South Florida Business Journal
Women's Business
Finding a Niche

Seven-year-old tech firm still alive, kicking

In their office without a door, Kim Bregman and Nancy LaPook Diamond of NicheDirectories.com have finally found their groove.

It's taken seven years to get here, but the Boca Raton women are ready to seek a second round of venture capital money - $2 million this time - to take their Internet-based directory company into the passing lane.

"We always ran our business on a traditional business approach," said Bregman, CEO. "We never created a dot.com and threw money at it to figure out the product later. We always knew what our product was."

It took 18 months of brainstorming and research before they launched their company in 1995. Then called KidsCamps.com, the business model was simple: provide as much information about children's sleep-away camps as possible in an online directory. Their revenue in those early days came from expanded listings, Web site development and hosting, as well as marketing to their clients' consumers.

But the business model was never intended to just provide information. There's little financial future in that, the women agree. So they spent a lot of time in the early days educating camp owners how the Internet could help them grow their businesses, said Diamond, president. Remember, this was 1995. They intended all along to be a leader for the businesses in this narrow niche, and to make money doing it.

"We recognized very early that the price to enter the Internet was low," Bregman said. "We need a large volume of B2B customers. We recognized there was a demand for a leader in the (camp) industry from a consumer point of view."

Listening to their camp-owner clients, the women eventually created 10 online resources for anyone who needs anything having to do with camps - from camp owners looking for employees, to parents looking for choices, to employees looking for jobs.

They call it vertical integration. It's a slow-growing model, but it has evolved into one with applications to multiple industries. Now that it's profitable on its own, the women have attracted the investment money to identify new niches.

They started with 600 camps that they called individually to create a database. The database now has more than 12,000 camps and a monthly circulation of 6 million, Diamond said.

Forbes.com selected KidsCamps.com a "Best of the Web" in spring 2001. The company also provides camp content for iVillage's ParentSoup.com and Child.com

The growth opportunities lie, the women said, in the replication of the model in other industries. They call that horizontal integration, and it can be powerful.

"We're very patient," Diamond said. "it comes with being a woman."

Tech support
Bregman and Diamond know there strengths. They are a sales and marketing team. When they started KidsCamps.com, they partnered with an Internet service provider to handle the technical side of the business.

They were ready to pitch their proven, debt-free company to venture capitalists when they got a call in April 2002, a month after the technology-supported Nasdaq market began its decline. Bregman said the call and the ensuing $1.3 million investment was unsolicited, but the timing was perfect.

By fall, the women had ended their partnership with the ISP and broke off on their own, renaming the company NicheDirectories.com and replacing all the things their partner had provided - office space, furniture and back office support.

"Unsolicited money anytime is unusual; unsolicited money in 2000 is more unusual because the economy was starting to slow," said Richard Rogers, VP of marketing and communications at Cenetec Ventures in Boca Raton, a technology commercialization an venture funding firm.

The company took its first horizontal steps last month when it launched VenueResource.com, a directory of venues for retreats. The idea started with camp owners interested in using their properties after summer and grew to include hotels, conference centers and other sorts of meeting space.

"In 1997, we recognized that properties were available when the kids aren't there," Diamond said. "We really wait and sit with an idea and talk to our customers before we decide what it should be."

That's also helped the company operate with a cash-flow model and remain debt free.

"Clients continue to renew their business every year so we have six figures of revenue that are with us every year," said Bregman, noting that's one thing about the company that attracted investors, which now occupy three seats on its seven-member board of advisors.

Though she's had no formal training in how to put together a venture capitol proposal, Bregman said she learned what she knows at IBM where she was fast-tracked through management training after being hired in the early 1980s.

"I don't think women have ever formally been in that space," she said of the venture capital arena. "Women don't know how to execute. Male venture capitalists rely on networking and their connections to make investments. Those don't include women."

So these women made their own connections. Working through the contacts their venture capitalists brought, the women are ready to seek more investor money.

"We're going out for another round of financing to ramp the company significantly faster," Bregman said. The venture capitalists "are giving us access to investors that we as women in Boca Raton just don't have access to."

Stepping out

In the next three years, the women plan to develop two new niche markets, though they won't divulge them. They are writing the business plans for the horizontal move, they plan new services to the vertical model, and they plan to hire a marketing manager.

"We are in no way representing that in seven years we haven't misstepped, but we have learned," Bregman said.

There biggest mistake was not focusing on sales sooner.

"We spent all of our time and money in branding and product development," Bregman said. "We should have hired people and chosen to allocate our cash flow to sales. But we didn't think we could represent it well enough."

They're making up for it. Since landing that venture capital, they've grown from a staff of nine to 15, with most of the growth in sales. They've got their exit strategy in place, too "to get really big and get bought out," Bregman said. "We're both intent not to leave it to our children."

"It's the classical model, but it's very conservative. People can say we left a lot of cash on the table, but right or wrong we're still here."