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Entrepreneur Energy – LaunchUp #30 20120607

LaunchUp had an attendance of only about 28 people at Mountainland Applied Technology College. Thanks to all the sponsors, presenters and companies. Companies:
DressCode Custom

Missing a microphone so listening closely. The companies are here for your feedback so help them out.

We are in the mobile gaming industry. Smart phones have taken over on this. 3D games on your phone. There is a big problem that isn’t addressed and it is the controls. We have found that doing multiple surveys and focus groups. I have a video clip.
“Fingers in the way and the controls are obnoxious.
The finger controls are awful but the game is perfect otherwise.”
This is a pretty big problem and we contacted these people who are normal game reviewers on YouTube. We talked to them about what they want for a solution.
We have a BladePad that is razor thin and attaches to the iPhone.Here is our prototype. I have a rougher prototype here. Full console controller. With Dual bumper buttons and the blade pad is detailed. You have a smooth back on the case and in working with the games reviewer they were very happy about our solution.
“this would make this epic” “there is a sore need for this in gaming.”
9.1 average rating out of 10 with 124 customers who are ready to buy. Wholesale price is 45.00. Landing to the customer cost is $22 with a 51% gross margin. We have made connections with the smaller independent game studies. We have existing relationships.

Q? Ownership?
A. Me and two other partners. We are looking for additional partners as an LLC.
Q? Impressive to put it together do you have lots of experience?
A. A lot of it was the validation I was talking about. We have done a lot without any money. I invested a good portion of my savings in the company. We had enough to do a little bit. We went to the games developers and worked with them to find out how we could get the code to work. They would be interested if we brought companies with a lot of their games. That is the validation of our model. We were able to do most of the partnerships whithout spending anything.
Q? Kickstarter?
A. We are launching this month after game dealer. It is a great to get the idea out there and not selling equity.
Q? Exclusive deals with these guys for the games?
A. We are looking for a big name to move the product. That is really why we have to go big with the developers then Sony and Apple could make their own product.
Q? Trademarks?
A. Just talked to Jared about that recently. In 6 months you have to submit the product with the sale.
Q? Strategy to get with the game makers to drive the sales to market. We want to be the best and first to market. If it doesn’t wok with the games then they won’t buy.
Q? Anyone else like you like competitors?
A. IPhone game blades. They are bad and bulky and don’t have joysticks. They are about in the same price range and without games. 80-124 dollars. We are a pretty good value proposition. The DS3 is a substitute.
Game developers and investment right now.

Q? Zagg sold for $105 million recently. They can surely get this in front of everyone you want. Have you talked with Zagg?
A. We spoke with another electronics company. We would prefer to do this ourselves. We have the connections to get this to retailers. So we would be hesitant to shift to someone else at this point.
Q? How long to production once you have funding?
A. October this year.
Q? Best Buy to be one?
A. We have talking with buyers and Walmart is the most interested and they are asking if we have made it yet. There would likely do a test in a few stores. We are looking for a Christmas promotional launch this year.
Q? Work across all games?
A. As of now there is none. We are building an SDK to work with the controller and popular game engines. We are getting ready to tool the injection molds and the SDK.
Q? IPhone compared to other units?
A. It is getting pretty close. The 2 current DS and BVita but it is pretty comparable on the Vita. The DS has the same size. I saw some projections that by 2 years from now the Smartphones will have the same graphics as XBox. There is portability of the smart phone and you won’t carry the game device. The games are a ton less. You buy a $300 device and $50 game then it it not valuable.
Q? Market?
A. We haven’t tested kids yet, just the hard core gamers. Casual to hard core. On the iPhone you have inGame adverts that are targeted. Number one downloaded apps are Games. A lot of them are social games but still games.
Q? Bluetooth?
A. Yeah 4.0
Q? In this SDK how much do you think it will cost to make?
A. We are outsourcing. Our initial quote was around 15-30k. Not small but we will give the SDK for free.
Q? Where are you outsourcing?
A. Found online they have worked with some big guys. They have done games before. We had conference calls. We like them and feel good about it and are going to have them speak with the game developers as well.

DressCode Custom
Speaking of surrounding yourself with good people Jared is our attorney. We are DressCode based in Utah Valley with HQ in Orem on State Street. We got busy and have wanted to present at LaunchUp. We have been in business over 15 months now selling product. We specialize in custom suits and dress for men. We are different from other solutions since everything is custom and created from scratch. We measure in 25 places and we design and make it. Our consultants are mobile and will meet with you at the home. We save in time.
We are different because we are not a storefront and e-commerce. On the supply side of things we run our own production. One of the things is that with retail you have wholesalers with buyer working with chains. Then you have factories and brokerage firms and fabric and suppliers and the average number of parties is 4 or 5. One of our competitors has about 4-5 layers behind them adding to the price. When you buy a suit a lot of the money is going to the chain. Traditional retail dealing with stores and inventory is hard. Nordtsroms doesn’t sell up to 30-40% what is on the floor. It is a big cost. It is expensive and slow to grow.
How can we solve this problem. Zappos and Amazon takes the product to the customer but the suit can’t go online. You don’t want to click and wait for it to show.
One of the main things that we focus on is fit. 75% of the suit look is how it fits. You can get a Walmart suit. Even if you spent
Men’s Wearhouse, Kohls, or some other. Are you loyal to the store?
We have an opportunity for the clients to develop the relationship. Our consultant knows what you are eating for dinner and knows your wife. With our product and pricing we develop an experience that is very good.
$299-$349 for fully custom. Our price is great and our experience is phenomenal. You don’t have to to the store and cringe. You get to create a product you like.
When you shop with DressCode you will set up an appointment with one of our of 15 consultants. They come to the home or office. Then you select material and look. We then build the product and ship locally with perfect fit guarantee. Some don’t know how this works. We have to guarantee that it works. 4-5 weeks.
We are now entering year 2. Just opened in Las Vegas. We have enjoyed what we have done. We just hired our first Office Manager.
Shake up the industry, improve the experience, mainstream custom suits, build a brand with loyalty.
When you are looking to shop around companies like ours will provide more value.
-Just closed a seed round
-POS tablet application
-Expand Markets where we don’t have office

Q? So consultant measures and then where does it go?
A. We are migrating form Bangkok to Shanghai. We have four tailors that are working on DressCode products. We get them to work and it takes 2-3 weeks and that is why the 4-5 weeks. The capacity that we have to do that is because the cloud has changed everything.
People ask, our clients, tailors have been doing high end. You go in to get the product made. We saw that custom was bigger in Asia and the experience is so much better. When a suit fits you right you can’t go back. We are working to mainstream customer but it used to have to be 1500-3000.00.
Q? Marketing effots?
A. Good question. We have a couple of techniques. Word of mouth. We have a walking product. When someone is wearing a suit it is a walking advertisement. Our label and logo is inside. We have done word of mouth. Wedding expos where we meet a thousand brides and grooms in a day. The brand that we are trying to build is through reputation. We are working with referral program. Once you meet someone then you want to tell your friends about it. We want to help that.
Q? Custom is luxury. Measuring as a tailor is an art. You can’t take them off the street.
A. Our consultants go through a pretty serious grating. The best thing is to do a final fitting if we need to fix. We create a member profile where we make the light tweaks. We can fit the product to you. If you want a dress shirt we can do that.
There is a budding industry that is online. They are finding ways to reduce to the 20 measures to just 6 and I don’t think that will work. They are showing that you need an expert. They are proving this can be done in scale.
Q? What kind of gross margins do you operate on?
A. We don’t have to talk about that since more of our dollar goes to your suit. We run 50-60% gross. We are migrating to China and we will get better a margins. There are a lot of factories that are looking to scale and run our products.
Our goal is to have the suit be just 3 weeks. Brooks Brothers about 1.5 weeks.
Q? If I were a man and 5’10” 175 lbs I don’t know that I would need a custom fit. Do you see more abnormal body types?
A. How many of you have loved the fit of the suit that you buy off the rack? (no one) What actually fits and feels good. Fit is a huge part but personalization like lining and other things also is important.
Q? I have had a custom fit and you can put on 20-30 pounds and it still fits better. The suit I bought for my wedding cost 3-4x more than other suits.
A. We have found that custom is yours and it is hard to go back. We have found that another initiative is that we now have relationships on fit. We launched dress shirts and we sell more of those than suits. If we took the same measurements and did jeans and still high end with our relationships. That same problem with fit. We are looking at it.
Q? I went to Shanghai and got a great suit there. If you guys do expand there is no going back. I am 5’6″ but you guys on are to something.
Challenging to expand with menswear since they don’t do as much.
A. Womens clothing is a very different industry. If we offered the opportunity there is endless opportunities so we do some women’s wear as well. But when we look at other products we are sticking to menswear. Women are tough to fit.
Q? What is the opp for the consultants?
A. They are sales people through and through. We don’t spend money on storefront. We invest in our sales people. We reward them with success and they are finding clients and bringing them in. There are a lot of part-timers. Some of them see this as an opportunity. Many of them see this as growth.
Q? Where do you get the fabrics that you get from “Italy” etc.?
A. Instead of buying from one fabric mill. We have relationships with 5-6 mills around the world. We are not after the New York client. We want to stay in the $299-$349 product. At the same time we want to carry about 250 like a curated wine list from the 7 mills. We like the mills that we work with and we work with new styles and new variety.
Q? Slacks only?
A. 70-90 depending on the fabric. Shirts 49-69.
Q? Alternations after the suit is sent from overseas?
A. We have relationships with local tailors and we get a good price break from them.
Talk to us
Good ways to get the message out!

Mike Maughan
We are happy to be here. I have been with C7 for several years now. My background is in Internet Marketing and some technical background. As data center providers we are at the bottom level.
One level up is IaaS Infrastructure as a Service. So you can just make a monthly payment. PaaS ia Platform as a Service. We provide IaaS so that you can spin up a Platform.
We target SMB so it is a custom experience that we give you. Platform as a Service developers would use us to help create their product. They don’t have to buy the hardware.
SaaS is all the way at the top that are developed on the PaaS.
We focus on IaaS. In 2009 we started our first cloud product. We understand the product. We see lots of clouds in our own data center.
Why FuseApp?
-High expenditures to buy services that you don’t know how well it will work.
-Reduces IT department size
-Flexible. You can add your own hardware on to our cloud in a private suite.
What do we sell?
RAM, CPU, Disk Space, IPs and other services then you build what you like on top of that
demo / demo
Just launched this 2 weeks ago (network is failing)
We plan on having 10 footprints around the world by the end of the year.
You can see on this image your resources. You can just buy more you need to. Here is our virtual data centers.
In a virtual data center you can build virtual appliances.
So we can create a server
Resellers can do this
After we assign an IP to the virtual data center we can then add Templates of WordPress or Apache, MySQL, LAMP you can drag and drop to provision on the Virtual machine.
Let’s drop a WordPress server here. We will have PaaS templates that you can add to your environment.
In this case we will just do a WordPress server.
We now assign the address
Then we Deploy it.
We are working on Remote Execution tools to help provision. We are arranging deals to do live monitoring. You can spin up and spin down infrastructure based on what you need. You can execute some code to help the scale up and scale down.
Here is Server and we can VNC right in to it now that we have provisioned.
It is an Ubuntu server that we would see. Let’s go to the IP.
We have done research and we are working on improving our User Experience. There are a lot of clouds that are not useful.
We feel like the UX is average or above average. We win in the bandwidth and we buy it in such bulk. A Gigabit connection is best path routing through multiple Tier One routing. We have the best path.
What you are not dealing with is over subscription. We offer metered bandwidth for $50/month. We don’t charge when you do backups between virtual data centers. That is the trend. The costs of bandwidth are going down and we buy so much we can do this. Unless you are a data center provider so we can compare on price for product.

Q? When you offer a Cloud you can pick Ubuntu server and you can get on. Do we have to compile our own things and version control?
A. We would have to build in the templates. If you have a server on there that you can build then we will allow you to create Hypervisor templates you can use with ours.
Q? You are in Utah but you won’t work there?
A. Footprint in data centers around the world to follow the low latency. He has gone to hundreds of data centers in places that we trust.
Q? How does this work with video?
A. 50/month use it then we can do this. That is the paradigm change. Bandwidth is just being on. You should not have to develop around it. People that do backups have to schedule over hours so that they don’t see their billing spike. Or they are in place that is over subscribed. That is because they have 20 other people using that. We are 3:1 which is very low in subscription.
Q? Work with BlueHost and FiberNet?
A. A little bit different we target different customers. BlueHost wanted for a good WP website. Someone loking for $5/month. We are looking for $115-thousands per month. We are different customer and under subscribed.
Q? 100GB of memory on virtual server cost?
A. $22/GB is the calculation. The website is a work in progress.
$22/core and $4 for IP address. $0.60 per GB
Q? Audiences for User Experience?
A. Our existing customers who were with our product in 2009. We talked with them. What we did was reduce their pains. We sponsor user groups and we surveyed them. The average number of servers was 22 cloud servers. That is our target customer SMB. About 90% of the pain points we were able to solve. The other audience reliability is a big one. Being a provider we are not a fly by night company.
Price was another issue.
Bandwidth pricing is really good.
Flexibility is very good. You can also cross connect our hardware with your own.
You can create an instance of ours or we can buy it for you.
Some have regulations in industries that can’t put their data in a shared environment so you have to be in your own private cloud where they can control it all. It costs more but that is what they are required to provide.

Aaron Davis
This is like AA for Entrepreneurs or an Amish barnraising. I am at LingoTek. I know Matt Smith and that is how I got roped in to this.
I brought my son Tyge. He has been moonlighting with his friends down in our basement where they have cubicles and card tables. They have a jar with $5 in $1 bills.
I had a great entrepreneur experience growing up. I lived in a rural area and we had 1.5 hour rides. My ideas required money that I lacked. I thought, “how can I take something and sell it to my friends?” I walked down the gravel driveway and I thought, I could sell them rocks. At Show and Tell I had shown them rocks and they loved it. If I can sell rocks to people I will have plenty of money. I remembered this cool word, “agate.” Everything with colors was “Aaron’s Agate.” I am not an agate magnate now. I was a decent salesman even though I am a tech guy.
I called them Aaron’s Moonshine Agates because of the Dukes of Hazzard that always kept moonshine away from Boss Hogg. The problem was that second graders only have so much money and then they run out. Trying to sell up to 3rd graders won’t work because they don’t buy and selling to 1st graders is “bullying.”
I had a friend that said he had some special money but he only got six agates for his 6 actual Silver Dollars. His Dad found out and I had to give the money back. My agates were done.
4 Principles of Motivation:
1) Sufficient money (1.2 million to be happiest)?
2) Self Directed – I was in charge and I was going to do things. I have really enjoyed taking a problem and providing a solution for people. The path may be crazy but it’s a lot of fun.
3) Mastery – Why do some guys pick up instruments? Because they want to master a skill. You are learning new technology and new things. You get to master these subjects.
4) Purpose – The reasonable man adapts to the world. The unreasonable persist in trying to adapt the world to them. Therefore all progress is based on unreasonable people.

Q? What have you done since second grade and how successful?
A. I was involved in first during high school. My Mom and Dad got in to mail order arts and crafts. I liked the programming of the databases. They did quite well and I was involved in the whole thing.
In college while I was with a company very young – iServer. We were bought by Verio then NTT. It was Virtual Hosting. I got to see the whole thing. I also did some consulting for startups.
I wanted to move up the stack and I co-founded LingoTek in 2006 so we have been going for almost 7 years.
Q? Biggest lesson at LingoTek?
A. Never give up. Keep looking back at the original motivation. You are always going to bump in to pain and you can’t run away from that. Just adapt and get to that solution.
Q? Funding for LingoTek?
A. I met this guy who was doing language services. I took the tech from there. Once we had something we pitched all over the place. I wasn’t there with iServer and I was the sales guy here. I was involved in the early capital. At LingoTek we need about a million and I followed this guys lead and that took a year and a half or so. It was not directed and we were just trying anything. We got a regional VC who told us we would do the funding in tranches. At six months if you can show progress with the product then we will give you the second tranche. Then the next phase was marketing an sales strategy. We needed to have those in place. That did us for a while.
We had to pitch some more and then got some help with other groups.
IncuTell funding from the CIA and I have pitched in a lot of places now. I have done some VC and regional VC but pitching to the CIA group was a different experience.

In the WeedsAnnouncements
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Grow America Springboard next competition starts July 23rd.

Next LaunchUp – July 5, 2012 MATC #31

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