America's Best Young Entrepreneurs 2010
It's not an easy time for young entrepreneurs. Most people in their teens or early 20s trying to start businesses today were not yet out of college when the Great Recession began in December 2007. Unlike their dot-com-era predecessors, today's startups aren't sloshing in venture capital, and business credit is tight. People under age 35 started businesses at a lower rate in 2009 than in the year before, even as the rate of entrepreneurship in the broader population is increasing, according to data from the Kauffman Foundation.
The finalists in Businessweek.com's sixth annual search for America's best young entrepreneurs reflect the times: Most of their companies are lean and focused on getting profitable before expanding. Take LiveProud, a group of clothing brands for sailors, hikers, and yoga enthusiasts that two Babson College seniors started in 2007. Founders Phil Tepfer and Charles Bogoian, both 24, keep costs down by sewing their apparel at contract manufacturers in the U.S. and Canada as orders come in. "We work on very low inventory numbers," Tepfer says. LiveProud, which gets its fabric from recycled landfill materials like plastic bottles and corn husks, became profitable within a year, and expects revenue of $375,000 this year, he says.
Others have built recession-friendly business models. Onetime Georgetown roommates Ben McKean and Dan Leahy got their idea for a service that would help high-end restaurants fill empty tables in 2009. McKean, then an analyst at Merrill Lynch, was covering the initial public offering for restaurant reservation service OpenTable (OPEN). By last September, he and Leahy had quit their Wall Street jobs to start VillageVines. Subscribers to their e-mail newsletter can pay $10 for discounts of 10 percent to 30 percent at restaurants in New York and five other cities. The service launched in May and now has more than 500,000 subscribers, McKean says. VillageVines raised $500,000 in angel investment and its New York operation became cash-flow positive in three months, and it's now investing in other cities such as San Francisco, Chicago, and Boston, he says.
Variety of Revenue Profiles
LiveProud and VillageVines are among the hundreds of young companies nominated by readers this summer and vetted by Businessweek.com reporters. Some are multimillion-dollar operations: 23-year-old Ray Land built a fleet of 40 charter buses in northern Florida that brought in $3 million last year. Others, like Bethlehem (Pa.)-based LifeServe Innovations, have no revenue yet. LifeServe's prototype, developed from the founders' university research and now in preclinical testing, is a medical device meant to help minimally trained care providers open patients' airways in emergency situations.
Each of the 25 companies in our roundup share a few qualities: Their founders were no older than 25 at the nomination cut-off date, and they appeared to hold promise based on business model, founders' experience, outside capital, and revenue. Now it's your turn to weigh in. Flip through this slide show of our 25 finalists and vote for your favorite by Oct. 21. We'll announce readers' top picks on Oct. 28.
Also in this year's report: We profile an effort at the University of Utah to nurture student startups; Smart Answers columnist Karen E. Klein evaluates funding options for aspiring business owners; and a 25-year-old New Jersey native who recently launched a Mandarin-language teaching business in Beijing describes her journey. You can find each of these features in the Related Items box at the upper right side of this overview.