Startups reverse course, try lower-tech approach

Entrepreneur Todd Woloson displays his new sparkling-juice product, Izze. The startup company is operated out of his office in downtown Boulder, and the drink is bottled in Minnesota.

Todd Woloson once doled out cash to Internet startups because he believed they would change the world.

By Jennifer Beauprez
Denver Post Business Writer

Today, with the tech boom behind him, the former venture capitalist is taking a ride on the other side of the money equation, as an entrepreneur.

Again, he wants to change the world, but this time he plans to do it the low-tech way – with a healthy fruit juice-based soda called Izze.

"A beverage company is fairly out of left field," the 35-year-old Woloson admitted. For six years, he was a partner with Canyon Capital, which invested in tech firms including MessageMedia and PlanetOutdoors.com

Yet Woloson’s career shift from software to soft drink underscores the changing face of today’s startups.

Unlike the tech firms that he once nurtured, Woloson’s new company, Izze Beverage Co., does not have high-powered financiers.

It is armed with just $250,000 from friends and family, rather than millions from venture firms.

And rather than being first to market, Izze is charting a course into a mature industry, competing against the likes of Coca-Cola and Pepsi for space on store shelves.

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STARTUP BASECAMP

Todd Woloson will speak today at 10:30 a.m. at Startup Basecamp, a seminar that offers tips for startup companies. The event, sponsored by the Mayor’s Office of Economic Development at the Marriott City Center downtown, is from 8 a.m. to 3:30 p.m. Cost at the door: $150.

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Startups such as Izze must employ bare-bones budgeting and guerrilla marketing to survive. And they’re not all high-tech.

More entrepreneurs are looking outside software, computer storage and the Internet when starting businesses, said David Secunda, an entrepreneur looking to start a company for Mobius Ventures, a venture capital firm in Superior. He said he talked to an entrepreneur just the other day who was hatching a plan for a manufacturing company.

"It’s brutal out there," Secunda said. "It’s so hard to get (tech) deals done that are new. So it may be a breath of fresh air to step out of tech for a while."

A broader swath of startups will show today at the annual Startup Basecamp seminar in downtown Denver. The seminar started three years ago to help dot-coms get venture capital financing.

But today, the conference caters to both tech and nontech companies, and offers not just financing help but tips on how to pick up an operation from the bootstraps.

Venture capital is a different game than when Woloson played – investments in Colorado companies are nearly half of what they were a year ago.

"They are all going back to the bare-bones approach to business, and they’re not glamorized by the venture capitalists," said Mary Beth Vaught, a specialist with the Mayor’s Office of Economic Development, which sponsors Startup Basecamp.

Woloson will share his low-cost guerrilla marketing tricks to get inside consumers’ heads.

"How do you build a brand without any money?" Woloson asked. His answer: "You’ve got to appeal to a passionate side of consumers, reach them in a more unique and serendipitous way."

For instance, Izze will offer samples in salons and spas.

A former in-house attorney for a software firm, Woloson doesn’t have expertise in marketing. But as an investor, he has met plenty of people with that knowledge.

Nor is his expertise in natural foods. But an amateur chef with a penchant for health food, Woloson saw an opportunity that no longer existed in high-tech.

"The natural-foods industry reminded me of what drew me to the Internet, which was this group of people who wanted to make the world a better place," he said.

Frustrated that there were few healthful sodas without artificial colors or flavorings, he got an idea when chatting with friend Greg Stroh in the middle of a parking lot.

Stroh, whose great-great-grandfather started Stroh’s Brewing Co. in Detroit, talked about importing a European-style juice drink to the United States.

But the plan to import the juice would be costly, and neither Stroh nor Woloson were committed to those products sold overseas.

"So Todd said, ‘Let’s do it ourselves,"’ Stroh said.

Two weeks later, they were touring a "flavor house" in Cincinnati, which is akin to a large warehouse where scientists create flavors for much of the food and drinks that Americans consume.

For months, they tested and tasted their drink until it was ready for store shelves. Wild Oats agreed to sell it in four of its stores.

This week, the natural-foods retailer said it will stock Izze Juice in 73 stores nationwide.

"It was very well received by our customers," said Sonja Tuitele, spokeswoman for Wild Oats.

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