Travel-planning technology startup is the first Kauai business accepted into venture acceleration program
Not every day does a business from Kauai get accepted into a company that invests in startups and offers mentorship programs from some of the top business people in the world.
In fact, only one Kauai startup is part of the Blue Startups program, and they’re taking full advantage.
The husband and wife duo of Yacine Merzouk and Michelle Rundbaken of Wailua are taking travel planning to a new level with Tripidee, an all-in-one website and app to research locations for your trip, organize each day and crowd source information from travelers to streamline your holiday.
Tripidee is the first startup from Kauai to be accepted into the investment and mentorship-driven program that targets companies in the technology sector.
Merzouk and Rundbaken are among seven startups accepted into the ninth cohort program. There were over 200 applications. About halfway through the 14-week program, Merzouk and Rundbaken will pitch their startup to investors in San Francisco.
Why was this started?
Michelle Rundbaken: We created this because we’re from Kauai. I was teaching and you get one to two vacations a year. It’s big. You get to get off of Kauai. We found that we were gathering ideas of what to do, but it was everywhere: It was on Pinterest, Google, it was on our email from friends and we were wasting so much time on the trip trying to organize. We realized that there was no tool out there to help put all those ideas into one place on a map. If you’re going to a location you’ve never been, you can really visualize it and make the most out of your vacation time.
What was it like in the beginning?
Yacine Merzouk: In December 2015, it was for a California road trip. We literally put up a website that no one knew about and we made a mobile map that no one knew about and we used it for ourselves.
Where in California did you go?
YM: That was one central coast. We hit all the vineyards.
MR: We went from San Francisco all the way to Los Angeles. We were putting in things we wanted to do all along the way and figuring out the best route, seeing everything on a map.
Was the first iteration of what you created similar to what you have today?
MR: Similar and different, and it’s going to change a lot still. We’ve been taking it really slow. It has a lot of features now.
YM: The core of it is the same: Easily gather all of your information about a trip and because you don’t know necessarily much about the place you’re going to, it has to grab the location and put it on a map and make it easy visually to know where you’re going. That’s the same: gathering and seeing where you are and where you’re going. We added a lot of features to that to make it easier to get started, get better directions once you’re on the road, get business hours and things like that.
MR: We had a sharing feature to collaborate, but we just added a feature to crowd source from friends, and it’s like magic. Even though I grew up here, I don’t know Oahu. On Facebook, I sent out an invitation to give me Oahu off the beaten track. It was so cool because all of a sudden my whole account was populated with all these ideas from my friends who visited and now they’re all a map, all ready to try out.
How much easier was it to streamline your vacation?
MR: A lot because everything’s on a map and there’s a companion app. You’re no longer on your email, on Pinterest, looking for addresses, names. It’s just all right there.
YM: Sometimes in the morning of a trip, especially if it’s a road trip, we would spend an hour trying to figure out the best route and not forgetting anything that’s on the way. Somehow it’s a few minutes.
MR: The biggest thing about this is it will not plan the trip for you. This is for people who want to gather their own ideas. We have a universal browser button, so if you’re searching for a place and you find something you really want to do, you just click the button and it puts it into your trip.
YM: You can do your research on Google, Tripadvisor or Yelp or enter things yourself. Anywhere you’re on the web, it’s one click and it saves it to your account.
MR: What makes us different is we allow you to add any address from anywhere — even GPS. If you’re a hiker, you can put in GPS and get locations.
When were you accepted into the cohort?
YM: The program started the third week of April.
What kind of training have you received?
YM: A lot. Every week we meet with multiple mentors: business people, government people from Hawaii and the Mainland and we meet with the program directors every week. Some of the mentor meetings are workshops. Some of them are one-on-one where we get to discuss whatever we want. Sometimes the experts have their expertise and they guide us through parts of the business development process. The program director every week gives us milestones of what they would like to see over the next seven days.
MR: The quality and quantity of mentors they have is amazing. We’ve seen mentors from Asia and the continental U.S., flying in just to help us out. It’s so nice that they’re so invested in the Blue Startup program and they give their time. There’s no strings attached.
How has the mentorship helped your company so far?
MR: The mentors have all succeeded in one way or another. Either they started or launched a couple startups or they worked for big companies. They help us see different sides of our business we can’t see. They ask questions we might not know the answers to that we realized, “Oh, we need to understand this better.”
What have been the best lessons so far?
YM: Ask. A lot of people are willing to help, so get in touch with people, staying in touch with people. If you need something, let them know. If somebody needs something, help them out.
MR: For me it’s just research, research, research. Do your market research. Treat running a business like science: isolate variables, do A/B testing and don’t stop. Keep fine-tuning what works and why and keep fine-tuning more.
How do you monetize your business?
MR: We’re not monetizing yet. This has changed lot since we entered it into Blue Startups. We’ve just been a year and a half in beta and slowly collecting users. When we first started, we thought we’d monetize with affiliate links — just make money off people using Tripidee, really giving them suggestions to help them on their trip. We were quickly told that is not a way to make money. That’s just little drops in a big bucket.
Now what we’re doing is moving toward creating a tool for travel agents. A lot of people think travel agents are a dying breed, but actually the millennials are coming back to it. They don’t currently have great tools to help millennials plan. Millennials need freedom. They don’t want packaged deals. They want things on their phone, on their computer. They don’t want paper.
YM: One interesting thing we found out when we were doing tests and trying to discover what our travelers wanted, we created this feature where they can ask for suggestions. They can ask their friends or they can ask to get in touch with their travel agent. Our tools are all about being in control. You can save things from everywhere, but even so, about half of the people want suggestions.
How many people have downloaded your app?
YM: We have 2,500 users on the website. The app is around 500 right now.
MR: We’re still taking it slow. Blue Startups gave us $25,000. It’s huge, but it’s not the biggest part. The mentors are bigger. They gave us all this money and we’re not pouring it into advertising. We’re using it slowly for research and development. Because you can blow that money so fast and what do you have to show? A product that may not be perfect yet.
How much longer is the cohort?
MR: It’s a month and a half more. We’re halfway through and at the end we’re going to be going to San Francisco to pitch to investors.
YM: It’s coming fast.
MR: We’ve run small businesses before, but it’s a whole different ballgame.
What are the features you’re working on?
YM: We’re developing the agent dashboard. We’re taking all the features about travel planning and adding things and getting suggestions from friends and we’re creating a dashboard for industry professionals, travel designers, custom-trip-experience designers to be able to participate in that process. They’ll be able to see what their customers are adding or saving or would like to do. And tools to communicate: live chat, instant messages. We’re hoping to turn that into a subscription service so travel professionals have a suite of tools they can use to communicate with customers.
What are you looking forward to in San Francisco?
YM: For me, I think it’s going to be interesting to get feedback from a finished, polished presentation. We take what we have. We worked on it for three months full-time and then some. We’re going to get real feedback from real investors and other companies in our industry and it’s going to be real interesting to see what opportunities come out of that.
MR: There’s still more ways to monetize. The travel agent market is relatively small. There’s about 70,000 full-time travel agents in the U.S. There’s only so much we can scale that business. We’re still exploring more ways. As we talk to investors and professionals, we’re going to get to hear more ideas. Realistically, we don’t expect to get investors right now. We still have a lot of growth, but the ideas are really important.
Do you have a goal in the next five years?
YM: Five years is probably way further than we’re looking, but in the next couple of weeks, we’d like to get a dozen or so travel professionals beta testing our service. That’s step one.
MR: Within the next six months, we want to get about 200 travel professionals on board. As far as users, we don’t have user numbers. But ideally for Tripidee, it will be one of the go-to trip planning sites. It becomes more powerful when more people are on there.
How often do you work on this startup?
MR: Now it’s every single day.
YM: Before the program, it was every three months or so we would do a mini sprint. We would free up some time and work on it for a couple weeks. Real life would get in the way. Now that we have this program, we’ve been working on it 60-70 hours a week.
MR: Per person. And we’re reaching out and doing market research. Some of the people we’re talking to are not even in America. Our lesson is you have to work really hard. You just have to keep pushing. You know when you’re from Kauai there’s a humbleness and not tooting your horn and not really asking for help sometimes. You need to get past that. That’s hard. You have to put yourself out there and just ask and keep asking. It’s a huge lesson.
Anything you would like to add?
YM: Blue Startups invests in the company, so they take 6 percent of the company. It’s not giving. The great thing about that is our goals and their goals are aligned. If we succeed, they succeed. If we don’t. They don’t. That’s a great part of the program.
Australia Government Program HOTDESQ Awarded KallFly with Funding from Queensland Government through Advance Queensland initiative
The Australian government has awarded Kallfly with funding from Queensland government through the HOTDESQ program to enable Kallfly continue to boost Queensland ecosystem and broaden its global connection.
Honored to receive Award from International Award Winning Company, given a Social Innovation Award for great jobs in “Rural Area” advocacy, which aims to provide more job to single parents in the rural areas in the Philippines.
It was also part of top companies selected from thousands of companies for the JFDI. Asia acceleration program, JFDI partner with Singapore government to Award Kallfly and other companies investments extensive trainings and networking with founders and CEOs of top companies in Asia.
Kallfly is an Awardee in the regional event in Tokyo, Japan and was part of the most promising East Asia startups to share our vision on a global stage.
Kallfly is an On Demand Virtual Contact Center which provides experienced call agents for Customer Support, Customer Survey, Telemarketing, Virtual Assistants, Appointment Setting and Lead Generation for both small and medium businesses.With a proven track-record of facilitating thousands of hours of work from our call agents, and more than 3 million phone calls, plus flexible terms such as month-to-month, quarterly and bi-yearly engagement model, Kallfly has established itself as the best option for companies seeking reliable and affordable live agent support for new or existing campaigns, whether seasonal or long term.
Address: 2711 Centreville Road, suite 400, Wilmington, DE 19808
Telephone (US): 808.233.9206
Address2: 17th floor, harbor court, 55 merchant street, Honolulu
Telephone: (AU): 1300.269.815
For more information Visit Our website: www.Kallfly.com
Company Name: Kallfly
Contact Person: Vince Loremia
Phone: (808) 233 9206, (1300) 269 815
Address:2711 Centerville Road, Suite 400
City: Wilmington 19808
Country: United States
At a cost of $49 a month, the subscription service sends a monthly box of curated men’s surf apparel to its members in 45 states and 11 countries.
Surf Shop Box’s curated boxes include apparel from well-known surf brands like Billabong and Quiksilver, as well as products from lesser known businesses, like Drifter Surf Shop, a surf store in Bali, Indonesia.
“Surf Shop Box isn’t just for the core surfer,” Tighe told Pacific Business News. “It’s also for someone who is aspiring to live the lifestyle.”
Surf Shop Box is one of seven companies selected to participate in Honolulu-based accelerator Blue Startups’ ninth and current cohort.
What gave you the idea for Surf Shop Box?
I got turned on to the subscription model by a company called Loot Crate. It’s called the subscription box for geeks and gamers. In the early days, I was at their office and I saw how quickly they were growing. I saw that one of the reasons was they have a really passionate interest group. And surfing — people change their lives for surfing. Whether you surf or don’t, people are attached to the beach lifestyle and the vibes around it. I was intrigued by the model and looking to start something in the surf industry, so I was just looking for the right business. I saw that no one had really done the subscription model with surf. And timing was really good because surf is growing, but so is stand-up paddle boarding. So now you have a new group of customers in the middle of the country, people who paddle board in a lake or river.
How many people work for you?
One of our biggest assets is that we have a really strong team that has done it before, in both surf and in subscription commerce which is really nice. We’re small in the day-to-day. We have about three people on operations, and then we have a marketing team with nine people. Not all nine are full time, but we have nine people that work in customer acquisition, our whole email marketing ecosystem, retention. Really digging into the data. It’s a really unique business model where you can dive into those things, dive into the psychology and use that to improve your marketing, but also improve your product and how you can make the experience better for customers.
What are your top markets?
Top markets are Florida, California, Hawaii, New York and Texas. Some of the most passionate members are in the middle of the country, like Minnesota and Indiana. That’s what we wanted. We wanted to make a product for the core surfer that loves it, but also someone that loves the lifestyle and can share in it too.
How do you choose what goes in each box?
We’re starting to roll out themes in June. If you have a theme box, everyone will get the same item, but it might be different versions. For instance, we’re doing a sustainable box. Every product in the box is from a sustainable company. Everyone will get the same three items, but different versions, based upon your style preferences. We’re doing a North Shore-themed box in August, so we’re teaming up with a local surf photographer named Zak Noyle to do a limited-edition round of shirts. … When we don’t have themes, it’s based upon where our member is. If it’s the winter time, someone in New York is not going to get the same thing as a guy in Hawaii. It’s based on their geographic location and their age. Everything is curated.
What is retention like?
Our churn is really low. It’s right now been 7 percent. In subscription commerce, 10 to 15 percent is good. So we’re well below that. We’re really happy with that, especially since we’re still very early stages. … People in general, we expect to stay 12 to 28 months. Then I expect to see them take a little break and then come back. Maybe they’ll start doing a quarterly box.
Are you planning on launching a women’s box?
We are aiming to launch women’s later this summer. We got a lot of demand for it. It’s a whole separate set of inventory, so it’s not as simple as it seems. Part of the fundraising we’re doing right now is to launch women’s. Women account for over 53 percent of spending on surf apparel now. There’s less of them buying, but they’re buying more. It’s a market you can’t ignore and we want to launch it as soon as possible.
What has been the biggest challenge in starting the company?
Growing the business in a smart way. We want to be really smart about it. Obviously, it’s a very cash intensive business, you have to be very on top of how you are spending your money to acquire customers, what that reflects in inventory costs, and how long it takes to break even and start profiting on those customers.
What’s the most rewarding part of owning a business?
I’ve been able to really connect with people around the world. I’ve become friends with a lot of the guys who are members. One of them became one of our first investors. If I go to an area and I know there are members, I’ll shoot them an email and say, “Can I take you guys out for a drink?” And I’ll just pick their brain. It’s really cool when you can connect with people that you normally wouldn’t have and also see that they’re excited about what you’re doing.
What’s your marketing strategy?
It’s a very ad-driven model. We spend most of our ad budget on Facebook and Google.
How do you find new products?
That’s where Mark comes in, since he travels the world surfing. He’s been everywhere and he knows everyone and all the cool places. A lot of it comes from his experience, traveling around the world finding the coolest products.
Founder and CEO,
Surf Shop Box
We all know the San Francisco Bay Area is home to Silicon Valley, but a few cities and states around the country are trying to recreate the region’s success. In Nebraska, you have Silicon Prairie, then there’s Silicon Alley in New York City, Silicon Roundabout in London, and Silicon Beach in Venice, California. Many of these have popped up in just the past few years, and some states are beginning to realize the importance of supporting these new innovation hubs.
Among these is one of the most isolated states, geographically speaking: Hawaii. Working with the local community, the government has been pursuing efforts to establish a tech hub that is being dubbed Startup Paradise. During my last visit to Hawaii, I spoke with Governor David Ige and others about the initiative, which is meant to further diversify the Aloha State’s industries and retain its talent.
Diversifying the economy
“I’m an electrical engineer by profession, a University of Hawai’i [alumnus], and I graduated in that first boom of tech,” Governor Ige said. “When I graduated…I had 41 job offers, 40 of them were on the mainland, and they were from everyone. My first time out of state was a job interview with Intel, IBM, and Hewlett Packard in Silicon Valley. So fast forward, once I became a legislator, I was on a mission to create more job opportunities for tech people and engineers…out of five friends in my EE class, four of them went to the mainland and never came back.”
Finding a thriving tech ecosystem in Hawaii is really difficult — I tried. During my trip, I sought out people I knew to see if maybe there was a startup market that remained relatively off the radar. Though there are accelerators, such as Blue Startups and Elemental Excelerator, and innovation centers, it’s rare to see a local startup make it big in Hawaii. But efforts are now being made to change all of that.
When I graduated from the University of Hawaii (UH), working in tech didn’t seem like a viable option — the focus was on travel and hospitality at that time. And unlike Stanford, Caltech, MIT, and others, Hawaii’s universities are perhaps known for their strong international business and research programs. So how can the state offer its young tech workers and entrepreneurs a reason to remain in Hawaii and contribute to the local economy?
During his time in the legislature, Governor Ige wrote all of the state’s venture capital laws, including creating the Hawaii Strategic Development Corporation(HSDC), which is tasked with making investments to boost economic development. “When I started, we had zero venture investments in the state of Hawaii..people weren’t interested in making this kind of investment,” he said. “We’ve had great tech successes, when you look at UH and the kind of things that started and evolved here, what should have been and could have been, but there was really no environment. When you talk about the ethernet and the core, it really started at UH. AlohaNet and the Aloha Protocol was really the beginning of TCP/IP — it’s the basic underpinning of the internet. None of it comes back to Hawaii, but it definitely was started here.”
He continued, “Clearly for me, now as governor, it really is about how we can complete the environment. How can we create opportunities for people so that the electrical engineering graduate from UH today has 40 local job offers and 1 from the mainland? Because that’s really what we want. And if you look at our economy from the 30,000 feet level, the hospitality industry is number one. We started this transition in 1950 when we knew that sugars, plantation, and big agriculture growth was limited and we started to think about the next economic driver in our community.”
While Hawaii is still largely focused on tourism, some believe diversification is the key to supporting the state’s economy, and the governor subscribes to that idea: “The challenge for us is that we’ve pretty much hit that ceiling to expand, and creating more jobs in the visitor industry really places too much of a burden on the natural resources that impact the community. So what’s the next great job creator for our community? It’s about innovation.” He alluded to how payment tech company Verifone got its start in Hawaii in the 1980s before eventually settling in San Jose, Calif. “If we had the right ecosystem and they stayed here, that definitely would be a great job creator,” he said.
Starting in Hawaii but ending on the mainland
Make no mistake, there are startups in Hawaii, but there are nowhere near as many as you’d find in cities known for being technology hubs. Startups based on the islands are not necessarily concentrated on consumer applications, but are more in tune with “non-sexy” technology fields, such as energy, biotech, and medicine, areas Hawaii is known for.
But, as the governor said, talent is escaping the islands and as people leave, so do the startups. To counter this trend, Hawaii is working to aggregate enough venture capital to incentivize entrepreneurs to stay. Last year, Governor Ige proposed that there should be consistent state investment in private equity and risk capital. He wants to have the HSDC work alongside accelerators and venture funds to invest in projects.
“Yes, it’s a big challenge,” he acknowledged. “I do think it’s about creating an ecosystem…I think it’s about creating an environment. I really do believe it’s a state of mind. People leave because they believe they have a better shot at being successful by going. I think it’s really about getting the startups here and it really takes just one that really commits to staying here. We have a couple of serial entrepreneurs that are committed to Hawaii. To me, that’s just as important as getting the equity. I mean, you want those business owners and entrepreneurs to be invested in Hawaii and really want to have their headquarters here.”
Some of the people I spoke with described a less-than-ideal venture capital environment and said that local investors tended to be gun-shy about putting money in unless they can get a mainland firm like Kleiner Perkins Caufield & Byers, Sequoia Capital, or Andreessen Horowitz to participate.
“It’s on us to show the world that we can create that quality, competitive company here. We have to create enough companies [in Hawaii] that a VC will see a pattern or trend,” said Chenoa Farnsworth, the managing director of Blue Startups, one of the more active startup accelerators in the state.
Governor Ige remains optimistic: “I do think that it’s a matter of mindset and if we can nurture enough of these startups and get them to the brink — and it’s really about getting one group of entrepreneurs who said that ‘we’re going to plant our flag in Hawaii’. And when they’re successful, other successes will follow.”
It’s about execution
Diversifying a state’s economy and moving forward with innovative technologies is definitely easier said than done, as the state has had at least one major stumble in recent history. In 2016, a Maui-based technology fund for early-stage startups, called Mbloom, was shuttered amid allegations that one of the investors engaged in securities fraud and that the fund’s initial investments were rife with conflicts of interest. The other major investment party to this was the state, and HSDC moved swiftly to terminate the venture, especially since it was supported by taxpayer money.
Hawaii did offer startups tax breaks for doing business in the state some years back, through a law called Act 221. But it was not renewed due to concerns about whether it was really effective. Governor Ige voted in favor of Act 221 when he was a legislator and has previously stated that he believes it was a good law that needed a few tweaks:
“Act 221 could be executed better. When we passed the law, we provided tremendous flexibility to the executive. We had a very broad definition, and we enabled the executive to implement. I believe that part of the challenges and the controversy truly was a result of poor decision-making on execution,” he explained.
While in his first term as the state’s chief executive, the governor has also proposed establishing a $30 million innovation fund, setting aside money from corporate tax revenues over six years to support startups. First announced in his 2016 State of the State address, Governor Ige revealed that he had submitted legislation that would take $5 million each year for five consecutive years. The money would go into a strategic fund that would be co-invested with a private provider.
“What we’re trying to do is commit a steady flow of income that would allow [the fund investors] to begin to program and set up relationships so they can create a sustained kind of investment pool,” he explained. “It would be $30 million over the next six years that they can count on. I’m pretty confident that in six years, we’ll be able to prove success, that we’ll be able to convince the other legislators to…make bigger investments.”
During this year’s State of the State address, Governor Ige touted the impact of innovation, announcing that 145 startups have gone through six accelerator programs, receiving $10 million in venture capital and generating more than $250 million in total capital. “That’s why the budget includes additional funds for the Hi Growth program,” he said in prepared remarks.
While the state executive and community organizations are behind this diversification effort, how does the general public feel about their taxes being used to boost tech companies? Governor Ige is bullish, telling VentureBeat, “I think that many of us who are residents see the same challenges. Our economy is doing great. Our unemployment is among the lowest in the country. The hospitality industry generates a lot of jobs, but they are living wage jobs. If you look at the median home price at $700,000, a lot of those jobs generated by the visitor industry would [make it] tough to be able to live here.”
As for the business community, he said: “I think they get it. I have three children and they’re all in school. What decisions do we make today to give them the best opportunity to call Hawaii home, to be able to have them graduate and find a challenging and enticing job opportunity in Hawaii that pays them a living wage and allows them to purchase a home so they can choose to call Hawaii home? I think for me, and many of those in our community, it really is about how we can create these opportunities.”
What Governor Ige, Farnsworth, and others in Hawaii are attempting isn’t new — others in the state have tried to establish a startup community of sorts. In 2012, the governor’s predecessor, Neil Abercrombie, signed into law HB2319, which would appropriate $2 million for a venture accelerator funding program. It was under Abercrombie that the aforementioned Hi Growth program, a state-sanctioned program to engage with the private sector, was created.
In 2013, then-Governor Abercrombie proposed providing $20 million in funding to focus on “the critical building blocks of research commercialization, entrepreneur mentoring, and the mobilization of startup investment capital.”
But while efforts have been made before now, the question is what it will take to make a real dent on the startup ecosystem.
In search of a startup paradise
“I’ve lived [innovation] and kind of understand how it works. I see the ups and downs in it,” Governor Ige said. “I understand how when it’s other people making investment, it’s about the money. So how do we create private equity and risk capital in Hawaii that believes in Hawaii?”
“It’s so funny how at one point in time, green companies were an outlier. People thought: ‘Who cares if your policies are green or if your company takes care of itself?’ Today, you can’t be a successful company if you’re not green,” he continued. “What we’re looking to create are companies that are truly doing the right things in the right way in every step of the way. These are the kind of companies that we want to build.”
To attract talent, startups, and investors, Governor Ige is backing the Startup Paradise initiative that was put forth by the local community and HSDC. As the name suggests, Hawaii believes that its real appeal lies in its being…well, Hawaii. The program also focuses on technological innovation, job growth, and economic strategies aimed at helping the state rival the tech hubs in other markets.
As of 2016, it was reported that 60 percent of the 145 startups participating in the program were based in Hawaii, and 78 percent of those are still operational. Nearly 40 percent of those participating in Startup Paradise are involved in software services, while 32 percent are in energy technology. The remaining startups deal with media (11 percent), hardware (6 percent), agriculture (6 percent), and life science or health care (5 percent).
“Most people think that they can start [in Hawaii], but if I really want to make it, I got to go [to Silicon Valley]. It’s really about creating the support structure so that [entrepreneurs] have the capacity to choose to stay here,” Governor Ige explained. “Once we can get the one or two breakthroughs, then I think it’ll be like a dam bursting. People, given the choice, will want to live in Hawaii. If their business can be successful, they’ll choose here.”
He doesn’t think Silicon Valley should have a monopoly on startups. “Nothing can be harder than Silicon Valley. Hawaii is a piece of cake compared to Silicon Valley, but Silicon Valley thrives. Why is that? It’s about the people. It’s about the human resource in the innovation economy that’s the most important resource.”
“I believe our environment gives us a competitive advantage because that human resource wants to be in Hawaii,” Governor Ige said, echoing statements that have been previously reported. “It’s about really changing the paradigm for our young entrepreneurs to show that, yes indeed, it can happen in Hawaii. And we’re going to create that ecosystem that supports them and that we’re going to be working really hard to make sure that they have a pathway if they want to start a company in Hawaii, that we’re going to provide them support they need to get the second, third, or fourth round [of funding] and that big expansion,” he said.
Major stakeholders concede that this is a long-term endeavor and that the current ecosystem is young, but they also see that it is growing and has potential. “Communities and cultures are not built overnight, and startup communities are no exception,” explained Dawn Lippert, a director at Elemental Excelerator, in a 2014 interview.
Rather than going head-to-head with every other technology hub around the world, Hawaii is opting to focus on a select group of clusters, areas where the state holds a competitive advantage. The state has pledged to support 100 percent renewable energy, ethnic and cultural diversity, biomedical and pharmaceutical research, Hawaii’s cancer center, and hospitality and tourism.
Is Governor Ige worried about any negative impact of innovation, such as gentrification and people being priced out of their home, things that have plagued cities such as San Francisco? He acknowledges the risk, but said: “It’s about changing the trajectory of Hawaii: What is it that we want? We want to support the innovators and creators that are committed to what’s special about Hawaii. It’s really about the integration of the host culture…celebrating diversity. I believe that Hawaii is the best place to raise kids and a family, bar none. So how do we keep it going?”
As part of that vision, the governor is in favor of disruptive technologies, even those that have run afoul of regulators, such as Uber and Airbnb:
“Uber is successful and the traditional business guys want to shut them down because their platform, their technology, and business model is so different from the existing. But the flip side is that their business models respond exactly to the concerns that the traditional business lived with and built…”
“So yes, it is disruptive,” he said, “and yes, we don’t want to clamp down and regulate them in the traditional sense. So how do we create an environment that is flexible? From a government side, that’s a challenge for us. I’ve challenged my cabinet to reinvent government to be flexible and innovate itself. How do we make sure that we don’t apply the same old regulatory tendencies onto these new areas? I’m not exactly certain, but I’ve encouraged the cabinet to think outside the box and encourage employees to not be close-minded and to think differently. I’m committed.”
As governor, Ige has also vetoed a bill that required online lodging services such as Airbnb to collect state and local taxes.
“It’s really about creating a vibrant innovation economy so that we can have the investment capital and we can find and grow the innovators here in our community that understand what it means to be in Hawaii, why it’s special, and why we have to take care of the environment, be respectful, and to celebrate the host culture, and celebrate our differences…Once we’ve gotten that first success, the rest of that will happen,” he said.
Having graduating the 500 Startups accelerator only a handful of months prior, I didn’t feel especially qualified to speak to members of another accelerator. My job as Founder CEO however, is to gladly accept such opportunities. So I showed up early and went to work. Paubox is on network time.
I was asked to talk about:
- B2B Sales.
I admittedly went off course and also discussed:
- “Behind the Cloud: The Untold Story of How Salesforce.com Went from Idea to Billion-Dollar Company-and Revolutionized an Industry” by Marc Benioff.
- “From Impossible to Inevitable” by Jason Lemkin and Aaron Ross.
- Creative ways to pump up your team.
- The true purpose of Social Mixers.
- Our homies at Clearscope.
- Leveraging Growbots to build out Outbound sales.
- The power of annual billing for a SaaS startup.
I am thankful to have been given the opportunity to talk story at Blue Startups!
About Blue Startups
Blue Startups is focused on recruiting capital efficient and scalable technology companies. This would include web, software, and mobile startups.
They recruit from Hawaii, Asia and North America. In addition, Blue Startups targets companies in certain sectors:
- Travel technology
- B2B solutions.
Lastly, they are keenly interested in companies addressing both East and West markets.
About Hoala Greevy
Sara Lin of the Hawaii Strategic Development Corporation wrote an article on Hawaii’s growing startup ecosystem, featuring Blue Startups alumni aXessPoint (formerly The Condo App) and Smart Yields, that describes the importance of having strong entrepreneurial actors to attract entrepreneurs.
In the startup community we talk about “the ecosystem” because it’s what attracts entrepreneurs. Accelerators, investment funds and co-working spaces are all critical pieces that help entrepreneurs hit the ground running.
Blue Startups just announced the seven startups that will participate in its ninth cohort.
Hawaii’s Blue Startups hopes a new partnership with a Japanese accelerator will encourage entrepreneurs in the Asian country to submit applications to join one of its future cohorts.
The Honolulu-based accelerator, which just announced the seven startups that will participate in its ninth cohort, said a partnership with 01Booster will hopefully result in Japanese companies applying for and completed its program.
“Japan is a unique market, it’s pretty focused on Japan as opposed to globally,” said Chenoa Farnsworth, managing partner for Blue Startups. “We’ve received applications from other Asian countries like Korea and Singapore, China and the Philippines, but Japan hasn’t really jumped in the global startup scene in a big way. We’re hoping we can help them reach that.”
Like most accelerators in Japan, Farnsworth said 01Booster is backed by corporations.
“What we’re talking to them about is probably doing some joint programming in the fall, specifically for Japanese entrepreneurs and Japanese intrapreneurs.”
Farnsworth said the accelerator is looking at holding a weeklong program at Blue Startups’ Honolulu headquarters that would instruct Japanese startups on about how to do business in the U.S. and how to market to U.S. customers.
“We’re trying to leverage our expertise and really target different foreign markets with specific programs for them,” Farnsworth said.
Farnsworth said the partnership will be mutually beneficial, with 01Booster also offering its expertise to Blue Startups companies that want to expand into Japan.
Farnsworth said 01Booster will also help promote Blue Startups through its corporate partners.
Pacific Business News
Ask Me Anything!
Can’t make it in person? Join our Managing Partner Chenoa Farnsworth on a webcast to learn more about our program and applying for Cohort #9!
When: February 21, Tuesday 10:00AM HST
She will do a short presentation about Blue Startups and answer any of your questions.
Three years ago, when the state-run HI Growth Initiative — created to attract private investment to Hawaii’s innovation sector — began to take shape, so did Blue Startups, a Honolulu-based startup support program.
The two are now teaming up to host the third East Meets West Conference, which will assemble scores of entrepreneurs and investors from Hawaii, Asia and North America in Honolulu next month. An opening party slated for Jan. 18 will be open to the public.
“There has never been a better time to start a company in Hawaii than right now because there are so many resources for that early-stage company to get off the ground,” said Chenoa Farnsworth, a managing partner at Blue Startups, which was
founded by Henk Rogers of Blue Planet Software and Tetris video game fame.
Farnsworth first lived in Hawaii as a teenager. After leaving for college on the mainland and a subsequent Washington, D.C.-based career in health policy issues, she moved back to pursue an MBA, and in 1999 — at the height of the dot-com boom — quickly immersed herself in the fledgling local technology sector.
“I got fascinated with the whole thing,” she said of her ongoing work with startup
business strategy and private equity investing.
After weathering the dot-com bust — followed in the islands by a slow-and-steady regrowth led by co-working spaces, incubators and accelerators — Farnsworth is encouraged by Gov. David Ige’s recent push to earmark $10 million in his proposed state budget for HI Growth’s continued support of public-private partnerships. With the initiative’s help, she said, Blue Startups has so far invested in 60 companies that have raised $60 million and created 200 jobs.
Question: You have said that the innovation sector holds the key to our future in Hawaii. How’s that?
Answer: While the tourism sector is strong, it cannot keep up with our growth requirements. We want to create more high-paying “knowledge worker” jobs. Really, the only solution … is innovation and technology. It is very low-impact in terms of the environment and very high-impact in terms of the pay that we can expect from that industry and also the level of interest among young people.
Q: Blue Startups describes itself as a “thriving early-stage entrepreneurial ecosystem.” How does an aspiring entrepreneur gain entrance to your program, or ecosystem? Is a good idea enough?
A: It’s competitive. So, yes, you need a good idea. More importantly, with the companies we work with, you need a good team. Initially, that’s what we look at most. Is this a team that can execute on this business plan? … We get to know the team and understand their strengths and whether they’ve got what it takes.
Our accelerator program is a little bit like an MBA on steroids. It’s 14 weeks of intensive learning. We take them through everything from how to incorporate to how to get funded and market your product. We provide space, services and funding.
Q: Who’s knocking at the entrepreneurial door these days?
A: We’re seeing a diverse group of people coming through Blue Startups. In general, we’re seeing a cultural shift in Hawaii with this new generation of young people. I do think that back in the day, so to speak, there was more reticence to go out on your own. That was not a culturally acceptable path. … You’d want to go work for the government or get a stable job. Now our young people are seeing entrepreneurship as a path. And I think what’s so hopeful about that is entrepreneurs and new companies create new jobs.
Q: If state lawmakers go ahead and allocate $10 million for HI Growth, how would the money be spent?
A: It would really go to a doubling down on efforts already underway. Now is the time to stay the course. … In other cities around the country that have really put an effort into building this type of sector, it takes about 20 years of concerted effort. … If we continue on this path, we will get there. I have no doubt about that.
Q: What are those efforts already in place?
A: There are three. One is supporting early-stage mentorship programs like Blue Startups. There are several of them, and all of those funds are matched by private dollars. … In order to get that money, we have to raise private funding. Then it’s just leveraged by the state funding. Also, some of that HI Growth money goes to match private investor money in early-stage venture capital funds. The third (effort) supports events throughout the community that bring investors and companies together. The networking activities are key to building an ecosystem. We need all of those parties, so to speak, to bring people together so that they can meet, mix, mingle, start companies, start conversations that end up, hopefully, in deals getting done.
Q: That’s what the East Meets West conference aims to do?
A: Yes. We’re showcasing, basically to the world, that Hawaii has startups, Hawaii can compete. Hawaii can be known for something other than beaches and palm trees. We’re bringing in investors from Asia and the mainland (managing a total of more than $1 billion) and are showing them what we have. Every time we do that — this is our third year — it really opens a lot of eyes.
Q: What do the visiting investors find most eye-opening?
A: The quality of our companies. I think there’s an assumption: “Oh, well, they might have startups out there but they’re probably not competitive.” And that’s not true. So many investors are now coming back because they have found good companies here that they’ve invested in and want to get access to that deal-flow again.
Q: What do you say to the complaint that Hawaii startups with big potential eventually take off for the mainland to tap the vast resources there?
A: That is totally true in a sense. We are a small economy. There’s 1.4 million people here. If we took a company that was based here and said: “You have to stay here,” it’s like tying a hand behind their back. So I think it’s really about re-framing what is happening. And the way I put it is: “Good news our companies are expanding.” Most of them stay here, too. They have offices here, they’re employing people here. But, yes, they are growing and opening offices in San Francisco or Hong Kong. I’m celebrating those successes.
For example, Volta Charging started here. Their electric-car charging stations are at Kahala and Ala Moana malls. They have staff here who service clients (on Oahu and Maui). They also have an office in San Francisco (and charging stations there as well as in Los Angeles, San Diego, Phoenix and Chicago).
Q: When Blue Startups opened, it focused on internet, software, mobile, gaming and e-commerce. Is that lineup changing?
A: Our first priority is to serve the local market. Whatever our local, smart entrepreneurs are coming up with, that’s what we want to fund. Priority No. 2 is looking at companies outside of our local market that we think we can serve. In other words, we have strategic advantage in helping them — primarily that’s in that East-meets-West thesis. It is companies from Asia that are trying to get into U.S. markets, and U.S. companies wanting to enter Asian markets. We’re looking for that confluence.
The more those two worlds become closer together from a business perspective … it’s important for Hawaii to plant a flag and say: “We’re open for business. We can serve both markets.”
Q: What sorts of new technologies or related industries do you see on the horizon?
A: We’re excited about eSports — competitive video-gaming for money. That’s an industry that’s on a very rapid trajectory. Straight up. … There are teams that are funded and sponsored and go through training just like an NBA team, but it’s to play head-to-head video games in stadiums. The future of that industry is expected to be huge.
We have a couple of companies in that space. One that collects data analytics from the best players and sells it to the novice players.
Q: Looking back on your tenure of nearly two decades in business here, how has the local innovation sector changed over the years?
A: We’re getting smarter about what Hawaii can bring to the party. We’re not going to be the next Silicon Valley. I think it’s really important for us to understand that and stop comparing ourselves and thinking that formula is going to work for us. … We’re unique. We are finding out what works for us now. That vision has to be aligned with who we are and what we believe in as a community.