Innovation Works

MARJORIE MALPIEDE, MASSINC COMMUNICATIONS DIRECTOR: I have fallen out of your demographic but I am pleased to be here. RealTalk allows young people to explore public policy issues that impact your lives and provides a platform for civic leadership. Innovations Works is the third in a series called Our Economy. We are going to look at how young entrepreneurs find success in this economy. Our moderator is Scott Kirsner, a columnist for the Boston Globe who has been writing about innovation for years.

SCOTT KIRSNER, BOSTON GLOBE COLUMNIST (MODERATOR): The introduction makes me feel really old. I came here to go to college and stuck around. The goal here is to have a fun and hopefully high energy discussion of what’s happening in entrepreneurial spheres here in Boston. I want to take questions from you. Just raise your hand. We will take them at any point. I want to ask first about the culture of entrepreneurship in Boston. When I got here there was an old culture of entrepreneurship, knowing the right people to get funding and working at other places for 20 years. A classic example is Mark Zuckerberg who started Facebook and no one wanted to fund him here and he launched Facebook in California. There is a new culture of young entrepreneurs and a lot of networking events that makes it more welcoming now. Agree or disagree with that premise?

MORGAN FIRST, CO-OWNER, THE SECOND GLASS: A big thing in the network in Boston is people who have self-funded their own company. Andrew and I met in a group called Boston Young Entrepreneurs. Some people like myself, I showed up as a senior at Emerson with an idea and went to meetings and I met people who were just like me. I was like, wow these are just normal people and I can do this. I was able through friends and family to raise enough money. Second Glass was self-funded. I sold my first company and used some of the money to put into Second Glass. It’s been less than $100,000 invested. A thing about entrepreneurship is if you can figure out how to make cash right away. We started doing crash courses with wine stores and said great, you are going to bring in bodies and we did ten or fifteen dollars a head.

ELIZABETH THORNTON, BABSON COLLEGE: A very small percentage of businesses get capital financing. Ninety-seven percent are bootstrapping. We have a saying – friends, families and fools. The average raised is $10,000 and that’s from all kinds of sources. That’s the reality.

SCOTT KIRSNER, BOSTON GLOBE COLUMNIST (MODERATOR): Andrew, where were you a bartender?

ANDREW PRESCOTT, CHIEF WHEEL OFFICER, URBAN ADVENTOURS: I watched the dot com boom in North Carolina and came here for a job. I’ve seen a few cycles of how this goes. A good thing about the recession, a friend worked for mortgage-backed securities at Bear Stearns and then I got a $25,000 loan at 5 percent from him. It was his way of giving back. There is the credit card loan. I was at $75,000 debt and have 10 left, but I’ve expanded. For a lot of folks you don’t need $200,000. You find a niche and you do it well. It’s something you can do in Boston and have a big difference.

TERRY LOZOFF, CO-FOUNDER, STREET ATTACK: I started Street Attack in 2002. We were not thinking about the culture of entrepreneurship. I moved to Boston after 2001 and it’s been an organic whirlwind. I started in the music industry. I linked up with a friend from Boston. I realized I needed to pay rent. I edited math textbooks for two months and a buddy said he was starting a music company. We started a business with music production and promotion and service businesses don’t need startup capital. We put together a music festival and I realized I did not want traditional advertising to promote it. I got on Google and searched for street teams and found Street Attack, which was just my partner. He was working in the back of a warehouse. I came from a business and marketing background and he came from a street background. We fused our thoughts and it’s always been incredibly organic. There’s never been a real master plan. We knew we could do something totally different and new. We have never had a whole lot of funding. We started off as amateurs as a lot of entrepreneurs do. We’ve written lots of business plans. I don’t think any have been finished. If you are not doing it to get money, it’s really an internal document. We have done vision statements and they change every few months.

SCOTT KIRSNER, BOSTON GLOBE COLUMNIST (MODERATOR): I believe entrepreneurs are pretty detached from reality in that it doesn’t matter what the economy is doing, if they have an idea they are going to start it. Is that true? Do you have to shut out signals the world is sending?

ELIZABETH THORNTON, BABSON COLLEGE: A lot of people will say, are you crazy, go get a job. People always say, don’t do it. Entrepreneurs are not delusional. They have passion. If they can harness the passion to start a business, that makes sense. A business plan is obsolete when it comes off the printer. The market changes. It is an organic process. Have a check list. Does it make sense? Is it feasible? Can I make a living? Will someone buy this product? If I sell this, can I earn a profit? Is there a lot of competition? Look at product feasibility, what are competitors doing and can I eat. Then take that passion and run.

MORGAN FIRST, CO-OWNER, THE SECOND GLASS: A lot of starting the business is throwing spaghetti against the wall and seeing what will stick. The economy is down but it’s cool because the wine world is actually growing. You see a bottle on the shelf – most of the people making wine are farmers. With social media taking off, companies are looking at how we can do well. If other people are hurting, our company is here to help them. The economy has made people realize we can help them. You can help people make money in a recession and do really well in five years when the economy picks up. Also, don’t always count on your friends and family. It’s surprising how many of my immediate friends don’t care what I am doing and family say, when are you going to move back to L.A.?

SCOTT KIRSNER, BOSTON GLOBE COLUMNIST (MODERATOR): This year everyone talked about traditional advertising going away and people spending less for every click in the Internet. Did that affect you?

TERRY LOZOFF, CO-FOUNDER, STREET ATTACK: Yes. I foolishly believed we would prosper with the economy because non-traditional marketing is fast growing. Big brands and major corporations would realize traditional and newspaper advertising is worthless. They’re wasting their money on media planners and they’re going to come our way. I was not entirely wrong. But brands were pulling back and not spending money and just putting it in their pocket. And businesses started getting into social media so there was more competition. I was riding the high wave for a while but at a point I realized we weren’t anymore and it got slower over the last six to eight months. We were 12 people and we had to scale back to what we needed to do what we really do best. In a service company, you scale back to your best people and start fresh. You get a new opportunity – in the flip side of a bad economy is a new world of what you can be. We sync up with our vision and look at what the world will look like and make sure we are what we need to be when things sync up. We have seen a real uptick in new business in the past two months.

SCOTT KIRSNER, BOSTON GLOBE COLUMNIST (MODERATOR): I am in your target market Andrew. I would sign up for a bike tour in another city. What works for marketing? It’s a noisy environment – all the brochures, what the concierge knows.

ANDREW PRESCOTT, CHIEF WHEEL OFFICER, URBAN ADVENTOURS: I started by saying I am going to do everything. I am going to help this organization and put myself everywhere. I ran myself really thin for a lot of years. Our business is locals. I want people to come to Boston and do something green, ride a bike, be healthy. What works for me in marketing is the recession creates opportunity. InterContinental charging $415 a room, I can go into most hotels and put together a package with a room and a bike tour and I am talking to people who would not have spoken to me before. They say let’s put together a package and we work with them in a weak economy. This year in the North End we have a lot more locals. People see us as part of the neighborhood. It’s about 80 percent tourists, 20 percent locals. We see people recently retired looking for things to do.

SCOTT KIRSNER, BOSTON GLOBE COLUMNIST (MODERATOR): TripAdvisor is a site a lot of people look at when traveling. Do you encourage customers to post reviews or is it organic?

ANDREW PRESCOTT, CHIEF WHEEL OFFICER, URBAN ADVENTOURS: Social networking, I tell the younger folks in the office you handle that stuff. I am 33. I don’t want to deal with Twitter and Facebook and I want to do other things. I woke up two years ago and someone said you are number one on TripAdvisor. I had no idea. It just started happening and we kind of slowly asked people to write reviews. Every customer who walks through my door is number one and by treating them that way they want to write reviews. My employees have fun when they are working and the customers recognize that. The other side is I had a guy come in from Dallas who had a broken bell on the bike and he accused us. He said his son almost cut his hand. It was a perfect bike when he went out and he broke it and then wrote a review. I butt heads because I believe in what I believe in.

AUDIENCE QUESTION: Andrew, in the mix of your business, is down economy or change in lifestyle a bigger effect?

ANDREW PRESCOTT, CHIEF WHEEL OFFICER, URBAN ADVENTOURS: Everything we do is green. Most of our customers drive hybrids. The price point is 50 dollars for a tour. We use $600 bikes. Quality is a big draw. Environment plays the biggest part and also it’s a family activity, and couples. We have tandems, which we also call divorce makers. Families are wanting to do something. You don’t want to sit with a five-year-old on a trolley for two hours. You want them to ride a bike and fall asleep at the hotel.

AUDIENCE QUESTION: Terry, I am helping a restaurant with marketing. If you were doing that, give me the top things you would do in the non-traditional space.

TERRY LOZOFF, CO-FOUNDER, STREET ATTACK: I hate to jump on the general consensus of the marketing industry but social media has been a game changer through and through whether your business is based on it or you have a restaurant or a non-technical company where you can find people through social media. You create a conversation with the potential audience and build an ongoing community they can reach into over time. Anyone who can tell you social media is cheap or free is misled. It takes time and money to build a strategy and presence. Once you build it you have a real time means of communicating with your base. The top point on the list is there are opportunities in the social media world. Facebook and Twitter are part of social media but there are a world of opportunities.

AUDIENCE QUESTION: My question is about timing. How do you balance starting your business with maintaining your social media?

TERRY LOZOFF, CO-FOUNDER, STREET ATTACK: You have to have something interesting to say. If you don’t and don’t have time to sustain the conversation then social media is not going to be a great channel for you. The conversation people talk about is something you need to time appropriately. Once you start your blog you need to water it for a long time to come if you want to see results.

MORGAN FIRST, CO-OWNER, THE SECOND GLASS: I hear this question on every panel I sit on. If you set aside a time of day – that’s one approach. Also it’s important that what you are putting out there is of value. There is a lot of talk of Twitter. Figure out if you are using it for business, what are you using it for? Twitter is just one social media tool. Figure out how you are going to use it. Sometimes you don’t have time to manage a company blog and run a company. Is it going to bring you a bunch of additional stuff? Then maybe it’s something that’s worth it.

SCOTT KIRSNER, BOSTON GLOBE COLUMNIST (MODERATOR): Twitter is a lot of fun. I used to do things during the day and now I just read Twitter. Those of you who are not on it are kind of smart. There is this idea of a Venture Café and they are putting money together now but they first put together a Facebook page to get ideas. It’s a focus group on the idea. They have a couple hundred people giving them feedback. There is the potential to use the Internet as a focus group.

MORGAN FIRST, CO-OWNER, THE SECOND GLASS: The coolest thing about social media is connecting with people. There are a million wine blogs and we connect with people we otherwise would not be able to. You almost want to find your customers and then create a product for them.

SCOTT KIRSNER, BOSTON GLOBE COLUMNIST (MODERATOR): What are factors with Babson students making a decision of, do I want to stay in Boston to start a business or move to another city?

ELIZABETH THORNTON, BABSON COLLEGE: Students bond in a class and develop a team in the school. They stay put and leverage Babson resources. For instance, we had a competition for a summer program and students stayed on campus with access to lawyers and accountants to help launch a business. Location isn’t as critical unless you are going to start a restaurant. It’s all about network at the end of the day – what do you know and who do you know to bring in stakeholders and how you can access them.

AUDIENCE QUESTION: I am from Northeastern University. When you decided to start your own business, what factors did you have as opposed to building a career?

ANDREW PRESCOTT, CHIEF WHEEL OFFICER, URBAN ADVENTOURS: For me it comes down to, I like riding bikes and things that are green and things that fit with my personality. I look at what I am going to enjoy. If I work 80 hours a week, I want to feel good about what I am doing. That is what drove me. My friends made tons of money on Wall Street after college. You kind of have to just jump. Entrepreneurs are certain types of people. You just have to do it. You have to have a mission statement and go for it and be willing to lose. If you are not, you are not going into it 110 percent.

TERRY LOZOFF, CO-FOUNDER, STREET ATTACK: To me the two options are not mutually exclusive. Having my own business is my career. I always wanted to be an entrepreneur. Working for somebody just didn’t appeal to me. Entrepreneurs have a risk profile. I always bet on the long shot horse. I’d never win, but I had fun doing it. I said I want to learn as I go along and teach myself and get people who get my vision to work for me.

MORGAN FIRST, CO-OWNER, THE SECOND GLASS: My whole thing was I wanted to be editor in chief of a magazine. I am also really dyslexic. I interned and magazines said you should not work in publishing. You can’t spell. I was determined. I was in my senior year at Emerson and took an entrepreneurial class and I was obsessed with traveling and I said I will never work my way up in a publishing company. I would have never made my way to the top had I not started my own company and hired people to do what I couldn’t do.

AUDIENCE QUESTION: How long were you in suffering mode before sustainability?

TERRY LOZOFF, CO-FOUNDER, STREET ATTACK: Your definition of survival mode changes as the years go on. When I first started it was can I pay rent and maybe eat out once a week and buy some beer. Now it’s I want to sustain my mortgage and buy a nicer house and think about a family. Maybe I even want to drink wine. Survival mode shifts. Street Attack, we are almost eight years old, but I am still in survival mode because I have not reached my goal where I want to be monetarily.

ANDREW PRESCOTT, CHIEF WHEEL OFFICER, URBAN ADVENTOURS: My way is to get as big as possible and wanting to have a presence and be in Boston for the next 50, 60 years. I am making it and paying the bills and thinking about other locations but I always want more. I just seem to have gotten a second wind now. Wanting more and more is a sign of success. I want to go to work probably more than I should.

MORGAN FIRST, CO-OWNER, THE SECOND GLASS: It depends on how far you want to push things. Andrew ran his company out of another bike store and then took a huge leap. He has a retail space. It was a big investment. He probably could have been fine but he decided to push himself to grow his company. With my first company I had to retrain my staff every year because we had constant turnover.

AUDIENCE QUESTION: I am at Northeastern University. As free spirits and organically minded, have you given thought to micro financing in Third World countries and have you started companies in countries where entrepreneurs have not been yet?

TERRY LOZOFF, CO-FOUNDER, STREET ATTACK: This is not really Third World but we sought an opportunity in Japan. We saw non-traditional marketing as not part of the landscape there, but we decided to concentrate on the home front first.

MORGAN FIRST, CO-OWNER, THE SECOND GLASS: The wine world is really growing in India and China but we are focused on growing our business here. I asked my parents to microfinance a company in Nepal as a Christmas present to me.

ELIZABETH THORNTON, BABSON COLLEGE: We have people in India, in Ghana. They have a passion to try to change the world and go off with a little bit of money. We try to bolster that and support them.

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