’s more people coming to the table. That’s very encouraging. It’s still very hard, but there’s a lot more community going on now than there was in 2010 when we started fundraising.”
Do you have much hope for crowdfunding?
Sorber: “You know who’s going to kill, it is the institutional VCs and angel groups. They don’t like it. It’s disrupting their business space, right?”
Aparicio: “I think we’re going to see a wave of companies that are intermediaries where people can find investors. The big question is whether when some of the horror stories come out, because people invested their money not very well, will we have the fortitude to stick with it and say we’re grown-ups we can still work with it?”
Blitz: “For me, crowdfunding really isn’t going to work. I need more stable funding because we don’t have a physical product that we’re manufacturing a million of.”
Are any of you hiring? When do you decide it’s time to bring a new person on board?
Sorber: “Even though we’re raising money and don’t have the capital for hiring, we have to hire. I had to bring in a CEO and so we had to use some real ingenuity in creating the opportunity to do that, stock options and the like. I have a director of engineering that I intend to hire here before too long, and that’s part of the fundraising. The risk is huge for everybody moving forward with that because you don’t know how the company is going to do.”
Lane: “I have been quite lucky to get master’s and Ph.D. candidates as interns. So there’s a number of interns that come through that are able to work on things like social media, which is quite important to a business like mine. In terms of hiring, if I were to go down that route, it would be specifically for developers.”
Blitz: “We need tons of programmers to do all of our coding, and this area is great for those people if you can afford them. You’re talking $50 to $70 an hour for programming, and I’m just a small business ... We ended up outsourcing. We went with an Indian firm because they’re $10 to $12 an hour, and we don’t have to worry about any of the taxes or the insurance liabilities or anything like that. ”
Hartigan: “We have had at least two interns on staff since the company started. Both me and my business partner went to George Mason, so we went straight back to George Mason and we’ve had a couple George Mason students on staff since the beginning.”
Aparicio: “My view for hiring for start-ups is it’s really hard until it gets really easy. You are competing with bigger companies that have benefits packages, and in this town there’s a little bit of over-inflation in wages because of the government. Your pitch is all around everything else you can offer: having a purposeful job, shaping the direction of the company, those kind of things.
You reach a point in your growth when you kind of get it all together and sales starts clicking. That’s the point at which you see huge hiring. A huge round of investment tends to be an external signal that you’ve hit that point, but not necessarily. [Some companies] have been able to break even and grow out of their organic resources.”
Have you ever been at the point of throwing in the towel? Why didn’t you?
Blitz: “For me, no. It’s more of a do I have to pivot. LuxSynergy started as automated check-in for hotels, that was our whole idea. That’s great if all of the hotels have the same technology and they all talk to each other and they weren’t all owned by different franchisees. So it was, do I want to be dead in the water trying to sell this? Or do I pivot slightly?”
Hartigan: “Before you go into it you have to really know what is that limit. What are you willing to completely give up? Is it your car or your house even? What is the towel? Really identify that at the beginning ... and then figure out what your support system is, whether it’s a business partner, a friend, a family member or your spouse.”