Show Business - Money Hunt TV show - includes information on business plans

Kiplinger's Personal Finance Magazine, June, 2000 by Ronaleen R. Roha

SMALL BUSINESS | Entrepreneurs who appear on this QUIRKY TV SHOW get valuable exposure.

A RED LIGHT over the door flashes to bar latecomers from the set of Money Hunt on Stage 18 in Norwalk, Conn. As the cameras roll, Christopher Karl, the 28-year-old co-founder of CarePackages.com, walks out onto the set--a tribute to the entrepreneurial spirit, with unfinished stone columns and a rendering of uncharted seas replete with monsters waiting to devour the intrepid.

For the next eight minutes Karl will pitch his company to the three businessmen on the panel, trying to convince them that his company has more potential than that of the week's other contestant, Robert Ehrlich, the founder of Robert's American Gourmet, a snack-and-health-food company. The winner gets one hour of free consulting from the panel's "guest mentor"--and priceless exposure when the show airs on PBS stations around the country.

Money Hunt is a quirky combination of two American passions: start-ups and quiz shows. It is the brainchild of its co-hosts: Miles Spencer, an investment banker, and Cliff Ennico, a corporate and securities lawyer. This week's guest mentor is Kenneth Krushel, president and CEO of College Enterprises, a supplier of copying and e-commerce services to colleges. The panelists have reviewed the contestants' business plans in advance. After the show, each gets his say, but the guest mentor picks the winner.

Tough audience

KARL OFFERS THE panel a 30-second tour of the business. CarePackages.com, based in Fairfield, Conn., was founded by Karl and the Moran brothers, Michael, 31, and Ryan, 28. Customers can order ready-made or custom care packages filled with a selection of brand-name items, from Twizzlers to Tide, along with an e-greeting card. Packages start at $7, and average $15 to $20. "We are between an e-card and an e-commerce company," says Karl. Last year, after its September launch, the firm had $200,000 in sales. It aims for $2 million this year. Currently, the company's business plan (the basis of its selection for Money Hunt) calls for raising $8 million to $10 million, largely for marketing.

The panel wastes no time going for the jugular. Questions are rapid-fire, and Karl barely has time to answer one before a panel member hits him with another. Krushel admits that CarePackages.com is a good idea but he has concerns. "What prevents any of us from going to Yahoo! and developing some type of care package next week?" he asks, and "How do consumers find out about you?" Ennico interrupts to ask how the company can maintain the stellar customer service needed to prepare care packages. Spencer wants to know how many college Web sites the partners have lined up to offer the company's services.

"We pride ourselves on trying to rattle these guys' cages," says Ennico. "A lot of entrepreneurs need to learn how to become better presenters." But he's quick to point out that "whatever we do to our Money Hunt guests, these folks are our heroes." Even so, there is an all's-fair atmosphere here.

Karl looks a bit nonplused but recovers quickly. He's confident, even a little cocky, as he lobs back answers while working in points about the company's strengths. "This is a company that takes many months to build," he says, from idea to execution--constructing relationships, securing inventory channels, and arranging for filling and delivering orders. Mike Moran, sitting behind the cameras, nods as Karl describes their fulfillment center's capabilities and the 24-hour-a-day customer-service center.

Karl sidesteps Spencer's question about how many colleges they have cut deals with by saying that they are working with a large company that creates campus Web sites, leaving the impression that the real answer is none. But he points out that they are reaching consumers by building relationships with other Web sites that list their service, such as Flooz.com, which sells gift certificates for Internet dollars that can be spent at a variety of online stores.

Right now their biggest brandbuilder, he says, is word of mouth, a method known on the Net as viral marketing--one care-package recipient becomes a sender, and so on. Viral marketing, Karl points out, helped build the Blue Mountain Arts greeting-card site into one of the busiest on the Web and led to the company's purchase by Excite@Home for $780 million.

What it takes: Practice

IT HAS TAKEN Karl and the Morans months to get where they are. They started putting the pieces together in mid 1998, when they wrote their first business plan (see the box at left for tips on drafting a dynamite business plan). Raising money for a small business that doesn't plan to stay small is a full-time job. Over time, as they answered questions for possible investors, "we revised the business plan about 100 times," Karl says. Now the plan is 50 to 60 pages long.

In April 1999 Karl and Mike Moran left their jobs at PointCast, an Internet pioneer of e-mail information, and Ryan Moran left the Gartner Group, a technology-consulting firm. They raised about $1 million, including several hundred thousand dollars of their own money, an investment from the company they contracted with to fulfill their orders, and money from family and friends.