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Wednesday, Feb. 13, 2013

The Entrepreneur Next Door

Milwaukee’s startups thrive despite struggling job numbers

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Wendy Baumann, president of WWBIC
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Despite the very slow economic recovery, Milwaukee’s startups are thriving. A possible explanation is that they are simply flourishing under the radar and using nontraditional means to find investors and like-minded entrepreneurs.

“I see hope and promise,” said Wendy Baumann, president of Wisconsin Women’s Business Initiative Corp. (WWBIC).

WWBIC, which offers financial education and accessible loans to budding business owners, is seeing healthy growth. The organization primarily serves—but is not limited to—low-income individuals, as well as women and minorities. Past WWBIC loan clients include Milwaukee favorites Hi Hat, C. Adams Bakery, The King and I Thai Restaurant, Mimma’s, Olive, Via Downer and Transfer Pizzeria.

Last year, Baumann said, WWBIC received more than 500 loan applications and approved about 130 loans, while 3,887 people attended more than 400 WWBIC workshops around the state.

“That’s a lot of goodness there,” Baumann said. “We are only one organization. There are others doing good work too in this area.”

She said the sluggish economy and limited bank lending has led prospective entrepreneurs to turn to alternative lenders for funding.

“When the economy gets a little bit different and is maybe a little fragile, our offices boom,” Baumann said.

Last week, Gov. Scott Walker announced his budget would provide more money for startups and economic development.

But Matt Cordio—who co-founded the Meetup networking group Startup MKE for digital entrepreneurs—said that while the city and state could do more to provide help to early-stage business ventures, local entrepreneurs are able to go it alone.

“The majority of startups are funding themselves through bootstrapping,” Cordio said. “So, yes, they are building stuff in their garage and not raising money. A lot of that unfortunately is due to necessity, I think. But we do see some startups that have raised substantial venture capital.”

He said he often refers potential digital entrepreneurs to Gener8tor, a startup accelerator with an office in the Third Ward, where there’s a cluster of digital ventures. Gener8tor offers an intense, 12-week course for startup founders, as well as $20,000 cash in exchange for 6-9% equity.



Joe Kirgues

Joe Kirgues, a Gener8tor co-founder, said a startup’s success is more likely to be determined by its founder, not the technology driving the business.

“I look for someone who is never going to quit,” Kirgues said.

Jalem Getz, who launched his third online business last year, wantable.co, said that Milwaukee’s lack of easy money isn’t necessarily a negative.

“There is significantly more money on the coasts,” Getz said. “You’re more likely to be funded there, but that doesn’t mean you’re likely to be successful.”

Baumann said she enjoys working with entrepreneurs, who are innovative, high-energy, positive people. Milwaukee’s entrepreneurs, Cordio said, minimize their risk by launching businesses with practical applications and services. Here are four entrepreneurs who have taken that risk and are glad they did.


The Serial Entrepreneur


Jalem Get

After launching two successful businesses, you’d think that Jalem Getz could rest on his laurels. Instead, this serial entrepreneur is continually refining his next innovative idea.

That’s apparent in Getz’s 2012 launch of wantable.co, an online retailer of beauty products and jewelry. Instead of replicating the formula of his previous ventures—GMI, which operates the Halloween Express stores, and buyseasons.com—Getz used the lessons he learned at those ventures, as well as his frustrations, when developing Wantable’s concept.

Traditional Internet retailers provide consumers with unlimited options. But Getz wanted his newest venture to limit a customer’s choices instead of offering every product under the sun. Therefore, Wantable leads shoppers through a questionnaire about their lifestyle and makeup preferences. Wantable then uses that information to select makeup and jewelry packages for customers.

“The value proposition of Wantable is to kind of cut through that noise and say, ‘Wait a minute. Instead of you starting to look around and finding things on your own, why don’t we get to know who you are?’” Getz said.

Getz also wanted to avoid delivery snafus by selling a product that could fit into a standard mailbox. Makeup and jewelry turned out to be a good option, he said.

Wantable, which formally launched online last fall, now employs a handful of staff in the Third Ward.

“We continue to evolve the product, the value proposition, the merchandise,” Getz said. “We continue to refine what we do for customers.”

Getz’s advice for budding entrepreneurs?

“Leverage the talents you have,” he said. “And seek out the ones that you don’t.”

The Dreamers



Steve and Lauren Schultz

 

According to Steve Schultz, his wife Lauren had always wanted to open her own ice cream shop. It was so important to her that she told him all about her plans on their first date.

Years later, after getting married and establishing careers as educators, the Schultzes turned that dream into reality.

With the guidance of WWBIC and strong links to visionary developer Juli Kaufmann and Clock Shadow Creamery, Steve and Lauren Schultz opened Purple Door Ice Cream last year at the corner of Second and Bruce in Walker’s Point.

When they decided to launch their shop, Lauren took WWBIC’s Start Smart course to learn more about business and draft their plan. They qualified for a WWBIC loan, which covered the cost of the ice cream machines and ingredients.

Developer Kaufmann found them on Facebook and invited them to be part of her eco-friendly Clock Shadow Building development, which houses the dairy-based retail shops on the ground floor and nonprofits on the upper floors. Purple Door and the creamery use the same production facilities by taking turns in the shared space. Steve likened it to a “college roommate” situation, with no complaints.

“It’s been going very well,” Schultz said of Purple Door’s first year. “Things have always progressed faster than we could have anticipated they were going to progress. Lauren and I aren’t business people. We’re educators. So a lot of the stuff is just us making things up as we go and trusting our instincts. And so far it’s paid off.”

An important part of the Schultzes’ dream is giving back to the community. Purple Door donates a portion of its profits to Milk for Milwaukee, which helps to provide fresh milk to local homeless shelters.

“Something really special is happening here in Walker’s Point,” Schultz said. “We’re so grateful to be part of this neighborhood.”


The Niche Filler


Kevin Leszcynski

 

Clean beer tap lines aren’t something you think about until you drink an off-tasting beer. But if you’re drinking a tasty beer in Milwaukee, you may have Kevin Leszcynski of Tap KLeen to thank.

Leszcynski was a sales rep for food distributor Sysco when one of his contacts approached him about taking over his beer line-cleaning business. After considering it for about a year and doing some research, Leszcynski used his savings to purchase his friend’s equipment and client list.

“I jumped all in,” Leszcynski said. “It was a very tough decision, because Sysco was very good to me. They gave me the confidence and skills so that I felt I could make that leap of faith.”

In about three years he’s now grown his business from a handful of clients to more than 40, some with as few as five tap lines and some with more than 30 lines.

After making his initial investment, Leszcynski purchased more equipment and went through a certification course in Illinois, which a regional microbrewer urged him to do. He said his upgraded methods are far more effective than traditional cleaning methods.

He cleans his clients’ tap lines at least every two weeks. If lines are cleaned less frequently, he said, bacteria will flourish and the beer will have an off-taste and could cause headaches.

“I don’t compromise on that,” Leszcynski said. “I’ve walked away from business if they won’t agree to it.”

His clients with dozens of tap lines, such as the Nomad on Brady Street, require up to five hours to clean properly. He said he puts in roughly 60 hours a week cleaning taps, running around town and taking care of the business side of things.

Leszcynski credited his success to his conservative approach to business.

“I didn’t want to get in over my head,” Leszcynski. “I knew I had to build a solid foundation. And then I hoped for the best.”


The Professional Fan

Not every entrepreneur needs financing—or even a business background. Some, like Matthew Segedy, just need a really good idea. Segedy, a personal trainer at a private gym downtown, drew his inspiration from his stint in the ’90s as a doorman at the Pfister Hotel, where he encountered a lot of celebrities—and autograph seekers.

Some autograph hounds were pros who’d turn around and sell the signed photos or swag; some of them were legitimate fans who just wanted a signature. Segedy noticed that many celebrities wouldn’t sign anything, since their autograph would be devalued when re-sold by the professionals. He said he couldn’t forget the time that Shaquille O’Neal ripped up a photo from a father and son who were avid fans of the basketball superstar. The son burst into tears.

Fast-forward a decade to the era of smart-phone apps. Segedy contacted his friend Eugene Khmelevsky about creating a sports-based app that would function as an autograph book. They signed an agreement and within weeks Khmelevsky came up with a working prototype that allows an athlete to sign the phone screen and have his or her photo taken. That image can then be emailed, texted, Facebooked and Tweeted to the fan’s friends.

“When they sign this they know that they are doing it for a true fan,” Segedy said.

Segedy and Khmelevsky submitted their Sports Fan app to Apple, which reviewed it and its potential competitors.

They got a response within 48 hours.

“Apple said they’d love to have it,” Segedy said.

Segedy said the best part is that he can make money while he isn’t working. Apple receives 29 cents from each 99-cent app for credit card processing and other services, while Segedy and Khmelevsky are splitting their share. Other than a little bit of money they spent for a graphic designer, the proceeds are pure profit. Segedy said he’s hoping to work on more versions for specific sports teams and movie and music fans.