April 2006
5 Hot Startups
An inside look at the big ideas that launched five breakout companies
By Martha Collins
Real estate developers Shawn Samson and Jack Kashani set out to build a retail furniture mart in Las Vegas and ended up orchestrating the largest trade show launch in U. S. history.
After seeing the furniture marts in North Carolina, Samson and Kashani came up with the idea of building the World Market Center, a Las Vegas retail complex. “As they got to know executives from some of the major home furnishings companies, it was suggested to them that they should be looking at the wholesale side of things because there was a need for a West coast market, and Las Vegas is arguably one of the best trade show communities in the world,” says Dave Palmer, General Manager, World Market Center.
Samson and Kashani had decades of experience developing and managing large-scale properties, but no trade show experience. So while they worked on building the World Market Center on 57 acres, they hired Palmer to work on producing the Las Vegas Market on the center’s property. Palmer’s experience includes stints at both the San Francisco Mart and the Chicago Merchandise Mart.
To many industry insiders, it looked like an uphill battle. The High Point International Home Furnishings Market in North Carolina had been so successful for so long that many in the industry were skeptical that a new show had much potential for success, especially in that it was scheduled to open at the hottest time of the year in Las Vegas.
As it turned out, the July 2005 Las Vegas Market at World Market Center exceeded everyone’s expectations, attracting more than 60,000 attendees from 83 countries, and showcasing 1,250 exhibiting companies (161 international) in 2.5 million square feet of permanent and temporary exhibit space. The winter market that followed in January 2006 was nearly as large.
EXPO interviewed Palmer and executives from four other startups to learn what it takes to launch a successful show management company.
Some of them had trade show experience, some did not. Three funded their startup companies entirely out of their own pockets, one negotiated a $185-million management buyout of several divisions of a major show management company, and one was financed as part of a real estate development deal.
They all agree that passion, drive, creativity and innovation are critical to success. Good timing also helps, as does an eye for a good opportunity, an unmet need, or a new market niche.
Martha Collins is an Austin, TX-based freelance business writer and editor who has covered medical meetings and trade shows since 1993. She has edited three meeting industry textbooks.
Las Vegas, NV
www.lasvegasmarket.com
Show: The July 2005 Las Vegas Market at World Market Center was the largest trade show launch in U.S. history — more than 60,000 attendees from 83 countries and 1,200 exhibiting companies (161 international) in 2.5 million square feet of permanent and temporary exhibit space.
Founders: Managing partners Shawn Samson and Jack Kashani had each developed large-scale commercial properties, but had no furniture industry or trade show experience.
Big idea: Develop an 8-building, 12-million-square-foot World Market Center — the largest home furnishings showroom complex in the Western United States — on 57 acres in Las Vegas.
Samson and Kashani soon learned that home furnishings companies wanted a trade show in Las Vegas, says Dave Palmer, General Manager, World Market Center. So in addition to the first building of permanent year-round showrooms, they constructed three pavilions on the property (at a total of 350,000 square feet, they’re the world’s largest tents, according to Guinness World Records), contracted with the Las Vegas Convention Center for additional space for a 2005 summer market, and the Mandalay Bay Convention Center for a 2006 winter market.
“Eventually we’ll have all the space we need on our own property,” says Palmer.
Funding: Samson and Kashani started construction in 2003, and in 2004 formed a partnership with The Related Cos., LP, a New York-based real estate firm. The partnership secured a $191 million loan to complete Phase One construction.
Strategy: Form a 20-member exhibitor advisory board of furniture industry heavy hitters, listen to their ideas and keep them informed about every aspect of the project. “They know everyone in the industry, so they created an enormous buzz for the market,” says Palmer.
Lessons Learned: Transportation, food service and registration were stretched to the limit for the first market, so next time they increased the number of shuttle buses from 70 to 100, added many more food stations and doubled the size of the registration tent.
Startup Tip: Hire for success. Hire really good people and pay them what they’re worth, advises Dave Palmer General Manager, World Market Center. “Expertise is important, but so is passion. Will they be passionate about your show?”
Las Vegas, NV
www.worldteaexpo.com
Show: Since it was launched in 2003, the World Tea Expo has tripled in size to more than 3,000 attendees and 200 exhibitors in over 20,000 square feet of space.
Founder: George Jage is President of the SFG Group, which produces World Tea Expo. His previous trade show experience included helping launch and manage two apparel shows. He also owned an import furniture business and a property holding company.
Big idea: Provide a centralized source of information and resources for the tea industry via the nation’s first trade show dedicated exclusively to tea.
Funding: Jage is the sole owner. He founded SFG in 2003 with two partners, then bought them out in 2005.
Strategy: Talk to potential exhibitors face-to-face, ask whom they’d like to see at a show, enlist the Tea Association as a marquee sponsor, and launch the Take Me 2 Tea Expo in 2003. “In 2005, we re-branded it as the World Tea Expo to more accurately reflect its growth, scope and position in the international tea industry,” he says.
Lesson Learned: After the first show in March 2003, SFG tried to capture a broader audience in 2004 by holding two events, a West coast show in Las Vegas in March (which doubled in size from 2003) and an East coast show in Providence, RI, in September.
“While the 2004 East Coast show was comparable in size to the first Las Vegas show in 2003, people were disappointed because they’d expected it to be as big as the 2004 Las Vegas show,” says Jage. “Exhibitor and attendee surveys revealed an overwhelming consensus for having one show but rotating it around the country.” 2006 and 2007 were already scheduled for Las Vegas; 2008 will be in Atlanta.
With the $6.8 billion tea industry expected to grow to $10 billion by 2010, according to Sage Group International’s “Tea is ‘Hot’ Report, 6th Edition,” there will be other opportunities to extend the show’s brand, says Jage.
Startup Tip:Sell exhibitors in person. “When you’re launching a new show and trying to establish a reputation in a new industry, build rapport by traveling to meet your potential exhibitors face to face,” says George Jage, President, SFG Group, World Tea Expo.
Los Angeles, CA
www.hdexpo.net
Shows: HD EXPO in Los Angeles in March and November (averaging 4,500 attendees and 100 exhibitors each), and in Chicago in May (2,500–3,000 attendees and 50 exhibitors), plus 20 international workshops.
Founder: Kristen Petrovich, CEO, the third generation of her family to work in the entertainment industry, says: “I’ve done everything in the area of television production, so I understand the issues and needs of the industry.” She had no trade show experience prior to launching HD EXPO.
Big idea: “I saw high-definition television for the first time at NAB and realized it was going to change the entire complexion of this industry. I wanted to be on the cutting edge of that transition,” says Petrovich. “There weren’t any organizations or communities being built around addressing the issues of creating HD. And I knew the industry well enough to understand the core issues and the education that was needed to make HD happen.”
Funding: Petrovich is sole owner. While HD EXPO may have started in the office of her marketing firm, KMP & Associates, “it made money right from the first show in 2001, and HD EXPO is a separate corporation,” she says.
Strategy: Promote the adoption and growth of high-definition and future technologies by building a community of experts and users through shared knowledge, experience and education. “I approached it logically: If I was a producer who was going to make a transition into HD, what would I need to know? Who could tell me? Who’s the best at it? Who’s been doing it the longest? Who’s made the mistakes and is willing to talk about them? Then, I contacted those people,” says Petrovich.
Lesson Learned: Community-building is essential to success. “We deliver information and resources to the HD community through trade shows, conferences, e-newsletters and our Web site. Since 2003, we’ve developed a database of 30,000 names, and in all that time only 200 people have opted out,” she says.
Startup Tip: Take a fresh approach. “Our attendees and exhibitors are in the entertainment industry, so instead of convention centers, we hold our events in venues that are familiar and comfortable for them — studios, sound stages, theaters,” says Kristen Petrovich, CEO, HD EXPO.
Los Angeles, CA
www.ihollywoodforum.com
Shows: 16 one- and two-day conferences, including Music 2.0; Digital Living Room; Digital Media Summit; Mobile Entertainment Summit; Impact! Mobile Marketing and Advertising; MoTV–Mobile TV and Video at NAB; IPTV World at NAB; and Next Gen and Mobile Games Forum. Most are held more than once a year. They average 300–500 attendees and a product showcase with 20–35 tabletop exhibitors. The largest has 75 exhibitors.
Founders: Zahava Stroud, President, and Michael Stroud, CEO. Zahava was a trial lawyer for 20 years. Michael has been a business journalist for 25 years, covering technology, entertainment, broadcasting, cable and the wireless industry. He handles programming, she manages business development, operations and marketing. They had no previous trade show experience.
Big idea: “In covering conferences and events, Michael heard all about how technology was transforming Hollywood,” says Zahava. “We realized that Hollywood’s traditional business models would be challenged by new Internet technologies, so we decided to start a series of dinner meetings to educate entertainment and technology executives about these new media issues.”
Strategy: In November 2000, they rented a hotel meeting room, enlisted a few experts to speak, then sent e-mail invitations to the 300 people in Michael’s contact file. “We were shocked that about 400 people showed up for that first event,” says Zahava. After conducting several more dinner meetings over the next six months, they expanded to offer one- and two-day conferences.
“The hallmarks of our brand are outstanding educational programming, great food, and the opportunity to do business deals with the industry’s top executives,” she says.
Funding: The Strouds did everything themselves the first year, setting up an office in the basement apartment of their Los Angeles home. The next year they moved to a business office where they now have 11 full-time employees and a database of 380,000 contacts. “Every event we’ve done has been profitable,” says Zahava.
Lesson Learned: “Early on some strategic partners for whom we created a market tried to steal our concept and do it on their own or with other partners,” says Zahava. “So now we’re very cautious about writing protections into our contracts.”
Startup Tip: Choose great strategic partners. “Our best partners are the trade media and trade organizations. We give them a presence at our events and they give us added visibility and credibility,” says Zahava Stroud, President, iHollywoodForums.
Newton, MA
www.questex.com
Shows: 25 conferences and trade shows in North America, South America, Asia and Europe, 23 trade magazines, 50 Web sites. Upcoming show launches: Incentive Travel Exchange, June 26–28 2006, Las Vegas; ECM (enterprise content management) West Conference & Expo, November 7–9, 2006, San Jose, CA.
Founder: Kerry Gumas, President and CEO, led the formation of Questex in May 2005, via a management buyout of several divisions of Advanstar Communications. Gumas has 26 years experience in trade show management and B-to-B media, including six years leading Advanstar’s Information Technology & Communications Group.
How it started: During a strategic review process, Advanstar identified a range of growth opportunities across all its markets — more opportunities than one company could pursue. So the best plan was to form two separate companies, explains Gumas.
He led negotiations for a management buyout of several Advanstar divisions with the goal of then using the operating capital to start growing the new company, Questex, by taking advantage of opportunities identified during the strategic review. The deal, worth $185 million, included Advanstar’s Information Technology & Communications, Travel & Hospitality, Beauty, Home Entertainment, Abilities and Portfolio groups.
Funding: “We have a mix of funding from the management team, plus the Audex Group, an investment firm which is by far the leading equity holder,” says Gumas.
Strategy: Build infrastructure and establish systems to support the new company. Then, gradually expand into each industry served by offering clients an integrated marketing campaign that incorporates trade show, magazine and digital marketing opportunities as a means of building a community of customers and developing a database of prospects that they can do business with.
Lesson Learned: When a company starts out big, it’s tempting to do a lot of things quickly, says Gumas. “But it’s important to try not to do too much too fast—to instead focus on doing a few things really well.”
Startup Tip: Think outside the box. “Listen to your customers and don’t be afraid of ideas that seem different or outlandish — they could help you position yourself differently. Both of our new shows came from just such ideas,” says Kerry Gumas, President and CEO, Questex Media Group.
Find additional, exclusive Web-only content, including:
• 5 more tips for startups
1. Budget for success. “I spent nearly 40 percent of my startup capital on attendee marketing. We were going into the show as complete unknowns in the tea industry, so I knew we had to commit a significant amount,” says Jage.
2. Know your exhibitors. “Do everything you can to understand and anticipate your exhibitors’ needs and think about the best way to showcase their products,” says Petrovich.
3. Engage the trade press. “It’s critical to a show’s success to get the trade press involved. Develop relationships with reporters and understand their needs,” says Palmer.
4. Offer the best possible program. “We spend a lot of time interviewing speakers to make sure we get the best, most lively and provocative speakers and topics on our panels,” says Stroud.
5. Consider private equity. “Think about teaming up with a private equity company. There’s an enormous amount of capital in private equity companies and they find our business-to-business media industry quite attractive,” says Gumas.
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