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Producer Frank Silverstein blogs about entrepreneurs who have made their love of scaring other people into a profitable business.

(Frank Silverstein, producer "Your Business" )

As a business reporter, I often hear B-school advisors vigorously warn new grads against entering a business they know nothing about…  “If you’re picking a business,” they say, “pick something you know and  love.”  The reason?  Since you’re going to be spending most of your waking hours fussing, worrying about, and promoting it… you darn well better love it! 

In the story I’m currently working on, the problem is not that too many enter a world they know nothing about… but the opposite… it’s a world they love far too much — haunted houses. 

A hidden industry
In all honesty, I wasn’t even aware of this as a viable industry until I spoke with Leonard Pickel of ‘Haunted Attraction Magazine.”  This guy is amazing… he’s got his ‘claws’ into just about every aspect of the haunted house industry…  And, I do mean “industry”… complete with several national trade shows www.hauntcon.co …  monthly published trade magazines, a cadre of time consultants and endless vendors and suppliers of such specialty  products as: Zombie Pinups from www.sinistervisions.com, Haunted Windows www.apparition3d.com, and  Sinister Scents“you can smell the fear.”

The customers and employees alike call themselves “haunters” and that includes theatrical make-up artists, mural painters, building contractors, robotics engineers, costume designers, pyrotechnic experts, actors and musicians and more.  The owners call themselves “Hauntrepreneurs”!  What they all have in common is they love to scare the stuffing out of other people. 

Image: Hanging out with ghouls
Frank Silverstein / MSNBC

The ‘startle’ vs. ‘true’ fear
Ask Leonard Pickel how he got into this, and he’ll answer:  “cause scaring people is sooo much fun!”  Ask Ben Armstrong, owner of Atlanta’s “Netherworld” attraction, and he’ll give you a more scientific answer… “there’s a difference between a ‘startle’ and a ‘scare’.  “A startle is an unexpected surprise that causes your adrenaline to spike until you realize everything’s okay then the adrenaline recedes and you’re ready for the next surprise… then it all falls off and you feel this enormous relief and you laugh out loud.”  He says, that’s what haunters really aim for.  “Real fear is something else completely, much more serious …and we try to avoid that.”  But when you push him to say why he does this, a dark sinister voice from deep-within croaks out the words:  “Because I love it!”

Frank Silverstein / MSNBC

Marketing is the key

From a business point of view the passion is important… but as Pickel points out:  “There are a lot of haunted house people that — do it because they love scarin' people — and don't really look at it as a business.  You have to make sure that the business model works.  Make sure that you're spendin' enough money on advertising to drive people to the door.”  And Armstrong agrees:  Marketing is essential in what we do because it’s got to hit like a hammer. We have no time.  People have got to be told immediately. 

And when it comes to reaching their target audience of young men and women in the age group of 15 to 35… these guys are masters.  It’s a consumer group that many marketers covet and spend a fortune to reach, but for “haunters” like Pikel and Armstrong it’s a demographic that they  manage to grab on a fairly modest budget. 

What’s the secret?  According to Ben Armstrong there’s no secret at all,  “… the audience finds us…” he says,  we just put the information out of where to go, make sure they hear about it and the lines just get longer and longer.

Oct. 5, 2006 | 5:30 p.m.

Marketing 'outside the box': Untraditional marketing techniques can pay off big-time

(Bob Males, senior producer)

Over the past few weeks, I’ve heard about a couple of companies taking chances with untraditional marketing techniques that paid off big-time for them.

After using Craig’s List for its initial marketing, Zen Home Cleaning in NYC was reviewed by Daily Candy.  Zen is a 5-star residential cleaning service using non-toxic cleaners.  After they were written-up on the very popular Daily Candy Web site, the number of phone inquiries they got exploded from several a week to five hundred on the very next day!  Months later, the calls keep coming.  Zen’s cleaning staff mushroomed from 3 to 15 (and they need more like 20).  Now, the owner is fielding requests for franchises from other cities.  Daily Candy may not work like that for every business.  For instance, the guys at Dirtbag Clothing had to find their own way.

Dirtbag Clothing, which we’re preparing a story on, went backstage at music events and hung out with the bands’ road crews.  They gave away free clothes to the crew, which exposed musicians to their fashion.  When the bands asked for clothes, Dirtbag “comped” them.  The company also emailed 4,000 music groups and offered to supply stage clothes. Dirtbag’s revenues grew when audiences saw their designs at hundreds (maybe thousands) of music performances.  It’s another guerrilla campaign you’ll never find in a traditional marketing textbook.

Paraphrasing marketing guru Andy Cohen (author of "Follow the Other Hand"): innovate and challenge the assumptions about your business.

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Sept. 25, 2006 | 5:30 p.m.

"Your business" host JJ Ramberg blogs about Simon Sinek's concept of Golden Circle. Sinek was a guest on the show last week.

(JJ Ramberg, host of "Your business" MSNBC TV show)

I spent quite a bit of time talking with Simon Sinek about his Golden Circle concept before the program last week.  Here is the gist of his theory: Most companies are very good at communicating what they do. For example, we make computers or we sell high- end beauty products.  Some companies can explain how they do it, but very few companies communicate why they do what they do. But, according to Sinek, people make decisions based on the “why” not the “what.” 

On the program, we spoke about this in terms of attracting customers, but off camera Sinek and I also spoke about how this is applicable to all parts of a business, particularly human resources.  He believes that if employees understand the “why” of a company, which is really the company's purpose and its soul, they will be happier at work. Therefore the “why” has to come from the inside out rather than the outside in — meaning it can't be something the company believes customers will respond to. It has to be something that truly generates from the heart of the company. 

Sinek's method for getting to the “why” is quite interesting and quite unconventional.  In one situation that I witnessed, he asked the founder about her childhood, her schooling, her interests and figured out what makes her tick. From there, he determined the “why” of her company and then went on to help her create a statement of purpose that incorporated that why.

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Sept. 18, 2006 | 5:30 p.m. ET

Easy rider:  Guest blogger Phil Town discusses this week’s motorcycle air bag pitch

(Phil Town, author and panelist)

Obviously an elevator ride is way too short a time to make a decision about an investment but being an avid (some friends say ‘insane’) motorcycle rider, I have to say that I was intrigued by the elevator pitch that Todd Brumley, the AireTronics CEO, made on today’s show.

He was smart and got in a good hook right away when he said that there are only two kinds of motorcycle riders: Those who have fallen and those who will.
I have several entries in the ‘those who have fallen’ category so I can relate — always a good thing when you’re being pitched.

A long time ago (yeah, I’m in THAT demographic, thank you Gwendolyn) I was riding a Triumph Bonneville from Panama to San Francisco. I’d just entered Mexico from Guatemala when it started raining lightly so I put on a helmet. About an hour later up the road to Vera Cruz I proceeded to hit a cow dead center doing about 50 mph (me, not the cow.) I just remember thinking, “This isn’t good,” as I sailed over the cow’s back and then I woke up staring blankly into the blue sky wondering why I was lying there.

The helmet saved my life no doubt since I landed right on my head, but the incident didn’t convert me into a big safety-first kinda guy.

To this day, I still don’t wear a helmet unless I have to. To each his own. I ride to hang it out there and so do a lot of other guys. I was just at the Sturgis, South Dakota, Harley rally in August with about 400,000 other bikers and almost no one was wearing a helmet. On the other hand, almost everyone was packing a gun so I guess the safety thing is in the eye of the beholder.

Point being, I was not immediately taken with wearing an air bag. I mean, come on: What if I forget it’s hooked to me and I inflate when I get off my bike at a gas station? I have to stand there fiddling around deflating the thing looking like the Michelin Man?

But hey, I know lots of bikers, including my sister and brother-in-law (Beemer riders) who wear all that safety stuff and this vest would fit right in with their gear.
So I thought what the heck, I’ll give it a shot and see what it feels like so I can tell the sis about it.

I went up to the Green Room where Todd put me in the vest and I yanked the cord. I was surprised how fast that thing inflated. And how tight it is. The jacket really squeezes hard. I gave it a test by slamming into the wall and felt nothing, although I wasn’t going all that fast. Still, it seemed pretty obvious even to me that the vest would do a better job of protecting my ribs and spine at any speed than my T-shirt does.

Todd, being a good entrepreneur on the prowl for money, took the opportunity to tell me I’d have to slam into a car at 80 mph or faster before I’d hit the car ahead of full inflation. Since most motorcycle wrecks happen a lot slower than 80 mph, that’s pretty cool. Of course, the way I roll, my head would be smashed down into my inflated vest if I hit a car going that fast but then that would be my bad for not wearing a helmet.

We talked money. I don’t like management cashing out. Generally it’s a red flag that something is wrong but it happens sometimes for good reasons and isn’t, by itself, a deal killer. Still, if they think they are going to walk away with $1.5 million of venture money, they’re smoking something stronger than Marlboros.

Ain’t gonna happen. Stock maybe but not cash. They’ve got patents so they may have a decent Moat — protection against competition — a fundamental of a durable business. Seems like AireTronics might have a lot of upside for the right investors.

And Todd did a good pitch. Although I wish Gwendolyn had gotten to pull on Todd’s cord to make him inflate. That would have been cool.

Phil Town: http://ruleoneinvestor.com

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Sept. 12, 2006 | 5:30 p.m. ET

CD baby.com, or how a guy who never wanted to start a dot-com business survived the boom and bust and now has a dot-com business worth millions

(Frank Silverstein, producer)

I’m working on a story about how entrepreneurs find the right marketplace to sell their products.  We decided to look at musicians selling their CDs.  We thought they’d be a good model for people making products that appeal to a narrow but loyal customer-base — and we wondered how they manage to get their CDs to their customers when they don’t have the advertising and distribution leverage of a big corporate music label.

We discovered that one way independent musicians manage is through a Web site specially designed to serve their needs, called CD Baby.  It was created by a musician who never wanted to be a businessman.  All he wanted to do was sell his own CDs.  But since none of the record stores online would put his music on their Web sites without support from a record label, he bought a book about it, and figured out how to set up a Web site for himself.  

The guy is Derek Sivers (rhymes with ‘rivers’) and he says he never really intended to start a business in the first place.  However, his company, CD Baby, is racking now up sales in the millions of dollars, employees are working seven days a week, and there are well over 75 people on his payroll.

It’s a lot of work, he told me, but it's work that Sivers says he enjoys doing because he knows it makes a difference in the lives of the musicians who use his service.  And, it's work which seems to have paid off big time.  He says several of the big music labels have made offers to buy his company, offers big enough that he could retire for life — but he’d never consider selling his business! 

I wanted to know, why wouldn't he ever sell?

“People have offered incredible money to buy CD Baby and I'm just not interested because this what I love doing best and no amount of money could replace this."
“Come on," I said.  “That’s awfully hard to believe.”

But Sivers explains:  “I saw friends start businesses with the best of intentions but once somebody started waving around tens of millions of dollars in their face it was hard for them to say no.  They would say: “Ooh, ooh,” and they'd think of all the things they could do with the money.  And, at the end of the day they sold out their dream. It killed me that they would take this small cool business that they started with a mission, and just sell it off to the highest bidder and they'd often be miserable afterwards. They'd have a big bank account and they'd just be lost, because they loved the business they’d created and they’d sold it to someone else."

CD Baby’s success on the Internet beat the odds for the dot-com industry.  When most of the dot-com businesses went broke Sivers’ continued to grow.  I asked Derek how come he didn't go bust like everyone else.

"I think one of the main reasons CD Baby survived the boom and bust is that I never had any investors. I was really running CD Baby the same way you would run a hot dog stand. Which is, I only had $500 when I started it.   I put my $500 into it and everything since then just stayed profitable. It was just me on a little folding card table in my bedroom. And, ever since the second month in business it's been profitable.  I’ve never had to take any investors, never had to take any advertising and all that stuff that really caused the dot-com crash didn't really apply to me because I was running it like a little hot dog stand.  I really couldn't afford to lose even a $100 for a month. I had to stay profitable and so that's why it has slowly and modestly stuck around.

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Sept. 5, 2006 | 2:30 p.m. ET

Turning lemons into lemonade
(Lisa Everson, producer)

We decided to do a story about ex-Enron employees who started their own small businesses even before Ken Lay died in July. Houston in August isn’t exactly a garden spot, but the hot and steamy weather didn’t dampen our spirits. JJ and I had a great time hanging out with these terrific people who have truly turned lemons into lemonade. All of them will tell you that the failure of Enron was the best thing that happened to them.

One woman we talked to, a former legal secretary, lost her retirement savings at Enron. At 66 years old, she told us she needs to continue to work in order to support herself. The amazing thing about her is that she’s happier than she’s ever been doing something she’s always dreamed of doing.

And what she does is hard work. I know because when I was a teenager I worked for a short time at a place that had a similar premise: running children’s birthday parties so the parents don’t have to do a thing. Never in my life did I work so hard and sleep so well.

The amazing thing is, Lois Black is doing this all on her own with no help. Lois says she gets a good workout every time she has a party and, watching her in action, I agree. Loading her car with tables, chairs and party props is the beginning of her day, then driving to the party location and unloading said props before transforming a Houston living room into pink poodle heaven — a 3-year-old’s dream birthday party. Suddenly I was transported into the land of "girly girl," where the mothers and children were having a ball putting on makeup, fluffing their feather boas and wearing pink poodle skirts.

Her business, Tea Parties To Go, takes care of every last detail from the invitations to the cake, party favors and entertainment — and she does it with a smile and a sparkle in her eye because she’s finally her own boss and doesn’t have anybody to answer to but herself.

And the tea Lois serves the 3-year-olds isn’t actually tea at all, it’s pink lemonade.

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Aug. 31, 2006 | 5:30 p.m. ET

Stuff we couldn’t stuff into the show, Take 2
(Bob Males, senior producer)

We were surprised to hear today that our friend Carolyn Kepcher, who appeared on our show Sunday, Aug. 27, is no longer working for the Trump Organization.  As part of our regular schedule of repeat broadcasts, you can catch that show again Saturday, Sept. 2 at 5:30 a.m. ET.

Video of Carolyn’s appearance is also available on this Web site at any time. Click on the following to see her:
Video: Elevator Pitch: Blow dry bar
Video: Ad tips for small biz owners.

Here’s something small business and big business alike should probably avoid.  The wire services are reporting that RadioShack Corp. notified about 400 workers by e-mail (by e-mail!) that they were being dismissed.

How’d you like to log on to this e-mail message? “The work force reduction notification is currently in progress. Unfortunately, your position is one that has been eliminated."
I’m not sure why, but this reminds me of the scene in the movie “Broadcast News,” where employees are marched into a small office and terminated.  The manager delivers the bad news to one worker and then says: “Now, if there’s anything I can do for you…”  The fired worker looks at him and deadpans, “Well, I certainly hope you’ll die soon.”

Still want to fly with just carry-on luggage, but don’t know what to do about taking your toiletries?  Here’s an interesting new business idea.  Mywetstuff.com lets you pre-order trial sizes of water-based toiletries and other travel amenities. Give them your travel date and the hotel where you’re staying, and MyWetStuff.com delivers a personalized travel kit ahead of time, waiting for you to get there.  They start taking orders Sept. 5, and there’s a $15 off promotion for the first 70,000 customers.

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Aug. 28, 2006 | 5 p.m. ET

Stuff we couldn’t stuff into the show
(Bob Males, senior producer)

Here are some things that interested us in the “Your Business” office, and we thought you’d enjoy reading about them:

Cereality: Just read a story about two men who started a “cereal bar” near Arizona State University in Tempe. For less than 3 bucks, you get 32 ounces of cereal (they stock 30 kinds). Their servers wear PJs and are called “cereologists.” The store took just two months to turn a profit. Since 2003, they’ve expanded to Philadelphia and Chicago. Their goal? “To become the Starbucks of cereal.”  Check them out at Cereality.com.

One of our Site-Seeing Web sites of the week is LinkedIn. A friend asked me to sign up to this business/social networking site well over a year ago. I did and promptly forgot about it until the topic came up in the office the other day.  I opened my profile to find I have about 38,000 links to people in the media. A quick scan through a tiny sliver of all that shows I’m just one degree of separation away from a Columbia University professor whose frequent writings about television news on another Internet site I’ve read from time to time. That grabbed my attention. Of course, I’ll never get through sifting all those names, but I know Kevin Bacon must be in there somewhere!

We’re still waiting for USAirways to provide us with a prototype of the airsickness bags on which they propose to print advertising. You must have heard about this. The airline is thinking about selling space on the bags to stomach remedy companies. This gives an all-new meaning to the phrase “viral marketing.” If and when we get the bag, we’ll give you a look at it on the show.

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Aug. 9, 2006 | 8:50 a.m. ET

The passion of the small business owner (JJ Ramberg)

IMAGE: JJ Ramberg

Last week, my producer Lisa and I set up camp in an office building in New York City that houses hundreds of small businesses. The company, Sunshine Suites, which runs the building (a small business itself), provides desks, Internet access, conference rooms, and fax machines —basically it's a plug-and-play solution for small businesses. And the result is four walls filled with some of the most dynamic, passionate people you could find.

We went there to talk to small business owners to get a sense of some of the challenges they face — to learn what keeps them up at night and what makes them pop the Champagne. We spoke to a pair of friends who are creating what they hope will be the next must-have T-shirt. They spend part of their time designing and getting the T-shirts made, and the other part literally driving through New York State themselves convincing store owners to stock their shirts. I spoke with a woman who worked for a major publishing company much of her life — who was used to expense accounts and paychecks, and gave it up to start her own small publishing company where for a few years she had neither.

What was most interesting for me about spending the day in these offices is that I did not meet one single person with whom I wouldn't have wanted to have a 10-hour conversation. Whether the product or service of these businesses was compelling to me was rather irrelevant because the process of running each of those businesses was infinitely interesting. And even more than that, the common thread of passion bordering on obsession (and sometimes crossing that border) is so magnetic. The egos I encountered were large — as you'd expect since you need a big ego to fuel the feeling that you can start something that will be a success — but kept in check as I think happens when you hold the job of both CEO and trash-taker-outer.

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