For Successful Start-Ups, The First Team Isn’t Always The Right Team

By Jane Wooldridge The Miami Herald

WWR Article Summary (tl;dr) Columnist Jane Wooldridge catches up with some of the top entrepreneurs from the Miami Herald's annual Business Plan Challenge.

The Miami Herald

Our 2017 Community Track winners have learned what every start-up must: refining your model is essential to success.

The sharing economy's claim to fame is in consumer services like Airbnb and Uber, but it can help businesses function more effectively, too.

That was the idea behind "Cargo 42", the 2017 winner in the Community Track and the overall Miami Herald Business Plan Challenge champion. The company's app matches shippers looking for reliable service at affordable rates with pre-vetted trucking companies that have empty space.

In the months since winning the challenge, the company's revenues have grown 20 to 30 percent per month, said co-founder Alfredo Keri. But like most businesses, Cargo 42 had made some shifts along the way.

Even before the winners were announced, co-founder Francine Gervazio moved to Europe, leaving the burgeoning business with Keri and co-founder Murilo Amaral. The pair has narrowed its emphasis, targeting smaller firms that often can't get the same favorable shipping rates and reliability as large companies.

They also added in features that turned out to be more important to clients than they had expected, such as the ability for a customer to set his own price, rather than negotiating between shipping and trucking customers. That change speeds up the process and encourages repeat business -- cutting down the time needed to market to new customers.

At this point, Cargo 42 now has several hundred carriers that have been precertified by the company and almost 100 shippers that have used the company repeatedly. The company is now seeking its first round of investment.

One of the lessons: How difficult it is to start up a company. "Everything is a challenge. Resources over all -- not only money but also time -- and how you invest in the right way to get the max out of it," said Keri. The company is now focusing on key accounts where they can earn trust and get repeat business.

His advice to other would-be entrepreneurs: -- Focus on what really matters, not on what is easy to do. Often, it's the hard work of trying to sell the product -- and sometimes getting rejected -- that's most crucial. -- Get out there and try. Getting feedback from real customers can be more valuable than continually conducting research or refining back-end processes. -- Don't confuse networking with real business. "There's a lot of movement going on in the ecosystem. That can be dangerous because you go to a lot of events that aren't really bringing business to your company. It doesn't show anything to the bottom line."

Apollonix refocuses Like many start-up teams, the sister-and-brother team behind Apollonix have found themselves refocusing their business since last spring, when the company was judged as the second-place winner in the Business Plan Challenge.

One of their original co-founders has moved on. But Jessica Shin and Paul Shin are continuing to build their web-based platform designed to match dental labs with dentists.

Winning in the Challenge "really helped us start conversations with the dental industry," said Jessica. As they learned more about industry needs, they realized they weren't providing enough specific value to their two target groups: dental labs and dentists. And marketing to two groups at once was stretching resources.

For now, they are focusing on dental labs, with an emphasis on small labs that have few marketing resources. They soon plan to release a site update that will give an online presence to labs without one.

In doing so, they are shifting their business model from a percentage of each transaction to a flat fee for creating the online presence.

Hurricane Irma brought another "ah-ha!" moment. Post-storm, many dentists found their regular suppliers without electricity or closed because of damage. That led to a "rush" feature that helps a dentist find a lab that can do the job in a hurry. "I think of it almost like Uber for the dental industry. The dentist needs something done and any dental lab with a slow day can do it."

Her advice: Be tough. "You have to put your whole heart into building a business. It's emotionally, mentally and physically draining. Even if you have a support system in your co-founders, it's the loneliest battle you can go through. You have to believe in it 100 percent."

Partnerships prove key For Caribu, last year's third-place finisher, 2017 was a winning year all around.

Thanks to a Miami Herald article about the app -- which enables children and far-away parents to read and draw together in real time -- the company caught the attention of Stars and Stripes, the news outlet for the U.S. military.

"All of a sudden we got this message from an airman in Djibouti," said Maxeme Tuchman, a former Teach for America director who was hired by founder Alvaro Sabido as CEO. "He had been deployed for six months and had six months to go. He said, 'I've been using Caribu with my son and it has changed our relationship.'

"It helped realize that our main focus is actually giving back to military families." (In fact, Sabido got the idea from watching a video of a service member reading to his child on a web cam. Other targets are traveling moms and grandparents.)

That letter spurred a new initiative: Caribu now donates six months of free membership service to any service member deployed overseas.

The Stars and Stripes article also led to a partnership with Blue Star Families, a nonprofit with 150,000 members that serves military families. Its corporate partners -- Tuchman can't name them -- are helping to get out the word and providing content.

Tuchman and Caribu have also won cash and in-kind prizes as finalists in 18 pitch competitions last year. It was also one of three winners of Toyota's Mother of Invention award, which earned the company its own Camry commercial featuring Tuchman.

Since the platform opened to the public in August, download engagement and revenues have shown double-digit growth month over month, she said. Staff has also grown. The team now has five members -- four of them women.

"It's a false narrative that you can't find talent in Miami," says Tuchman, whose family are Cuban immigrants. "Miami is a perfect place [to grow a company] because the ecosystem is still growing so you can help shape it. And Miami's diversity will make us one of the strongest, most competitive ecosystems out there."

Her top tip: "If you are building something that has a tech foundation -- and today, you better be -- you really need to be sure at the beginning that you have the right technical partner. A lot of people outsource [the technology] or don't value it early enough."

Other advice: "Building a business is not for the faint of heart. It is the most amazing, awesome wild ride. If you're up for the ride and the challenge, it's the best decision you could make."

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