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Making their move

Innovative ideas and smart strategies help startup founders thrive in a tough economy

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Print this page by Heather B. Hayes
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Blake Hall and Matthew Thompson of ID.me.
Photos by Mark Rhodes

Starting a company has become the dream of many young Americans.  A study released last year, “Millennials and the Future of Work,” found that 71 percent of 20- and 30-somethings today want to quit their jobs and work for themselves.

“Two decades ago, if someone came out of college and said they wanted to be an entrepreneur, what everybody figured was that they couldn’t find a job,” says Raul Chao, who teaches courses on entrepreneurship at the University of Virginia’s Darden School of Business. “By contrast, today’s young people are going into entrepreneurship because they want to be free to dictate their own fate and pursue their dreams, and society totally supports and admires that.”

Succeeding in business takes a lot more than just desire, of course, and no one knows that better than the following entrepreneurs, who have thrived in a tough economy.

Blake Hall and Matthew Thompson, co-founders, ID.me, McLean
Blake Hall and Matthew Thompson found they had a common bond when they met at Harvard Business School.  Both are former Army Rangers and combat veterans.  They often talked about a challenge facing active-duty personnel and their families.

“A lot of nonprofits and retailers want to give back to that [military] community in the way of special discounts or promotions, but what we had found was there was really no efficient way to prove our military affiliation online or that we had served,” says Thompson, 34, a Fredericksburg native and Virginia Military Institute graduate who served four tours in Iraq and Afghanistan.  “So organizations were requiring us and others to send a lot of documentation with sensitive, personally identifiable information, which just really increased the threat of identity theft for this community.”

To address the problem, they created ID.me in 2010. The digital identity network enables people to prove who they are online while controlling what personal information is shared with others. For retailers and nonprofits, ID.me acts as an intermediary that verifies that someone’s information is accurate.

“Although anonymity is a great characteristic of the Internet, there are certain contexts and transactions where it benefits both you and the counter-party to be known in a verified way,” says Hall, 31, who earned two Bronze Stars in Iraq. “So we’re allowing the consumer to securely forward that information across a network, much like you can use PayPal to check out at multiple websites.”

Neither partner has a background in computer science, so they hired engineers and project managers to create the website and the backend technology platform. They also raised nearly $10 million in angel funding and government grants.

Named one of “100 Brilliant Companies” for 2014 by Entrepreneur magazine, ID.me verifies the information of 550,000 registered individuals for 100 organizations, including retailers such as Overstock.com, UnderArmour.com, Carhartt and Home Depot.

Thompson says the company has seen 50 percent growth in new applications being built for use on ID.me’s platform during the past two quarters. “It shows that more retailers are signing up for our service, and they’re signing up faster,” he explains.

Although the company began with a focus on military personnel, it is expanding its reach.  For example, the company helps online retailers offer discounts to groups such as first responders, teachers and students.

ID.me is one of five companies chosen to share in $7 million in grants to support the President’s National Strategy for Trusted Identities in Cyberspace (N-STIC). The company soon will be the first digital identity credential certified for use by private-sector and public-sector organizations.

“Essentially, one of our credential holders will have one digital identity that they can use for everything, from an e-commerce site all the way to accessing their health records and government benefits,” says Hall. “To us, that would be true success: providing our digital credential as a mass-market service that all citizens and all consumers can use anywhere online or in-store.”

Rebecca Hough, CEO, Evatran, Richmond
For electric vehicles to become widely used, drivers must have an easy, convenient way to charge their batteries, a problem that a number of large technology firms are racing to solve.

Leading the way, however, is Evatran, a tiny company headed by 28-year-old Rebecca Hough.

Hough and her team of engineers have developed the world’s first wireless electric vehicle charging system, known as Plugless Power. It became available on a limited basis in May 2013. So far Evatran has installed more than 300 units in the U.S. and Canada.

How did a small company manage to jump out front in a high-profile market? Hough credits Evatran’s early success in part to a willingness to learn and get feedback.
“I think that has manifested itself into a personal management philosophy in which I push my team to develop a thick skin, willingly ask for constructive criticism and then take it to heart,” she says.

Hough made it a point early on, for example, to partner with companies such  as Hertz, Google and Duke Energy, asking them to test Evatran’s prototypes and provide honest assessments.

“We’ve been really smart to say, ‘Tell us about what you think is wrong, tell us about the bumps, tell us what we can do to really make this something that you can’t live without,’” she says.

Hough, who was named to Inc. magazine’s “30 Under 30” last year, comes by her entrepreneurial skills naturally. Both of her parents are engineers. Her father, Tom Hough, purchased Wytheville-based MTC Transformers in 1998, broadened its customer base and grew its annual revenues from $500,000 to more than  $30 million over 10 years.

In 2009, he asked Rebecca, a University of Virginia graduate then working as a management consultant in New York, to help him develop a new battery charging technology.

“I realized that right under my nose was this fantastic opportunity where I could have a significant impact and, as a bonus, get to work with my dad, who is one of my biggest mentors,” she says.

Evatran, formed as a subsidiary of MTC, was spun off as an independent company with Rebecca as CEO. Her father remains the company’s largest shareholder and serves as chairman of the board.

Evatran’s Wytheville production facility can turn out up to 300 Plugless Power units a month. The company now has 22 full-time employees and three contractors, but it expects to hire additional sales and manufacturing staff in the next year.

Evatran is ramping up to begin making and selling its wireless charging pad for automobiles on a mass scale next year. That effort will include unveiling products compatible with different vehicles, including the Cadillac ELR. Evatran also will be training installation and repair partners.

Being first, however, doesn’t guarantee long-term growth, so Evatran has plans to develop products for alternative applications, such as airport transport vehicles, forklifts, military and medical equipment, and even amusement park rides.

“We expect some big competitors with deep, deep pockets to come into this market soon,” she states, “and I think the only way we’re going to stay in the lead is to continue to be very innovative, continue to get new generations of the product out there with new features and functionality, and strive to get really constructive criticism on how we can continue to make it better.”

Alexander Obenauer and Josh Milas, co-founders, Mindsense, Blacksburg
Mindsense is one of the hottest startups in the country, thanks to the intense popularity of its first product, Mail Pilot. Earlier this year it ranked as the top paid app in the Apple App Store.

Ironically, Alexander Obenauer, 24, and Josh Milas, 23, never intended to start a company.

In 2011, the friends, then students at Virginia Tech, just wanted to find a way to better manage emails that overwhelmed their inboxes.

“We sort of had a friendly little competition to see who had the most unread emails, and the day that Josh’s number topped 10,000 is the day we both decided that something is not quite right here,” says Obenauer, who grew up in Woodbridge and holds a degree in computer science. “So we did this fun exercise, trying to figure out: ‘How could this be better?’”

They realized that email, with its focus on categorizing messages as either “read” or “unread,” no longer fit the needs of many users. “We came to one dogmatic truth about email, which is that all messages need some sort of further action, whether it’s to schedule a meeting, delete it, pay a bill, or whatever,” recalls Milas, a Forest native with a degree in biological sciences. “So we started designing an email client around that concept.”

Armed with $54,000 they raised during a five-week-long Kickstarter campaign, Obenauer and Milas started Mindsense and worked to bring Mail Pilot to market.

The application stands out from other email programs because users can interact with their inbox as a to-do list. For example, messages can be marked as complete once all necessary actions are taken, pushed to a notification center to be reviewed by a certain date or organized into user-created workflow categories.

A Web app version of Mail Pilot hit the market in September 2012. It soon gained the attention of Apple developers, who encouraged Obenauer and Milas to build an app specifically for the iPhone and iPad. When that product was launched the next April, Apple featured it on the front page of its App Store, which has more than 1 million apps.

“From there, we started to get a lot of requests to bring the app to Mac desktop computers because users who had downloaded it wanted it on all their devices,” says Obenauer. When the Mac product came in January, it became the No. 1 paid app in Apple’s App store in more than 50 countries.

Mail Pilot, called “ingenious” by the New York Times, now has 60,000 users, a number that Obenauer expects to hit 100,000 by the end of the year. The founders plan to develop Mail Pilot apps for Androids and Windows while creating other types of applications for personal information management.

Despite their sudden visibility, the entrepreneurs take a conservative approach to growth. “I think the secret to our success is that we’re a small player, and because our only funding came through Kickstarter, we only answer to our customers,” Milas says. “We get to be 100 percent responsive to what people want to see in their email.”

Porter Hardy IV, president, Smartmouth Brewing Co., Norfolk
When Porter Hardy IV received a law degree from Washington and Lee University, his wife, Kim, gave him a home brewing kit as a graduation gift.

Less than 10 years later, he left a well-paid position as a corporate attorney to found Smartmouth Brewing Co.  “It was one of the scariest things I’ve ever done —and one of the proudest,” he admits.

Hardy, now 39, didn’t dislike his job, but he just wanted to spend his working days differently. “What was frustrating to me about being a lawyer is that, while I helped facilitate people in doing various things, at the end of the day, there was never a tangible product to show for it,” he says. “By contrast, making beer results in a very real thing that sort of promotes fun and happiness, and you get to watch people sit back and enjoy it.”

Smartmouth opened in late 2012 with three signature beers and a 1,100-square-foot tasting room.  Since then, the brewery has earned rave reviews and an avid following.

“The first couple of months we were open were really overwhelming because the response was so positive,” Hardy says. “It just took off.”

Last year, Smartmouth sold 1,400 barrels of beer, just shy of 350,000 pints. Sales are on course to more than double those numbers this year. The brewery recently expanded its production capacity by 75 percent and has begun producing cans of beer for sale in grocery stores, gourmet shops and other retail outlets.

Hardy, who grew up in Virginia Beach, is the grandson of the late Porter Hardy Jr., a Virginia congressman for 22 years. He credits the brewery’s growth to a number of factors, not the least of which were thorough research, organization and planning. He spent two years writing a business plan, sought investors who also could offer valuable advice and hired Greg Papp, a highly experienced brewer who shared Hardy’s passion for quality and creativity.

Luck also played a role. Smartmouth’s brewhouse was under construction when Virginia passed legislation that allowed breweries to sell beer on-premises without having to sell food.

“We were able to build a nice tasting room and create a little bit of a community spot where people could come have a beer and hang out,” says Hardy.

In addition, Hardy worked to differentiate Smartmouth from the increasingly crowded herd of Virginia microbreweries.

That effort began with the name.  Smartmouth, Hardy says, “lets us be a little bit snarky and clever without being disrespectful.” The name also is a nod to the idea that the best beer drinkers have an intelligent palate.  Smartmouth’s eye-catching cans also feature doodles and formulas used to explain the brewing process.

Hardy is having a lot of fun, but he is serious about the company’s long-term growth. “Maybe I just had my midlife crisis early, but this isn’t my semi-retirement,” he says. “This, for me, needs to work out, so that probably means I’m just as hungry as any other young guy starting out.”Innovative ideas and smart strategies help startup founders thrive in a tough economy


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