The best young U.S. entrepreneurs

In the October 12, 2009 BusinessWeek article "America's Best Young Entrepreneurs 2009," John Tozzi, Stacy Perman, and Nick Leiber introduce several promising young U.S. entrepreneurs:

For our fifth annual roundup, BusinessWeek readers nominated a record number of young entrepreneurs. Meet the 25 most impressive.

Welcome to our fifth annual roundup of the country's most promising young entrepreneurs. Before we get started examining the new batch, consider this question: Who is more likely to start a business: A college student or a worker with a few decades of experience? Yep, you guessed it: the experienced worker.

It turns out it's boomers, not twentysomethings, who start the most businesses in the U.S. Over the past decade or so, the highest rate of entrepreneurial activity belongs to the 55-64 age group. The 20-34 age bracket, by contrast, had the lowest rate. That's according to a recent report by Dane Stangler, a senior analyst with the Kauffman Foundation, based on data collected from 1996 to 2007. It echoes research by entrepreneur-turned-academic Vivek Wadhwa, who found that twice as many tech entrepreneurs create ventures in their 50s as do those in their early 20s.

So not only are these entrepreneurs navigating the toughest economy many of us have ever lived through, they're also vastly outnumbered by older, more experienced competitors, who usually have more contacts and capital. That's even more reason to continue to give young entrepreneurs the encouragement, respect, and awe that they've received since becoming cultural icons during the dot-com boom.

Stangler says he's not suggesting young people aren't entrepreneurial or won't be. "The cachet of large, established companies has taken a hit. Job tenure has been falling for a long time. Employment is not going to recover in the very near future. People across all age groups are going to take the future into their own hands."

Dorm Room Beginnings

Brian Ruby, 25, is just one entrepreneur who is following through on Stangler's prediction. He founded molecular imaging equipment maker Carbon Nanoprobes in 2003 in his Columbia University dorm room and has since raised about $4 million from institutional and private investors. After six years doing research, Carbon Nanoprobes is now transitioning to equipment sales, and Ruby expects about $1 million in revenue in 2010. The nine-person company based in Pike Malvern, Pa., sells its equipment to universities, semiconductor firms, and material sciences companies.

Husband-and-wife team Eric Koger, 25, and Susan Koger, 24, launched indie clothing e-tailer ModCloth in 2002, near the end of their freshman year at Carnegie Mellon University. They've managed to raise a little over $3 million from angels such as StubHub co-founder Jeff Fluhr and venture capital firms First Round Capital and Maples Investments. Eric says the 104-employee, Pittsburgh-based company is profitable, with around $1 million in monthly sales, and forecasts more than $15 million total in 2009.

Logan Green, 25, and John Zimmer, 25, started Zimride in 2007 to allow carpoolers to connect online. Its 35 clients are mostly colleges but include corporate customers such as Cigna (CI) and Wal-Mart (WMT). Universities pay about $10,000 per year to use the platform, although pricing varies. Zimmer says the Palo Alto (Calif.) firm, with six employees, expects revenue of $400,000 this year and is now profitable.

Record Numbers

These are just a few of our finalists defying the odds. To assemble the group, as in previous years, we asked BusinessWeek readers to nominate candidates aged 25 and under who were running their own companies that showed potential for growth. Given the severity of the recession, we were pleased to receive a record number of nominations this year -- more than 600. After the call for nominations ended in mid-August, our staff sifted through the nominees looking for the most impressive.

Not surprisingly, the majority were Web-based businesses, where barriers to entry continue to fall. There were a smattering of more traditional companies, including an aircraft seller, a specialty mushroom grower, and a machinery lubricant vendor. Compared with last year, more women were nominated, more businesses were profitable, and more had secured equity capital.

You can flip through this slide show for profiles of each of the 25 finalists, then vote for the business you feel holds the most promise. We'll announce the top vote-getters on Nov. 9. Then check out our slide show on where last year's finalists are now. For more elements of the special report, including a feature on selling to universities and a video interview with a standout alum, visit the related items box at upper right side of this overview.

U.S. Entrepreneurs Ages 25 and Under

This summer, BusinessWeek set out on its fifth annual search to find the country's most promising young entrepreneurs. As in previous years, we asked readers to nominate candidates ages 25 and under running their own companies. After the call for nominations ended in August, our staff whittled the batch down to 25 impressive businesses. To read profiles of the finalists and vote for the business you feel holds the most promise, click on. We'll announce the top vote-getters on Nov. 9.

Note: Revenues and traffic numbers are self-reported. To be considered, founders had to be 25 or under when the nomination form was posted in late June.

1. Ascension Aircraft

What It Does: Aircraft sales and leasing
Founder: Jamail Larkins, 25
Web Site: www.ascensionaircraft.com
Based: Augusta, Ga.

Jamail Larkins has been hooked on flying ever since he took his first flying lesson at age 12. The Augusta (Ga.) native completed his first solo flight at 14, performed in an aerobatic air show four years later, and earned a bachelor's degree in aviation business administration from Embry-Riddle Aeronautical University. But instead of following a traditional career path and going to work for Boeing (BA) or Lockheed Martin (LMT), Larkins decided to channel his passion into his own business. It came naturally. At 15, he had started Larkins Enterprises, selling flight training books and videos to local pilots, to pay for his flying lessons. "I promise you we started off selling a lot less than we do today," he says. Though he continues to run Larkins to do marketing and consulting for clients that include his alma mater, the National Business Aviation Assn., and Michelin Aircraft Tires, he says 90% of his revenue comes from his aircraft sales and leasing company, Ascension Aircraft, which he started in 2006. Larkins says four-employee Ascension is profitable and had a little over $7 million in revenue in 2008, despite the downturn. He expects revenue to increase slightly this year. He continues to fly for fun every chance he gets and is planning to get back into aerobatics in 2010.

2. Box.net

What It Does: Online collaboration tool
Founders: Aaron Levie, 24, and Dylan Smith, 24
Web Site: box.net
Based: Palo Alto, Calif.

Aaron Levie and Dylan Smith started Box.net in 2005, when they were both college sophomores, as a tool to collaborate on projects with fellow students. The pair -- childhood friends from Seattle -- soon saw business potential in an online platform to let companies share information securely. Nine months after launching, they both left school (they were at University of Southern California and Duke, respectively) and moved to the Bay Area to work on the company full time, with an initial $350,000 investment from Mark Cuban. (His stake has since been bought out.) The service, targeted toward companies with fewer than 100 employees, has 3 million users representing 50,000 businesses. Individuals can try a limited version for free, but businesses pay $15 per user per month for the premium version. The company, now based in Palo Alto, has 50 employees and has raised $14.5 million in venture capital from Draper Fisher Jurvetson and U.S. Venture Partners. The firm is not yet profitable, though Levie says revenue is in the "mid-to-high single millions," and he expects it to turn a profit soon.

3. Click To Client

What It Does: Online marketing agency
Founder: Shama Kabani, 24
Web Site: www.clicktoclient.com
Based: Dallas

While completing her master's degree in organizational communication at the University of Texas at Austin, Shama Kabani wrote her thesis on why people use Twitter and other social networking sites. She became convinced businesses could use the tools to market their products and services. But when Kabani made that pitch as she applied for jobs at big management consulting firms such as McKinsey and Bain & Co. in 2006, she was rejected. "At that point, nobody really cared for social media knowhow. They were just thinking, 'This is a fad. Our clients don't really need it.' " Undeterred, Kabani, whose parents are both entrepreneurs, founded her own full-service online marketing firm in March 2008, to build Web sites, handle SEO, and create and manage social media campaigns. The six-employee business now takes on about 25 one-off projects a month and also acts as an online marketing department for six regular clients on a retainer basis. Fees range from a few hundred dollars for a newsletter design to $2,500 for a Web site project; monthly retainer fees start around $2,500. Kabani says Click To Client had about $120,000 in revenue in 2008, expects $280,000 for 2009, and is shooting for $1 million in 2010. Her first book, The Zen of Social Media Marketing, is due out in April.

4. Emergent

What It Does: Renewable energy consulting
Founders: Jesse Gossett, 23 (left); Jayson Uppal, 23 (center); and Chris Jacobs, 21 (right)
Web Site: www.emergentgroup.com
Based: Boston

Two years ago, three Tufts University students and one Babson College student attended the Energy Security Initiative at Tufts (now the Tufts Energy Forum), a group whose mission is "to spread and enhance the discussion surrounding all aspects of the transforming, global energy industry." It was there that Jesse Gossett, Jared Rodriguez, Jayson Uppal, and Chris Jacobs decided there was a need in the consulting sphere to help guide municipalities and private businesses toward using renewable energies and setting up sustainability practices. The quartet spent their final year in college researching and readying a business to do just that. Before they graduated, they landed their first consulting contract. Emergent now has about 30 clients, mostly municipalities, including the towns of Yates, Shelby, and Orleans County in western New York. The firm had $108,000 in revenue last year, and estimates it will reach $250,000 in 2009 and become profitable by 2011.

5. I Bec Creative

What It Does: Web development and graphic design
Founder: Becky Stockbridge, 25
Web Site: www.ibeccreative.com
Based: Portland, Me.

While a senior at the University of Southern Maine, Becky Stockbridge wrote a business plan to start a Web and graphic design business for medical professionals, a group she found was in need of logos, brochures, and informative Web sites -- and who also had the money to pay for them. She got started in 2006 with a $4,200 grant from the Libra Future Funds, a Maine-based group that helps entrepreneurs under 25. The Maine Center for Enterprise Development awarded her free office space for one year. However, Stockbridge says she found it difficult to get through to the decision-makers in medical practices. While she struggled to make contact, Stockbridge began designing Web sites and logos for other small businesses. By 2007, she had more business clients than doctor clients and shifted her focus. Last year the five-person company had about $225,000 in revenue and Stockbridge expects $350,000 in 2009.

6. Intern Queen

What It Does: Internship placement consultancy
Founder: Lauren Berger, 25
Web Site: www.internqueen.com
Based: Los Angeles

While earning her degree at the University of Central Florida, Lauren Berger says she completed 15 internships in four years. After graduating in 2006 she began helping the children of her parents' friends land internships. Soon, the idea to start a consulting business was born. But first Berger had to pay the bills, so she moved to Los Angeles and worked as an assistant at top talent agency Creative Artists Agency. While there, Berger met movie producer and director Marshall Herscovitz (Thirtysomething, The Last Samurai), who liked her concept and backed her financially for one year.

Last September, Berger launched her company -- Herscovitz has a 12% stake -- offering to vet potential applicants and match them with more than 500 companies from across the country that pay to list on her Web site. Berger says what sets her service apart is the personal attention -- she and her small band of interns review every application and Berger calls each company to make an introduction. Potential interns can apply for one slot gratis to get a feel for the service. They pay $3 for every subsequent application; employers pay an annual fee of $50 for unlimited listings. In the four months the firm was running last year, Berger says she had about $100,000 in revenue and expects to double that to $200,000 next year. A regular on the college speaking circuit, she is also planning to expand into Canada and is exploring endorsement deals with Microsoft (MSFT) and Payless Shoes.

7. ModCloth

What It Does: Online marketplace for indie designer fashion and decor
Founders: Eric Koger, 25, and Susan Koger, 24
Web Site: www.modcloth.com
Based: Pittsburgh

You might not expect an indie clothing e-tailer to get the attention of equity investors. But Eric and Susan Koger, the husband-and-wife team that launched ModCloth in 2002, near the end of their freshman year at Carnegie Mellon University, have managed to raise a little over $3 million from angels like StubHub co-founder Jeff Fluhr and venture capital firms First Round Capital and Maples Investments. ModCloth's inventory strategy helps explain its success. Eric says Susan and her buyers build rapport with independent designers, try to get payment terms of net 30, and normally sell 70% to 90% of the goods within the net-30 period. "We can turn our inventory faster than we have to pay for it. That's enabled us to scale as fast as we have." Being online only and located in Pittsburgh keeps operating costs low, too. ModCloth employs 104 people -- mostly young women who, Eric says, "come at it from a perspective that's truly aligned with the customer, because they are our customers" -- up from 22 people a year ago. The company became profitable in 2007 but wasn't in 2008, largely because it spent a lot of money to redesign its Web site -- which now gets more than 1.25 million unique visitors a month. Eric says ModCloth has around $1 million a month in sales and forecasts more than $15 million total in 2009.

8. NoteHall

What It Does: Online marketplace for class notes
Founders: Sean Conway, 25 (right); Justin Miller, 21(far right); B.J. Stephan, 24 (left); Fadi Chalfoon, 23 (second from left)
Web Site: www.notehall.com
Based: Tucson, Ariz.

Launched in 2008, NoteHall is an online marketplace for college students who want to buy and sell class notes. Sean Conway, who has ADHD and finds it difficult to comprehend a lecture and take notes simultaneously, says the impetus to start the company came when he noticed fellow students shared his frustration. For initial funding, the founders used $70,000 they put together from Conway's inheritance and Miller's bar mitzvah money. To access documents, users purchase credits via the site's virtual currency system ($3 buys 100 credits; notes from one lecture cost 25 credits; a study guide costs 100 credits). When a student purchases credits and redeems them, NoteHall receives a commission that varies based on the product. According to Conway, 20 colleges and universities are participating now, including Drexel University and the University of Arizona, and an additional 30 will be by December. Last year, NoteHall had $40,000 in revenue, will be profitable this year, and expects to reach $900,000 in revenue in 2010.

9. Trunk Club

What It Does: Online clothes shopping service for men
Founder: Joanna Van Vleck, 26
Web Site: www.trunkclub.com
Based: Bend, Ore.

When Joanna Van Vleck graduated from the University of Oregon in 2005 with degrees in psychology and business, she worked as a style consultant, taking men and women clothes shopping. No surprise here -- most men disliked shopping but enjoyed the new duds. So Van Vleck decided the shopping process should be turned on its head. Instead of accompanying men to the shops, she would take the shopping to them. In January 2008, she opened a location she describes as a "swanky man hang-out spot," where hesitant shoppers were sized up and regaled with advice and brand-name picks. Within a month of opening, an angel investor approached her and offered to commit $500,000 to expanding the concept to other locations. But after Bear Stearns failed that March, he changed his mind.

Convinced her idea had potential, Van Vleck searched for another source of funding. During a meeting via Webcam with a new would-be investor, Van Vleck decided to shift gears. Instead of opening physical locations, she would operate the business virtually, using Webcams to meet with clients, assess their needs, and then ship a box of clothing to them. Clients would only pay for items they liked. With zero retail experience, she launched the site in November 2008, buying marked brands wholesale from suppliers and selling them retail. Trunk Club now has six employees, 36 independent contractors who work as fashion consultants remotely, and around 2,000 members. Van Vleck says the company is close to breaking even and is on track for $2.3 million to $2.5 million in revenue in 2009. She expects to close her first venture capital round with a Bay Area firm within a month.

10. Tumblr

What It Does: Microblogging platform
Founder: David Karp, 23
Web Site: www.tumblr.com
Based: New York

In 2005, David Karp was running his software consulting business, developing new media for big media companies. He got the idea for Tumblr after becoming captivated by a new form of blogging known as "tumblelogging" that presented material of various formats (such as text, photo, and video) in a stream. While building a tumblelog for himself, the programmer realized other fans of the form would want to use a simple tool that would allow them to create their own. So during a two-week window between consulting jobs, Karp, who first started coding when he was 11, created the first iteration of such a tool designed with speed, ease of use, and customization in mind. Launched in 2007 for general consumption, the Tumblr platform now has 1.8 million users and has landed $5.5 million in venture capital from two rounds of funding with Union Square Ventures and Spark Capital. Karp, 23, says the 10-person company is not making money yet but will be experimenting with revenue-generating features this quarter. "Goal No. 1 is growth. We're aiming this thing for a mainstream audience."

See the full slide show of 25 U.S. Entrepreneurs Ages 25 and Under.

Bengals Backup Quarterback Will Help You Pee

Entrepreneurs can become fabulously wealthy if they create or improve a product or service that consumers willingly buy to satisfy a need or want. An aspiring professional football player has developed a unique service that he hopes will make him rich, just in case he cannot succeed in the NFL. According to the September 3, 2009 article "Bengals Backup Quarterback Will Help You Pee," Kurt Helin reports:

Cincinnati Bengals backup quarterback Jordan Palmer is not his brother Carson — he doesn’t have the golden arm or the Heisman Trophy or the weight of a struggling football franchise on his shoulders.

But if you have to go to the bathroom during a movie, he’s your man.

During this week’s episode of HBO’s entertaining series “Hard Knocks” (which follows the Bengals through training camp), the younger Palmer talks about his other business — RunPee.

The iPhone application does just what it sounds like it does. Say your girlfriend is forcing you to sit through “The Time Traveler’s Wife” (she loved the book) and that 32-ounce Big Gulp you downed on the way to the theater has caught up to you. Just launch Run Pee, call up the movie and it will tell you the best times in the film to make a bathroom run and give you a synopsis of what you missed while you were gone. As this is the Time Traveler’s Wife, you might need to go a few times. Just because.

All that for just $1.99, what a deal.

Palmer was pimping the product on Hard Knocks, wearing a Run Pee shirt, showing it off on his iPhone. Carson has worn a Run Pee shirt as well during some of the tapings. Jordan is part of the RockSoftware team that develops and markets mobile applications.

The fact Palmer the Younger was hyping his other business on national television may tell you all you need to know about his NFL career. He’s battling to make the Bengals roster as a backup quarterback along with the inimitable J.T. O’Sullivan. Of course, backing up his made-of-glass older brother (standing behind a patchwork offensive line), Jordan could get a shot this season, who knows.

Now, if he and his buddies could develop an app to tell us when to go to the bathroom during a Bengals game so we don’t miss a big play, that is something we could all really use. Wait, this is the Bengals we are talking about, we can just go whenever.

More Successful Entrepreneurs

Entrepreneurs can become fabulously wealthy if they create or improve a product or service that consumers eagerly buy to satisfy a need or want. In the August 31, 2009 article "Million-Dollar Businesses You've Never Heard Of," Miriam Marcus profiles several successful entrepreneurs you probably have not heard of before:

Seven-figure top lines abound -- if not in the most obvious places.

Best friends Adrian Salamunovic and Nazim Ahmed weren't looking for the next million-dollar idea. They were just two guys hanging out on a Friday night, enjoying a good bottle of wine, when the light bulb went on.

Ahmed worked for Bio-Rad, which markets DNA-imaging equipment. Salamunovic noticed Bio-Rad's brochure on the table and to his untrained eye, the images looked like art.

Turns out others saw it that way too. Smelling opportunity, in 2005 the twosome plunked down $2,000 in savings for initial prints and a Web site to feature their work; they outsourced DNA imaging to a DNA-extraction lab in Montreal. Working out of Ahmed's apartment, they sold a few prints to family and friends. As the work caught on, they were invited to showcase at an Absolut Vodka-sponsored party in Ottawa's SOHO neighborhood. The new company, called DNA 11, sold $40,000 worth of art in the first month. An 8"x10" mini-DNA portrait goes for $200, while a 36"x54" wall canvas garners $1,300. The Museum of Modern Art features DNA 11 art in its museum stores in New York and Tokyo. The company's revenue in 2008: $1.4 million.

Have a nutty idea for a business? It just might work. For inspiration (and even a few chuckles), we went looking for small companies that pull in at least $1 million in annual revenue in unexpected ways. Look hard enough and they are legion. So before you toss that nutty idea aside, check out some entrepreneurs who didn't. Here are a few highlights from our search.

1. Fairy Tales Hair Care
Passaic, N.J.
Entrepreneur: Risa Barash, 43
Product/Service: Head-lice prevention shampoos and conditioners
Start Date: 1999
Start-up Costs: $1,000
Revenue in 2008: $6 million

Business ideas come from anyone, anywhere, anytime. In 1999, Risa Barash, a 33-year-old stand-up comic, heard from her then-fiancé's cousin (got that?) about a rash of head lice cases at his Hewlett, N.Y.-based children's salon. After doing some research (including a lot of chatting with relatives in Israel, where head lice was a big problem), Barash hit upon an organic preventative shampoo, as opposed to chemical-based products applied only after the louse has taken up residence. Her big break came one morning while watching The Rosie O'Donnell Show -- Rosie was lamenting her own children's lice outbreak. Barash wrote a letter (in the voice of a fellow well-known comic), walked over to the NBC studio and told the security guard she was delivering some hair products for O'Donnell's kids. The next day, Fairy Tales Hair Care's Rosemary Repel Shampoo was the talk of the show.

2. The Fiero Store
Stafford Springs, Conn.
Entrepreneur: Matthew Hartzog, 32
Product/Service: Parts and accessories for the Pontiac Fiero
Start Date: 1991
Start-up Costs: $5,000
Revenue in 2008: $2.3 million

Matthew Hartzog, 32, spent his teenage summers and school breaks working for his stepfather selling parts and accessories for GM Opels. But the long-defunct, two-seat, mid-engine Fiero was where his heart lay. Approximately 370,000 Fieros rolled off the lines between 1984 and 1988 before Pontiac stopped producing the car; less than 75,000 are currently registered in the U.S. Keeping them purring proved a tidy little business. Fanatics make great customers.

3. Jimmy Beans Wool
Reno, Nev.
Entrepreneur: Laura Zander, 35
Product/Service: Knitting and crochet supplies
Start Date: 2002
Start-up Costs: $30,000
Revenue in 2008: $2.1 million

Laid off from her software engineering gig, Laura Zander decided to open a yarn store with her husband Doug in 2002. They plowed $30,000 into hanks of yarn, a Web site and a lease on a new store in Truckee, Calif. Good timing: The knitting market spiked in 2003 after a few celebrities, such as Julia Roberts and Vanna White, were seen knitting and crocheting. Zander found success with walk-in customers; she could teach them how to knit in less than five minutes, and many walked away with $100 worth of novelty yarns, enough to make five scarves, a fashion craze at the time. Zander, 35, now boasts an average of 20,000 customers per month, mostly through the Web site.

4. PetRelocation.com
Austin, Texas
Entrepreneur: Kevin O'Brien, 34, and Angie O'Brien, 34
Product/Service: Pet travel
Start Date: 2004
Start-up Costs: $97,000
Revenue in 2008: $2.5 million

"Pets aren't just household goods -- they're beings, just like people are." Such is the mantra of Kevin and Angie O'Brien, the husband-and-wife team who sold a doggy day-care business to get into the pet-moving game. They invested $97,000 of the proceeds in a new van, Google ads, a Web site, a USDA-backed carriers and intermediate handlers license (allowing the couple to transport animals over state lines) and a $300 membership to IPATA, an international trade association of animal handlers. The couple says it can move any live animal, anywhere around in world -- say, a dog from Seattle to Shanghai, mole rats from South Africa to San Antonio and dart frogs from Switzerland to the U.S. It's a turn-key service, covering airline bookings, blood tests, vet check-ups, logistics, customs and quarantine. The company expects to pull in $3.5 million in revenue this year, has been debt free since day one and turned a profit in its second month.

5. DNA 11, Ottawa, Ontario

Entrepreneurs: Adrian Salamunovic, 33, and Nazim Ahmed, 33
Product/Service: DNA artwork
Start Date: 2005
Start-up Costs: $2,000
Revenue in 2008: $1.4 million

Best friends Salamunovic and Ahmed blend science and medicine with modern art--and make money doing it. With a simple cheek swab, they can collect enough organic matter to create an image of human DNA using specialized equipment, similar to the machines Ahmed used to sell for a Canadian biotech firm. Working out of Ahmed's apartment, the twosome sold a few prints to family and friends, and were invited to showcase their work at an Absolut Vodka-sponsored party in Ottawa's SOHO neighborhood. They sold $40,000 worth of art in the first month. An 8"x10" mini-DNA portrait goes for $200, while a 36"x54" wall canvas garners $1,300. The Museum of Modern Art features DNA 11 art in its museum stores in New York and Tokyo.

Crocs: An Entrepreneurial Success ... and Failure

Entrepreneurs can become fabulously wealthy or lose vast sums of money. The makers of Crocs managed to do both:

Once-Trendy Crocs Could Be on Their Last Legs
By Ylan Q. Mui
Washington Post Staff Writer
Thursday, July 16, 2009

Crocs were born of the economic boom.

The colorful foam clogs appeared in 2002, just as the country was recovering from a recession. Brash and bright, they were a cheap investment (about $30) that felt good and promised to last forever. Former president George W. Bush wore them. Aerosmith lead singer Steven Tyler wore them. Your grandma wore them. They roared along with the economy, mocked by the fashion world but selling 100 million pairs in seven years.

Then the boom times went bust, and Crocs went to the back of the closet.

The company had expanded to meet demand, but financially pressed customers cut back. Last year the company lost $185.1 million, slashed roughly 2,000 jobs and scrambled to find money to pay down millions in debt. Now it's stuck with a surplus of shoes, and its auditors have wondered if it can stay afloat. It has until the end of September to pay off its debt.

"The company's toast," said Damon Vickers, who manages an investment fund at Nine Points Capital Partners in Seattle. "They're zombie-ish. They're dead and they don't know it."

Two summers ago, Nancy Fisher of the District bought two pairs of Crocs, one green and one pink, for her daughters. The girls, now 8 and 12, wore them constantly and even got charms to decorate the tops. This year, the shoes are forgotten.

"They were their go-to," Fisher said, "and now they're just really interested in flip-flops."

The story of Crocs mirrors the country's tale of economic expansion and contraction. At the height of the real estate market, in 2006, the company sold shares to the public, raising more than $200 million in the biggest stock offering in shoe history. It ramped up manufacturing to keep up with demand, only to then find that shoppers were snapping their wallets shut.

Rachel Weingarten, a trend and marketing expert, has relegated Crocs to the wasteland of the comfort-shoe aisle. Maybe in a decade nostalgia will set in, said Weingarten, author of "Career and Corporate Cool." Then a pair of hot-pink Crocs dug from the back of the closet might inspire misty-eyed memories: "Remember when we had ugly, Flintstone-looking feet?"

Crocs not only had a look, they had a story. In 2002, three longtime friends from Boulder, Colo., got hold of technology developed in a Canadian laboratory in 1999 that created a lightweight, antimicrobial foam. They called it Croslite and molded it into a boating and water-sports shoe they named "Beach."

The shoes quickly developed a following among landlubbers as well. Gardeners touted their stability, runners enjoyed their light feel, and the chairman of the company's board wore them with his tuxedo.

The company used money from its public stock offering to diversify and acquire new businesses, such as Jibbitz, which makes charms designed to fit Crocs' ventilating holes, and Fury Hockey, which used Croslite to make sports gear. It built manufacturing plants in Mexico and China, operated distribution centers in the Netherlands and Japan, and forged into the global marketplace. More than half of Crocs were sold outside the United States.

Then, chief executive John Duerden wrote in an e-mail: "the industry was taken by surprise by the severity of the downturn. It affected us more than most because the brand had been gearing up for a continuation of the extraordinary growth in the prior years."

But the shoes were hitting a saturation point; the problem with a nearly indestructible product is that shoppers rarely need to replace it.

A foray into Croslite clothing in 2007 fell flat and was quickly scaled back. The company liquidated Fury Hockey last year.

"They had added a huge amount of infrastructure to meet this demand going forward," said Jeff Mintz, an analyst with Wedbush. "Demand fell off, and they had way too much capacity and way too much supply of product."

Who needs a second pair of Crocs in a recession, particularly when the first pair is holding up just fine?

The company swung from a profit of $168.2 million in fiscal year 2007 to a loss of $185.1 million last year. In its annual report, Crocs said that an independent auditor expressed concerns about "conditions that raise substantial doubt about our ability to continue." Its stock price has plummeted 76 percent.

Five months ago, the company announced that it was replacing chief executive Ron Snyder, who went to college with the company's founders, with Duerden, an industry veteran who ran a consulting firm focused on brand renewal. Duerden believes there is life yet in Crocs and plans to market them to caterers, medical workers and people with foot problems. Actor George Clooney has promised to work with the company, Duerden told analysts. Maybe he could wear a red pair.

"The bottom line is, people talk about Crocs," he said at a conference with analysts. "They either love them or hate them, but it's in the vernacular."

Thinking about Being an Entrepreneur? Economic Downturns Can Be a Good Time to Start a Business

According to a June 11, 2009 article in Real Clear Politics by Brandon Ott, now might be a good time to start your own company:

In the middle of a long and bruising recession, perhaps the worst since the Great Depression, starting a new business might not be a bad idea. As counterintuitive as it might seem, successful entrepreneurship in an economic downturn has produced some of the world's most famous companies-IBM, General Motors, Microsoft and FedEx, to name a few. Will this recession prove to be another launching pad from which highly renowned and innovative companies emerge? One can only speculate, but given new research, we might see the top companies of 2020 or 2030 begun in the recession of 2007-2009.

According to a new study by the Ewing Marion Kauffman Foundation, more than half of the companies on the 2009 Fortune 500 list and just under half of Inc. magazine's list of America's fastest-growing companies began during a recession or a bear market.

"You can see the story of the American economy in these numbers," said Carl Schramm, president and CEO of the Kauffman Foundation. "History has demonstrated this time and again: new firms create new jobs and fuel our economy. Policies that support entrepreneurship support recovery."

Recessions are a time of both death and renewal--the so-called "creative destruction" of Joseph Schumpeter. Though we might expect downturns to negatively affect entrepreneurial activity through a lack of available financing and the overall dampening of "animal spirits," there are also reasons to expect recessions and bear markets to be auspicious periods for new business formation.

Rising unemployment can create a pool of highly-skilled, highly-trained workers ready to enter a new field either by starting their own business or becoming employees of a start-up. Financing constraints, common in a downturn, may not impede a firm's birth, but may hinder its growth in the future. Contractions are also likely to weaken competitors, thus making entry easier into a market for a new company.

That's good news for the economy. According to the Kauffman study, job creation of start-up companies is less volatile and sensitive to bad economic times than established companies, which are unlikely to add many jobs despite the economic environment. For example, absent new businesses, the economy as a whole would have added jobs in only one year during the 1990s. Employment created by nascent enterprise, therefore, is vital in sustaining an economy's strength.

Similarly, new business creation seems little affected by recessions and bear markets. In fact, the study says that entrepreneurs' motivation in starting a new company can be a way "to beat unemployment" by taking "the future into their own hands."

Even in this bear market, there are likely to be 400,000 to 700,000 startups in both 2008 and 2009. Since 2001, the average
size of a new firm is 4 employees. When combined, these numbers provide a positive impact on employment that otherwise would be lacking.

In addition to job creation, new businesses also help the economy in a variety of ways. They account for the commercialization of new innovation, often are more productive and flexible than their older peers and have positive effects on already established companies and industries.

As the Kauffman analysis concludes, it is promising to see that even in a depressed economic situation, entrepreneurs are starting businesses and not relying on others to provide for them.

Special Types of Labor in Business

The business world is divided into several functional areas, such as entrepreneurship, management, marketing, finance, and accounting. Entrepreneurship is the invention of new products, the improvement of existing products, or the delivery of products in better or more efficient ways. Management is the allocation of economic resources. Marketing is the process of informing society about products in an attempt to convince potential consumers to purchase them. Finance is the management of money, credit, and other financial assets.Accounting is the preparation and inspection of financial reports. Each of these functional areas of business has a special type of labor associated with it.

An entrepreneur is someone who invents a new product that satisfies a want or need of society, improves an existing product, or provides a product in a better or more efficient way. One way to become wealthy is to become a successful entrepreneur. Mark Cuban, the owner of the National Basketball Association’s Dallas Mavericks, acquired his wealth by being a successful entrepreneur. Cuban co-founded Broadcast.com, which provided streaming multimedia on the Internet, in 1995. The Internet company Yahoo! Inc. purchased Broadcast.com in 1999 for $5.7 billion. Successful entrepreneurs are usually highly motivated, creative leaders with some specialized knowledge that can be used to help satisfy the wants or needs of society.

A manager is someone who allocates economic resources. Successful managers are efficient in their use of labor, capital, and natural resources. Economic efficiency occurs when a society obtains the largest possible amount of output from a given set of resources. Skillful management is a key component of successful businesses. Examples of the importance of management are provided by professional sports. The head coach of a baseball team is called the manager and the major league baseball executives in charge of hiring players are called general managers. Four men have even been elected to Baseball’s Hall of Fame based solely on their achievements as general managers: Ed Barrow, Larry MacPhail, Branch Rickey, and George Weiss.

A marketer is someone who promotes the purchase or sale of a product. The marketing process includes the conception, pricing, promotion, and distribution of ideas, goods, and services. These are often referred to as the marketing mix or the four Ps of marketing: product (conception), price, promotion, and place (distribution). Businesses paid an average of $2.4 million for a 30 second commercial during the 2005 Super Bowl. The willingness of some firms to pay such large sums for advertising indicates the importance of marketing to the success of businesses.

A financier is someone who engages in large-scale financial affairs. A financier is sometimes called a capitalist if he or she invests in a business by providing it with significant money or other financial assets. It is not uncommon for people who develop new products to lack the financial resources to market their ideas. Financiers may provide these entrepreneurs with the financial capital to develop and market their products in return for a share of the revenues or profits from future sales.

An accountant is someone who prepares and inspects the tax reports and other financial records of individuals or businesses. Financiers and other business executives rely on accountants to provide an accurate portrayal of the financial condition of a company. Accountants also assist individuals in the preparation of personal financial reports, such as income tax returns for federal, state, and local governments.