These Start-ups Are Hot! Hot! Hot!

"There are 25 different ways to generate wealth, and a surefire way to fail is to focus on all of them at one time. One of the things we've done is be very true and consistent to our strategy from the outset," says Joe Beninati, founder, chairman and CEO of GTP, which filed for its IPO on April 13. "We stayed very focused on infrastructure and networks. Partnerships have been essential to us. They've ranged from small companies to large ones like Cisco, Citrix and Juniper."

Good partnerships don't stop with vendors. Greenwich created a board of directors that Beninati says "looks like that of a Fortune 500 company with CEOs and former CEOs of Fortune 1000 companies."

GotMarketing.com, a service provider that launched last fall to deliver automated Web-based marketing services, formed an advisory board that includes musician Sheryl Crow, a former vice president of America Online Inc. and industry pundit Esther Dyson. Board members lend expertise and credibility, serving as a source of business contacts and publicity.

The Name And the Pain
GotMarketing.com co-founder Lynda Partner says finding a good name was also key for her company. It came hot on the heels of establishing the business mission, as did finding related domain names. "We registered another 120 names that all started with the word 'got',everything from GotAdvertising to GotEverything, and even GotMoney," she says.

Research to focus the business strategies closely followed. "We had good contacts and interviewed dozens and dozens of people, asking them what their pain was when it came to implementing a good marketing program," Partner says. "We came up with the top four pain-causing ideas and started implementing solutions for those four areas first."

The Critical Loop
Thomas R. Graunke, president and founder of Scottsdale, Ariz.-based KnowledgeNet, which launched last year, and GTP's Beninati are members of a growing collective of entrepreneurs embarking on their second or third start-ups, a group Beninati calls "second or third offenders." They had enough capital from selling previous enterprises to get KnowledgeNet and GTP past the incubation stage with their own funds.

Beninati was a leader in the acquisition of Telos, a technology services government contractor, from GTE Corp. in 1992. He became its CFO and later its chairman. That platform gave him the capital to co-found Antares Investment Partners, which made the seed investment in GTP.

Graunke had already built and sold Mastering Computers, an instructor-led training organization in Scottsdale. He used the $225 million from that sale as seed money for KnowledgeNet.

Attracting capital and key employees is a cyclical process: Having key employees in place is crucial to attracting investors to a start-up; having venture capital backing and the promise of an IPO is a selling point in luring key employees.

GotMarketing.com's Partner and her co-founder, Teri Dahlbeck, had little more than a business plan, some potential employees and a PowerPoint presentation when they started. With few financial resources, they used the power of their idea and the promise of equity,not salaries,to hire a start-up team.

"We didn't get our initial funding until three months after we recruited people to start working," Partner says.

Besides giving everyone a piece of the company, GotMarketing.com required every initial employee to bring in an angel investor. "The bottom line was that everybody put their reputations on the line for this company," Partner says.

KnowledgeNet went a different route. "We hired the entire management team first," Graunke says.

Impressed by KnowledgeNet's structure, Silicon Valley venture capitalists also liked the depth of its management team, Graunke says. Having the team in place helped the company secure solid financial backing and to grow from five to 275 employees in 12 months. But, "it was a very expensive proposition when you add up all those salaries and you have no revenue coming in," Graunke says.

Do Or Die
Most start-ups in today's economy need to grow explosively or die.

KnowledgeNet was so anxious to build momentum that it didn't even wait for its equipment to arrive to get started. Employees brought home computers, some of which belonged to their children, into a shared office.

But all three companies can boast strategies to lure dedicated employees that ran apace with their growth rates.

"Our people are our product," says Beninati. "If you don't take care of them, you end up not growing your business."

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