Magazine article Success

Sweet Spots for Startups: Entrepreneurs Find Success by Keeping a Finger on the Pulse of the Market and Then Seizing Opportunities

Magazine article Success

Sweet Spots for Startups: Entrepreneurs Find Success by Keeping a Finger on the Pulse of the Market and Then Seizing Opportunities

Article excerpt

Little entrepreneurial engines that could are driving U.S. job creation. Small-business owners are more optimistic about getting on track now than at any time since the recession gripped the economy in early 2008, according to the Wells Fargo/Gallup Small Business Index. Startups and small businesses were responsible for about 7 million of the 10.9 million jobs that were added to the U.S. economy by the end of 2014, Small Business Administration figures show. And U.S. entrepreneurship rates rose to nearly 14 percent in 2014 from a post-recession low of 7.6 percent in 2010, says the Global Entrepreneurship Monitor 2014 Global Report released this February.

The engines driving that growth seem very sector-specific, says Stewart Thornhill, executive director of the Samuel Zell & Robert H. Lurie Institute for Entrepreneurial Studies at the University of Michigan. Certain web-based sectors are exploding.

Here are the stories of some little engines in various stages of powering up.

Data-Driven Services

Matt Ehrlichman's quest to build his dream house is a prime example of the possibilities in the online services sector.

A Seattle-based entrepreneur with two software company launches on his resume, Ehrlichman, 36, decided to take a year off to build a house. As he began the daunting process of identifying what he needed and how to find the right contractors, he learned there was no reliable source to provide all of that information.

"The way I'm geared, I started exploring for a solution," Ehrlichman says. He began seeking colleagues' help--"about 10 to 12 of us started meeting regularly in my basement"--to organize inspiration, project data and word-of-mouth referrals in one place. Porch, based on the idea that its namesake is the public space of a private home, was the end result. Because he had a track record, Ehrlichman says he had no problem raising $6.25 million in seed money for Porch, which he co-founded in September 2013.

Ehrlichman didn't get his year off after all (but he did build his dream house).

The company gained momentum in April 2014, when it launched a strategic partnership with Lowe's 1,700-plus stores. The home-improvement chain points to Porch as an in-store resource to help homeowners find home-improvement professionals for nearly any project that falls outside A the scope of Lowe's installation services. In February 2015, it added Better Business Bureau information, including ratings and accreditation status, for millions of professionals in Porch search results.

In the process, Ehrlichman reports that homeowners in 62 percent of U.S. cities and towns use its services, and more than 3.2 million contractors have displayed approximately 150 million home remodeling projects on the Porch website. The company has 350 employees.

A staff that follows a laser focus--"no jerks, no egos, no bureaucracy" is one of Ehrlichman's battle cries--and clear communication is crucial, he says, especially as a young enterprise encounters growing pains. The company's principles are painted on the office walls and iterated in all-hands weekly Porch meetings. Ehrlichman has no five-year plan because Porch's rapid year-to-year growth would render one useless, he says.

Telemedicine

The market for online medical services and products is developing rapidly. In his role at a Research 1 University, Thornhill sees robust research and development in health care data analysis, health informatics (an evolving specialization that links information technology, communications and health care to improve the quality and safety of patient care) and medical devices. Expect major changes "in the online health treatment and services market over the next couple of years as the winners and losers get sorted out," Thornhill says. "It's going to be a really interesting shakeout."

In preparing to launch MyDerm Portal, a website focused on follow-up dermatology visits, Austin, Texas-based Paul Robichaux saw "a lot of stuff on the web that just didn't work. …

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